**UNITED
      STATES SECURITIES AND EXCHANGE COMMISSION**


WASHINGTON,
      D.C. 20549




**FORM
      20-F/A**




**(Amendment
      No. 1)**




 ̈
            REGISTRATION
                STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THESECURITIES
                EXCHANGE ACT OF 1934




OR




x
            ANNUAL
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE
                ACT OF 1934




For
      the
      fiscal year ended December 31, 2007




OR




 ̈
            TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE
                ACT OF 1934




OR




 ̈
            SHELL
                COMPANY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIESEXCHANGE
                ACT OF 1934




Date
      of
      event requiring this shell company report ______________




For
      the
      transition period from       to




Commission
      file number 1-14014





**CREDICORP
      LTD.**


(Exact
      name of registrant as specified in its charter)




**BERMUDA**


(Jurisdiction
      of incorporation or organization)


**Calle
      Centenario 156**


**La
      Molina**


**Lima
      12, Perú**


(Address
      of principal executive offices)









**Securities
      registered or to be registered pursuant to Section 12(b) of the
      Act.**





**Title
                of each class**
            
            **Name
                of each exchange on which registered****Common
                Shares, par value $5.00 per share**
            
            **New
                York Stock Exchange**





**Securities
      registered or to be registered pursuant to Section 12(g) of the
      Act.**


None




**Securities
      for which there is a reporting obligation pursuant to Section 15(d) of the
      Act.**


None




**Indicate
      the number of outstanding shares of each of the issuer’s classes of capital or
      common stock as of the close of the period covered by the annual
      report.**


Common
                Shares, par value $5.00 per share
            94,382,317




**Indicate
      by check mark if the registrant is a well-known seasoned issuer, as defined
      in
      Rule 405 of the Securities Act.**


Yes x No  ̈





**If
      this report is an annual or transition report, indicate by check mark if the
      registrant is not required to file reports pursuant to Section 13 or 15(d)
      of the Securities Exchange Act of 1934.**




Yes  ̈ No x





**Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 12 months (or for such shorter period that the registrant was required
      to file such reports), and (2) has been subject to such filing requirements
      for
      the past 90 days.**




Yes x No  ̈





**Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, or a non-accelerated filer. See definition of
“accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange
      Act.**




Large
      accelerated filer x Accelerated
      filer  ̈ Non-accelerated
      filer  ̈




**Indicate
      by check mark which financial statement item the registrant has elected to
      follow.**




**** Item
      17  ̈  Item
      18 x




**If
      this is an annual report, indicate by check mark whether the registrant is
      a
      shell company (as defined in Rule 12b-2 of the Exchange Act).**





Yes  ̈ No x










**EXPLANATORY
        NOTE**





Credicorp
        Ltd. is filing this amendment to its Form 20-F for the year ended December
        31,
        2007 to supplement information concerning share ownership in the original
        Form
        20-F filed on June 30, 2008 (the “Original Filing”).





This
        amendment amends and restates the following Items of Credicorp’s Form
        20-F:





·
              Item
                  6(E) "Share Ownership"





This
        amendment and the Original Filing continue to speak as of June 30, 2008,
        the
        date on which the Original Filing was made. Except as described above, this
        amendment does not, and does not purport to, amend or restate the information
        in
        any other Item of the Original Filing, or update the disclosure for or on
        account of any events that have occurred after the date on which the Original
        Filing was made.





For
        the
        convenience of the reader, the document has been re-filed in its
        entirety.









**TABLE
      OF CONTENTS**





**PRESENTATION
                  OF FINANCIAL INFORMATION**
              **2****CAUTIONARY
                  STATEMENT WITH RESPECT TO FORWARD-LOOKING
                  STATEMENTS**
              **3****PART
                  I****ITEM
                  1.**
              **IDENTITY
                  OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS**
              **4****ITEM
                  2.**
              **OFFER
                  STATISTICS AND EXPECTED TIMETABLE**
              **4****ITEM
                  3.**
              **KEY
                  INFORMATION**
              **4****ITEM
                  4.**
              **INFORMATION
                  ON THE COMPANY**
              **12****ITEM
                  4A.**
              **UNRESOLVED
                  STAFF COMMENTS**
              **91****ITEM
                  5.**
              **OPERATING
                  AND FINANCIAL REVIEW AND PROSPECTS**
              **91****ITEM
                  6.**
              **DIRECTORS,
                  SENIOR MANAGEMENT AND EMPLOYEES**
              **119****ITEM
                  7.**
              **MAJOR
                  SHAREHOLDERS AND RELATED PARTY TRANSACTIONS**
              **125****ITEM
                  8.**
              **FINANCIAL
                  INFORMATION**
              **128****ITEM
                  9.**
              **THE
                  OFFER AND LISTING**
              **130****ITEM
                  10.**
              **ADDITIONAL
                  INFORMATION**
              **134****ITEM
                  11.**
              **QUANTITATIVE
                  AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**
              **136****ITEM
                  12.**
              **DESCRIPTION
                  OF SECURITIES OTHER THAN EQUITY SECURITIES**
              **144****ITEM
                  13.**
              **DEFAULTS,
                  DIVIDEND ARREARAGES AND DELINQUENCIES**
              **144****ITEM
                  14.**
              **MATERIAL
                  MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
                  PROCEEDS**
              **144****ITEM
                  15.**
              **CONTROLS
                  AND PROCEDURES**
              **144****ITEM
                  16A.**
              **AUDIT
                  COMMITTEE FINANCIAL EXPERT**
              **147****ITEM
                  16B.**
              **CODE
                  OF ETHICS**
              **148****ITEM
                  16C.**
              **PRINCIPAL
                  ACCOUNTANT FEES AND SERVICES**
              **148****ITEM
                  16D.**
              **EXEMPTIONS
                  FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES**
              **149****ITEM
                  16E.**
              **PURCHASES
                  OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED
                  PURCHASERS**
              **149****ITEM
                  17.**
              **FINANCIAL
                  STATEMENTS**
              **150****ITEM
                  18.**
              **FINANCIAL
                  STATEMENTS**
              **150****ITEM
                  19.**
              **EXHIBITS**
              **151**





**PRESENTATION
      OF FINANCIAL INFORMATION**




Unless
      otherwise specified or the context otherwise requires, references in this Form
      20-F (the “Annual Report”) to “$,” “US$,” “Dollars,” “U.S. Dollars,” are to
      United States Dollars, and references to “S/.,” “Nuevo Sol” or “Nuevos Soles”
are to Peruvian Nuevos Soles and references to “foreign currency” are to U.S.
      Dollars. Each Nuevo Sol is divided into 100 céntimos (cents).




Credicorp
      Ltd., a Bermuda limited liability company (“Credicorp” as a separate entity or
      together with its consolidated subsidiaries, as the context may require),
      maintains its financial books and records in U.S. Dollars and presents its
      financial statements in accordance with International Financial Reporting
      Standards (“IFRS”) as issued by the International Accounting Standards Board
      (IASB). IFRS differ in certain respects from United States generally accepted
      accounting principles (“U.S. GAAP”).




Credicorp
      operates primarily through its four principal subsidiaries, Banco de Crédito del
      Perú (together with its consolidated subsidiaries, “BCP”), Atlantic Security
      Holding Corporation (together with its consolidated subsidiaries, “ASHC”), El
      Pacífico-Peruano Suiza Compañía de Seguros y Reaseguros (together with its
      consolidated subsidiaries, “PPS”) and Grupo Crédito S.A (together with its
      consolidated subsidiaries, “Grupo Crédito”). BCP’s activities include commercial
      banking, investment banking and retail banking. As of and for the year ended
      December 31, 2007, BCP, accounted for 69.8% of Credicorp’s total
      revenues, 82.9% of total assets, 103.0% of net income and 65.4% of net equity.
      Unless otherwise specified, the individual financial information for BCP, ASHC,
      PPS and Grupo Crédito included herein has been derived from the audited
      consolidated financial statements of each such entity. See “Item 3. Key
      Information—(A) Selected Financial Data” and “Item 4. Information on the
      Company—(A) History and Development of the Company.”




“Item
      3.
      Key Information—(A) Selected Financial Data” contains key information related to
      Credicorp’s performance. Such information was obtained mainly from Credicorp’s
      consolidated financial statements as of December 31, 2003, 2004, 2005, 2006
      and
      2007.




Credicorp
      management’s criteria on foreign currency translation for the purpose of
      preparing the Credicorp Consolidated Financial Statements is described in “Item
      5. Operating and Financial Review and Prospects—(A) Operating Results—(1)
      Critical Accounting Policies—Foreign currency translation.”




Certain
      of Credicorp’s subsidiaries maintain their operations and balances in Nuevo
      Soles. As a result, this Annual Report contains certain Nuevo Sol amounts
      translated into U.S. Dollars solely for the convenience of the reader. None
      of
      these translations should be construed as representations that the Nuevo Sol
      amounts actually represent such equivalent U.S. Dollar amounts or could be
      converted into U.S. Dollars at the rate indicated as of the dates mentioned
      herein or at all. Unless otherwise indicated, such U.S. Dollar amounts have
      been
      translated from Nuevos Soles at an exchange rate of S/.2.996= US$1.00, the
      December 31, 2007 exchange rate set by the Peruvian Superintendencia de Banca,
      Seguros y AFP (the Superintendency of Banks, Insurance and Pension Funds, or
      “SBS”). The average of the bid and offered free market exchange rates published
      by SBS for June 6, 2008 was S/.2.807 per US$1.00. The translation of amounts
      expressed in Nuevos Soles as of a specified date by the then prevailing exchange
      rate may result in presentation of U.S. Dollar amounts that differ from the
      U.S.
      Dollar amounts that would have been obtained by translating Nuevos Soles as
      of
      another specified date by the prevailing exchange rate on that specified date.
      See also “Item 3. Key Information—(A) Selected Financial Data—Exchange Rates”
for information regarding the average rates of exchange between the Nuevo Sol
      and the U.S. Dollar for the periods specified therein. The Federal Reserve
      Bank
      of New York does not publish a noon buying rate for Nuevos
      Soles.


2


**CAUTIONARY
      STATEMENT WITH RESPECT TO FORWARD-LOOKING STATEMENTS**




Certain
      of the statements contained in this Annual Report are not historical facts,
      including, without limitation, certain statements made in the sections hereof
      entitled “Item 3. Key Information,” “Item 4. Information on the Company,” “Item
      5. Operating and Financial Review and Prospects” and “Item 11. Quantitative and
      Qualitative Disclosures about Market Risk,” which are forward-looking statements
      within the meaning of Section 27A of the U.S. Securities Act of 1933 and
      Section 21E of the U.S. Securities Exchange Act of 1934 (the “Exchange Act”).
      These forward-looking statements are based on management’s current views and
      assumptions and involve known and unknown risks and uncertainties that could
      cause actual results, performance or events to differ materially from those
      expressed or implied in such statements. Actual results, performance or events
      may differ materially from those in such statements due to, without
      limitation:




·
            general
                economic conditions, including in particular economic conditions
                in
                Peru;




·
            performance
                of financial markets, including emerging
                markets;




·
            the
                frequency and severity of insured loss
                events;




·
            interest
                rate levels;




·
            currency
                exchange rates, including the Nuevo Sol/U.S. Dollar exchange
                rate;




·
            increasing
                levels of competition in Peru and other emerging
                markets;




·
            changes
                in laws and regulations;




·
            changes
                in the policies of central banks and/or foreign governments;
                and




·
            general
                competitive factors, in each case on a global, regional and/or national
                basis.




See
“Item
      3. Key Information—(D) Risk Factors,” and “Item 5. Operating and Financial
      Review and Prospects.”




Credicorp
      is not under any obligation to, and expressly disclaims any such obligation
      to,
      update or alter its forward-looking statements, whether as a result of new
      information, future events or otherwise.


3


**PART
      I**




**ITEM
                1.**
            **IDENTITY
                OF DIRECTORS, SENIOR MANAGEMENT AND
                ADVISERS**




Not
      applicable.




**ITEM
                2.**
            **OFFER
                STATISTICS AND EXPECTED
                TIMETABLE**




Not
      applicable.




**ITEM
                3.**
            **KEY
                INFORMATION**




**(A)**
            **Selected
                Financial Data**




The
      following table presents summary consolidated financial information for
      Credicorp at the dates and for the periods indicated. This selected financial
      data is presented in U.S. Dollars. This information should be read in
      conjunction with, and is qualified in its entirety by reference to, the
      Credicorp Consolidated Financial Statements, also presented in U.S.
      Dollars.




The
      summary consolidated financial data as of, and for the years ended, December
      31,
      2003, 2004, 2005, 2006 and 2007 are derived from the Credicorp Consolidated
      Financial Statements audited by Medina, Zaldívar, Paredes & Asociados
      S.C.R.L, member of Ernst & Young Global, independent registered public
      accountants.




The
      report of Medina, Zaldívar, Paredes & Asociados S.C.R.L on the Credicorp
      Consolidated Financial Statements as of December 31, 2006 and 2007 and for
      the
      years ended December 31, 2005, 2006 and 2007 appears elsewhere in this Annual
      Report.


4


**SELECTED
      FINANCIAL DATA**


**Year
                  ended December 31,****2003**
              
              **2004**
              
              **2005**
              
              **2006**
              
              **2007***(U.S.
                  Dollars in thousands, except percentages, ratios, and per common
                  share
                  data)***INCOME
                  STATEMENT DATA:****IFRS:**Interest
                  income
              
              US$
              548,285
              
              US$
              542,842
              
              US$
              612,432
              
              US$
              782,002
              
              US$
              1,065,974Interest
                  expense
              
              
              (163,580
              )
              
              (160,298
              )
              
              (173,159
              )
              
              (283,478
              )
              
              (432,000
              )Net
                  interest income
              
              
              384,705
              
              
              382,544
              
              
              439,273
              
              
              498,524
              
              
              633,974Provision
                  for loan losses (1)
              
              
              (66,421
              )
              
              (16,131
              )
              
              6,356
              
              
              4,243
              
              
              (28,439
              )Net
                  interest income after provision for loan losses
              
              
              318,284
              
              
              366,413
              
              
              445,629
              
              
              502,767
              
              
              605,535Fees
                  and commissions from banking services
              
              
              189,472
              
              
              201,474
              
              
              206,163
              
              
              243,778
              
              
              324,761Net
                  gains (losses) from sales of securities
              
              
              3,235
              
              
              10,135
              
              
              8,965
              
              
              27,281
              
              
              41,359Net
                  gains on foreign exchange transactions
              
              
              23,681
              
              
              24,165
              
              
              29,286
              
              
              41,638
              
              
              61,778Net
                  premiums earned
              
              
              125,115
              
              
              192,672
              
              
              218,955
              
              
              251,261
              
              
              297,272Other
                  income
              
              
              23,227
              
              
              8,105
              
              
              21,571
              
              
              26,197
              
              
              90,022Claims
                  on insurance activities
              
              
              (99,774
              )
              
              (154,325
              )
              
              (175,500
              )
              
              (186,522
              )
              
              (238,600
              )Operating
                  expenses
              
              
              (430,373
              )
              
              (459,928
              )
              
              (477,073
              )
              
              (585,058
              )
              
              (742,072
              )Merger
                  costs
              
              
              (18,587
              )
              
              (3,742
              )
              
              0
              
              
              (5,706
              )
              
              0Income
                  before translation result and income tax
              
              
              134,280
              
              
              184,969
              
              
              277,996
              
              
              315,636
              
              
              440,055Translation
                  result
              
              
              (3,675
              )
              
              2,040
              
              
              (9,597
              )
              
              15,216
              
              
              34,627Income
                  tax
              
              
              (39,695
              )
              
              (45,497
              )
              
              (73,546
              )
              
              (83,587
              )
              
              (102,287
              )Net
                  income
              
              
              90,910
              
              
              141,512
              
              
              194,853
              
              
              247,265
              
              
              372,395Net
                  income attributable to Credicorp’s equity holders
              
              
              80,607
              
              
              130,747
              
              
              181,885
              
              
              230,013
              
              
              350,735Minority
                  interests
              
              
              10,303
              
              
              10,765
              
              
              12,968
              
              
              17,252
              
              
              21,660Net
                  income per Common Share attributable to Credicorp’s equity holders
                  (2)
              
              
              1.01
              
              
              1.64
              
              
              2.28
              
              
              2.88
              
              
              4.40Cash
                  dividends declared per Common Share
              
              
              0.40
              
              
              0.80
              
              
              1.10
              
              
              1.30
              
              
              1.50**BALANCE
                  SHEET DATA:****IFRS:**Total
                  assets
              
              
              8,321,783
              
              
              9,087,560
              
              
              11,036,075
              
              
              12,881,529
              
              
              17,705,898Total
                  loans (3)
              
              
              4,481,496
              
              
              4,559,018
              
              
              4,972,975
              
              
              5,877,361
              
              
              8,183,845Reserves
                  for loan losses (1)
              
              
              (326,677
              )
              
              (271,873
              )
              
              (218,636
              )
              
              (210,586
              )
              
              (229,700
              )Total
                  deposits
              
              
              5,976,506
              
              
              6,270,972
              
              
              7,067,754
              
              
              8,799,134
              
              
              11,299,671Equity
                  attributable to Credicorp's equity holders
              
              
              910,730
              
              
              1,065,197
              
              
              1,190,440
              
              
              1,396,822
              
              
              1,676,009Minority
                  interest
              
              
              72,841
              
              
              85,253
              
              
              101,515
              
              
              136,946
              
              
              139,264Net
                  Equity
              
              
              983,571
              
              
              1,150,450
              
              
              1,291,955
              
              
              1,533,768
              
              
              1,815,273**SELECTED
                  RATIOS:****IFRS:**Net
                  interest margin (4)
              
              
              5.15
              %
              
              4.85
              %
              
              4.90
              %
              
              4.64
              %
              
              4.50
              %Return
                  on average total assets (5)
              
              
              0.95
              
              
              1.50
              
              
              1.81
              
              
              1.92
              
              
              2.29Return
                  on average equity attributable to Credicorp's equity holders
                  (6)
              
              
              9.27
              
              
              13.55
              
              
              16.39
              
              
              18.47
              
              
              22.67Operating
                  expenses as a percentage of net interest and non-interest income
                  (7)
              
              
              50.66
              
              
              49.18
              
              
              46.25
              
              
              50.26
              
              
              50.62Operating
                  expenses as a percentage of average assets
              
              
              5.08
              
              
              5.28
              
              
              4.74
              
              
              4.89
              
              
              4.85Equity
                  attributable to Credicorp’s equity holders as a percentage of period end
                  total assets
              
              
              10.94
              
              
              11.72
              
              
              10.79
              
              
              10.84
              
              
              9.47Regulatory
                  capital as a percentage of risk-weighted assets (8)
              
              
              15.28
              
              
              14.04
              
              
              13.10
              
              
              11.98
              
              
              12.80Total
                  past due loan amounts as a percentage of total loans (9)
              
              
              5.72
              
              
              3.49
              
              
              1.93
              
              
              1.31
              
              
              0.75Reserves
                  for loan losses as a percentage of total loans
              
              
              7.29
              
              
              5.96
              
              
              3.97
              
              
              3.24
              
              
              2.58Reserves
                  for loan losses as a percentage of total loans and other contingent
                  credits (10)
              
              
              5.38
              
              
              4.99
              
              
              3.19
              
              
              2.59
              
              
              2.17Reserves
                  for loan losses as a percentage of total past due loans
                  (11)
              
              
              127.50
              
              
              170.93
              
              
              206.22
              
              
              247.85
              
              
              343.68Reserves
                  for loan losses as a percentage of substandard loans (12)
              
              
              50.26
              
              
              54.11
              
              
              65.42
              
              
              78.24
              
              
              101.98


(1)
                Provision
                    for loan losses and reserve for loan losses include provisions
                    and
                    reserves with respect to total loans and contingent credits,
                    net of write
                    off recoveries.


5




(2)
              Credicorp
                  has 100 million authorized common shares (“Common Shares”). As of December
                  31, 2007, Credicorp had issued 94.4 million Common Shares, of which
                  14.6
                  million are held by ASHC. Per Common Share data presented considers
                  net
                  outstanding shares (Common Shares net of shares held by BCP, ASHC
                  and PPS)
                  of 79.7 million in 2002 to 2007. See Notes 18 and 27 to the Credicorp
                  Consolidated Financial Statements.
 
 (3)
              Net
                  of unearned interest, but prior to reserve for loan losses. In
                  addition to
                  loans outstanding, Credicorp had contingent loans of US$782.9 million,
                  US$889.1 million, US$1,220.9 million, US$1,455.4 million and US$1,564.5
                  million, as of December 31, 2003, 2004, 2005, 2006 and 2007, respectively.
                  See Note 21 to the Credicorp Consolidated Financial
                  Statements.
 
 (4)
              Net
                  interest income as a percentage of average interest-earning assets,
                  computed as the average of period-beginning and period-ending balances
                  on
                  a monthly basis.
 
 (5)
              Net
                  income as a percentage of average total assets, computed as the
                  average of
                  period-beginning and period-ending
                  balances.
 
 (6)
              Net
                  income as a percentage of average equity attributable to Credicorp ́s
                  equity holders, computed as the average of period-beginning and
                  period-ending balances. Calculated on a monthly
                  basis.
 
 (7)
              Sum
                  of the salaries and employee’s benefits, administrative expenses,
                  depreciation and amortization, as a percentage of the sum of net
                  interest
                  income and non-interest income, less net gains from sales of securities
                  and other income.
 
 (8)
              Regulatory
                  capital calculated in accordance with guidelines by the Basel Committee
                  on
                  Banking Regulations and Supervisory Practices of International
                  Settlements
                  (the “BIS I Accord”) as adopted by the SBS. See “Item 5. Operating and
                  Financial Review and Prospects—(B) Liquidity and Capital
                  Resources—Regulatory Capital and Capital Adequacy
                  Ratios.”
 
 (9)
              BCP
                  considers loans past due after 90 days, for installment loans,
                  which
                  include mortgage loans but exclude consumer loans. ASHC considers
                  past due
                  all overdue loans except for consumer loans, which are considered
                  past due
                  when the scheduled principal and/or interest payments are overdue
                  for more
                  than 90 days. For IFRS 7 disclosure requirements on past due loans,
                  see
                  Note 31.1 to the Credicorp Consolidated Financial Statements. See
“Item 4.
                  Information on the Company—(B) Business Overview—(12) Selected Statistical
                  Information—(iii) Loan Portfolio—Classification of the Loan Portfolio
                  Based on the Borrower’s Payment
                  Performance.”
 
 (10)
              Other
                  contingent credits primarily consist of guarantees, stand-by letters
                  and
                  letters of credit. See Note 21 to the Credicorp Consolidated Financial
                  Statements.
 
 (11)
              Reserves
                  for loan and contingent credit losses, as a percentage of all past
                  due
                  loans, with no reduction for collateral securing such loans. Reserves
                  for
                  loan and contingent credit losses includes reserves with respect
                  to total
                  loans and other credits.
 
 (12)
              Reserves
                  for loan and contingent credit losses as a percentage of loans
                  classified
                  in categories C, D or E. See “Item 4. Information on the Company—(B)
                  Business Overview—(12) Selected Statistical Information—(iii) Loan
                  Portfolio—Classification of Loan
                  Portfolio.”




**Exchange
      Rates**




The
      following table sets forth the high and low month-end rates and the average
      and
      end-of-period rates for the sale of Nuevos Soles for U.S. Dollars for the
      periods indicated.




**Year
                ended December 31,**
            
            **High(1)**
            
            **Low(1)**
            
            **Average(2)**
            
            **Period-end(3)***(Nominal
                Nuevos Soles per U.S. Dollar)*2003
            
            
            3.496
            
            
            3.463
            
            
            3.477
            
            
            3.4642004
            
            
            3.500
            
            
            3.283
            
            
            3.410
            
            
            3.2832005
            
            
            3.440
            
            
            3.249
            
            
            3.295
            
            
            3.4202006
            
            
            3.455
            
            
            3.195
            
            
            3.274
            
            
            3.1952007
            
            
            3.197
            
            
            2.998
            
            
            3.125
            
            
            2.998





Source:
      SBS


(1)
            Highest
                and lowest of the 12 month-end exchange rates for each year based
                on the
                offered rate.


(2)
            Average
                of month-end exchange rates based on the offered
                rate.


(3)
            End-of-period
                exchange rates based on the offered
                rate.


6


The
      following table sets forth the high and low rates for the sale of Nuevos Soles
      for U.S. Dollars for the indicated months.


**High(1)**
              
              **Low(1)***(Nominal Nuevos Soles per U.S. Dollar)***2007**December
              
              
              2.998
              
              
              2.969**2008**January
              
              
              2.978
              
              
              2.913February
              
              
              2.940
              
              
              2.889March
              
              
              2.884
              
              
              2.746April
              
              
              2.861
              
              
              2.694May
              
              
              2.868
              
              
              2.755June
                  (through June 26)
              
              
              2.963
              
              
              2.788







Source:
      Bloomberg


(1)  Highest
      and lowest of the daily closing exchange rates for each month based on the
      offered rate.





The
      average of the bid and offered free market exchange rates published by the
      SBS
      for June 26, 2008 was S/.2.965 per US$1.00.




**(B)**
            **Capitalization
                and Indebtedness**




Not
      applicable.




**(C)**
            **Reasons
                for the Offer and Use of
                Proceeds**




Not
      applicable.




**(D)**
            **Risk
                Factors**




Credicorp’s
      businesses are affected by a number of external and other factors in the markets
      in which they operate. Different risk factors can impact Credicorp’s businesses
      and their ability to operate their respective businesses and business strategies
      effectively. The following risk factors should be considered carefully and
      read
      in conjunction with all of the information in this Annual Report.




*The
      Group’s geographic location exposes it to risk related to the Peruvian political
      and economic conditions*




Substantially
      all of BCP’s and PPS’s operations and customers are located in Peru. In
      addition, although ASHC is based outside of Peru, substantially all of its
      customers are located in Peru. Accordingly, the results of operations and the
      financial condition of Credicorp will be dependent on the level of economic
      activity in Peru. Credicorp’s results of operations and financial condition
      could also be affected by changes in economic or other policies of the Peruvian
      government (which has exercised and continues to exercise a substantial
      influence over many aspects of the private sector) or other political or
      economic developments in Peru, including government-induced effects on
      inflation, devaluation and economic growth.




For
      several decades, Peru has had a history of political instability that has
      included military coups and a succession of regimes with differing policies
      and
      programs. Past governments have frequently intervened in the nation’s economy
      and social structure. Among other actions, past governments have imposed
      controls on prices, exchange rates, local and foreign investment and
      international trade; restricted the ability of companies to dismiss employees;
      expropriated private sector assets; and prohibited the remittance of profits
      to
      foreign investors.


7


In
      July
      1990, Alberto Fujimori was elected President, and his administration implemented
      a broad-based reform of Peru’s political system and economic and social
      conditions aimed at and with a focus on stabilizing the economy, restructuring
      the national government (by reducing bureaucracy), privatizing state-owned
      companies, promoting private investment, developing and strengthening free
      markets, institutionalizing democratic representation, and enacting programs
      for
      the strengthening of basic services related to education, health and
      infrastructure. After taking office for his third term in July 2000 under
      extreme protest, President Fujimori was forced to call for general elections
      due
      to the outbreak of corruption scandals and later resigned in favor of a
      transitory government headed by the President of Congress, Valentín
      Paniagua.




Mr.
      Paniagua took office in November 2000 and in July 2001 handed over the
      presidency to Alejandro Toledo, the winner of the elections decided in the
      second round held on June 3, 2001, ending two years of political turmoil.
      President Toledo retained, for the most part, the economic policies of the
      previous government, focusing on promoting private investment, eliminating
      tax
      exemptions, and reducing underemployment and unemployment. President Toledo
      also
      implemented fiscal austerity programs, among other proposals, in order to
      stimulate the economy. Despite Peru’s moderate economic growth, the Toledo
      administration at times faced public unrest spurred by the high rates of
      unemployment, underemployment and poverty.




President
      Toledo transferred the presidency to Alan García Pérez on July 28, 2006
      following Mr. Garcia’s victory in the run-off of the presidential elections held
      on June 4, 2006.




President
      García had previously served as president of Peru from 1985 to 1990, a period
      which was marked by a severe economic crisis. President García is following
      conservative economic policies and has indicated a desire to avoid the mistakes
      of his past government. García named banker Luis Carranza as Minister of Economy
      and Finance. Carranza has held a senior position at Banco Bilbao Vizcaya
      Argentaria (“BBVA”) in Spain and was a key adviser to Pedro Pablo Kuczynski, the
      Prime Minister (and former Minister of Economy and Finance) of former president
      Alejandro Toledo. García has indicated that his administration would generally
      follow economic policies similar to those of the Toledo administration, which
      included achieving sustained economic growth, increasing exports of Peruvian
      goods, reducing unemployment, underemployment and poverty, reforming the tax
      system, fostering private investment and increasing public investment in
      education, public health and other social programs, while reducing overall
      public spending.




*Foreign
      exchange fluctuations and exchange controls may adversely affect Credicorp’s
      financial condition and results of operations*




Even
      though the functional currency of Credicorp’s financial statements is the U.S.
      Dollar, and its dividends are paid in U.S. Dollars, BCP and PPS, for local
      statutory purposes, prepare their financial statements and pay dividends in
      Nuevos Soles. As declared in the Peruvian Constitution, the Peruvian government
      currently imposes no restrictions on a company’s ability to transfer U.S.
      Dollars from Peru to other countries, to convert Peruvian currency into U.S.
      Dollars or to remit dividends abroad. Peru has had restrictive exchange controls
      in the past and there can be no assurance that the Peruvian government will
      continue to permit such transfers, remittances or conversion without any
      restriction. See “Item 10. Additional Information—(D) Exchange Controls.” In
      addition, a depreciation would decrease the U.S. Dollar value of any dividends
      BCP and PPS pay to Credicorp, which would have a negative impact on Credicorp’s
      ability to pay dividends to shareholders.


8


Although
      the current level of Peru’s foreign reserves compares favorably with those of
      other Latin American countries, there can be no assurance that Peru will be
      able
      to maintain adequate foreign reserves to meet its foreign currency-denominated
      obligations, or that Peru will not impose exchange controls should its foreign
      reserves decline. A decline in Peruvian foreign reserves to inadequate levels,
      among other economic circumstances, could lead to a currency devaluation or
      a
      volatility of short-term capital inflows. While Credicorp seeks to manage the
      gap between its foreign currency-denominated assets and liabilities, for
      instance by matching the volumes and maturities of its Nuevo Sol-denominated
      loans against its Nuevo Sol-denominated deposits, a sudden and significant
      devaluation could have a material adverse effect on Credicorp’s financial
      condition and results of operations. See “Item 11. Quantitative and Qualitative
      Disclosures about Market Risk—Exchange Rate Sensitivity.” Also, a significant
      group of BCP’s borrowers and PPS’s insureds generate Nuevo Sol revenues from
      their own clients. Devaluation of the Nuevo Sol against the Dollar could have
      a
      negative impact on the ability of BCP’s and PPS’s clients to repay loans or make
      premium payments. Despite any devaluation, and absent any change in foreign
      exchange regulations, BCP and PPS would be expected to continue to repay U.S.
      Dollar-denominated deposits and U.S. Dollar-denominated insurance benefits
      in
      U.S. Dollars. Therefore, any significant devaluation of the Nuevo Sol against
      the Dollar could have a material adverse effect on Credicorp’s results of
      operations and financial condition.




*It
      may be difficult to serve process on or enforce judgments against Credicorp
      or
      Credicorp’s principals residing outside of the United States*




A
      significant majority of Credicorp’s directors and officers reside outside the
      United States (principally in Peru). All or a substantial portion of the assets
      of Credicorp or of such persons are located outside the United States. As a
      result, it may not be possible for investors to effect service of process within
      the United States upon such persons or upon Credicorp or to enforce against
      them
      in federal or state courts in the United States judgments predicated upon the
      civil liability provisions of the federal securities laws of the United States.
      Credicorp has been advised by its Peruvian counsel that there is uncertainty
      as
      to the enforceability, in original actions in Peruvian courts, of liabilities
      predicated solely under the United States federal securities laws and as to
      the
      enforceability in Peruvian courts of judgments of United States courts obtained
      in actions predicated upon the civil liability provisions of the United States
      federal securities laws. Credicorp has been advised by its Bermudan counsel
      that
      uncertainty exists as to whether courts in Bermuda will enforce judgments
      obtained in other jurisdictions, including the United States, against Credicorp
      or its directors or officers under the securities laws of those jurisdictions
      or
      entertain actions in Bermuda against Credicorp or its directors or officers
      under the securities laws of other jurisdictions.




In
      addition, Credicorp’s bye-laws (the “Bye-laws”) contain a broad waiver by its
      shareholders of any claim or right of action, both individually and on
      Credicorp’s behalf, against any of Credicorp’s officers or directors. The waiver
      applies to any action taken by an officer or director, or the failure of an
      officer or director to take any action, in the performance of his or her duties,
      except with respect to any matter involving any willful negligence, willful
      default, fraud or dishonesty on the part of the officer or director. This waiver
      limits the right of shareholders to assert claims against Credicorp’s officers
      and directors unless the act or failure to act involves willful negligence,
      willful default, fraud or dishonesty.




*As
      a
      holding company, Credicorp’s ability to pay dividends to its shareholders and to
      pay corporate expenses may be adversely affected by restrictions on its
      subsidiaries to pay dividends to Credicorp*


9


As
      a
      holding company, Credicorp’s ability to make dividend payments, if any, and to
      pay corporate expenses will be dependent primarily upon the receipt of dividends
      and other distributions from its operating subsidiaries. Credicorp’s principal
      subsidiaries are BCP, PPS, ASHC and Grupo Crédito. To the extent that
      Credicorp’s subsidiaries do not have funds available or are otherwise restricted
      from paying dividends to Credicorp, Credicorp’s ability to pay dividends to its
      shareholders will be adversely affected. Currently, there are no restrictions
      on
      the ability of BCP, ASHC, PPS or Grupo Crédito to remit dividends abroad. In
      addition, the right of Credicorp to participate in any distribution of assets
      of
      any subsidiary, including BCP, PPS, ASHC and Grupo Crédito, upon any such
      subsidiary’s liquidation or reorganization or otherwise (and thus the ability of
      holders of Credicorp securities to benefit indirectly from such distribution),
      will be subject to the prior claims of creditors of that subsidiary, except
      to
      the extent that any claims of Credicorp as a creditor of such subsidiary may
      be
      recognized as such. Accordingly, Credicorp’s securities will effectively be
      subordinated to all existing and future liabilities of Credicorp’s subsidiaries,
      and holders of Credicorp’s securities should look only to the assets of
      Credicorp for payments.




*A
      deterioration in the quality of our loan portfolio may adversely affect our
      results of operations*




Given
      that a significant percentage of Credicorp’s revenues are related to banking
      activities, a deterioration of loan quality may have an adverse impact on
      Credicorp’s financial condition and results of operations of Credicorp. While
      loan portfolio risk associated with lending to certain economic sectors or
      clients in certain market segments can be mitigated through adequate
      diversification policies, Credicorp’s pursuit of opportunities in which it can
      charge higher interest rates, thereby increasing revenues, may reduce
      diversification of the loan portfolio and expose Credicorp to greater credit
      risk. Credicorp believes that significant opportunities exist in middle market
      and consumer lending in Peru and that Credicorp can, on average, charge higher
      interest rates on such loans as compared with interest charged on loans in
      its
      core corporate banking business, made primarily to clients that operate in
      industrial and commercial economic sectors. Accordingly, Credicorp’s strategy
      includes a greater emphasis on middle market and consumer loans, as well as
      continued growth of its loan portfolio in general. An increase in the
      portfolio’s exposure to these areas could be accompanied by greater credit risk,
      not only due to the speed and magnitude of the increase, but also due to the
      shift to lending to the middle market and consumer sectors, which have higher
      risk profiles compared, particularly, to loans to large corporate customers.
      Given the changing composition of its loan portfolio, historical loss experience
      may not be indicative of future loan loss experience.




*We
      are subject to banking regulations and supervision in Peru. Changes in the
      regulatory framework in Peru could adversely affect our
      business*




Credicorp
      is subject to extensive supervision and regulation through the SBS’s
      consolidated supervision regulations, which oversee all of Credicorp’s
      subsidiaries and offices including those located outside Peru. BCP’s operations
      are supervised and regulated by the SBS and the *Banco
      Central de Reserva* (“Central Bank”). Peru’s Constitution and the SBS’s statutory charter grant the
      SBS the authority to oversee and control banks and other financial institutions.
      The SBS and the Central Bank have general administrative responsibilities over
      BCP, including designation of capitalization and reserve requirements. In past
      years, the Central Bank has, on numerous occasions, changed the deposit reserve
      requirements applicable to Peruvian commercial banks and both the rate of
      interest paid on deposit reserves and the amount of deposit reserves on which
      no
      interest is payable by the Central Bank. Such changes in the supervision and
      regulation of BCP, if made in the future, may adversely affect the results
      of
      operations and financial condition of Credicorp. See “Item 4. Information
      on the Company—(B) Business Overview—(11) Supervision and Regulation—(ii)
      BCP.”


10


*We
      are subject to insurance regulation in Peru. Changes in insurance regulations
      may impact the ability of our insurance subsidiary to underwrite and price
      risk
      effectively and may adversely affect Credicorp’s operating performance and
      financial condition*




Credicorp’s
      insurance business, carried out by its subsidiary PPS, is subject to regulation
      by the SBS. Insurance regulation in Peru is an area of constant change. New
      legislation or regulations may adversely affect PPS’s ability to underwrite and
      price risks accurately, which in turn would affect underwriting results and
      business profitability. PPS is unable to predict whether and to what extent
      new
      laws and regulations that would affect its business will be adopted in the
      future, the timing of any such adoption, and what effects any new laws or
      regulations would have on its operations, profitability and financial
      condition.




Credicorp’s
      operating performance and financial condition depend on PPS’s ability to
      underwrite and set premium rates accurately for a full spectrum of risks. PPS
      must generate sufficient premiums to offset losses, loss adjustment expenses
      and
      underwriting expenses so it may earn a profit. In order to price premium rates
      accurately, PPS must collect and analyze a substantial volume of data; develop,
      test and apply appropriate rating formulae; closely monitor changes in trends
      in
      a timely fashion; and project both severity and frequency with reasonable
      accuracy. If PPS fails to assess accurately the risks that it assumes or does
      not accurately estimate its retention, it may fail to establish adequate premium
      rates, which could reduce income and have a material adverse effect on its
      operating results or financial condition. Moreover, there is inherent
      uncertainty in the process of establishing property and casualty loss reserves.
      Reserves are estimates based on actuarial and statistical projections at a
      given
      point in time of what PPS ultimately expects to pay out on claims and the cost
      of adjusting those claims, based on the facts and circumstances then known.
      Factors affecting these projections include, among others, changes in medical
      costs, repair costs and regulation. Any negative effect on PPS could have a
      material adverse effect on Credicorp’s results of operations and financial
      condition.




*We
      are facing increased competition that may impede our growth*




BCP
      has
      experienced increased competition, including increased pressure on margins,
      primarily as a result of the presence of highly liquid commercial banks in
      the
      market; local and foreign investment banks with substantial capital, technology
      and marketing resources; and, recently, from local pension funds that lend
      to
      BCP’s corporate customers through participation in such customers’ securities
      issues. Larger Peruvian companies have gained access to new sources of capital,
      through local and international capital markets, and BCP’s existing and new
      competitors have increasingly made inroads into the higher margin middle market
      and retail banking sectors. Such increased competition, with entrants who may
      have greater access to capital at lower costs, has affected BCP’s loan growth as
      well as reduced the average interest rates that BCP can charge its customers.




Competitors
      may also appropriate greater resources and be more successful in the development
      of technologically advanced products and services that may compete directly
      with
      BCP’s products and services, adversely affecting the acceptance of BCP’s
      products and/or leading to adverse changes in spending and saving habits of
      BCP’s customer base. If these entities are successful in developing products and
      services that are more effective or less costly than the products and services
      developed by BCP, BCP’s products and services may be unable to compete
      successfully. Even if BCP’s products and services prove to be more effective
      than those developed by other entities, such other entities may be more
      successful in marketing their products and services than BCP because of their
      greater financial resources, higher sales and marketing capacity, and other
      factors. BCP may not be able to maintain its market share if it is not able
      to
      match its competitors’ loan pricing or keep pace with their development of new
      products and services. Any negative impact on BCP could have a material adverse
      effect on Credicorp’s results of operations and financial
      condition.


11


*Fluctuation
      and volatility of capital markets and interest rates may decrease our net
      income*




Credicorp
      may suffer losses related to the investments by BCP, ASCH, PPS, Grupo Crédito
      and other subsidiaries in fixed income and equity securities, and to their
      respective positions in currency markets, because of changes in market prices,
      defaults, fluctuations in market interest rates or exchange rates or other
      reasons. A downturn in the capital markets may lead Credicorp to register net
      losses due to the decline in the value of these positions, in addition to
      negative net revenues from trading positions caused by volatility in prices
      in
      the financial markets, even in the absence of a general downturn.




Fluctuations
      in market interest rates, or changes in the relative structure between
      short-term interest rates and long-term interest rates, could cause a decrease
      in interest rates charged on interest-earning assets, relative to interest
      rates
      paid on interest-bearing liabilities. Such an occurrence could adversely affect
      Credicorp’s financial condition by causing a decrease in net interest
      income.




**ITEM
                4.**
            **INFORMATION
                ON THE COMPANY**




**(A)**
            **History
                and Development of the
                Company**




Credicorp
      Ltd. is a limited liability company incorporated in Bermuda on October 20,
      1995
      to act as a holding company, coordinate the policy and administration of its
      subsidiaries, and engage in investing activities. Credicorp’s principal activity
      is to coordinate and manage the business plans of its subsidiaries in an effort
      to implement universal banking services and develop its insurance business,
      focusing on Peru and Bolivia and with limited investments in other countries
      of
      the region. It conducts its financial services business exclusively through
      its
      subsidiaries. Credicorp’s registered address is Clarendon House 2 Church Street,
      Bermuda. Its management and administrative offices are located at Calle
      Centenario 156, La Molina, Lima 12, Perú, and its phone number is
      51-1-313-2000.




Credicorp
      is the largest financial services holding company in Peru and is closely
      identified with its principal subsidiary, BCP, the country’s largest bank and
      the leading supplier of integrated financial services in Peru. Credicorp is
      engaged principally in commercial banking (including trade finance, corporate
      finance and leasing services), insurance (including commercial property,
      transportation and marine hull, automobile, life, health and pension fund
      underwriting insurance) and investment banking (including brokerage, trust,
      custody and securitization services, asset management and proprietary trading
      and investment). As of December 31, 2007, Credicorp’s total assets were
      US$17.7 billion and its net equity was US$1.8 billion. Its net income
      attributable to Credicorp’s equity holders in 2006 and 2007 was
      US$230.0 million and US$350.7 million, respectively. See “Item 3. Key
      Information—(A) Selected Financial Data” and “Item 5. Operating and Financial
      Review and Prospects.” The following table presents certain financial
      information for Credicorp by principal business segments as of and for the
      year
      ended December 31, 2007 (see Note 28 to the Credicorp Consolidated
      Financial Statements):


**As of and for the Year ended December 31, 2007****Total**
                **Revenues**
              
              **Operating**
                **Income**
              
              **Total**
                **Assets***(U.S. Dollars in millions)*Commercial
                  Banking
              
              US$
              1,402
              
              US$
              614
              
              US$
              16,245Insurance
              
              
              377
              
              
              110
              
              
              1,138Pension
                  Fund Administration
              
              
              55
              
              
              (1
              )
              
              244Investment
                  Banking and others
              
              
              47
              
              
              (30
              )
              
              79Credicorp
              
              US$
              1,881
              
              US$
              693
              
              US$
              17,706


12




Credicorp
      conducts its commercial banking and investment banking activities primarily
      through BCP, the largest (in terms of total assets, loans, deposits, net equity
      and net income) full service Peruvian commercial bank (“Peruvian commercial
      bank,” “Peruvian insurance company” and similar terms when used in this Annual
      Report do not include the assets, results or operations of any foreign parent
      company of such Peruvian entity or the foreign subsidiaries thereof), ASHC,
      a
      diversified financial services company and the pension fund business through
      Prima AFP. Credicorp’s insurance activities are conducted through PPS, the
      second largest Peruvian insurance company in terms of premiums, fees and net
      income.




Credicorp
      was formed in 1995 for the purpose of acquiring, through an exchange offer
      (the
“Exchange Offer”), the common shares of BCP, ASHC and PPS. Pursuant to the
      Exchange Offer, in October 1995, Credicorp acquired 90.1% of BCP; 98.2% of
      ASHC;
      and 75.8% of PPS. Credicorp acquired the remaining 1.8% outstanding shares
      of
      ASHC in March 1996, pursuant to a further exchange offer.




In **** December
      1995, Credicorp purchased 99.99% of Inversiones Crédito, a non-financial entity
      with assets of US$50.4 million as of December 2004, with principal
      investments currently in shares of Peruvian electric utilities.




In
      August
      1997, Credicorp acquired 39.5% of Banco de Crédito de Bolivia (“BCB”) from BCP
      for US$9.2 million. In July 1998, Credicorp acquired 97% of Banco de La
      Paz, a Bolivian bank with US$52.1 million in assets, which was subsequently
      merged with BCB in January 1999, at which time Credicorp also increased its
      beneficial ownership in BCB to 55.79%, with BCP owning, directly or indirectly,
      44.21%. In November 2001, BCP bought back a 53.1% stake in BCB from Credicorp
      for US$30.0 million. As of December 31, 2005, BCB operated
      47 branches located throughout Bolivia, together with 124 ATMs. BCB’s
      results have been consolidated in the BCP financial statements since the date
      of
      its acquisition in November 1993.




In
      March
      2002, Credicorp made a tender offer for outstanding BCP shares for S/.1.80
      per
      share, approximately equal to the book value of such shares, disbursing directly
      and through its subsidiary PPS an amount of approximately US$35.3 million.
      As a result of the tender offer, Credicorp’s equity stake in BCP increased from
      90.6% to 97.0% (including shares held by PPS).




In
      December 2002, BCP acquired, for US$50.0 million, Banco Santander Central
      Hispano-Perú (“BSCH-Perú”), which is included in BCP’s consolidated financial
      statements since such date. On December 31, 2002, BSCH-Perú had total assets of
      US$975.2 million, total loans of US$719.4 million and deposits of
      US$659.0 million. BSCH-Perú was merged into BCP on February 28,
      2003.




In
      March
      2003, BCP, adding to its 55% stake, acquired the remaining 45% of the equity
      shares of Solución Financiera de Crédito del Perú S.A. (“Solución”) from Banco
      de Crédito e Inversiones de Chile (“BCI”) and other foreign shareholders for
      US$17.0 million, making Solución once again a BCP wholly owned subsidiary.
      Substantially all of Solución’s assets and liabilities were absorbed into BCP’s
      Peruvian banking operations in March 2004. Solución’s net income in 2003 was
      US$7.6 million, and it had, as of February 28, 2004, a loan portfolio of
      US$88.4 million, with a 3.0% past-due ratio.




During
      2003, BCP converted Banco de Crédito Overseas Limited (“BCOL”), its offshore
      bank in the Bahamas, into a vehicle to conduct investments and sold it to ASHC.
      ASHC subsequently consolidated BCOL into its operations during 2004. Certain
      long-term equity interests, held previously by BCOL, were transferred to BCP
      which were then transferred to Grupo Crédito in accordance with Credicorp’s
      policy for holdings of equity interests in non-financial companies. In April
      2004, PPS sold substantially all of its holdings of Credicorp’s equity shares to
      ASHC (see “Item 7.–(A) Major Shareholders and Related Party
      Transactions”).


13


In
      March
      2004, PPS acquired Novasalud Perú S.A. – Entidad Prestadora de Salud
      (“Novasalud EPS”), one of three private health insurance providers in Peru, and
      merged Novasalud EPS with Pacífico S.A. Entidad Prestadora de Salud (“Pacífico
      Salud”), a subsidiary of PPS, in August 2004.




Banco
      Tequendama, a Colombian banking enterprise acquired by Credicorp in January
      1997, was sold in March 2005 to a Colombian bank. This followed the sale by
      Credicorp in December 2002 of Banco Tequendama’s Venezuelan branches. While the
      sale of Banco Tequendama was publicly announced in October 2004 and its
      effective date was January 1, 2005, the sale was not completed until March
      2005
      when all approvals required from Colombian authorities were obtained. Credicorp
      did not record any significant gain as a result of the transaction.




In
      January 2005, BCP and Bank of America, both principal shareholders of Fleet
      Boston N.A., agreed to engage in a buy-sale transaction of the loan portfolio
      of
      the Peruvian branch of Bank Boston N.A. and the loan portfolio of Peruvian
      nationals with Fleet Boston N.A. The transaction, which took place on
      January 24, 2005, was recorded at acquisition cost. BCP paid approximately
      US$353.8 million in cash for the loan portfolio, which included commercial
      loans, mortgage and leasing operations.




In
      February 2005, Credicorp was authorized by Peruvian regulatory authorities
      to
      establish Prima AFP, in which Grupo Crédito is the main shareholder. Prima AFP
      started operations in August 2005 and had losses of US$7.6 million for the
      year ended December 31, 2005.




In
      August
      2006, Prima AFP acquired Unión Vida AFP, a pension fund operating in the
      Peruvian market, in a strategic move toward consolidation, as part of its
      efforts to gain a leading position in the pension fund market. The acquisition
      of Unión Vida AFP, which was formerly held by Banco Santander, enabled Prima AFP
      to position itself as the second ranking company in market share terms, and
      as a
      leader in the industry, given its second highest returns and lowest commissions
      for affiliates (who invest a portion of their salary each month). The merger
      between Prima AFP and Unión Vida AFP was consummated in December
      2006.




In
      2006,
      Prima AFP incurred significant merger expenses relative to its size, reaching
      the end of the year with losses of US$20.7 million. Prima AFP had a net income
      of US$3.0 million during 2007 with 1,023,482 affiliates and funds under
      management amounting to US$6,403 million.




In
      November 2006, PPS sold to Credicorp the remaining 1.02% of BCP shares that
      it
      maintained to that date, generating a goodwill in respect of the minority
      interest acquired by Credicorp (0.25%) of approximately US$7.2
      million.




The
      following tables show the organization of Credicorp and its principal
      subsidiaries as of December 31, 2007 and their relative percentage
      contribution to Credicorp’s total assets, total revenues, net income and net
      equity at the same date (see “—(C) Organizational Structure”):









14




**As of and for the Year ended December 31, 2007**(2)**Total**
              **Assets**
            
            **Total**
              **Revenue**
            
            **Net Income**
              **(Loss)**
            
            **Net**
              **Equity**Banco
                de Crédito del Perú
            
            
            82.9
            %
            
            69.8
            %
            
            103.0
            %
            
            65.4
            %Atlantic
                Security Holding Corporation
            
            
            8.5
            %
            
            5.5
            %
            
            6.1
            %
            
            9.0
            %El
                Pacífico-Peruano Suiza Compañía de Seguros y Reaseguros
            
            
            6.3
            %
            
            21.2
            %
            
            1.2
            %
            
            11.1
            %Grupo
                Crédito (1)
            
            
            2.1
            %
            
            3.3
            %
            
            2.9
            %
            
            15.7
            %Others
                (3)
            
            
            0.2
            %
            
            0.2
            %
            
            -13.2
            %
            
            -1.2
            %





(1)
            Includes
                Prima AFP and others.


(2)
            Percentages
                determined based on the Credicorp Consolidated Financial
                Statements.


(3)
            Includes
                Credicorp Ltd., CCR Inc., Credicorp Securities Inc. and
                others.




The
      following tables show the organization of BCP and its principal subsidiaries
      as
      of December 31, 2007:










**As of and for the Year ended December 31, 2007(2)****Total**
              **Assets**
            
            **Total**
              **Revenue**
            
            **Net Income**
              **(Loss)**
            
            **Net**
              **Equity**Banco
                de Crédito del Perú
            
            
            91.6
            %
            
            89.0
            %
            
            85.4
            %
            
            84.1
            %Banco
                de Crédito de Bolivia
            
            
            5.4
            %
            
            6.0
            %
            
            8.2
            %
            
            7.5
            %Crédito
                Leasing S.A.
            
            
            2.1
            %
            
            1.9
            %
            
            -0.3
            %
            
            1.3
            %Financiera
                de Crédito Solucion
            
            
            0.3
            %
            
            0.2
            %
            
            -0.1
            %
            
            0.4
            %Credifondo
                S.A.
            
            
            0.2
            %
            
            1.7
            %
            
            2.8
            %
            
            1.8
            %Credibolsa
                Sociedad Agente de Bolsa S.A.
            
            
            0.2
            %
            
            0.9
            %
            
            2.9
            %
            
            1.9
            %Others(3)
            
            
            0.2
            %
            
            0.3
            %
            
            1.1
            %
            
            3.0
            %





(1)
            Credicorp
                holds an additional 4.08% stake.


(2)
            Percentages
                determined based on BCP’s consolidated financial statements as of and for
                the year ended December 31, 2007.


(3)
            Includes
                Creditítulos S.A., Inmobiliaria BCP and
                others.




**(B)**
            **Business
                Overview**




**(1)**  **Introduction –
      Review of 2007**




*General*




In
      2007,
      Credicorp experienced extraordinary growth in almost all of its business lines.
      It increased its profitability, opened new, highly-profitable retail markets
      for
      the group’s various businesses, and increased exchange of capabilities and
      talents within the group, all of which led to outstanding
      results.


15


In
      a
      favorable economic environment with a growth rate of 9% in Peru, Credicorp’s net
      income reached a new record of US$351 million, 52.5% above 2006. This
      significant improvement encompassed all of its business units, such as
      commercial banking and fund management, as well as the insurance business,
      despite the great challenges faced by the group’s responding to risk and risk
      management, especially in the aftermath of the devastating earthquake in
      southern Peru in August 2007.




As
      in
      2006, the most significant performance in commercial banking was recorded in
      BCP’s Retail Banking Group, where loans, deposits and transactions grew beyond
      our forecasts, as a consequence of brisk local consumer demand. However, more
      surprising still was the growth achieved during this year by BCP’s Wholesale
      Banking Group thanks to expanding economic and investment activities in the
      business sector, driven by strong domestic consumer demand and expanding exports
      that contributed to the outstanding 40.0% annual growth in bank loans.




In
      the
      insurance business, 2007 was also a year of major growth and recovering market
      share. Despite the major impact of the earthquake in southern Peru and a number
      of major fire and technical claims in various branches that hit the insurance
      industry, results were positive, though lower than in 2006.




Finally,
      the pension fund business in 2007 was characterized by strong competition.
      Prima
      AFP started the year aiming at consolidating its position as a market leader
      and
      significantly bolstered recruitment. As a result, for the first time since
      it
      was formed, Prima AFP closed 2007 with a positive contribution to Credicorp’s
      strong results.




Credicorp’s
      total assets and asset quality improved substantially in 2007. Total assets
      reached US$17.7 billion as of December 31, 2007, a 37.4% increase from
      US$12.9 billion as of December 31, 2006. While total loans grew
      by 39.2% in 2007 (18.2% in 2006), increased liquidity led to an increase in
      investments of 51.0% in the same period. Provision for loan losses net of
      recoveries resulted in US$28.4 million (US$4.2 million earnings in 2006).
      The increase is attributable to incurred losses not specifically identifiable
      and related primarily to consumer’s loans. For the sixth consecutive year, past
      due loans have been decreasing and reached 0.8% in 2007 (1.3% at year-end 2006;
      1.9% at year-end 2005), while past due loan coverage by provisions increased
      significantly to 343.7% from 247.9% at year-end 2006 and from 206.2% at year-end
      2005.




As
      a
      result of such an outstanding year, Credicorp’s return on average net equity
      improved substantially and grew from 18.4% in 2006 to 22.7% in 2007.




*BCP*




BCP’s
      banking business, after generating net earnings of US$332 million and
      contributing to Credicorp’s earnings (after deduction of minority interests)
      US$323 million, 35% more than the previous year, and evidencing 31.7% average
      return on net equity, a record level compared to past periods.




Although
      the favorable Peruvian economic environment had a major influence on BCP’s
      outstanding results, the strategies implemented in the various banking business
      areas were likewise of significant importance. Highlights in 2007 include:
      (i)
      an extraordinary growth in loans; (ii) an even stronger growth in income from
      interest, a result of BCP’s strategy targeting the most profitable segments in
      the Retail Banking Group; (iii) a continued improvement in portfolio quality;
      and (iv) a major development and expansion of our network and alternative
      channels, including Agentes BCP.


16


Strong
      growth of loans drove asset growth at BCP, which expanded to US$14,987 million,
      an increase of 40% compared to 2006. As a result, BCP’s loans totaled US$8,188
      million, accounting for 55% of all assets. The total past due loans in the
      loans
      portfolio reached US$60.3 million, 20% lower than in 2006. Likewise, trading
      investments and investments available for sale, which accounted for 23% of
      total
      assets, grew by 77% during the year, particularly in BCR Certificates of Deposit
      and liquid and short term instruments.




The
      increasing role of BCP’s Retail Banking Group in 2007 was evidenced by an
      extraordinary loan growth of 39.2% at year end balances (30% measured in annual
      daily average balances). Similarly, the composition of the loan portfolio has
      changed and was comprised of 37% of Retail Banking Group loans and 63% of
      Wholesale Banking Group loans. Thus, the strongest loan growth was achieved
      by
      the Retail Banking Group with 39% (measured in annual daily average balances).
      This growth reflects the national economy’s continued improvements, strong
      domestic demand and growing private investments as well as BCP’s strategic
      approach and new products targeting this segment. BCP’s Wholesale Banking Group
      also played an important role with loans growing by 34%, reflecting significant
      lending opportunities in the Peruvian corporate sector. Moreover, despite strong
      competitive pressures, by the end of the year BCP held a 32.2% market share
      of
      the Peruvian loans market.




Once
      again, active Retail Banking Group was a result of significant development
      of
      the various products offered to this type of clients. With respect to portfolio
      share, products included mortgage loans and loans for small companies, with
      a
      share of 42% and 31%, respectively. However, in terms of growth and yields,
      consumer loans were the best performing product, reaching 80% growth (measured
      in annual daily average balances) to a total volume of US$360 million; followed
      by loans to small companies that grew 44% to US$733 million. Finally, credit
      cards grew 42%, reaching US$283 million. Mortgage credits, a product that showed
      a significant growth potential given its low market penetration, grew 24%,
      compared to 20% growth in 2006. Such figures reveal a dynamic Retail Banking
      Group and its importance as the main pillar of BCP’s development and
      profitability, resulting both from the options for growth and the larger margins
      it affords.




Though
      2007 was an exceptional year for Retail Banking Group development, 2007 was
      also
      exceptional for the Corporate Banking and the Middle Market Banking. The
      Corporate Banking expanded by 33.0% and Middle Market Banking expanded by 34.2%.
      That was the result of a record high number of investment projects in the
      business sector, both in large corporations as well as in medium and small
      companies, which led to the expansion in the demand for short-, medium- and
      long-term financing. Significant economic growth driven by the increase in
      domestic demand has led to investments in, among others, expansion of industrial
      facilities, replacement of fixed assets, financing exports, and increasing
      working capital needs.




Additionally,
      deposits reached US$10,714 million on December 31, 2007, or an increase of
      34%
      year over year. The highest growth was in time deposits (48%), and significant
      growth was also recorded in demand and savings deposits and Severance Accounts
      (CTS) (32%, 22% and 16%, respectively). Because the deposits did not grow as
      much as loans, it was necessary to resort to alternative funding sources, some
      of which had been tapped in previous years, but not as aggressively. Moreover,
      in the second half of 2007, BCP, through a special vehicle, CCR Inc., issued
      US$500 million of securitized structured bonds and US$160 million of
      subordinated debt in local currency to provide additional funding and capital,
      respectively, which were deposited in its Panamenian branch.




Such
      change in funding structure increased costs, which were mostly offset by the
      larger net interest income from high yield loans, targeted as part of the
      modified loan portfolio structure. Such net interest income reached 5.24% in
      2007 compared to 5.17% in 2006.


17


The
      past
      due loans portfolio quality indicator reached 0.7%, lower than that of 2006,
      while the coverage ratio was 351.8%. Both indicators reflect efficient risk
      management policies, coupled with the positive impact that Peru’s economic
      prosperity has had on these ratios. Consequently, results benefited from low
      provisioning needs and an improved rate of recoveries of past accounts
      write-offs.




As
      a
      result of our focus on the retail business, the number of transactions grew
      by
      20.6%, a growth which is comprised of a particularly high growth of Agente
      BCP
      transactions (309.6%) and Internet Banking (31.0%), in addition to increasing
      transactions through conventional channels, including teller transactions (9.5%)
      and automated teller machines (26.7%). Such growth reflects BCP’s decision to
      expand through all its channels, with a view at building Peru’s largest network.
      To pursue this goal, in 2007 the Bank opened 36 more branches, reaching a total
      of 273 branches, installed 93 automated teller machines, reaching a total of
      748
      ATMs, and 670 Agentes BCP, reaching a total of 1,221 Agentes BCP as of December
      2007.




Finally,
      the efficiency ratio reached 51.3%, compared with 50.5% in 2006, due to
      investment in a larger network and related personnel needs. Growth of net
      interest income (26.8%) and income for commissions (21.1%) made up for higher
      payroll and administrative expenses (29.8%), principally related to marketing
      campaigns and systems. Salaries and employees benefits, accounting for 50%
      of
      total operating expenses, grew by 32.2%, as a result of increased personnel
      recruitment (1,896 employees added) and growing provisions for the Stock
      Appreciation Rights program (see below), higher provisioning requirements for
      employees’ profit sharing and variable salaries adjustment.




Overall,
      BCP’s results exceeded all forecasts, further contributing to Credicorp’s
      achievements and improved profitability.




*BCP
      Bolivia*




In
      the
      Bolivian market, Banco de Crédito de Bolivia (BCP Bolivia) also showed excellent
      results, compared not only to the results of previous years but to the overall
      Bolivian financial system. A favorable economic environment, a strategy
      targeting high yield business and strict risk controls allowed BCP Bolivia
      to
      obtain a net profit of US$27 million, 91.5% higher than that obtained in 2006.
      BCP Bolivia has become one of the main banks in Bolivia, with 35.6% return
      on
      equity, a past due loan ratio of 1.7% and coverage ratio of 240.1%, higher
      than
      those of the Bolivian banking system (22.2%, 5.6% and 112.2%, respectively).




The
      loan
      portfolio of BCP Bolivia expanded by 19% during 2007 reaching a total of US$464
      million. Moreover, BCP Bolivia further diversified its Retail Banking Group
      portfolio and fostered a growth of 104.6% in the small companies business (SME).
      In this effort, BCP Bolivia invested in expanding customer service channels,
      mostly by introducing the Agentes BCP in remote areas of Bolivia, reaching
      segments of the population not served by traditional banking.




Despite
      a
      volatile Bolivian political environment, BCP Bolivia accomplished outstanding
      results and continued to increase its market share, positioning itself as a
      leading Bolivian bank and further contributing to Credicorp’s strong banking
      business performance.




*ASHC*




Earnings
      at ASHC reached US$39.5 million in 2007, equivalent to 25.4% growth year over
      year. This growth can be attributed to larger asset volumes flowing from
      increased customer wealth, higher net interest income, higher commissions and,
      to a large extent, dividends received from Credicorp stock held by ASHC
      treasury. Although Credicorp’s dividend revenues will cancel out in the
      consolidated statement, ASHC’s contribution to the corporation’s total revenues
      increased by 31% compared to 2006 and totaled US$20.5 million, reflecting a
      dynamic private banking business.


18


Increased
      ASHC’s focus on the asset management business resulted in an increase of 50% in
      income from commissions, from US$6.1 million in 2006 to US$9.2 million in 2007.
      Deposit base increased by 19%, to US$1.383 billion. This is a particularly
      noteworthy result considering the increase in managed funds with customers’
deposits migrating to investment products.




Managed
      funds grew by 62% to US$860 million. Approximately 63% of this growth resulted
      from investment appreciation and 37% of this growth is attributed to new
      investments. Yields from these managed funds improved when compared to the
      previous year. In 2007, an ASB weighted index (an internal index elaborated
      based on monthly returns of ASB funds under management weighted by the size
      of
      the funds) evidenced a 6.2% return compared to 5% in 2006. These yields were
      50
      basis points lower than the hedge funds benchmark, and volatility was almost
      40%
      lower (2.6% compared to 4.5%), thus leading to extremely satisfactory
      risk-adjusted performance.




In
      2008,
      ASHC plans to continue implementing a low risk strategy in managing its own
      investments, although it expects a wider financial margin with the fall in
      its
      cost of funding, triggered by lower rates, and stable asset yields as loan
      spreads widen.




*PPS*




Pacifico
      Peruano Suiza (PPS) has changed its strategy and is now focused on distribution
      channels and specialized risk management. The significant growth of net premiums
      in 2007 was mainly related to those retail lines of business which are more
      predictable in terms of net losses and more profitable. In addition,
      distribution channels, focused on the retail market, led to growth in premiums
      compared with 2006 while the relationship with brokers and agents was reinforced
      by offering web tools and risk management courses.




As
      for
      financial results for 2007, under IFRS, PPS, which encompasses Pacífico Seguros,
      Pacífico Vida and Pacífico Salud EPS, recorded a total premium of US$467.2
      million, a 25.4% increase from 2006. Pacifico Seguros reported a net income
      of
      US$12.5 million in 2007, less than the US$53.3 million obtained in 2006, a
      year
      in which Pacifico Seguros reported extraordinary financial gains of
      approximately US$40 million from the sale of a significant share package,
      including BCP shares, which are eliminated for the consolidation of Credicorp.
      The 2007 results are low also given the low performance of the general insurance
      business as a result of the increase in net claims paid as a percentage of
      net
      premiums written. In August, a 7.9 magnitude earthquake struck the southern
      area
      of the country which affected Pacífico Seguros’ underwriting results as well as
      the local insurance industry generally. The company was affected also by the
      severity of other fire and technical claims that had a negative impact in the
      company results. As a consequence, its contribution to Credicorp consolidated
      net income in 2007 was US$9 million, a 35% drop compared to the previous period.




The
      effects of the strategy change are already noticeable in the growth of
      consolidated net premiums earned by the group, which increased at the rate
      of
      18.3% in 2007. However the technical results decreased from US$34.7 million
      in
      2006 to US$15.4 millions in 2007, representing 3.3% of the total premiums
      registered compared to the 9.3% in 2006. This result can be explained by the
      aforementioned increase in net claims paid as a percentage of net premiums
      written from 72% in 2006 to 77.7% in 2007.


19


*Prima
      AFP*




Prima
      AFP
      started 2007 by striving to consolidate its market leadership. To do so, it
      focused on offering great value: the market’s lowest management commission,
      strong support from Grupo Credito and vast experience in the investment
      business.




Commercial
      growth came principally from higher productivity in sales management, which
      allowed exceeding Prima AFP’s goals of capturing a higher volume of funds by
      affiliating a higher number of clients. Such growth was coupled with an
      expanding national economy (that resulted in higher salaries and returns to
      individual and corporate contributing members), underpinning the growth of
      the
      company’s revenues base.




Strong
      performance by Prima AFP also resulted from a wider and stronger revenue
      calculation base, coupled with a stable and improved portfolio of contributing
      members. The company continued to cut costs, reducing the number of sales
      representatives from 2,225 in December 2006 to 421 in December
      2007.




In
      2007,
      Prima AFP earned US$3 million. The company thus reverted losses incurred in
      2006
      (US$20.7 million), and continued on the path of increasing revenues and
      gradually reducing expenses. The managed portfolio reached 31.4% market share
      in
      December 2007, with a total US$6,403 million, 29.2% market share in 2006, with
      a
      total of US$4,211 million, 33.7% market share for collections and 47.2% for
      Voluntary Contributions. Prima AFP closed 2007 with 1,023,482 affiliates and
      459,370 contributing members.




In
      2007,
      Prima AFP revenues reached US$55 million, or 139.1% higher than in 2006. A
      significant portion of this increase is due to flows from AFP Unión Vida’s
      portfolio, effective and efficient corporate marketing and an improved
      portfolio. Such improvement came from a stronger Peruvian labor market that
      resulted in a major increase in the Monthly Insurable Remuneration (RAM). Such
      strong revenue base is complemented by the new Voluntary Contribution (Aporte
      Voluntario) product that started to generate fee flows in December 2007 and
      may
      account for as much as 6% of revenues in 2008. Also in 2007, the amount of
      Voluntary Contributions managed by Prima AFP reached US$167.9 million, leading
      to the highest system-wide market share (47.2%).




The
      merger between Prima AFP and Unión Vida and the surviving company resulted in
      increased administrative expenses. Amortization and depreciation charges reached
      US$2.8 million as a consequence of investment in systems and furniture and
      amortization of intangible assets worth US$5.6 million, which were identified
      during the purchase of Unión Vida.




To
      further pursue its enhanced service orientation, Prima AFP strengthened its
      customer service office network by opening a branch in Ica, refurbishing and
      moving its Cajamarca office to another area of the city and opening a new office
      in Lima’s historical downtown quarter, thereby increasing its nationwide
      presence with its 13 branches and 19 customer service offices.




Overall,
      strong performance in each of the businesses where Credicorp operates resulted
      in an outstanding year for the entire corporation, in particular extraordinary
      BCP results.


20


The
      following table sets forth the contribution to the consolidated net income
      attributable to Credicorp’s equity holders by each of its principal
      subsidiaries:




**2005**
            
            **2006**
            
            **2007**
            
            **Variation 2007/2006***(U.S.
                Dollars in millions, except percentages)*BCP(1)
            
            
            176.5
            
            
            238.9
            
            
            322.5
            
            
            35
            %ASCH
            
            
            13.5
            
            
            15.4
            
            
            20.5
            
            
            31
            %PPS
            
            
            5.6
            
            
            14.5
            
            
            9.4
            
            
            -35
            %Grupo
                Crédito(2)
            
            
            -13.7
            
            
            -38.8
            
            
            -1.7
            
            
            96
            %Total
            
            
            181.9
            
            
            230.0
            
            
            350.7
            
            
            52
            %





(1)
            Includes
                Banco de Crédito de Bolivia, which contributed US$27.0 million in 2007,
                US$14.1 million in 2006, and US$10.2 million in
                2005.


(2)
            Includes
                Prima AFP (which recorded a net income of US$3.0 million in 2007,
                losses
                of US$20.7 million in 2006 and net income of US$7.6 million in 2005),
                Credicorp Securities, Credicorp Ltd. holding company (which mainly
                includes expenses and the tax withheld in connection with the estimation
                of the dividends to be distributed to Credicorp by its Peruvian
                subsidiaries (BCP and PPS)) and
                others.





**(2)**  **Strategy**




Credicorp
      was established to create a financial group that would benefit from the
      synergies among the group’s companies and would become a leader within each
      business market in which it operates. With this purpose in mind, we designed
      a
      strategy for 2007 which laid down the guidelines to take better advantage of
      the
      eventual group synergies and to focus better on the contribution that each
      of
      the companies could make to the overall organization. We are now walking along
      that path and reaching major accomplishments, while making adjustments to
      optimize results. We hope that the coordinated effort will accomplish the
      expected synergies and start bearing fruit in 2008.




2007
      has
      shown that our vision of Credicorp’s growth opportunities in our market is
      correct. Moreover, these opportunities are even greater than we thought when
      we
      laid down our strategy a few years ago. Credicorp, from its position as the
      country’s largest and strongest financial group, has managed to position its
      companies particularly well and our group’s approach is still based on building
      the synergies we envisioned when Credicorp was first established.





We
      are
      devoted to our plan to further integrate the companies within the group,
      creating a Credicorp identity that will bind them and that will allow us to
      reach the high profit rates we seek for each of our businesses. We are gradually
      moving closer to accomplishing our main strategic objectives, *i.e.* making
      our investments profitable and enhancing their respective returns so that they
      reflect and/or exceed international expectations for each business
      line.





Consequently,
      the basic principle of our strategy will continue to be the focus on growth
      opportunities within our market, identifying synergies that will lead to high
      levels of efficiency in our business, and identifying individual road maps
      so
      every company within the group will earn outstanding profit rates, in line
      with
      the risk inherent to each business. From this stand point, we will seek to
      accumulate knowledge, resources, experience, technology and capacities of each
      company for the benefit of the group as a whole.


21


Thus,
      in
      2007, we focused on:




(i)
            growing
                our main business, BCP, through expansion of Retail Banking and
                transactional business;


(ii)
            restructuring
                our insurance business by expanding our share in the personal insurance
                branch, to stabilize risks and revenues;


(iii)
            positioning
                Prima AFP pension fund management business; and,


(iv)
            improving
                our asset management business throughout Credicorp’s companies.




We
      are
      convinced that the results achieved in 2007 confirm that we are moving toward
      accomplishing our objective. For this reason, many of the strategic steps
      designed for 2008 are based not only on a focus on business areas experiencing
      the largest growth but also on fine-tuning the path taken, improving our own
      decision-making processes and designing strategies to better consolidate
      information, capabilities and strengths apparent in the group’s
      companies.




The
      following is a description of the specific strategies employed by the various
      businesses in the group:




Banking
      Business




*Banco
      de Crédito del Perú - BCP*




For
      BCP,
      both in Peru and in Bolivia, our strategy is built on four pillars:


(i)
            growing
                all products offered to the retail market;


(ii)
            investing
                in the increase of our bank penetration, and expanding the network
                of our
                branches, ATMs and Agentes BCP, thus providing innovative channels,
                coupled with specifically tailored products;


(iii)
            growing
                revenues from transactional services; and


(iv)
            investing
                in streamlining products and processes, expanding our information
                processing capacities, and building more secure support systems.





At
      ASHC,
      our strategy focuses on providing quality financial services and securing the
      best possible returns for our investment funds, in order to remain the private
      bank of choice for our clients and to be able to grow with them.





Insurance
      Business




As
      in
      banking, in the insurance business we focus on strategies designed to increase
      return in every branch and, especially, in the retail market. These strategies
      include:


·
            controlling
                costs and increasing returns by business unit;


·
            focusing
                on Credicorp’s strategy products characterized by the best margins, most
                predictable risks and stable revenues in the retail market, coupled
                with
                the design of new products that match the possibilities and needs
                of our
                present and potential clients;


·
            striving
                for differentiation through excellence in service, and


·
            searching
                for knowledge (through our partner, AIG), distribution (with BCP)
                and
                investment and information management (with Credicorp group – Asset
                Management) synergies.


22




Asset
      Management Business




Developing
      asset management strategies with a global approach is the foremost effort to
      build synergies within the Credicorp group. Our achievements in this field
      during 2007 confirm that this is the way to create a world-class asset
      management business. Consequently, our vision is that all companies will share
      and benefit from market intelligence, experience and best practices held by
      the
      various group companies in this group devoted to asset management. It is also
      fundamental to define investment policies, standards, guidelines and parameters
      for each entity in line with its specific needs and applicable regulations.
      This
      effort encompasses all of the group’s companies, including BCP subsidiaries,
      Credifondo, the asset management units at ASHC and PPS, and Prima AFP.




*Prima
      AFP*




Since
      its
      positioning in 2007 as the pension management company with the best commercial
      proposal assessed in cost-benefit terms, Prima AFP’s strategy has focused on
      increasing operating profits through:


(i)
            improving
                its fee structure;


(ii)
            yielding
                the highest profits from fund management;


(iii)
            increasing
                the volume of funds under management; and


(iv)
            searching
                for synergies with other Credicorp companies.




Outlook **** for
      2008




Our
      vision of the future development of the financial industry, especially in Peru,
      where our principal subsidiary, Banco de Crédito del Perú, is located, is
      optimistic. The Board of Directors believes that our industry will continue
      to
      grow at a high rate in the coming years, because we expect further growth of
      the
      Peruvian economy. We must take account of Peru’s financial lag resulting from
      past policies that led to inflation while financial, as well as judicial,
      instability reigned, hurting people’s confidence in the market and in the
      system. Fortunately, trust has been gradually rebuilt. By way of example,
      deposits presently account for 25% of GDP and loans account for 20% of GDP,
      and
      we expect that, similar to other countries whose per capita incomes were similar
      to those prevailing in Peru now, ratios will grow closer to 37% and 43%,
      respectively.





This
      optimistic perspective assumes no substantial economic policy changes in the
      near future and further assumes that the unstable international financial scene
      will not affect us drastically due to the strength of Peru’s external and fiscal
      accounts. We believe that while the external crisis will probably slow down
      growth, it will not eliminate it altogether.





As
      we
      expect a fast expansion in the coming years, our company prepares itself to
      take
      advantage of such period of prosperity. To deal with the strong economic growth
      in 2007, we invested US$70 million in our offices, ATMs and IT. For 2008 we
      have
      budgeted investments worth US$150 million. Our intention is to open 75 new
      offices, install 150 ATMs and launch 350 new Agentes BCP. A significant amount
      will be spent by our IT departments on new equipment and applications. Also,
      we
      plan to expand the La Molina administrative headquarters and to construct two
      alternate computer centers as processing back-up facilities (one in Chorrillos
      and the other in Trujillo).





We
      will
      incur higher personnel expenses as a result of these investments, due to the
      increase in the number of employees, as well as general expenses for marketing,
      IT and transport and communications required to operate the growing channels
      of
      client services.





The
      development we expect does not only imply expanding infrastructure and human
      resources. It is necessary to ensure Banco de Crédito del Perú’s working
      capital. To this end, we plan to issue subordinated bonds in 2008 and to retain
      significant amounts of profit to support the growth of our business.


23


Accelerated
      growth, however, can produce a potential increase in credit risk. To mitigate
      this, we will continue enforcing high evaluation standards when granting loans
      and reviewing the reasonableness of our provisions for loan losses.





**(3)**  **Credicorp
      Operating Groups**




Credicorp
      conducts its business operations through four different principal subsidiaries:
      BCP and subsidiaries (which include BCB), Atlantic Security Holding Corporation,
      Pacífico Peruano Suiza and Grupo Crédito (which includes Prima
      AFP).




The
      majority of Credicorp’s commercial banking business is carried out through BCP,
      Credicorp’s largest subsidiary and the oldest bank in Peru. A portion of
      Credicorp’s commercial banking business is also carried out by ASHC, which
      principally serves Peruvian private banking customers through offices in Panama.
      Credicorp conducts commercial banking activities in Bolivia through BCB, a
      full
      service commercial bank with US$663.9 million in deposits,
      US$821.9 million in assets and US$445.2 million in net loans, as of
      December 31, 2007. As of such time, BCB was the third largest Bolivian bank
      in
      terms of loans and deposits, with a 14.9% market share.




Credicorp’s
      commercial banking business is organized into wholesale banking activities,
      which are carried out by BCP’s Wholesale Banking Group (which includes the
      Corporate Banking operations of ASHC), and retail banking activities, which
      are
      carried out by BCP’s Retail Banking Group. Credicorp performs its leasing
      operations either directly through BCP or through Crédito Leasing S.A.
      (“Credileasing”), a subsidiary of BCP.




Credicorp
      applies uniform credit policies and approval and review procedures, which are
      based on conservative criteria adopted by BCP, to all of its subsidiaries.
      Credicorp’s General Manager is in charge of setting the general credit policies
      for the different business areas of Credicorp. These policies are set within
      the
      guidelines established by Peruvian financial sector laws and SBS regulations
      (see “ 3⁄4 (11) Supervision
      and Regulation—(ii) BCP”), and the guidelines set forth by Credicorp’s
      Board of Directors.




Credicorp’s
      deposit-taking operations are principally managed by BCP’s Retail Banking Group
      and ASHC’s Private Banking Group. See “ 3⁄4 (12) Selected
      Statistical Information—(iv) Deposits.”




The
      majority of Credicorp’s trading and brokerage activities are conducted through
      BCP and ASHC and, since January 2003, through Credicorp Securities Inc.
      (“Credicorp Securities”), a wholly owned subsidiary of Credicorp. Credicorp
      Securities is a U.S. registered broker-dealer with its offices in Miami.
      Credicorp’s asset management business is carried out by BCP in Peru, through its
      subsidiary Credifondo, and by Prima AFP, the pension fund administrator.




Credicorp
      offers investment banking products and services through BCP and ASHC. BCP offers
      clients a wide range of such products and services, such as brokerage, mutual
      fund and custody services through its branch network in Lima and, on a more
      limited basis, throughout the rest of Peru. In addition, Credicorp also
      distributes such products through ASHC.


24


In
      the
      last few years, Credicorp has consolidated an important line of business;
      namely, investment management for its customers. The growth of this business
      may
      be attributed to several major factors, the most outstanding of which is
      Credicorp’s incursion into the business of managing Peruvian private pension
      funds in August 2005, through Prima AFP, and the subsequent acquisition of
      AFP
      Unión in August 2006. Another contributing factor was the growing penetration of
      mutual funds in Peru in general in recent years. BCP’s mutual funds subsidiary,
      Credifondo, leads the market, with a share of 45.1% of the total assets
      currently under management. Finally, another relevant factor was the high and
      sustained growth of the international mutual funds and financial advisory
      services offered by BCP’s affiliate, Atlantic Security Bank, to its private
      banking customers. On December 31, 2007, the sum of the market value of the
      assets under management serviced by the Investment Management, International
      Mutual Funds, and Financial Advisory Services Groups totaled US$10,449 million.




Credicorp
      has re-organized a corporate supervision project entitled Asset Management
      due
      to the size of these businesses, the importance of the commissions they generate
      and, above all, the fiduciary responsibility they entail. The main objectives
      of
      the project are to establish homogeneous risk control and investment policies
      and evaluate the management and results of the portfolios under management
      based
      on best international practices.




Credicorp’s
      Asset Management is composed of four main components:




·
            Portfolio
                Management: Credicorp seeks to consolidate the good performance of
                its
                portfolios and funds through strict risk control and an appropriate
                level
                of diversification. To achieve this, it focuses on improving three
                key
                aspects: investment policies, investment processes and management
                metrics.




·
            Financial
                Management: Credicorp focuses on providing quality financial advisory
                services, building customer loyalty, and encouraging customers to
                invest
                in a diverse combination of securities according to their risk profile.
                Credicorp’s objective is to improve the standards of the advisory services
                that the commercial bank offers and to distinguish between the levels
                of
                advisory services provided to different
                sectors.




·
            Brokerage:
                Credicorp attempts to provide a timely and high quality service,
                offering
                competitive execution costs, channeling a greater proportion of the
                assets
                traded by the group’s companies to profitable investments and identifying
                opportunities for joint action (resulting in better prices), in addition
                to improving controls aimed at avoiding possible conflicts of interest.




·
            Risk
                Analysis: Credicorp seeks to identify, quantify, regulate and, ultimately,
                minimize the risks associated with operations, credit, market, liquidity,
                legal contingencies, conflict of interests and other risks. Another
                objective of risk analysis is setting corporate investment limits,
                creating a portfolio investments risk manual, and ensuring strict
                compliance with risk control rules.




Credicorp
      conducts its insurance operations exclusively through PPS and its subsidiaries,
      which provides a broad range of insurance products. PPS focuses on three
      business areas, *i.e.* ,
      general
      insurance through Pacífico Seguros, life and pension insurance through Pacífico
      Vida, and health care insurance through Pacífico Salud EPS. PPS, like other
      major Peruvian insurance companies, sells its products both directly and through
      independent brokers and agents. Directly written policies tend to be for large
      commercial clients, as well as for life and health insurance lines.




Credicorp
      is attempting to expand PPS’s sales network, which currently has 20 offices
      throughout Peru, by selling certain insurance products through BCP’s branch
      network. PPS offers, in collaboration with BCP, a life and health insurance
      product called Segurimax as well as a personal life insurance product that
      combines accidental death coverage with renewable term life
      insurance.


25


**(4)**  **BCP
      and Subsidiaries**




**(i)**  **General**




BCP’s
      activities include commercial banking, investment banking and retail banking.
      As
      of December 31, 2007, the consolidated operations of BCP ranked first among
      Peruvian banks in terms of total assets of US$15.2 billion, total loans of
      US$8.0 billion, deposits of US$11.2 billion and net equity of US$1.1 billion.
      As
      of December 31, 2007, BCP’s loans, on an unconsolidated basis, represented
      approximately 32.6% and the deposits represented approximately 36.2% of the
      total Peruvian banking system, respectively.




As
      of
      December 31, 2007, BCP had the largest branch network of any commercial bank
      in
      Peru with 273 offices, including 168 in Lima and the adjoining city of Callao.
      BCP operates an agency in Miami and a branch in Panama.




As
      of and
      for the year ended December 31, 2007, BCP accounted for 69.8% of
      Credicorp’s total revenues, 82.9% of total assets, 103.0% of net income and
      65.4% of net equity. BCP’s operations are supervised and regulated by the SBS
      and the Central Bank.




Beginning
      in February 2007, BCP implemented a new way to grouping its loan portfolio
      for
      business and management purposes. The new grouping criteria changed as follows:




**Before**
            
            **After**Sales*(US$MM)*
            
            Group
            
            Sales*(US$MM)*
            
            GroupUp
                to 0.3
            
            Micro-business
            
            Up
                to 0.3
            
            Micro-businessFrom
                0.3 to 1
            
            Small
                Business
            
            From
                0.3 to 1.5
            
            Small
                BusinessFrom
                1 to 15
            
            Middle
                market
            
            From
                1.5 to 30
            
            Middle
                marketHigher
                than 15
            
            Corporate
            
            Higher
                than 30
            
            Corporate




The
      new
      grouping was a result of an analysis, which addressed factors beyond the simple
      size and volume of activity for each client, and looked also at clients’
affiliation with other companies or groups, the degree of follow-up required,
      their credit ratings, etc. As a result of this process, US$75 million of the
      loan portfolio of the SME group (Retail) was transferred to the Middle Market
      group (Wholesale).




*Subsidiaries*




BCP’s
      corporate structure consists of a group of local subsidiaries offering
      specialized financial services, which complement BCP’s commercial banking
      activities. In addition to its local subsidiaries, BCP has an agency in Miami
      and a branch in Panama, one subsidiary in Bolivia and an affiliate bank,
      Atlantic Security Bank, in the Cayman Islands.




BCP
      and
      its principal subsidiaries as of December 31, 2007 are as follows:


26


•
            Banco
                de Crédito de Bolivia is BCP’s commercial bank in Bolivia. BCP owns 96% of
                BCB and Credicorp holds the remaining interest. BCB initiated operations
                under the BCP umbrella in February 1994. In July 1998, BCB absorbed
                Banco
                de la Paz’s operations for US$140 million, making BCB the fourth
                largest bank in Bolivia. In May 1999, BCB acquired the portfolio
                of Banco
                Boliviano Americano for US$116 million and became Bolivia’s second
                largest bank. Currently, BCB is the fourth largest bank in Bolivia
                in
                terms of market share and has a network of 61 offices located throughout
                Bolivia. BCB owns one of Bolivia’s largest brokerage houses, Credibolsa
                S.A. Agente de Bolsa. BCP targets middle- and small-sized clients
                and
                offers a broad range of corporate, personal banking and leasing products.
                BCB’s results are consolidated in BCP’s financial
                statements.




•
            Credibolsa
                Sociedad Agente de Bolsa (“Credibolsa”) was established in June 1991 and
                is fully owned by BCP. It is engaged in portfolio advisory and brokerage
                activities in the Lima Stock Exchange. Credibolsa is 100% owned by
                BCP.




•
            Credileasing
                offers a large variety of financial leasing products. Credileasing
                was
                established in July 1996 and is 100% owned by
                BCP




•
            Credifondo
                Sociedad Administradora de Fondos Mutuos (“Credifondo”) is a mutual fund
                management company, established in 1994. Credifondo is 100% owned
                by
                BCP.




•
            Creditítulos
                (“Creditítulos”) was established in 1997 and is 100% owned by BCP. The
                company serves as an asset securitization entity.




•
            Inmobiliaria
                BCP is the real estate subsidiary of BCP. This subsidiary was created
                to
                manage and promote the sale of real estate that had been foreclosed
                or
                received in payment by BCP. Inmobiliaria BCP is 100% owned by
                BCP.




**(ii)**  **Wholesale
      Banking Group**




The
      Wholesale Banking Group has traditionally represented the majority of BCP’s
      loans.




BCP’s
      Wholesale Banking Group competes with local and foreign banks. BCP’s traditional
      relationships provide the Wholesale Banking Group with a competitive
      advantage.




During
      2007, the Wholesale Banking Group kept the positive trend in loan placements
      which started in prior years, posting average portfolio levels of US$3,973
      million in 2007, 33.5% higher than in 2006. This result was achieved despite
      BCP’s already large market share, the aggressive competition, and the financial
      disintermediation caused by the rapid development of the local capital markets.
      BCP has the largest capital base among Peruvian banks, which provides it with
      more resources to meet the financing needs of its corporate clients. Since
      Peruvian companies were not able to access international sources of credit
      until
      the mid-1990s, BCP has established longstanding client relationships with
      virtually all of the major industrial and commercial groups in Peru. The
      Wholesale Banking Group provides its customers with short- and medium-term
      loans
      in local and foreign currencies, foreign trade-related financing and lease
      financing.




The
      Wholesale Banking Group is divided into the following areas:




·
            Corporate
                Banking, which provides loans and other credit services to companies
                with
                annual revenues in excess of
                US$30 million;


27


·
            Middle
                Market Banking, which serves mid-sized companies;




·
            International
                Trade Finance, which manages BCP’s relationship with financial
                institutions abroad;




·
            Corporate
                Finance, which provides underwriting and financial advisory services
                to
                corporate and middle market clients;




·
            Business
                Finance, which finances business projects and manages the financial
                leasing product;




·
            Institutional
                Banking, which focuses principally on serving non-profit organizations,
                state-owned companies and other major institutions; and




·
            Business
                Services, which develops transactional
                services.




Net
      interest income from the wholesale banking sector reached US$152 million, a
      growth which resulted from the increase in business volume and compensated
      for
      the reduction in lending rates. Income from financial services accounted for
      31%
      of the total income generated by the wholesale banking sector. At the same
      time,
      the retail group, undergoing reorganization, still accounts for the bulk of
      loan
      placements, with 36% of the wholesale banking sector in this area.




Although
      state-controlled corporations are served by BCP’s Wholesale Banking Group,
      mostly in connection with international trade finance, BCP does not regularly
      extend loans directly to the Peruvian government or to regional or municipal
      governments.




*Corporate
      Banking*




According
      to BCP’s internal reports, loans provided by the Corporate Banking Area
      represent 37% of BCP’s total loans granted in 2007. Despite the relatively small
      growth of this group (due to the growing array of financing alternatives offered
      by the capital markets), corporate banking loans grew for the fourth consecutive
      year and reached an average portfolio balance of US$2,401 million, which
      represents a 33% increase compared to 2006. The composition of these loans
      was
      approximately 70% foreign currency-denominated (primarily U.S.
      Dollar-denominated) and 30% Nuevo Sol-denominated. As in the middle market
      banking sector, the corporate banking group has faced a very aggressive
      competitive environment in terms of rates, which translated into a reduction
      in
      the lending spreads. On the deposit side, corporate deposits kept growing,
      accounting for approximately 27% of BCP’s total deposits.




Client
      Profile: The Corporate Banking Area is focused on serving large-sized companies
      with annual turnover of over US$30 million, with audited financial
      statements and with dominant market positions given their particular products
      or
      brands. BCP may classify other firms under this category even if they do not
      meet the above criteria if they belong to very large economic groups from
      industries that are important to the country’s economy.




Products:
      The Corporate Banking Area offers a broad range of products and tailors its
      product offerings to meet the unique requirements of each client. In general,
      this Area is oriented to offering high-value-added products and services,
      particularly cash management services, at competitive prices.




The
      majority of financing is provided to fund sales, international trade and
      inventories. In general, the Corporate Banking Area grants short-term financing;
      however, it can provide longer term financing for companies in need of financing
      capital expenditures and fixed assets, among other purposes. The Area also
      offers term financing (in all cases backed by real guarantees), financial
      leasing, factoring, and domestic collections and nationwide fund transfers.


28


Additionally,
      Corporate Banking clients can obtain investment banking, advisory and financing
      services through the Corporate Finance Area, which operates as part of the
      Wholesale Banking Group and also serves major middle market clients.




Guarantees
      received by this Area consist of receivables in the case of sales financing,
      warrants or pledges on inventory, in the case of inventory financing, and real
      guarantees, in the case of financing for fixed asset acquisitions and
      improvements to their infrastructure.




There
      is
      a limited growth prospect in this business due to high market penetration and
      competition from capital market in loans.




*Middle
      Market Banking*




BCP’s
      Middle Market Banking Area generally serves the same industries and offers
      the
      same products as the Corporate Banking Area. Its focus, however, is on providing
      its customers with working capital loans, primarily secured by accounts
      receivables. This is accomplished by arranging financing for medium- and
      long-term investment programs, including leasing services offered through
      Credileasing. BCP has a middle market client portfolio of approximately 4,200
      companies.




According
      to BCP’s internal reports, the annual average loan portfolio of the Middle
      Market Banking Area of BCP reached US$1.5 billion in 2007, 34.2% higher than
      the
      average US$1.2 billion in 2006 (US$963 million in 2005), despite the enforcement
      of stringent credit quality requirements. BCP expects that this sector will
      grow
      and increase its relative importance as the Peruvian economy grows.




BCP
      expects significant opportunities in lending to middle market businesses,
      particularly in Peru’s agriculture, fishing and construction industries, where
      special emphasis has been placed and specific task Areas have been created
      to
      attend to the needs of these economic groups.




BCP’s
      medium-term financing products, which include structured loans, project
      financing and syndicated transactions, are designed to accommodate specific
      clients’ needs. Through these products, BCP has been an active lender and
      financial advisor to Peru’s mining, technology and energy sectors. In addition
      to its regular sources of funds, BCP is an intermediary of Corporación
      Financiera de Desarrollo (Development Finance Corporation or “COFIDE,” a
      second-floor bank fully owned by the State of Peru) and such international
      financial institutions as Corporación Andina de Fomento (Andean Development
      Corporation or “CAF”), the International Finance Corporation (“IFC”) and the
      Inter-American Development Bank, in several medium-term credit lines for project
      financings in certain sectors.




Financial
      margins in the Middle Market Banking Area continue to be attractive. Because
      of
      their size, middle market companies in Peru generally do not have access to
      the
      local or international capital markets or to credit from foreign banks. In
      addition, BCP believes that middle market companies have benefited significantly
      from the overall economic improvements in Peru over the past few years. Loan
      quality problems have been addressed through procedures and organizational
      changes that have focused on improving the loan approval and credit-risk
      assessment processes.




The
      Middle Market Banking Area focuses on organizations with annual revenue levels
      between US$1.5 million to US$30 million, through seven regional
      managers nationwide. Generally, these clients are not listed on the stock
      exchange but in some cases are capable of issuing financial obligations or
      commercial papers. Their financial information is reliable and audited. These
      companies are typically family-controlled but professionally
      managed.


29


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




•
            Revolving
                credit lines to finance inventories and sales, as well as stand-by
                letters
                of credit and international trade
                financing;


•
            Financing
                for short-term requirements such as current account credits and temporary
                account advances (overdrafts); and


•
            Financing
                for medium and long-term requirements using intermediation resources
                (term
                deposits) and various types of financial leasing
                financing.




The
      Middle Market Banking Area requires that all facilities granted to middle market
      clients be guaranteed by the main shareholders and their respective spouses.
      In
      addition, these clients are usually required to grant real guarantees of assets
      unrelated to the business, such as real estate owned by the
      shareholders.




*Institutional
      Banking*




BCP’s
      Institutional Banking Area was moved from the Retail Banking Group to the
      Wholesale Banking Group in 2004, since most of its clients have a significant
      volume. This Area serves non-profit organizations, whether public or private,
      including approximately 4,800 state and local government entities, international
      bodies, educational institutions and non-governmental organizations among
      others. The client base has grown significantly since 2002 due to a market
      re-segmentation effort. Specialized teams in both the Wholesale Banking and
      Retail Banking Groups serve these clients.




The
      Institutional Banking Area is strategically important due to the business
      potential of its clients, which demand diverse products and services, and the
      opportunities its clients present for generating income from fees and
      cross-selling opportunities. The Institutional Banking Area’s clients are
      principally users of transactional products and require consultancy for
      investment management. BCP’s strategy in this Area is focused on building
      customer loyalty by offering customized services at relatively competitive
      rates
      and provides outstanding service quality. The institutional banking clients
      mainly require remote office banking, collections and automated payroll payment
      services.




*International
      Trade Finance*




BCP’s
      International Trade Finance Area is focused primarily on providing short-term
      credit for international trade, funded with internal resources or with credit
      lines from foreign banks and institutions. Medium-term lines of credit funded
      by
      international commercial banks and other countries’ governmental institutions
      are also provided. In addition, the International Trade Finance Area earns
      fees
      by providing customers with letters of credit and international collections
      and
      providing foreign exchange services to clients. The International Trade Finance
      Area also promotes international trade activities by structuring Peruvian
      overseas commercial missions and introducing Peruvian businesses to potential
      foreign clients and vice versa.




BCP
      maintains business relations with over 1,200 correspondent banks, development
      organizations, multilateral financial organizations, and Export Credit Agencies
      in countries around the world. At present, BCP manages credit lines for foreign
      trade transactions, working capital and medium- and long-term investment
      projects. The current international markets volatility in additional to the
      dedollarization process in Peru have deteriorated BCP’s liquidity position in
      U.S. Dollars; BCP has been frequently borrowing short-term funds in the
      international markets, and participating in securitization programs for medium-
      and long-term funding. Meanwhile, in November 2007, we have started a process
      to
      raise US$300 million through an international syndicated loan.


30


BCP
      has
      been active in lending to Ecuadorian corporations where approximately
      US$15-25 million was placed in 2007. These loans were granted to companies
      enjoying the soundest creditworthiness ratings, and in strict compliance with
      country risk guidelines.




According
      to the Peruvian Central Bank, in 2007, Peruvian exports increased 15.3% to
      US$27.4 billion from US$23.8 billion in 2006, principally due to
      increased exports of commodities (copper, zinc and oil) and of manufactured
      goods (agribusiness and textiles). During the same year and based on BCP’s
      internal report, BCP’s exports volume increased 21.3% to US$10.8 billion
      from US$8.9 billion in 2006, amounting to 41.3% of total Peruvian exports.
      Total
      Peruvian imports were US$20.5 billion in 2007, increasing 33.7% from
      US$15.4 billion in 2006, principally due to higher demand for capital goods
      (industry, construction and transportation), raw materials for industry and
      consumer goods. BCP’s import letters of credit, collections and transfers
      amounted to US$4.3 billion in 2007, increasing from US$2.9 billion in
      2006.




BCP
      has a
      direct presence abroad through its agency in Miami and its branch in Panama
      and
      has access to a wide network of foreign correspondent banks to offer several
      internationally competitive products to its customers.




BCP
      has
      correspondent banking relationships and uncommitted credit lines with more
      than
      80 banks for foreign trade operations, financing of working capital, and medium-
      and long-term investment projects. During 2006, BCP’s significant surplus of
      liquidity allowed it to maintain a very low use of foreign lines of credit,
      but
      during 2007 BCP made extensive use of these credit lines.




In
      2006,
      BCP introduced to the market a new product that supports exporters whose sales
      to other countries are conducted with no bills of credit or document collection.
      By introducing Factoring Internacional, BCP created an affiliation with Factor
      Chain International (FCI), the world’s largest chain in these types of products.
      BCP can presently acquire export invoices and relieve the exporters’ working
      capital needs. During 2007 the total turnover of invoices has increased by
      657%
      and reached US$62.4 million, compared to US$9.5 million in 2006.




*Corporate
      Finance*




BCP’s
      Corporate Finance Area provides a wide range of underwriting and financial
      advisory services to corporate clients and middle market businesses and has
      a
      leading position in the local market. The Corporate Finance Area was
      incorporated into BCP’s Wholesale Banking Group in the first quarter of 1996 in
      order to enhance its effectiveness as the demands of Peru’s larger corporations
      move away from loan-based operations toward capital markets-based operations.
      This Area focuses on the capital markets, primarily debt and equity issues,
      project financing, corporate financing, financial restructurings and mergers
      and
      acquisitions.




Based
      upon BCP’s internal records, BCP’s share of the market for structuring
      fixed-income instruments was 24.82%. Private debt placements, are increased
      again from US$1.6 billion in 2007. Among its main operations in 2007, of
      particular importance was the structuring of the private share offering of
      Maple
      Energy for US$55 million. Additionally, BCP completed a structured financing
      of
      Pesquera Hayduk for US$113 million. BCP also structured financing of Compañía
      Eléctrica El Platanal for US$120 million in 2007. BCP has issued US$30 million
      bonds of Inmuebles Panamericana bonds, the first long-term debt issuance of
      an
      AA-rated issuer from the retail industry in 15 years. Finally, it has
      successfully consulted on and structured a mid-term financing for Inversiones
      Andino of S/.88 million, to buy Cemento Andino’s stocks in a public auction.


31


Additionally,
      the Corporate Finance Area structures short-term instruments, primarily
      commercial paper and certificates of deposit, and offers financial consultancy
      services focused on restructuring debt, appraisals and evaluations of payment
      capacity for companies from several sectors, such as paper, manufacturing,
      sugar, food, real estate and construction.




*Leasing*




Leasing
      offers and manages financial leasing operations. It also carries out medium-term
      operations, principally for small and medium-sized companies. BCP is the leader
      with a market share of 35% of total leasing.




BCP’s
      management estimates that BCP’s lease finance business is currently the largest
      in Peru with a market share of 35% as of December 31, 2007. The principal
      means of financing for Credileasing is through the issuance of specific leasing
      bonds and mid-term loans granted by BCP. The total amount of outstanding leasing
      bonds reached S/.251.8 million (US$84.0 million) as of
      December 31, 2007. According to SBS, Credileasing’s market share among
      specialized leasing companies was 59.7% as of December 31,
      2007.




The
      financial leasing business grew by 64.1% ****** during
      2007. BCP’s leasing loan balances shows a 107% growth in 2007 as a consequence
      of tax rule stabilization applicable to leasing operations and the growth of
      the
      Peruvian economy which is evolving favorably.




Growth
      during 2007 was driven by business loans in sectors requiring investment in
      mining, transportation services to mining companies, energy generation and
      manufacturing companies. Loan demand also increased in the telecommunications
      sector.




*Business
      Services*




BCP’s
      Business Services Area is in charge of developing transactional services that
      handle the exchange of information and money transfers to corporations, midsize
      companies, institutions and micro-business companies. This Area is responsible
      for both the development and marketing of transactional, or “cash management,”
services for BCP’s corporate and institutional clients. More than 30 product
      groups are offered, aiming at strengthening ties with clients, assuring their
      loyalty and reciprocity in the business carried out with BCP, as well as
      reducing costs using electronic channels and increasing fee income.




Services
      managed by the Business Services Area include collections (automated trade
      bill
      collection and electronic factoring), automated payments (direct credits to
      personnel and suppliers accounts and money transfers), electronic office
      banking, and cash management through checking accounts with special
      features.




During
      2007, transactional services continued to contribute to BCP’s earnings. The
      monthly average number of current accounts increased by 12.1% and fee revenues
      increased by 10.23
      % compared
      to those of 2006. This improvement is mainly the result of the dynamism
      experienced in SME (small business) sector. Collection services, such as bills
      and companies’ collections, generated commissions that increased 5.5% and 22.5%,
      respectively, over the 2006 collections. BCP’s strategic decision to offer value
      to its clients through the implementation of more efficient mechanism of
      information related to these services, explained part of this improvement.
      On
      the other hand, the higher demand by clients for the remote banking service,
      “Telecredito,” generated 17.1% more transactions than were in 2006. Other
      commissions generated by remittances abroad grew 7.9% from those generated
      in
      2006. Likewise, the transaction volume generated by Electronic Factoring
      increased 31% in 2007. Finally, the electronic service for invoice financing,
      recently introduced in the market, grew by 151% in volume with respect to that
      of 2006.


32


**(iii)**  **Retail
      Banking Group**




According
      to BCP’s internal reports, retail banking-related loans accounted for
      approximately 38% of BCP’s total loans in 2007 compared to 37% in 2006, 36% in
      2005, 33% in 2004 and 28% in 2003.




After
      several years of declining loan volumes of BCP’s retail Groups, volumes grew in
      2002, particularly in loans to small businesses and home mortgages, but
      decreased again in 2003, and had a modest 4.4% increase in 2004, according
      to
      BCP’s internal records. Between 2005 and 2006, loan volumes totaled US$1,962
      million, a significant growth of 30%. Furthermore, home mortgages, consumer
      loans and small-business loans have showed an outstanding growth during 2007;
      home mortgages grew approximately 31% to US$1,135 million, consumer
      lending, which includes credit cards and consumer installment loans, grew 72%
      to
      US$806 million, while micro-business loans grew 48% to
      US$436 million.




With
      the
      segmentation of its retail client base, BCP is able to focus on the
      cross-selling of products and on improving per-client profitability. BCP’s
      management expects the retail banking business to be one of the principal growth
      areas for BCP’s lending activities.




BCP’s
      retail banking serves individuals and small-sized companies with annual sales
      levels of up to US$1.5 million. BCP’s objective is to establish profitable
      long-term relationships with this broad client base, using segmentation
      strategies that satisfy the specific needs of each client type. BCP’s retail
      strategy changed since the beginning of 2007, when BCP started using the branch
      network as the center for all transactional and commercial activities. BCP
      now
      has a Commercial Division, in charge of all direct sales forces and the
      branches, which in turn are organized on a geographic level. Each branch is
      responsible for servicing and selling products to three customers groups:
      Exclusive Banking, Small Business Banking and Consumer Banking. In addition,
      each branch is responsible for coordinating the different channels offered
      within the branch, such as Customer Service Representatives and Tellers. The
      Marketing Division is responsible for product, channel and segment
      management.




*Exclusive
      Banking*




Exclusive
      Banking is BCP’s upscale retail banking area, which manages a select number of
      individual customers who are key to BCP because of the high volume of loan
      and
      deposit business and their attractive profitability.




The
      Exclusive Banking customers are serviced through specialized accounts managers
      in charge of a small number of high-income clients with a good credit record
      and
      at least US$10,000 in loans or US$20,000 in deposits. The account manager is
      responsible for improving per-client profitability and achieving long-term
      relationships with customers through personalized service, cross sell and share
      of wallet strategies. Account managers are also responsible for new customer
      acquisition, in particular through mortgage loans. The Exclusive Banking segment
      is very profitable and responsible for approximately 40% of retail baking’s
      deposit and loan volume with approximately 80,000 customers. BCP provides a
      preferential service to the exclusive banking segment by offering both
      traditional and innovative products to its clients, including privileged service
      in the branches at the teller window, access to a specialized account manager,
      expert phone banking, and preferential interest rates on loans. The higher
      end
      of this segment also has access to investment advisors who prepare customized
      investment plans consisting of capital market products and mutual funds.


33


*Small
      Business Banking*




In
      2004,
      following the merger with Financiera Solución, this area experienced some
      adjustment: *i.e.* ,
      the
      portfolio was divided such that larger clients, still defined as Mid Size
      Business Banking, and the smaller clients, which were incorporated by the
      incoming Solución portfolio and are currently part of the Small Business
      Banking.




BCP’s
      Small Business segment now accounts for 180,000 clients. Customers are divided
      into three groups with different business models and different services and
      products. The first group is the mid size business banking, which serves
      approximately 9,000 clients, with annual sales between US$300,000 and
      US$1.5 million. The next group of 60,000 clients, with annual sales between
      US$10,000 and US$300,000, is the small business banking segment and the third
      group, with a little over US$100,000 in sales, is the very small business
      customers.




In
      addition to products, such as revolving credit line repaid in installments,
      BCP
      also helps the development of the small and micro (SME lending) business
      segments, individuals who primarily derive their income from small, family-run
      businesses in two fronts (i) client training programs through seminars and
      presentations; and (ii) formalization programs based upon alliances with
      government institutions such as Prompyme, the Ministry of Labor and Social
      Promotion, Municipalities and the Peruvian Center for the Promotion of Small
      Business. BCP’s loans to small businesses as of December 31, 2007 amounted to
      US$436 million, representing another year of consecutive growth.




According
      to BCP’s internal reports, the Small Business Banking loan portfolio grew, at
      year end, from US$240 million in 2005 to US$356 million in 2006 and to
      US$597 million in 2007 (regardless of contingent facilities). In terms of
      deposits, this group increased deposits from US$350 million in 2005 to
      US$415 million in 2006 and to US$592 million in 2007.




*Consumer
      Banking*




Consumer
      Banking is in charge of developing strategies for the retail customers not
      included in Exclusive Banking or Small Business Banking, approximately 2 million
      medium to low income individuals. Nonetheless, the center of attention is on
      customers who receive their payroll in BCP. BCP is especially interested in
      this
      group of customers who represent more than 700,000 clients. The strategies
      applied vary from basic acquisition of new a ccounts
      for wage-earners with special terms regarding fees and interest rates, to more
      sophisticated, aggressive cross sell and retention programs expanding benefits
      to non-banking products ( *i.e.,* access
      to
      discounted products). BCP has continued excelling in expanding its debit card
      as
      a form of payment ,
      maintaining a 60% market share in withdrawals and payments with debit cards
      and
      a year-to-year increase of 242,000 active cards, achieving more than 2.2 million
      active cards by the end of 2007.




*Mortgage
      Lending*




As
      of
      December 31, 2007, BCP was the largest mortgage lender in Peru with a market
      share of 39.7% of total mortgage loans in the Peruvian banking system. This
      was,
      to a large extent, the result of extensive marketing campaigns and improvements
      in the quality of procedures for extending credit and establishing
      guarantees.


34


BCP
      expects mortgage lending business to continue to grow given the low levels
      of
      penetration in the financial market, the increasing demand for housing, the
      availability of funds for the Peruvian government’s MiVivienda low-income
      housing program, and the current economic outlook for controlled inflation
      and
      economic growth in Peru. BCP believes that it has become the largest issuer
      of
      MiVivienda credits, increasing its market share of outstanding loans from 6%
      in
      2002 to 28% in 2005, according to Asociación de Bancos del Perú (“ASBANC”).




BCP
      had
      US$1,125 million of outstanding mortgage loans as of December 31, 2007
      compared to US$859 million for year-end 2006.




All
      programs of mortgage financing are available to customers with minimum monthly
      income of US$400. The MiVivienda program, a program supported by government
      resources, placed a limit on the value of the house to be purchased of up to
      US$35,000. BCP will finance up to 90% of the appraised value of a property
      where
      monthly mortgage payments do not exceed 30% of the client’s stable net income.
      The maximum maturity of the mortgage loans BCP offers is 25 years in U.S.
      Dollars and 20 years in local currency. Within the mortgage lending business,
      BCP offers variable, fixed and Libor-based interest rates on home mortgage
      loans
      denominated in both U.S. Dollars and Nuevos Soles; however, BCP’s mortgage
      portfolio is predominantly variable rate and U.S.
      Dollar-denominated.




In
      May
      2006, the original MiVivienda program was terminated. However, local banks,
      with
      government approval, launched a similar project, known as MiVivienda2, to which
      proprietary funds contribute. In addition, in March 2007, BCP created a new
      program financed by the government called Mi Hogar, which targeted persons
      with
      a lower income profile. The conditions of the new program are almost identical
      to those of the first MiVivienda, except that financing is in local currency.




*Consumer
      Lending (Credit Cards and Installment Loans)*




Consumer
      lending, credit cards and installment loans have grown significantly as
      improving economic conditions have led to increased consumer spending. BCP
      expects the strong demand for these products to continue. In addition to
      interest income, BCP derives fee income from customer application and
      maintenance, retailer transactions, merchant processing and finance and penalty
      charges on credit cards.




Peru’s
      economic growth has had a huge impact on the consumer credit market, which
      grew
      by 34% during 2007. The outstanding balance is US$4,979,000, US$2,060,000 for
      credit card and US$2,919,000 in installments loans. BCP’s market share increased
      during 2007 from 16.9% to 18.8% for credit cards and from 12.9% to 16.3% for
      installment loans. The 59% growth in consumer lending was achieved while
      maintaining a low 2% ratio of delinquent accounts (over 30 days).




Installment
      loans had an unprecedented expansion reaching US$70 million in outstanding
      balances, an 80% increase from 2006. These results are due in part to a
      strategic change designed to broaden our customer base. For the first time,
      50%
      of new loans came from customers with a monthly gross income of less than
      US$400.




In
      the
      credit card business, another area of consumer loans, BCP continued to apply
      segmented strategies. BCP continues to offer value to its high end customers
      through partnerships with the airline LAN and with Primax, a chain of gas
      stations. These programs, coupled with our own Travel Program, enabled us to
      reach record levels, both in point generation and point usage (exchanges).
      To
      catch the attention of the lower income segment, BCP worked on streamlining
      its
      risk assessment and card delivery process. In addition, we have been
      continuously improving monitoring and optimizing scoring models, including,
      among others, behavior, payments and income forecasting. With these actions,
      BCP
      has achieved a growth of 38%, or a US$32 million increase, in outstanding
      balances over the previous year, reaching a total balance of US$387 million.
      According to BCP’s internal records, the numbers of active credit cards have
      increased from 296,000 in 2005 to 325,000 in 2006 to 387,000 in 2007. Total
      purchases increased from US$592 million in 2006 to US$868 million in
      2007.


35


In
      1997,
      VISANET was established in Peru to acquire and process transactions involving
      credit and debit card transactions and to widen their acceptance, with the
      participation of major local banks and Visa International. BCP is the largest
      shareholder of VISANET, holding approximately 36% of its total shares. Based
      upon BCP’s internal data, the number of electronic payment terminals was
      approximately 41,000 in 2007 compared to 28,000 in 2006, 18,000 in 2005 and
      15,741 in 2004.




**(iv)**  **Capital
      Markets Group**




In
      addition to BCP’s wholesale and retail banking operations, BCP operates a
      Capital Markets Group, which currently is the largest capital markets and
      brokerage distribution system in Peru. The principal activities of the Capital
      Markets Group include currency transactions both for clients and on a
      proprietary basis, treasury, custody and trust, investment advisory services,
      and general research activities.




The
      products offered are distributed through BCP’s subsidiaries and branches. A
      close relationship and coordination with subsidiaries has established BCP as
      the
      market leader in the capital markets business.




Credibolsa
      is BCP’s brokerage subsidiary through which BCP offers a wide variety of
      variable and fixed income products and services. Activities include the
      structuring and placement of primary market issues and the execution and trading
      of secondary market transactions.




Creditítulos
      is BCP’s asset securitization subsidiary through which BCP offers local
      securitization structuring to corporate entities.




Credifondo
      is BCP’s fund management subsidiary, which offers investment fund products and
      services. Fund types offered include short/long term, US dollar and local
      currency, fixed/variable income and real estate funds.




*Trading
      and Brokerage Services*




BCP’s
      subsidiary, Credibolsa, is the leading brokerage house on the Lima Stock
      Exchange. According to data from the Lima Stock Exchange, during 2007,
      Credibolsa had a total trading volume of US$4.8 billion, increasing from
      US$2.96 billion in 2006. Credibolsa had 19.1% of the total trading volume
      in variable equity instruments on the Lima Stock Exchange and 35.9% of the
      volume in trading of fixed income instruments on the Exchange in 2007, compared
      to 18.93% and 67.4% in 2006, respectively. Credibolsa’s trading volume was
      generated by domestic customers, both retail and institutional, and by foreign
      institutional clients as well as by Credicorp’s proprietary
      trading.




BCP’s
      management believes that, despite an environment of low profitability and high
      competition over the past few years, Credibolsa has been able to increase its
      profitability by expanding its sources of revenue. In addition to providing
      basic brokerage services, Credibolsa serves as a local market advisor for
      specialized stock market transactions and has been one of the principal agents
      in the equity offerings of privatized companies in Peru.


36


*Treasury,
      Foreign Exchange and Proprietary Trading*




BCP’s
      treasury and foreign exchange groups are active participants in money market
      and
      foreign exchange trading. These groups manage BCP’s foreign exchange positions
      and reserves and are also involved in analyzing liquidity and other
      asset/liability matters. The trading desk plays an important role in short-term
      money markets in Nuevos Soles and in foreign currencies and has been active
      in
      the auctions of certificates of deposit by Peru’s Central Bank and in financings
      through certificates of deposit, inter-bank transactions and guaranteed
      negotiable notes, among other instruments. According to BCP’s internal reports,
      its foreign exchange transaction volume was US$17.7 billion in the forward
      market and US$49.4 billion in the spot market in 2007, achieving a market
      share in the foreign exchange trading services of approximately 34% in the
      forward market and 30% in the spot market.




BCP’s
      proprietary trading consists of trading and short-term investments in
      securities, which include instruments from various countries. These short-term
      investments are primarily made to facilitate its treasury management and
      corporate finance efforts. This has become an increasingly important part of
      BCP’s business, as BCP seeks returns on excess liquidity pending improved
      lending conditions.




*Asset
      Management*




In
      June
      1994, BCP created Credifondo S.A., Sociedad Administradora de Fondos Mutuos
      de
      Inversión en Valores (Credifondo) to establish, provide advice to and operate
      mutual funds in Peru. In 2006, it continued to be the largest mutual fund
      manager in Peru with 45.1% of the market at year-end, as compared to 50.9%
      in
      2004, based upon data from the Comisión Nacional Supervisora de Empresas y
      Valores (“CONASEV”), the Peruvian securities market authority. As of
      December 31, 2007, total Peruvian funds in the mutual funds system amounted
      to US$4.3 billion, increasing 65.4% from US$2.6 billion in
      2006.




According
      to CONASEV, as of December 31, 2007, Credifondo managed eight separate
      funds, with a total of 114,340 participants (41.6% of total participants)
      compared to 81,774 (58.8% of total participants) in 2006. Among the securities
      in which the different funds specialize are: equities, U.S. Dollar-denominated
      bonds, Nuevo Sol-denominated bonds, U.S. Dollar-denominated short-term
      securities and U.S. Dollar-denominated real estate securities. As of
      December 31, 2007, the total amount of funds managed by Credifondo was
      US$1,956 million, increasing from US$1,234 million as of December 31,
      2006. Such funds are subject to certain volatility, and there can be no
      assurance as to their future performance. Credicorp does not guarantee any
      return on these investments.




As
      of
      December 31, 2007, the Bolivian fund administrator managed a total of
      US$70.9 million of third-party funds (US$57.6 million in
      2006).


37


*Trust,
      Custody and Securitization Services*




According
      to BCP’s internal reports, BCP holds US$23.4 billion in securities for over
      62,797 domestic and foreign clients. Custody services provided by BCP include
      the physical keeping of securities and the payment of dividends and interest.
      In
      addition, BCP acts as paying agent for securities of which it does not keep
      custody. BCP is one of the few banks in Peru qualified to serve as a foreign
      custodian for U.S. mutual funds. Trust services include escrow, administration
      and representation services, supervision of transactions done for its clients
      and transfer settlement and payment services for local securities issues,
      allowing clients to be adequately represented in their activities in the local
      and international securities markets.




In
      2000,
      Inversiones Crédito del Perú (now Grupo Crédito), a subsidiary of Credicorp,
      jointly with two other Peruvian banks, formed La Fiduciaria S.A. (“Fiduciaria”),
      an associated entity and the first specialized trust services company in Peru,
      in which Credicorp holds a 45% interest. In its eighth year of existence,
      Fiduciaria has managed trusts for a majority of the institutions in the national
      financial system, putting itself at the forefront of fiduciary services in
      the
      country. Operations encompassed sectors including energy, communications,
      mining, tourism, fishing, education and construction. Fiduciaria ended 2007
      with
      200 outstanding operations (116 in 2006).




**(vi)**  **Lending
      Policies and Procedures**




Uniform
      credit policies and approval and review procedures are based upon conservative
      criteria adopted by BCP and are uniformly applied to all of its subsidiaries.
      These policies are set within the guidelines established by Peruvian financial
      sector laws and SBS regulations. (See “—(11) Supervision and Regulation— (ii)
      BCP,” and the guidelines set forth by Credicorp’s Board of
      Directors.)




The
      credit approval process is based primarily on an evaluation of the borrower’s
      repayment capacity and on commercial and banking references. A corporate
      borrower’s repayment capacity is determined by analyzing the historical and
      projected financial condition of the company and of the industry in which it
      operates. An analysis of the company’s current management, banking references
      and past experiences in similar transactions, as well as the collateral to
      be
      provided, are other important factors in the credit approval process. For BCP’s
      individual borrowers, the information that is presented by the prospective
      borrower is evaluated by a credit officer and the application is passed through
      a scoring program for approval by a centralized credit unit.




Credit
      risk in retail banking group involves the assessment of the client’s financial
      track record and other aspects in order to determine its ability to repay debt.
      Additionally, in each case, loan approval is subject to a number of credit
      scoring models, which assign loan-loss probabilities that relate to expected
      returns of each market sector.




Success
      in the small business and personal lending areas depends largely on BCP’s
      ability to obtain reliable credit information about prospective borrowers.
      In
      this regard, BCP, together with several partners, formed a credit research
      company called Infocorp in November 1995. In addition, the SBS has expanded
      its
      credit exposure database service to cover all businesses or individuals with
      any
      amount borrowed from a Peruvian financial institution, including information
      on
      the loan risk category in which the borrowers are classified: Normal, Potential
      Problem, Deficient, Doubtful and Loss.




BCP
      has a
      strictly enforced policy with respect to the lending authority of its loan
      officers and has in place procedures to ensure that these limits have been
      adhered to before a loan is disbursed. Under BCP’s credit approval process, the
      lending authority for middle market and small business loans is centralized
      into
      a specialized credit risk analysis area, whose officers have been granted
      lending limits, thus allowing middle market and small business loan officers
      to
      concentrate on their client relations. To ensure that loan officers and credit
      analysis officers are complying with their lending authority, the credit
      department and BCP’s internal auditors regularly examine credit
      approvals.


38


The
      following table briefly summarizes BCP’s policy on lending limits for loan
      officers and credit risk analysis officers. Requests for credit facilities
      in
      excess of the limits set forth below are reviewed by BCP’s General Manager,
      Executive Committee or, if the amount of the proposed facility is sufficiently
      large, the Board of Directors.




In
                US$thousands
            
            Risk without collateral or with
              only personal collateral or
              guarantee
            
            Risk with preferred guarantees
              (1)
            
            YearsBoard of
                Directors
            
            
            No credit limit
            
            
            No credit limit
            
            
            No credit limitExecutive
                Committee
            
            US$
            60,000
            
            US$
            60,000
            
            
            15General
                Manager
            
            US$
            15,000
            
            US$
            30,000
            
            
            15Credit
                Group Manager
            
            US$
            7,500
            
            US$
            15,000
            
            
            15Credit
                Risk Manager
            
            US$
            4,000
            
            US$
            8,000
            
            
            10Credit
                Risk Chiefs
            
            US$
            1,000
            
            US$
            3,000
            
            
            10





(1)
            Preferred
                guarantees include deposits in cash, stand-by letters, securities
                and
                other liquid assets with market price, mortagages, non-real estate
                property guarantees and assets generated by leasing
                operations.





BCP
      believes that an important factor in maintaining the quality of its loan
      portfolio is the selection and training of its loan and risk officers. BCP
      requires loan officers to have degrees in economics, accounting or business
      administration from competitive local or foreign universities. In addition,
      the
      training program consists of a six-month rotation through all of the
      business-related areas of BCP and the credit risk analysis area. After the
      training period is over, trainees are assigned as assistants to loan officers
      for a period of at least one year before they can be promoted to loan officers.
      Loan officers also receive additional training throughout their careers at
      BCP.
      Laterally hired officers are generally required to have held previous positions
      as loan officers.




In
      general, BCP is a secured lender. As of December 31, 2007, approximately
      US$3.9 billion of the loan portfolio and contingent credits were secured by
      collateral which represents 50.8% of the total loan portfolio based upon BCP’s
      unconsolidated figures (53.1% as of December 31, 2006 and 51.3% as of
      December 31, 2005). Liquid collateral is a small portion of the total
      collateral. In general, if BCP requires collateral for the extension of credit,
      it requires collateral valued at between 10% and 50% above the facilities
      granted. The appraisal of illiquid collateral, in particular real estate assets,
      machinery and equipment, is performed by independent experts when required
      for
      specific reasons.




The
      existence of collateral does not affect the loan classification process
      according to regulations in effect as of December 1998. Pursuant to the Peruvian
      Banking Law, secured loans, or the portion thereof covered by collateral,
      classified in Class “B,” “C,” or “D” risk categories have a lower loan loss
      provision requirement for Peruvian accounting purposes. If a borrower is
      classified as substandard or below, then BCP’s entire credit exposure to that
      borrower is so classified.




BCP
      conducts unannounced internal audits on the financial statements, consistent
      with local banking regulation of the different jurisdictions in which it
      operates.


39


**(vii)**  **Deposits**




Deposits
      are principally managed by BCP’s Retail Banking Group. The main objective of
      BCP’s Retail Banking Group operations has historically been to develop a
      diversified and stable deposit base in order to provide a low-cost source of
      funding. This deposit base has traditionally been one of BCP’s greatest
      strengths. BCP has historically relied on the more traditional, stable, low
      cost
      deposit sources, which it considers to be its core deposits: time, demand
      deposits, savings and CTS deposits. CTS deposits, or Severance Indemnity
      Deposits, are funded by companies in the name of their employees, amounting
      to
      one month’s salary per year, and may be withdrawn by the employee only upon
      termination of employment or upon transfer to another bank, subject to certain
      exceptions. Exceptions include disposing of 50% of the CTS deposit at any time
      and disposing of up to 80% at once for home purchase.




As
      of
      December 31, 2007, these core deposits represented 97.1% of BCP’s total
      deposits on an unconsolidated basis. BCP’s extensive branch network facilitates
      access to this type of stable and low-cost source of funding. BCP’s corporate
      clients are also an important source of funding for BCP. As of December 31,
      2007, BCP’s Wholesale Banking Group accounted for approximately 45% of total
      deposits, of which 41% were demand deposits, 57% time deposits, and 2% savings.
      Of all deposits from BCP’s Wholesale Banking Group, most (54.7%) were foreign
      currency-denominated (almost entirely U.S. Dollars) and the balance (45.3%)
      was
      Nuevo Sol-denominated.




**(viii)**  **Support
      Areas**




Commercial
      banking operations are supported by BCP’s Market Risk Area, which evaluates and
      helps administer credit relationships, establishes credit policies and monitors
      credit risk. See “—(4) BCP and Subsidiaries— (vi) Lending Policies and
      Procedures.”




BCP’s
      Planning and Finance Area is in charge of planning, accounting and investor
      relations functions and is also responsible for analyzing the economic, business
      and competitive environment in order to provide the information necessary to
      support senior management’s decision-making.




In
      addition to the above, BCP’s Administration Group is generally responsible for
      information technology, quality control, **** institutional
      and public relations, human resources, the legal department, security,
      maintenance and supplies.




*Information
      Technology*




BCP
      is a
      technology leader in the Peruvian banking sector. BCP developed its technology
      platform largely using internal resources and was the second to introduce ATMs
      in 1986 in the Peruvian market, the first to introduce electronic banking for
      corporations in 1988, telephone banking in 1996, and Internet banking for the
      retail sector in 1999.




BCP’s
      management believes that BCP offers a wider range of banking services through
      its ATM network and electronic banking facilities than any of its competitors.
      In 1974, BCP, in an effort to improve the data transmission among its offices
      connected all its offices through the Teleproceso – TP Bancario, becoming
      the first bank in Latin America able to approve account balances online,
      allowing, among others, money transfers from an account in one province of
      Peru
      to another province, immediately.




All
      of
      BCP’s retail banking group services and a substantial portion of BCP’s corporate
      banking services are fully computerized. All of BCP’s points of service,
      including branches, ATMs and POS terminals, are linked to BCP’s Data Processing
      Center, permitting BCP to monitor and analyze service while allowing most
      transactions to be executed on a real-time, online basis.


40


BCP’s
      technology operations and initiatives are managed by BCP’s electronic data
      processing and software development departments. These departments employ a
      total of 550 full-time employees, including employees who develop, install,
      maintain and operate all of BCP’s software applications, management information
      and security systems and install branch hardware equipment. BCP’s most critical
      operational data and software are stored on a mainframe computer system, access
      to which is controlled by a series of authorized passwords, in the frame of
      very
      strong IT security policies.




BCP
      considers its technology platform to be one of its main competitive strengths
      and has continued to invest in this area to maintain its competitive position
      in
      the banking sector. Therefore, BCP’s investments in IT have provided the
      computing power, storage capacity, bandwidth and other IT services to the best
      of their class.




Many
      Linux/Unix/Windows server systems are deployed or upgraded to host collaborative
      applications, call center and virtual POS systems. JAVA-based application
      servers have been chosen as the strategic growth platform for core business
      applications. Over the next three years, the replacement of BCP’s branch
      automation software will commence in order to use the latest proven technology
      available, which will improve its successful system that among other things
      can
      prioritize queues for eligible customers via a ticketing system in the
      branches.




The
      Systems and Organization Group’s mission is to act as technological partner with
      the various businesses of BCP. It designs and manages computer and
      communications systems; designs and enhances processes; manages strategic
      projects; and provides consultancy in technological and organizational
      aspects.




During
      2007, expenses on systems totaled US$78.7 million, of which US$61.9 million
      were
      recurring expenses and US$16.8 million were allocated to specific projects.
      Investments totaled US$35.1 million, of which US$13.8 million were for tactical
      projects, US$13.4 million for core processes, and US$7.9 million for subsistence
      projects.




In
      2007
      we started three important projects to develop new, world class systems with
      a
      view to reaching our strategic objectives. The first project is the
      implementation of a new computer system for our office windows that will provide
      BCP branches with a more modern, safer and stronger technological platform.
      The
      second project is installing a new system for the management of collections
      in
      Retail Group in order to enhance efficiency in collections by providing a model
      of excellence that will have positive impacts on our levels of provisioning.
      The
      third project is installing the SAP platform to efficiently manage the bank’s
      accounting, logistic and human resources functions. To continue with the
      objective of increasing lending in Retail Group, in 2007 the Loans Integrated
      Model (MIC) nationwide system was updated to provide an immediate response
      to
      clients about their credit card applications, and the assigned credit line,
      once
      approved. One of the main uses of this system was for the new Plaza San Miguel
      credit card where applications are evaluated in real time and cards are
      delivered instantly if approved. We extended the use of this system to consumer
      loans, which started in March 2008 to improve response time to the client at
      the
      contact point. Finally, in November 2007 we implemented the new system for
      prevention of money laundering and we provided the bank with a world class
      system to enforce regulations for preventing asset and money laundering.
      Moreover, we have made important progress in our systems to enforce the
      guidelines of the New Basel Capital Agreement, with results expected to manifest
      themselves in the next two years.





In
      2007,
      BCP started implementing a disaster recovery system which duplicates all
      operational and functional systems by mirroring each of BCP’s computer systems.
      BCP’s disaster recovery center is located 10 miles from BCP’s main center
      (downtown Lima office). The ECO Program (Excellence in Operational Continuity),
      started building two new computer centers, one in our headquarters in La Molina,
      to replace the existing computer center; and another in Chorrillos, to replace
      the one in the main downtown Lima office. With these two updated and
      interconnected computer centers, the bank will simultaneously backup operations
      against incidents in either of them, without service interruptions. The
      facilities will include state of the art, highly efficient, reliable and
      redundant facilities using the most recent techniques and methodologies to
      guarantee high availability of our services at all times.


41


Additionally,
      we have started the construction of a computer center in Trujillo in order
      to be
      able to cope with the possibility of a major incident in Lima. The computer
      center will continually back up information from Lima and will be capable of
      launching in a few minutes, if needed, allowing us to preserve the financial
      information of our clients even in case of a serious event.




The
      new
      computer center of La Molina is expected to begin operating at the end of 2008,
      the one in Trujillo in mid 2009 and in Chorrillos in early 2010.




In
      order
      to streamline the decision making regarding technology issues in accordance
      with
      the strategic objectives of the organization, we continue to consolidate the
      IT
      Governance policy. The Systems Committee, together with the IT Systems and
      Organization Division, follow up on the condition of the strategic technology
      projects on a monthly basis. Moreover, we created an IT Governance Committee,
      which is led by the Deputy General Manager and includes the Finance Division
      Manager, the Business and Corporate Banking Division Manager, the Systems and
      Organization Division Manager, the Marketing Manager, the Business Solutions
      Manager and the Systems Development Manager. The objective is to involve the
      main business areas in technological decision making. During 2007, the IT
      Governance Committee defined technology principles consistent with our business
      objectives.




*Marketing*




BCP
      continually works to protect and strengthen the BCP brand. BCP has a proactive
      attitude towards competition and, focusing on change and innovation, it seeks
      to
      promote its products and services by constantly improving them. In this manner,
      BCP aims to meet market needs with the ultimate purpose of creating the highest
      possible value for its clients and shareholders. In 2007, BCP’s strategy was
      developed mainly on two fronts:




*Generating
      Value*




In
      terms
      of generating value, the Bank continues to develop strategies to approach
      different customer groups. The increasing usage of CRM (Customer Relation
      Management) tools across all sectors enables the Bank to reach customers and
      provide them with personalized offers and terms in a timely manner. In an effort
      to build long-term relationships, the Bank has boosted its development and
      training activities, including training programs with small-business owners
      supported by Universidad del Pacífico, the fair organization ExpoNegocios,
      Bodegas y Mercados, and intensive seminars conducted in different cities across
      the country. Another key element for creating value is innovation, and BCP
      has
      launched several innovative products, including new products in the services
      provided to very wealthy customers; new benefits to customers whose wages are
      paid at their BCP accounts; and the development of the Línea Múltiple de
      Negocios (Multiple Business Line) that allows our customers to meet their
      financial needs with a comprehensive, easy-to-use product.




*Quality
      in* ** *Service*




Quality
      in service is a permanent goal for BCP. In this field, progress has been made
      as
      part of implementing a new regulation promulgated under the Consumer Protection
      Law, including significant investments geared at improving service and keeping
      customers informed about the products and services we offer. We have also
      implemented longer working hours in branches.


42


Improved
      processes and supporting tools have enabled us to follow up and leverage growing
      businesses. The new commercial loan disbursement process (promissory notes,
      loans, advances and issuing bank guarantees nationwide) was successfully
      implemented by using CAPS as a tool. This allowed us to improve our customer
      service timing and to reduce our business consultants’ and assistants’
workload.




**(ix)**  **Anti
      Money Laundering Policies**




Since
      1995, BCP has implemented programs and adopted policies designed to comply
      with
      the “know your customer” regulations in the countries in which it operates. As
      an additional precaution, ASHC will open accounts only for individuals or
      entities that are recommended by senior officers of ASHC or BCP.




Peru
      has
      long-standing laws criminalizing money-laundering activities, and such laws
      were
      further strengthened in 1996 with the adoption of the Peruvian Banking Law,
      which incorporated the guidelines of the Organization of American States
      directly into Peruvian law, and Law 28306, which revised functions assigned
      to
      the Financial Intelligence Area, a public entity in charge of directing
      anti-money-laundering actions and monitoring information that public and private
      companies are required to provide. The Financial Intelligence Area has the
      authority to request detailed reports with respect to the movement of funds
      and
      the identity of depositors. According to recently enacted regulations, mainly
      Law 28306 and SBS Resolution 1725-2003, financial institutions must adopt
      internal mechanisms, appoint a full-time compliance officer reporting directly
      to the Board of Directors, and conduct special personnel training programs
      and
      procedures to detect and report unusual or suspicious transactions as defined
      therein.




**(x)**  **Employees**




As
      of
      December 31, 2007, BCP had 9,593 full-time employees, compared to 8,243
      employees as of December 31, 2006 and 7,568 employees as of December 31,
      2005. All employees of banks in Peru are given the option of belonging to an
      employee union, and such employee unions are collectively represented by the
      Federación de Empleados Bancarios or Federation of Banking Employees (“FEB”). In
      order to negotiate a collective agreement on behalf of its members, FEB must
      have as members over 50% of all Peruvian banking employees. Because the
      representation of banking employees members in FEB has declined to below 50%,
      primarily because of the substantial reduction in the size of the state-owned
      banking business during the 1990s, the most recent collective bargaining
      agreement, which expired on June 30, 1995, was not renewed. As of
      December 31, 2007, BCP had no unionized employees. The last strike by union
      employees occurred in 1991 and did not interfere with BCP’s
      operations.




**(5)**  **Atlantic
      Security Holding Corporation**




ASHC
      engages in trade finance, private banking, asset management and proprietary
      investment and trading activities. ASCH was incorporated in December 1981 in
      the
      Cayman Islands and principally serves Peruvian-based customers through banking
      offices in Panama and representative offices in Lima.




A
      portion
      of Credicorp’s commercial banking business is also carried out by ASHC, which
      principally serves Peruvian private banking customers through offices in Panama.
      As of December 31, 2007, ASHC had total assets of
      US$1,615.7 million and net equity of US$214.1 million (compared with
      US$1,379.1 million and US$178.9 million, respectively, as of
      December 31, 2006). ASHC’s net income was US$39.5 million in 2007 and
      US$31.5 million in 2006, which included income from dividends paid by
      Credicorp. Larger revenues from dividends are a consequence of strong Credicorp
      dividend payments in 2007, resulting from improved earnings in the prior year.
      Though not reflected in the consolidated results, ASHC’s net income attributable
      to Credicorp increased compared to the US$15.4 million registered during the
      2006, reaching a total of US$20.5 million.


43


Total
      loans outstanding in ASHC’s portfolio were US$133.8 million and
      US$131.4 million on December 31, 2006, and 2007, respectively, representing
      a decrease of 1.8%. Deposits increased 18.6% to US$1,382.9 million on December
      31, 2007 from US$1,166.1 million on December 31, 2006. Third-party assets
      under management increased 60.6% from US$1,396.2 million in 2006 to
      US$2,241.8 million in 2007, principally due to the increase in value of
      customers’ stock portfolios. ASHC’s past due loans as a percentage of total
      loans was 0.0% from 1996 through 2002, but reached 2.3% as of December 2003,
      and
      declined back to 0.0% on December 31, 2004, 2005, 2006 and 2007.




ASHC’s
      Corporate Banking Group makes working capital and bridge loans. As of
      December 31, 2007, approximately 46.6% of ASHC’s loans were to Peruvian
      companies, 4.4% were to companies in Bolivia, 11.9% were to companies in
      Colombia, 9.5% were to companies in Mexico, and the remainder was to borrowers
      in other Latin American countries. ASHC’s trade finance activities are conducted
      by its Corporate Banking Group. ASHC has concentrated its extensions of credit
      on short-term trade transactions with Latin American countries other than
      Peru.




ASHC’s
      policy is to provide funding to customers on the basis of approved lines of
      credit. ASHC’s Credit Committee meets weekly to discuss the entire credit risk
      inherent in the risk portfolio, composed of loans and trading securities, and
      to
      review facilities approved by the committee charged with overseeing extensions
      of credit by ASHC’s Panama branch. ASHC’s loan officers operate within
      established credit limits ranging from US$50,000 to US$500,000. Regardless
      of
      whether an approved facility exists for a client, any transaction in excess
      of
      US$500,000 requires the approval of senior management. In addition, all credit
      extensions are monitored by ASHC’s General Manager and reviewed and approved
      quarterly in their entirety by the Credit Committee of the Board of Directors
      of
      ASHC.




ASHC’s
      Private Banking Group’s clients have traditionally provided a stable funding
      source for ASHC, as many are long-time clients who maintain their deposits
      with
      ASHC. As of December 31, 2007, ASHC had approximately 3,200 customers.
      Currently, about 95% of ASHC’s private banking clients are
      Peruvian.




ASHC
      trades on its own account primarily by making medium-term investments in fixed
      income securities, equity securities and sovereign debt. The portfolio includes
      investment grade and non-investment grade debt securities of public companies
      and, to a much lesser extent, private U.S. debt and equity issues. Such
      securities are subject to substantial volatility and there can be no assurance
      as to their future performance. As of December 31, 2007, ASHC had approximately
      US$853.7 million, at fair value, invested in these types of securities
      (US$737.8 million in 2006). ASHC generally utilizes its own funds for these
      activities rather than borrowings. ASHC also holds an equity investment in
      Credicorp with a fair value of approximately US$1,115.6 million on December
      31, 2007 (US$598.6 million on December 31, 2006). ASHC’s investment
      portfolio, as well as future purchases, sales, overall investment strategy
      and
      the general profile of the trading portfolio are reviewed on a monthly basis
      by
      an investment committee composed of members of its senior management. The Board
      of Directors of ASHC reviews and approves exposure limits for countries with
      transfer risk on a quarterly basis. The credit risk by counterparty is evaluated
      on a consolidated basis, including direct and indirect risk, such as interbank
      placements, loans, commitments, guarantees received, and trading securities
      purchased in the secondary market.


44


ASHC’s
      Asset Management group, created in 1989, conducts ASHC’s management of
      third-party funds which, including the aggregate of third-party assets, had
      total assets under management of US$2,241.8 million as of December 31,
      2007, compared to US$1,396.2 million as of December 31, 2006. This increase
      was principally due to the increase in value of customers’ stock portfolios.
      Investment decisions for funds, except for outsourced funds, are made by senior
      officers within ASHC, in accordance with guidelines of the Investment
      Committee.




**(6)**  **Pacífico
      Peruano Suiza**




Credicorp
      conducts its insurance operations exclusively through PPS and through its
      su bsidiaries
      El Pacífico Vida and Paćifico Salud, which together comprise Pacifico Grupo
      Asegurador, which provides a broad range of insurance products in the property
      and casualty, life and health groups. In 2007, the six most significant lines
      together con stituted
      81.8% of total premiums written by PPS. These are commercial property damage
      (including fire, earthquake and allied lines and limited liability risks),
      automobile, health, life and pension fund underwriting and life annuities.
      PPS
      is the second leading Peruvian insurance company, including private health
      companies, with a market share of 34.2% based on net premiums earned and fees
      in
      2007.




PPS’s
      consolidated net income attributable to Credicorp in 2007 was
      US$9.4 million, a decrease of 35.1% from US$14.5 million
      in 2006. Total premiums increased 25.4% to US$467.2 million during 2007 from
      US$372.3 million in 2006, and net premiums earned, net of reinsured premiums
      and
      of technical reserves (as defined below in “―(ii) Claims and Reserves”), were
      US$3 07.2
      million in 2007, increasing 18.6% as compared to the previous year. PPS’s net
      underwriting results decreased from US$34.7 million in 2006 to US$15.4 million
      in 2007, amount that represents 3.3% of total premiums. This is mainly explained
      by the increment of the net claims paid as a percentage of net premiums written
      from 72% during 2006 to 77.7% during 2007, due to the earthquake that affected
      the south of Peru in August 2007 and several severe claims in the fire and
      technical branches.




PPS’s
      business in property and casualty and private health is highly concentrated,
      with a client base of over 30,000 companies and over 330,000 individuals in
      the
      property and casualty and health insurance programs, including individuals
      affiliated with group health insurance programs through the companies by which
      they are employed. PPS’s life insurance client base consists of over 115,000
      individuals. As of December 2007, revenues from policies written for PPS’s three
      largest and 20 largest customers represented 7.0% and 23.3% of total premiums
      in
      P&C and Health insurance, respectively, PPS’s property insurance lines are
      sold through agents and brokers, while life insurance is sold by its own sales
      force. The 10 largest brokers in the property and casualty as well as in the
      private health segment accounted for approximately 40.3% of total premiums
      as of
      December 31, 2007 (35.7% as of December 31, 2006).




El
      Pacífico Vida (“Pacífico Vida”), PPS life insurance subsidiary since 1997, is
      38%-owned by ALICO, a subsidiary of AIG. In 2007, Pacífico Vida had total
      premiums of US$136.7 million, a 17% increase from total premiums of US$117.2
      million in 2006. Pacífico Vida’s net income reached US$15.5 million in 2007
      compared to US$9.4 million in 2006. Pacífico Vida’s market share was 25.8% in
      2007 versus 23.0% in 2006. Individual life and personal injuries businesses
      increased by 24.14%, mainly due to the development of new products, improved
      productivity and growth of their sales force, reaching a market share of 33.4%.
      Life annuity business decreased 12% in total earnings but resulted in an
      unexpected increase in market share from 17.7% to 19.2%, mainly due to a more
      conservative investment policy, which decelerated the demand for this product.
      The pension fund underwriting business grew 28.8% with respect to the same
      period in 2006. Likewise, Group Life, Legal Life, SCTR and Credit Life increased
      thanks to the business with BCP such as credit cards and mortgage loans. In
      2007, total premiums on Group Life, Legal Life and SCTR (limited workers
      compensation) increased by 7.4% with Credit Life being the most dynamic product,
      reaching an increase of 46% over that of 2006. Pacífico Vida, the life insurance
      company, generated financial earnings amounting to US$25 million in
      2007.


45


In
      1999,
      PPS formed Pacífico Salud, becoming one of only three private health insurance
      companies in Peru at that time to offer an alternative to public social
      security. In March 2004, PPS acquired Novasalud EPS for US$6.5 million and
      merged it with Pacífico Salud in August 2004. Pacífico Salud had total revenue
      of US$95.1 million in 2007 (US$80.7 million in 2006), with a net
      income of US$2.7 million in 2007 (US$3.7 million in 2006) mainly due to an
      increase in claims. The net loss ratio, defined as net claims paid as a
      percentage of net premiums earned, increased to 80.1% in 2007 from 77.3% in
      2006.




**(i)**  **Underwriting,
      Clients and Reinsurance**




Underwriting
      decisions for substantially all of PPS’s insurance (property and casualty) risks
      are made through its central underwriting office. PPS’s own risk management
      staff inspects most medium and medium-to-large commercial risks prior to their
      underwriting, whereas third party surveyors are employed to inspect smaller
      risks. Underwriting standards are approved by the Board of Directors on a yearly
      basis.




PPS
      utilizes reinsurance to limit its maximum aggregate losses and minimize exposure
      on large risks. Reinsurance is placed with reinsurance companies based on
      evaluation of the financial capacity of the reinsurer, terms of coverage and
      price. PPS’s principal reinsurers in 2007 were, among others, Lloyd’s, New
      Hampshire Insurance Co., Münchener Ruck, Swiss Reinsurance Co., Hannover Ruck,
      XL Re Ltd., Liberty Mutual, London Life, Mapfre Re and QBE Reinsurance. Premiums
      ceded to reinsurers represented 18.9%, 17.0% and 20.8% of premiums written
      in
      2005, 2006 and 2007, respectively. PPS acts as a reinsurer on a very limited
      basis, providing its excess reinsurance capacity to other Peruvian insurers
      who
      are unable to satisfy their reinsurance requirements. As of December 31, 2007,
      premiums for reinsurance written by PPS totaled US$6.1 million.




Although
      PPS historically has obtained reinsurance for a substantial portion of its
      earthquake-related risks through excess loss contracts, there can be no
      assurance that a major catastrophe would not have a material adverse impact
      on
      its results of operations or financial condition. See “—(ii) Claims and
      Reserves.”




**(ii)**  **Claims
      and Reserves**




Net
      claims paid by PPS as a percentage of net premiums written ( *i.e.* ,
      the net
      loss ratio) reached 64.5% in 2007, up from 60.3% in both 2005 and
      2006.




The
      net
      loss ratio, in the property and casualty segment, which represented 51.3% of
      PPS’s premiums in 2007 (47.8% in 2006) increased from 63.3% in 2006 to 70.6% in
      2007, due to the low performance of fire and allied lines as well as the
      technical lines. The net loss ratio from the fire and allied lines, which
      represented 22.3% of property and casualty premiums in 2007 (27.7% in 2006)
      increased from 35.0% in 2006 to 81.4% in 2007, mainly as consequence of the
      earthquake that affected the south of Peru in August 2007. The net loss ratio
      of
      the Technical lines, which was 9.4% of property and casualty premiums in 2007
      (8.2% in 2006) increased from 82.9% in 2006 to 140.4% in 2007.




The
      net
      loss ratio in the life insurance lines, which represented 29.2% of PPS’s
      premiums in 2007 (31.4% in 2006) increased from 44.3% in 2006 to 47.1% in 2007,
      due to the low performance of individual annuity, and a better performance
      in
      disability and survivor (pension fund) insurance. The net loss ratio of
      individual annuity, which represented 17.6% of life insurance premiums in 2007
      (27.1% in 2006) increased from 44.2% in 2006 to 70.5% in 2007. Disability and
      survivor insurance, 28.1% of life insurance premiums in 2007 (25.4% in 2006),
      decreased from 86.3% in 2006 to 72.9% in 2007.


46


The
      net
      loss ratio in the health insurance lines, which represented 19.5% of PPS’s
      premiums in 2007 (20.8% in 2006), increased from 81.2% in 2006 to 82.3% in
      2007.




PPS
      is
      required to establish claims reserves in respect of pending claims in its
      property-casualty business, reserves for future benefit obligations under its
      in-force life and accident insurance policies, and unearned premium reserves
      in
      respect of that portion of premiums written that is allocable to the unexpired
      portion of the related policy periods (collectively, “Technical
      Reserves”).




PPS
      establishes claims reserves with respect to claims when reported, as well as
      for
      incurred but not reported (IBNR) claims. Such reserves are reflected as
      liabilities in PPS’s financial statements.




PPS
      records as liabilities in its financial statements actuarially determined
      reserves calculated to meet its obligations under its life and accident policies
      and its pension fund underwriting business. These reserves are determined using
      mortality tables, morbidity assumptions, interest rates and methods of
      calculation in accordance with international practices.




Pursuant
      to SBS regulations, PPS establishes pre-event reserves for catastrophic risks
      with respect to earthquake coverage. See “—(11) Supervision and Regulation—(v)
      PPS—Reserve Requirements.” In accordance with IFRS principles, the pre-event
      reserves and income charges for catastrophic reserves are not considered in
      Credicorp’s consolidated financial statements.




There
      can
      be no assurance that ultimate claims will not exceed PPS’s
      reserves.




**(iii)**  **Investment
      Portfolio**




As
      of
      December 31, 2007, the book value of PPS’s portfolio (which includes Pacífico
      Seguros ,
      Pacifico Vida and Pacifico Salud) was US$821.3 million, which included US$56.6
      million in equity securities and US$764.6 million in bonds. In addition, real
      estate investments book value reached US$31.8 million. The book value of
      Pacifico Seguros in 2007 was US$136.2 million and was invested mainly had
      short-term debt instruments and equity, while Pacifico Vida’s book value was
      close to US$675.6 million and was mainly invested in long-term debt instruments.
      Pacifico Salud, on the other hand, had a small portfolio with a book value
      of
      US$9.4 million and was mainly invested in short-term debt instruments.




As
      part
      of its improvement process, PPS changed its investment policy to employ the
      best
      international risk management practices and tools, and incorporated the
      recommendations of Solvencia II and Basel II with a view to developing a better
      match of terms and currencies with the company’s liabilities, especially in
      connection with obligations vis-à-vis PPS’s insured customers.




Investment
      profits earned during 2007, although lower than 2006, were significantly higher
      than PPS’s forecasts. Earnings in 2007 were attributed primarily to: (i) the
      increase in the stock market value at the beginning of the year and accurate
      profit tacking and portfolio restructure; (ii) a slight increase in fixed income
      earnings due to a larger position and better local interest rates; and (iii)
      an
      additional income from our real estate investment book due to higher rent fees.
      Year to year financial income was lower by US$12.5 million, due to the
      extraordinary financial gains registered in 2006, which result from the sales
      of
      a significant package of shares, the majority of which were stock of Banco
      de
      Credito, that generated US$40 million in gains at PPS level.


47




Although
      large payments were required to cover for the damages caused by the earthquake
      that struck Lima in August 2007, cash inflow generated by sales premium, stock
      sales, fixed income earnings and real estate rent fees allowed Pacífico
      Seguros to make
      additional investments. In this sense, the PPS (property and casualty) equity
      portfolio increased from US$42.6 million as of December 31, 2006 to US$56.6
      million as of December 31, 2007 and fixed income portfolio from US$754 million
      as of December 31, 2006 to US$764.6 million as of December 31, 2007. These
      allowed PPS to assure large reserves for possible future claims.




PPS’s
      main strategy is to have an appropriate match of currency and term for its
      assets and liabilities. In this sense, since a significant portion of its
      premiums is denominated, and much of its operations are conducted, in U.S.
      Dollars, most of the assets are invested in this currency. In 2007, 71.4% of
      the
      gross premiums received by PPS were denominated in U.S. Dollars (71.5% in 2006).




PPS’s
      investments are made primarily to meet its solvency equity ratio and to provide
      reserves for claims. PPS manages its investments under two distinct portfolios.
      The first portfolio is designed to match the liabilities of property, automobile
      and health lines, and the second portfolio is designed to match the liabilities
      of life and annuities lines. Each portfolio is managed under the authority
      of
      its own committee, which reviews portfolio strategy on a monthly basis. PPS
      invests in foreign markets, emphasizing investments in U.S. and European
      sovereign debt. PPS has adopted strict policies related to investment decisions.
      PPS’s investment strategies and policies are reviewed and approved by PPS Board
      of Directors. However, Senior management also has investment authority and
      decision making authority with respect to investments strategies.




PPS,
      like
      other major Peruvian insurance companies, sells its products both directly
      and
      through independent brokers and agents. Direct written policies tend to be
      for
      large corporate clients, as well as for life and health insurance lines. In
      recent years, PPS has focuses its energy on positioning itself as leader of
      the
      retail segment by introducing new and differentiated products and services.




Finally,
      Credicorp is attempting to expand PPS’s sales network by using the branch
      network of Banco de Credito. PPS offers, in collaboration with BCP, a life
      and
      health insurance product, personal life insurance product that combines
      accidental death coverage with renewable term life insurance, car insurance,
      leasing insurance and credit life.




**(7)**  **Grupo
      Crédito/Prima AFP**




Continuing
      to pursue its strategy of fast growth and positioning in the market, on August
      24, 2006 Prima AFP reached an agreement with Grupo Santander Perú S.A. for the
      acquisition of 99.97% of Unión Vida AFP. The acquisition was consummated for a
      total of US$141 million and the final purchase price determination was made
      with
      the conclusion of the arbitration proceedings between the parties. As a result,
      Credicorp received a reimbursement in an approximate amount of US$4.5 million.
      See Note 2(a) to Credicorp Consolidated Financial Statements. Of the US$141
      million, US$112 million came from a capital increase and US$29 million came
      from
      a BCP loan. Later, the company engaged in a tender offer directed at the
      minority shareholders. The company has successfully managed the operational
      and
      commercial challenges associated with the merger period. Unión Vida managed to
      resist competitive pressure, reaching 36,974 gross transfers and 8,907
      affiliations between September and November 2006.




Prima
      AFP
      started 2007 by striving to consolidate its market leadership. To do so, it
      focused on preserving its strong value proposal, namely the market’s lowest
      management commission, strong support from Grupo Credito and its vast experience
      in the investment business, and outstanding service, information and
      advice.


48





Commercial
      growth came principally from higher productivity in sales management which
      allowed exceeding Prima’s AFP goals of capturing a high quality portfolio. Such
      growth was coupled with an expanding national economy (that resulted in higher
      salaries and returns to individual and corporate contributing members),
      underpinning the growth of the company’s revenues base.





Prima
      AFP’s strong performance also resulted from a wider and stronger revenue
      calculation base, coupled with a stable and improved portfolio of contributing
      members. The company continued to cut costs, reducing the number of sales
      representatives from 2,225 in December 2006 to 421 in December
      2007.





In
      2007,
      Prima AFP earned US$3 million. The company thus reverted losses incurred in
      2006
      (US$20.7 million). The managed portfolio reached 31.4% market share to December
      2007, with a total of US$6,403 million (29.2% market share with a total of
      US$4,211 million). Prima AFP closed 2007 with 1,023,482 affiliates and 459,370
      contributing members.





Prima
      AFP
      revenues reached US$55 million, or 139.1% higher than in 2006. A significant
      portion of this increase may be attributed to flows from AFP Unión Vida’s
      portfolio, effective and efficient corporate marketing and an improved
      portfolio. Such improvement came from a stronger Peruvian labor market that
      resulted in a major increase in the Monthly Insurable Remuneration (RAM). It
      was
      complemented by the new Voluntary Contribution (Aporte Voluntario) product
      that
      started to generate fee flows in December 2007 and may account for as much
      as 6%
      of revenues in 2008. Also in 2007, the amount of Voluntary Contributions managed
      by Prima AFP reached US$167.9 million, leading to the highest system-wide market
      share (47.2%).





The
      merger between Prima AFP and Unión
      Vida and the
      profile of the surviving entity resulted in increased administration expenses.
      Amortization and depreciation charges of US$2.8 million as a consequence of
      investment in systems and furniture and amortization of intangible assets worth
      US$5.6 million, which were identified during the Unión
      Vida AFP’s
      purchase following IFRS.





To
      further pursue its enhanced service orientation, Prima AFP strengthened its
      customer service office network by opening a branch in Ica, refurbishing and
      moving its
      Cajamarca office to another area of the city and
      opening a new office in Lima’s historical downtown quarter, thereby increasing
      its nationwide presence with its 13 branches and 19 customer service
      offices.





In
      2007,
      Credicorp focused on strengthening customer service quality, providing more
      information and giving advice to investing members, all of which required
      improving service and communications channels for affiliates, employers and
      pensioners.




**(8)**  **Competition**




**(i)**
            **Banking**




The
      Peruvian banking sector is currently composed of 13 commercial banking
      institutions. As of December 31, 2007, BCP (excluding foreign branches)
      ranked first among all Peruvian banks in terms of assets, deposits and loans
      with a market share of 38.4% of assets, 36.2% of deposits and 32.5% of
      loans.


49


**Major
                  Peruvian Banks as of December 31, 2007**
              
              **Assets**
              
              **Deposits**
              
              **Loans**BCP
              
              
              38.4
              %
              
              36.2
              %
              
              32.6
              %Banco
                  Continental
              
              
              22.8
              %
              
              24.2
              %
              
              26.3
              %Scotiabank
                  Perú
              
              
              16.2
              %
              
              17.2
              %
              
              15.3
              %Interbank
              
              
              9.3
              %
              
              10.2
              %
              
              9.7
              %Citibank
              
              
              2.7
              %
              
              2.1
              %
              
              3.1
              %







Source:
      SBS




The
      Peruvian banking industry experienced consolidation following the economic
      downturn in 1998, with the number of institutions declining from a peak of
      25
      banks. During 1999, Banco de Lima merged with Wiese, Banco Sur merged with
      BSCH-Perú, Banco del País merged with Nuevo Mundo and Progreso merged with
      Norbank, while Banex was liquidated and Solventa was turned into a finance
      company. During 2000, Orion and Serbanco were liquidated. In 2001, Interbank
      and
      Latino agreed to merge, NBK Bank merged with Banco Financiero and Nuevo Mundo
      was liquidated. In December 2002, BCP acquired BSCH-Perú and merged it into BCP
      in March 2003. In the first quarter of 2005, BCP acquired the onshore and
      offshore loan portfolio of Bank Boston’s Peruvian subsidiary, which amounted to
      approximately US$353 million. In 2006, Banco Wiese merged with Banco
      Sudamericano and created Scotiabank Perú. During the same year, HSBC launched
      operations in Peru and is currently focused on top corporate segments. Banco
      Fallabela started operations in the Peruavian banking system in August 2007
      and
      its loan portfolio is concentrated in credit cards, consumer finance and, at
      a
      very low extent, in mortgages.




Credicorp
      believes that the Peruvian banking industry will continue to be a competitive
      environment within a generalized excess liquidity situation. Such increased
      competition may in the future affect Credicorp’s loan growth and reduce the
      average interest rates that it may charge its customers, as well as reduce
      fee
      income.




Since
      1999, excess liquidity at major Peruvian banks has put pressure on margins.
      Credicorp does not intend to pursue corporate lending opportunities that are
      unprofitable solely in order to maintain market share. Credicorp expects
      Corporate Banking to grow at levels similar to GDP growth. Credicorp will seek
      to maintain its close relationships with corporate customers, focusing on
      providing prompt responses to their requirements and setting competitive prices.
      To this end, Credicorp is currently updating its information systems to improve
      customer service and to allow management to obtain information on customer
      and
      business profitability more efficiently. Credicorp also intends to expand the
      range of BCP’s investment banking and cash management products.




In
      its
      core corporate lending and trade finance businesses, ASHC principally competes
      with larger international institutions. ASHC attributes its ability to compete
      effectively with larger lending institutions to its aggressive marketing
      efforts, its ability as a smaller, more flexible institution to make decisions
      quickly and respond rapidly to customer needs, its association with BCP, and
      its
      superior knowledge of the region, particularly the Peruvian market.




**(ii)**
            **Capital
                Markets**




In
      the
      Wholesale Banking Group, BCP’s Corporate Banking Area has experienced increased
      competition and pressure on margins over the last few years. This is primarily
      the result of new entrants into the market, including foreign and privatized
      commercial banks, as well as local and foreign investment banks and non-bank
      credit providers, such as pension fund administrators (“AFPs”) and mutual fund
      companies.


50


In
      addition, Peruvian companies have gained access to new sources of capital
      through the local and international capital markets. In recent years, the AFPs
      and mutual funds-managed assets have increased at rates over those experienced
      by the banking system. The private pension fund assets reached
      US$20.4 billion as of December 31, 2007, increasing by 41.4% since December
      31, 2006. Total mutual funds reached US$4.3 billion in 2007, a 65.4%
      increase from US$2.6 billion in 2006.




**(iii)**
            **Other
                Financial Institutions**




Other
      institutions in the Peruvian financial system tend to specialize in a given
      market sector. Such institutions include finance companies, municipal and rural
      savings and credit associations, municipal public credit associations, and
      savings and credit cooperatives that mainly issue retail loans to small and
      micro-businesses and consumer and mortgage loans to individuals, markets which
      have shown substantial increases in recent years. BCP is facing strong
      competition from these credit providers, primarily in respect of micro-business
      loans, where such providers lent US$1,175.2 million as of December 31,
      2007, or 48.7% of the total in the financial system, and consumer loans, where
      such providers lent US$508.2 million, or 21.1% of the total in the
      financial system. BCP also faces strong competition in its credit card
      operations from credit cards issued by retail stores.




In
      retail
      banking, Credicorp has found that small businesses are able to borrow from
      banks
      at better rates than those provided by suppliers and that the rates offered
      by
      BCP are competitive with those of other banks and other types of financial
      institutions.




Credicorp
      believes that BCP’s reputation as a sound institution, together with its
      nationwide branch network coverage, provides it with an advantage over its
      principal competitors.




**(iv)**
            **Insurance**




Peruvian
      insurance companies compete principally on the basis of price and also on the
      basis of name recognition, customer service and product features. PPS believes
      that its competitive pricing, solid image, and quality of customer service
      are
      significant aspects of its overall competitiveness. In addition, PPS believes
      that its long relationship with AIG provides PPS with competitive advantages
      through access to AIG’s expertise in underwriting, claims management and other
      business areas. While increased foreign entry into the Peruvian insurance market
      may put additional pressure on premium rates, particularly for commercial
      coverage, PPS believes that in the long-term foreign competition will increase
      the quality and strength of the industry. PPS believes that its size and its
      extensive experience in the Peruvian insurance market provide it with a
      competitive advantage over foreign competitors.




However,
      competition in the Peruvian insurance industry has increased substantially
      since
      the industry was deregulated in 1991, with particularly strong competition
      in
      the area of large commercial policies, for which rates and coverage typically
      are negotiated individually. The loss by PPS to competitors of even a small
      number of major customers or brokers could have a material impact on PPS’s
      premium levels and market share.




**(9)**  **Peruvian
      Government and Economy**




While
      Credicorp is incorporated in Bermuda, substantially all of BCP’s and PPS’s
      operations and customers are located in Peru. Although ASHC is based outside
      of
      Peru, a substantial number of its customers are also located in Peru.
      Accordingly, the results of operations and financial condition of Credicorp
      could be affected by changes in economic or other policies of the Peruvian
      government (which has exercised and continues to exercise a substantial
      influence over many aspects of the private sector) or other political or
      economic developments in Peru, including a devaluation of the Nuevo Sol relative
      to the U.S. Dollar or the imposition of exchange controls by the Peruvian
      government. See “Item 10. Additional Information—(D) Exchange Controls.”
Credicorp’s results of operations and financial condition are dependent on the
      level of economic activity in Peru.


51




**(i)**
            **Peruvian
                Government**




During
      the past several decades, Peru has had a history of political instability that
      has included military *coups
      d’état* and
      different governmental regimes. Past governments have frequently intervened
      in
      the nation’s economy and social structure. Among other things, past governments
      have imposed controls on prices, exchange rates, local and foreign investment,
      and international trade; have restricted the ability of companies to dismiss
      employees; and have expropriated private sector assets. In 1987, the
      administration of President Alan García attempted to nationalize the banking
      system. Facing an attempt by the state to control BCP, the majority shareholders
      of BCP at that time sold a controlling interest in BCP to its employees, which
      prevented the government from gaining control of BCP. See “—(C) Organizational
      Structure.”




In
      the
      past, Peru experienced significant levels of terrorist activity, with *Sendero
      Luminoso* (the
“Shining Path”) and the *Movimiento
      Revolucionario Tupac Amaru* (the
“MRTA”) having escalated their acts of violence against the government and the
      private sector in the late 1980s and early 1990s. Upon being elected to office
      in 1990, President Alberto Fujimori’s government made substantial progress in
      suppressing Shining Path and MRTA terrorist activity, including the arrest
      of
      the leader and the principal second level of leadership in each terrorist group
      and approximately 2,000 others.




Over
      the
      course of his government, President Fujimori implemented a broad-based reform
      of
      Peru’s political system, economy and social conditions, aimed at stabilizing the
      economy, reducing bureaucracy, eradicating corruption and bribery in the
      judicial system, promoting private investment, developing and strengthening
      free
      markets, strengthening education, health, housing and infrastructure and
      suppressing terrorism. In 2000, President Fujimori won a third five-year term
      in
      a controversial two round election. After taking office for his third term
      in
      July 2000 under extreme protest, President Fujimori was forced to call for
      general elections due to the outbreak of corruption scandals and later resigned
      in favor of a transitory government headed by the president of Congress,
      Valentín Paniagua.




Mr.
      Paniagua took office in November 2000, and in July 2001, handed over the
      presidency to Alejandro Toledo, the winner of the elections decided in the
      second round held on June 3, 2001, ending two years of political
      turmoil.




Toledo
      assumed the presidency against a backdrop of high unemployment and
      underemployment, economic recession and social need. Despite the economic
      strides achieved between 1990 and 2000, poverty remains a persistent problem
      in
      Peru, with more than half of the population living below the poverty line,
      which
      the World Bank defines as monthly income of less than US$60 per capita, adjusted
      to reflect differences in purchasing power. A significant number of Peruvians
      live on an income of less than US$30 per capita per month.




Peru
      has
      experienced continuous economic growth since the second half of 2001. President
      Toledo retained, for the most part, the economic policies of the previous
      government, focusing on achieving sustained economic growth by: increasing
      exports, reducing unemployment, reforming the tax system (primarily by
      increasing the tax base and improving tax collection), fostering private
      investment by promoting concessions, maintaining low inflation and the floating
      exchange rate, improving oversight, transparency guidelines and requirements
      in
      regulated sectors of the economy, improving the efficiency of the public sector,
      and maintaining open trade policies.


52




President
      Toledo transferred the presidency to Alan Garcia Pérez on July 28, 2006
      following Mr. Garcia’s victory in the run-off of the presidential elections held
      on June 4, 2006. Mr. Garcia has sent positive signals to the international
      financial markets following his election as president, and it is expected that
      Mr. Garcia’s government will substantially retain the economic policies of the
      previous government, although there can be no assurance that this will be the
      case.




***President***




President
      García is following conservative economic policies and has indicated a desire to
      avoid the mistakes of past governments. García named banker Luis Carranza as
      Minister of Economy and Finance. Carranza held a senior position at Banco Bilbao
      Vizcaya Argentaria (BBVA) in Spain and was a key adviser to Pedro Pablo
      Kuczynski, the Prime Minister (and former Minister of Economy and Finance)
      of
      former president Alejandro Toledo. García has announced that his administration
      would follow economic policies similar to those of the Toledo administration,
      which included achieving sustained economic growth, increasing exports of
      Peruvian goods, reducing unemployment, underemployment and poverty, reforming
      the tax system, fostering private investment and increasing public investment
      in
      education, public health and other social programs, while reducing overall
      public spending.




**(ii)**
            **Peruvian
                Economy**




At
      the
      beginning of the 1990s, President Fujimori liberalized price and wage controls
      in the private sector, eliminated all restrictions on capital flows, instituted
      emergency taxes to reduce the fiscal deficit, and liberalized interest rates.
      Furthermore, his government established an agenda to institute a wide-ranging
      privatization plan and re-establish relations with the international financial
      community. President Toledo continued these market-oriented policies but, facing
      opposition from a fragmented Congress and social pressures from unions and
      regional movements, he has passed some interventionist measures.




In
      the
      late 1980s and early 1990s, the Peruvian economy was volatile, with the
      country’s GDP contracting by 11.7% in 1989 and by 5.2% in 1990, growing by 2.2%
      in 1991, and contracting by 0.4% in 1992. The results of stabilization plans
      resulted in GDP increasing 4.8% in 1993, 12.8% in 1994, 8.6% in 1995, 2.5%
      in
      1996, 6.7% in 1997. The “El Niño” and other adverse economic conditions led to a
      drop of -0.7% in 1998, but recovered 0.9% in 1999, 3.0% in 2000, 0.2% in 2001,
      5.2% in 2002, 3.9% in 2003, 5.2% in 2004, 6.7% in 2005, 7.6% in 2006 and 9.0%
      in
      2007; this growth for nine years in a row had not been experienced by Peru
      since
      1977. The “El Niño” phenomenon (a shift in ocean temperatures and atmospheric
      conditions in the tropical Pacific that disrupts the weather) was still
      considered a threat in 2006 but is expected to have a low impact on the economy
      in the coming years.




It
      should
      be noted that GDP growth figures for some years were revised downwards by the
      national statistical institute, the INEI, in 2000, which recalculated Peru’s GDP
      in 1999 at around $52 billion using a 1994 base year, some 10% below the
      previous estimate based on 1979 figures.




In
      2004,
      the Peruvian economy benefited from increased international demand for exports,
      which drove growth in the construction and manufacturing sectors, as well as
      in
      private investment, and more recently in consumption. The continued growth
      in
      GDP since the second half of 2001 evidences the strength of Peru’s economy in
      the face of adverse external and internal factors. In 2002 and 2003, unlike
      other Latin American countries, Peru managed to resist the effects of on-going
      internal political unrest, the Argentine crisis, the climate of uncertainty
      that
      surrounded the presidential elections in Brazil, and a greater reluctance among
      investors to take on risks in Latin America.


53


One
      of
      the principal factors that contributed to the improvement of economic
      expectations was the 38.8% increase in exports in 2004, which was followed
      by
      new increases in 2005 (40.8%), 2006 (41.9%) and 17.0% in 2007. In particular,
      it
      has continued high foreign demand for minerals and raw materials and
      manufacturers benefited from the Andean Trade Promotion and Drug Eradication
      Act
      (“ATPDEA”) tariff preferences. However, production was uneven, with investment
      recovering, and sectors such as construction, oil and gas, mining (particularly
      mining of precious metals), non-primary manufacturing and fishing registered
      gains, while agriculture registered only minimal growth.




The
      decision of the United States in August 2002 to renew and expand tax benefits
      through the ATPDEA for certain Latin American exports was very beneficial to
      the
      manufacturing sector because of its inclusion of Peruvian textiles. These
      incentives are expected to stimulate exports over the next two years. In May
      2004, a free trade agreement began to be negotiated with the United States,
      together with Colombia and Ecuador, which is expected to extend the favorable
      tariff status beyond 2006. During 2007, the Free Trade Agreement with the United
      States was signed which is expected to be implemented by September 2008.
      Moreover, trade policy is oriented towards developing bilateral agreements
      with
      a series of countries and economic regions, including the European Union,
      Canada, and Singapore.




The
      government-backed initiative to encourage mortgage loans and the construction
      of
      low-cost housing through the MiVivienda program continued to stimulate
      significant volumes of construction in 2004, aiding expansion of mortgages.
      As
      part of the MiVivienda program, US$213 million in loans were granted in
      2005, compared to US$170 million in 2004, US$134 million in 2003 and
      US$72 million in 2002.




Since
      1991, the government has privatized most of its assets in the finance, fishing
      and telecommunications sectors. The government made significant progress in
      privatizing the mining and hydrocarbons, manufacturing, electricity and
      agriculture sectors. The more than 220 privatizations that have been completed
      in Peru since 1991 have generated revenues of approximately
      US$8.2 billion.




The
      privatization program, which had been expected to raise US$700 million
      during 2002, encountered problems in June 2002 with public protests against
      the
      sale of two electricity generating companies in the south of Peru. This caused
      the virtual suspension of the program, which obtained income of only
      US$355 million in 2002, and almost negligible amounts in 2003. The
      government successfully relaunched its concessions program in 2004, generating
      revenue in excess of US$200 million. Some of the noteworthy transactions
      include the Las Bambas copper mine exploration, the Olmos hydro and irrigation
      project, the Bayóvar phosphates extraction project, the concession for the
      Yuncan hydroelectric plant and several highway concessions. The government
      has
      continued the concession program in 2005 and 2006, with some small projects
      with
      a total value of US$57 million.




Peru’s
      trade deficit decreased from US$600 million in 1999 to US$300 million
      in 2000 and US$90 million in 2001. Peru registered a US$210 million
      surplus in 2002, which grew to US$731 million in 2003, and further to
      US$2.7 billion in 2004, principally due to continued exports growth.
      Exports climbed to US$12.5 billion in 2004, 40% higher than the
      US$9.0 billion registered in 2003, driven by the greater volume of
      traditional exports, in particular minerals. Imports rose to US$9.8 billion
      in 2004, with increases mainly in raw materials and capital goods. In 2006,
      trends continued, with exports rising to US$23.8 billion and imports
      increasing to US$14.9 billion, and in 2007, exports continued rising to
      US$28.0 billion and imports increased to US$19.6 billion.




Peru
      registered a current account deficit of US$0.9 billion in 2003, which
      decreased to US$10 million in 2004, and reversed to a US$1.0 billion
      surplus in 2005. In 2006, a record was registered with a surplus of US$2.6
      billion, equivalent to 2.8% of GDP. However, this amount decreased in 2007,
      when
      the surplus was US$1.5 billion (1.4% of GDP).


54


Peru’s
      financial account had a surplus of US$1.1 billion in 1999 and in 2000,
      declined to US$1.0 billion in 2001, grew to US$1.8 billion in 2002 as
      a result of increased public sector capital inflows, was US$0.7 billion in
      2003, grew to US$2.2 billion in 2004, and was US$0.2 billion in 2005.
      In 2006, surplus was US$0.7 billion, mainly due to repayment of external debt
      made by the public sector. This account grew substantively in 2007, and reached
      US$8.3 billion due mainly to higher foreign direct investment and long-term
      loans.




The
      flow
      of direct foreign investment into Peru was US$433 million in 2000,
      US$803 million in 2001, US$2.2 billion in 2002, US$1.3 billion in
      2003, US$1.8 billion in 2004, US$2.6 billion in 2005, US$3.5 billion
      in 2006 and US$5.3 billion in 2007.




The
      inflation rate in Peru, as measured by the Lima consumer price index, has fallen
      from 7,650.0% in 1990 to 139.2% in 1991, 56.7% in 1992, 39.5% in 1993, 15.4%
      in
      1994, 10.2% in 1995, 11.8% in 1996, 6.5% in 1997, 6.0% in 1998, and 3.7% in
      both
      1999 and 2000, turning into deflation of 0.1% in 2001, and back to inflation
      of
      1.5% in 2002, 2.5% in 2003, 3.5% in 2004, 1.5% in 2005, 1.1% in 2006 and 3.9%
      in
      2007. On the other hand, Peruvian Central Bank reduced its inflation target
      range for 2007 from 1.5% - 3.5% to 1.0% - 3.0%. It is worth mentioning that
      in
      the last five years the average inflation rate was below 2%.




The
      average bank market exchange rate for Nuevos Soles in Peru was S/.3.282 per
      US$1.00 on December 31, 2004, a 5.2% decrease from S/.3.463 per US$1.00 as
      of
      December 31, 2003, which followed a 1.5% decrease in 2003 from S/.3.514 per
      US$1.00 as of December 31, 2002. The strengthening of the Nuevo Sol relative
      to
      the U.S. Dollar was consistent with the pattern for other Latin American
      currencies, which resulted from higher exports and the weakening of the U.S.
      Dollar. However, in second half 2005, Nuevo Sol depreciated due to higher
      international interest rates and political uncertainty, closing the year at
      S/.3.430. After the presidential elections in 2006, the exchange rate decreased,
      closing the year at S/.3.196 for US$1.00 and at S/.2.996 in 2007.




Interest
      rates have behaved erratically since 1995 but fell gradually over this period
      until September 1998, at which point the trend reversed due to liquidity
      constraints brought on by the international financial crisis. The nominal annual
      interest rate on loans in Nuevos Soles was 37.1% in December 1998, decreasing
      to
      32.0% in December 1999, to 26.5% in December 2000, to 23.0% in December 2001,
      to
      20.7% in December 2002, before increasing to 22.3% in December 2003, and further
      to 25.4% in December 2004, decreasing to 23.6% in December 2005. In 2006 and
      2007, a reduction was registered, closing at 23.1% and 22.3%,
      respectively.




Peru’s
      recent economic performance has also been reflected in a lower fiscal deficit.
      Peru had a deficit of 3.1% in 1999 and 3.2% in 2000. The deficit declined to
      2.5% in 2001, principally due to lower public investment, declined again to
      2.3%
      in 2002, in line with the goal agreed upon with the International Monetary
      Fund
      (the “IMF”), continued to decline to 1.9% in 2003, and further to 1.1% in 2004
      and 0.7% in 2005. In 2006, because of higher earnings generated from income
      tax,
      a surplus of 2.1% of GDP was achieved. This favorable situation remained during
      2007, when surplus increased to 3.2% of GDP.




In
      addition, efforts to increase tax revenues have been successful, due in part
      to
      administrative measures and increased taxes, one of which is the new tax on
      financial transactions introduced in 2004. Tax collections increased from 6.7%
      of GDP in 1989 to 12.3% of GDP in 2001, 12.1% in 2002, 13.0% in 2003 and 13.3%
      in 2004, 13.6% in 2005 and 14.9% in 2006 and 15.5% in 2007.




In
      July
      1996, Peru reached an agreement with the Paris Club countries, resulting in
      the
      rescheduling of 1996-1998 maturities. Likewise, due to a successful program
      with
      this group of creditors, Peru was able to reduce its external debt from US$8.5
      billion at the end of 2004 to US$5.6 million at the end of 2006. An additional
      pre-payment of US$2.5 billion was made in the second half of
      2007.


55


In
      1999,
      Peru signed a three-year extended fund facility accord with the IMF, the third
      consecutive IMF program it has followed, giving the country a stable framework
      for macro-economic planning. However, the fall in tax revenue and increased
      spending in 1999 caused Peru to fail to fulfill the fiscal goal agreed upon
      with
      the IMF of a primary fiscal surplus of 0.5%, which is the public sector’s result
      before capital costs or gains, debt servicing and privatization income. In
      fact,
      Peru reported a primary sector deficit of 0.1% in 1999 and of 0.2% in 2000.
      Peru
      renegotiated economic targets of its 2000 three-year program, and the IMF
      approved a new one-year program in March 2001, a second agreement in February
      2002 and a follow-up accord in March 2003 with a 1.9% fiscal deficit target
      for
      2003, which was achieved.




The
      subsequent Stand-By Agreement was approved by the IMF on June 9, 2004 and
      covered years 2004 to 2006. The macro-economic framework of the agreement
      stresses the consolidation of recent year-on-year gains due to the low inflation
      rate and continued improvements in the public sector deficit, tax reform,
      current account deficit, level of foreign reserves, and other variables, in
      order to seek higher GDP growth. The program focused on, among other points,
      reducing the public sector deficit to 1.4% of GDP in 2004 and to 1% per year
      in
      each of 2005 and 2006, and on lowering the debt-to-GDP ratio from 47.5% in
      2003
      to 41.0% in 2006. With a favorable international context, and thanks to a fast
      reduction of deficit, debt-to-GDP ratio in 2006 decreased to 38.0%.  A
      recent
      review of the current Stand-By Arrangement focused on the implementation of
      the
      policies for 2008 to: (i) sustain the strong fiscal performance and to
      strengthen the credibility of inflation targeting; (ii) enhance the fiscal
      framework, the effectiveness of the tax system, and the quality of public
      spending; (iii) effectively tackle high poverty levels; (iv) deepen financial
      intermediation and capital markets, and reduce dollarization; and (v) ensure
      strong and sustainable medium-term growth.




There
      can
      be no assurance that economic growth will be sustained in the future or that
      inflation in Peru will not increase (whether as a result of an “overheating” of
      the Peruvian economy, an increase in the foreign trade deficit, or otherwise).
      Such events may have an adverse effect on the business, financial condition,
      results of operations and prospects of Credicorp and adversely affect the market
      price of Credicorp’s Common Shares. In addition, deposits in the Peruvian
      financial system are currently much higher than in the late 1980s when
      hyperinflation caused a lack of confidence in the financial system. A return
      to
      high levels of inflation could cause a lack of confidence in the financial
      system, resulting in widespread withdrawal of deposits.




**(10)**  **The
      Peruvian Financial System**




As
      Credicorp’s activities are conducted primarily through banking and insurance
      subsidiaries operating in Peru, a summary of the Peruvian financial system
      is
      set forth below.




**(i)**
            **General**




On
      December 31, 2007, the Peruvian financial system consisted of the following
      principal participants: the Central Bank, the SBS, 13 banking institutions
      (not
      including Banco de la Nación, a Peruvian state-owned bank), three finance
      companies and five leasing companies. In addition, Peru has various mutual
      mortgage associations, municipal and rural savings and credit associations,
      municipal public credit associations and savings and credit
      cooperatives.


56


The
      present text of Law 26702 was passed in December 1996. Law 26702 regulates
      Peruvian financial and insurance companies. In general, it provides for tighter
      loan loss reserve standards, brings asset risk weighting in line with Basel
      Committee on Banking Regulations and Supervisory Practices of International
      Settlements (the “Basel Accord”) guidelines, broadens supervision of financial
      institutions by the SBS to include holding companies, and includes specific
      treatment of a series of recently developed products in the capital markets
      and
      derivatives areas. The primary law governing the Peruvian financial system
      before the enactment of Law 26702 was Legislative Decree 637, passed in 1991
      and
      amended by Legislative Decree 770, which substantially reformed the Peruvian
      financial system, modifying regulations initially issued in 1930.




**(ii)**
            **Central
                Bank**




The
      Central Reserve Bank was established in 1922. Pursuant to the Peruvian
      Constitution, its primary role is to ensure the stability of the Peruvian
      monetary system. The Central Bank regulates Peru’s money supply, administers
      international reserves, issues currency, 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 before the IMF
      and the Latin American Reserve Fund ( a
      financial institution whose purpose is 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 Central Bank is the 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
      the Congress. The Chairman is one of the executive branch nominees, but must
      be
      approved by the Congress.




The
      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 Central
      Bank.




**(iii)**
            **SBS**




The
      SBS,
      whose authority and activities are discussed in “—(11)  Supervision and
      Regulation,” is the regulatory authority charged with implementation and
      enforcement of the norms contained in Law 26702 and, more generally, with the
      supervision and regulation of all financial institutions in Peru. On June 22,
      2008, the SBS issued amendments to the Peruvian Banking regulations, some of
      which will take effect in December 2008 and in July 2009. Credicorp’s management
      is currently evaluating the impact of these amendments on its consolidated
      financial statements.




**(iv)**
            **Financial
                System Institutions**




Under
      Peruvian law, financial system institutions are classified as banks, financing
      companies, other non-banking institutions, specialized companies and investment
      banks. BCP is classified as a bank.




*Banks*




A
      bank is
      defined by Law 26702 as an enterprise whose principal business consists of
      the
      receipt of monies from the public, whether in deposits or under any other
      contractual form, and the use of such monies (together with its own capital
      and
      funds obtained from other sources) to grant loans or discount documents, or
      in
      operations subject to market risks.


57


Banks
      are
      permitted to carry out various types of financial operations, including the
      following: (i) receiving demand deposits, time deposits, savings deposits and
      deposits in trust; (ii) granting direct loans; (iii) discounting or
      advancing funds against bills of exchange, promissory notes and other credit
      instruments; (iv) granting mortgage loans and accepting bills of exchange in
      connection therewith; (v) granting conditional and unconditional
      guaranties; (vi) issuing, confirming, receiving and discounting letters of
      credit; (vii) acquiring and discounting certificates of deposit, warehouse
      receipts, bills of exchange and invoices of commercial transactions;
      (viii) performing credit operations with local and foreign banks, as well
      as making deposits in such institutions; (ix) issuing and placing local currency
      and foreign currency bonds, as well as promissory notes and negotiable
      certificates of deposits; (x) issuing certificates in foreign currency and
      entering into foreign exchange transactions; (xi) purchasing banks and
      non-Peruvian institutions which conduct financial intermediation or securities
      exchange transactions, in order to maintain an international presence; (xii)
      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; (xiii) acting as financial agent for investments in Peru
      for external parties; (xiv) purchasing, holding and selling instruments
      evidencing public debt, whether internal or external, as well as obligations
      of
      the Central Bank; (xv) making collections, payments and transfers of funds;
      (xvi) receiving securities and other assets in trust and leasing safety deposit
      boxes; and (xvii) 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 and 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, universal banks
      may also act as trustees in trust agreements.




Law
      26702
      authorizes banks to operate, through their subsidiaries, warehouse companies,
      securities brokerage companies and leasing companies, and to establish and
      administer mutual funds.




Branches
      of foreign banks enjoy the same rights and are subject to the same obligations
      as branches of Peruvian banks. Multinational banks, with operations in various
      countries, may engage in the same activities as Peruvian banks, although their
      foreign activities are not subject to Peruvian regulations. To carry out banking
      operations in the local market, such banks must maintain a certain portion
      of
      their capital in Peru, in an amount not less than the minimum amount required
      of
      Peruvian banks.




*Finance
      Companies*




Under
      Law
      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, (ii) engaging in certain derivative operations, (iii) originating
      securitization operations, and (iv) establishing subsidiaries in certain
      specialized fields, such as bonded warehouses, currency transportation and
      custody, among others.




*Other
      Financial Institutions*




The
      Peruvian financial system has a number of less significant entities which may
      provide credit, accept deposits or otherwise act as financial intermediaries
      on
      a limited basis. Leasing companies specialize in financial leasing operations
      by
      which goods are leased over the term of the contract with the option of
      purchasing such 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.
      The
      impact of these institutions on the financial system in Peru has not been
      significant.


58


*Insurance
      Companies*




Since
      the
      deregulation of the Peruvian insurance industry in 1991, insurance companies
      are
      authorized to conduct all types of operations and to enter into all forms of
      agreements necessary to offer risk coverage to customers. Insurance companies
      may also invest in financial and non-financial assets, subject to the
      regulations on investments and reserves established in Law 26702 and the
      regulations issued by the SBS.




Law
      26702
      is the principal law governing insurance companies in Peru. The SBS is charged
      with the supervision and regulation of all insurance companies, and the
      formation of an insurance company requires prior authorization of the
      SBS.




The
      insurance industry has experienced consolidation in recent years with the number
      of companies decreasing from 19 in 1991 to 14 in 2007.




**(11)**  **Supervision
      and Regulation**




**(i)**
            **Credicorp**




Currently,
      there are no applicable regulatory controls under the laws of Bermuda that
      are
      likely to have a material impact upon Credicorp’s operations as currently
      structured. Under Bermuda law, there is no regulation applicable to Credicorp,
      as a holding company, that would require Credicorp to separate the operations
      of
      its subsidiaries incorporated and existing outside Bermuda. Since Credicorp’s
      activities will be conducted primarily through subsidiaries in Peru, the Cayman
      Islands and Bolivia, a summary of Peruvian banking and insurance regulations
      and
      Cayman Islands banking regulations is set forth below.




Certain
      requirements set forth in Law 26702 and certain SBS regulations, including
      SBS
      Resolution No.0446-2000, enacted in June 2000, which approved the “Regulation of
      the Consolidated Supervision of Financial and Mixed Conglomerates,” are
      applicable to Credicorp and BCP. These regulations affect Credicorp and BCP
      primarily in the areas of reporting and risk control guidelines, limitations,
      ratios and capital requirements.




Since
      Credicorp’s Common Shares are listed on the Lima Stock Exchange in addition to
      the New York Stock Exchange, Credicorp is subject to certain reporting
      requirements of the CONASEV, the securities market regulator, and the Lima
      Stock
      Exchange. See “Item 9. The Offer and Listing—(C) Markets—The Lima Stock
      Exchange—(ii) Market Regulation.”




**(ii)**
            **BCP**




*Overview*




The
      operations of BCP are regulated by Peruvian law. The regulatory framework for
      the operations of the Peruvian financial sector is set forth in Law 26702.
      Implementation and enforcement of Law 26702 are effected by periodic resolutions
      issued by the SBS. See “—(10) The Peruvian Financial System.” The SBS,
      under the direction of the Superintendent of Banks and Insurance Companies,
      supervises and regulates those entities that Law 26702 classifies as financial
      institutions, including commercial banks, finance companies, small business
      finance companies, savings and loan corporations, financial services companies
      such as trust companies and investment banks, and insurance companies. Financial
      institutions must seek the authorization of the SBS before initiating new
      operations.


59


BCP’s
      operations are supervised and regulated by the SBS and the Central Bank.
      Violators of specified provisions of Law 26702 and its underlying regulations
      are subject to administrative sanctions and criminal penalties. Additionally,
      the SBS and the Central Bank have the authority to fine financial institutions
      and their directors and officers if they violate Peruvian laws, regulations
      or
      their own institutions’ bye-laws.




CONASEV
      is the Peruvian government institution charged with promoting the securities
      markets, ensuring fair competition in the markets, supervising the proper
      management of businesses that trade in the markets and regulating their
      activities and accounting practices. BCP must inform CONASEV of significant
      events affecting its business and is required to provide financial statements
      to
      the Lima Stock Exchange on a quarterly basis. BCP is regulated by CONASEV
      through Credibolsa, BCP’s wholly owned brokerage house, and Credifondo, BCP’s
      wholly owned mutual fund administration company. CONASEV examines Credibolsa
      and
      Credifondo on a regular basis.




Under
      Peruvian law, banks are permitted to conduct brokerage operations and administer
      mutual funds, but must conduct such operations through subsidiaries. Bank
      employees, however, 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.




*Authority
      of the SBS*




Peru’s
      Constitution and Law 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), insurance and reinsurance
      companies, companies that receive deposits from the general public and other
      similar entities as defined by the law. The SBS is also responsible for
      supervising the Central Bank to ensure that it abides by its statutory charter
      and bye-laws. Law 27328, enacted in July 2000, transferred to the SBS the
      supervision and regulation of the private AFPs which had been supervised and
      regulated by a specialized superintendency since the inception of the system
      in
      1992.




The
      SBS
      is granted 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 Central Bank, 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
      non-bank holding companies, such as Credicorp); (iv) reviewing the bye-laws
      and
      amendments thereto of these companies; (v) setting forth 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 *Central
      de Riesgos* (Bank
      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). In addition to supervising BCP, the SBS supervises Credicorp on
      the basis that it is a financial conglomerate conducting the majority of its
      operations in Peru.




*Management
      of Operational Risk*




SBS
      Resolution No. 006 established guidelines for the management of operational
      risk, which includes a broad range of risks. Resolution No. 006 defines
      operational risks as those dealing with the possibility of suffering financial
      losses due to deficiencies in internal procedures, information technology or
      personnel, or the occurrence of adverse external events. It also establishes
      responsibilities for developing policies and procedures to identify, measure,
      control and report such risks. Banks are required to adequately manage risks
      involved in the performance of their operations and services in order to
      minimize possible financial losses due to inadequate or non-existent policies
      or
      procedures.


60


Credicorp,
      following these SBS guidelines as well as guidelines issued by the Basel
      Committee on Banking Supervision and the advice of international consultants,
      has set up at BCP a specialized team in charge of introducing advanced
      operational risk control procedures and created a new Operational Risk
      Committee. Credicorp intends to be guided by the risk control standards of
      international financial institutions noted for their leadership in this field,
      with the overall objective of implementing an efficient and permanent monitoring
      system for the control of operational risks, while actual management of risk
      control procedures is conducted by the areas that carry out critical activities.
      There are ongoing initiatives for the establishment of operational risk
      management procedures at other Credicorp subsidiaries.




Pursuant
      to Section 404 of the Sarbanes-Oxley Act of 2002, Credicorp is required to
      make
      certain certifications regarding its internal controls over financial reporting
      as of December 31, 2007. Credicorp has developed an internal methodology, which
      is in accordance with Public Company Accounting Oversight Board-PCAOB,
      Accounting Standard 5, to evaluate the effectiveness of its internal controls
      over financial reporting. In addition, Credicorp is implementing computer
      programs to allow for the continuous monitoring, assessment and documentation
      of
      its internal controls. During 2007, Credicorp has completed its evaluation
      of
      internal controls over financial reporting and is now able to obtain the
      attestation of its independent auditors. See “Item 15. Controls and
      Procedures.”




*Capital
      Adequacy Requirements*




Since
      the
      approval of Legislative Decree 637 in 1991, the SBS has issued capital adequacy
      requirements for credit institutions, adopting a framework structurally similar
      to that proposed by the Basel Accord. Weights assigned to various classes of
      assets and the contents of the classifications were initially more stringent
      under Legislative Decrees 637 and 770 than under the Basel Accord. Law 26702
      has
      adopted criteria similar to the Basel Accord and provides for five categories
      of
      assets, with different risk weights assigned to each category. The categories
      range from risk-free assets, to which a weight of 0% is assigned, to assets
      which require a weight of 100%. Banks are required to prepare and submit to
      the
      SBS, within the first 15 days of each month, a report analyzing the bank’s
      assets for the previous month and totaling the bank’s regulatory capital.
      Foreign currency-denominated assets are valued in Nuevos Soles at the SBS
      average exchange rate in effect as of the date of each such report.




According
      to Article 184 of Law 26702, regulatory capital consists of the sum of (i)
      paid-in capital, legal reserves, discretionary reserves (if any), reserves
      incurred but not specifically identified loan losses in the loan portfolio
      or
      other indirect credit exposure (up to 1% of the total value of both) and a
      percentage of certain subordinated bonds issued by the bank, less (ii) equity
      investments in all consolidated subsidiaries. According to Article 184,
      regulatory capital can be segmented and applied to cover credit risks and market
      risks. SBS regulations require the segregation of regulatory capital to cover
      foreign exchange risk exposure and to cover risk related to investments in
      equity shares.




Law
      26702
      requires that the total amount of risk-weighted assets not exceed 11 times
      the
      regulatory capital of the bank, meaning that BCP must maintain regulatory
      capital at a level of at least 9.09% of its total risk-weighted assets. The
      limit of 11 times risk-weighted assets to regulatory capital was phased in,
      becoming effective in December 1999. Any bank that is not in compliance with
      the
      capital adequacy requirements of Law 26702 is required to post a special deposit
      with the Central Bank, which is frozen until such bank is within the capital
      adequacy requirements. Regulatory capital in excess of credit risk requirements
      may be applied to cover market risks. In general, foreign exchange risk
      positions require a coverage of 9.09% of regulatory capital. As of December
      31,
      2007, BCP’s unconsolidated amount of risk-weighted assets was 8.44 times the
      regulatory capital, or regulatory capital was 11.84% of risk-weighted assets,
      which included US$294 million of market risk assets.


61


Regulations
      for the supervision of market risks require banks to establish internal policies
      and procedures to monitor these risks, as well as market risk exposure limits.
      Regulations define market risks as the probable loss derived from exposure
      to
      various classes of commodities, securities, foreign exchange, derivative
      operations or commercial assets that banks may hold, that could be registered
      or
      not in their balance sheets.




*Legal
      Reserve Requirements*




Pursuant
      to Article 67 of Law 26702, all banks must create a legal reserve. Each year
      a
      bank must allocate 10% of its net income to its legal reserve until its legal
      reserve is equal to 35% of its paid-in capital stock. Any subsequent increases
      in paid-in capital will imply a corresponding increase in the required level
      of
      the legal reserves to be funded as described above. As of December 31,
      2007, BCP’s consolidated legal reserve was S/.546.5 million
      (US$182 million), equivalent to 42.5% of BCP’s paid-in capital as of such
      date.




*Provisions
      for Loan Losses*




Guidelines
      for the establishment of provisions for loan losses by Peruvian credit
      institutions, including commercial banks, are set by the SBS. Law 26702 grants
      authority to the SBS to establish loan reserves and does not allow for the
      inclusion of collateral in determining the net amount of outstanding credit
      risk
      subject to provision. Starting in July 2006, SBS’s Resolution No. 41-2005,
      enacted in January 2005, will require additional provisions for credits subject
      to foreign exchange risk, which are recorded for local purposes. See “—(12)
      Selected Statistical Information—(iii) Loan Portfolio—Classification of the
      Loan Portfolio.” Credicorp estimates and records its allowance for loan losses
      according to the criteria set out in IAS 39, adjusting the local provisions
      as
      necessary. See Note 3(f) ii and 3(i) to the Credicorp Consolidated Financial
      Statements.




*Provisions
      for Country Risk*




SBS
      Resolution No. 505 requires the establishment of provisions for exposure to
      country risk, which is defined as including sovereign risk, transfer risk and
      expropriation or nationalization risk, that may affect operations with companies
      or individuals in foreign countries. The SBS has also established guidelines
      for
      the procedures and responsibilities for the management of country risk.
      Credicorp estimates and records its allowance for country risk according to
      the
      criteria set out in IAS 39. See Note 3(f) ii and 3(i) to the Credicorp
      Consolidated Financial Statements.




*Central
      Bank Reserve Requirements*




Under
      Law
      26702, banks and finance companies are required to maintain an *encaje* (legal
      reserve) for certain obligations. The Central Bank may require additional and
      marginal reserves. The exact level and method of calculation of the reserve
      requirement is set by the Central Bank. For purposes of calculating the required
      legal reserve, the following, pursuant to regulations issued by the SBS, are
      obligations: demand and time deposits, savings accounts, securities, certain
      bonds and funds administered by the bank. The Central Bank requires reserves
      on
      amounts due to foreign banks and other foreign financial companies, which were
      not previously considered obligations. The regulation excludes funding from
      other central banks, governments or multilateral lending
      agencies.


62


Between
      August 2000 and December 2007, the rate of the legal reserve has been 6%
      (formerly 7%) of the obligations described above. The legal reserve requirement
      increased to 7% again in February 2008, to 8% in March 2008 and to 8.5% in
      May
      2008. The reserve may be kept in cash by the corresponding bank or finance
      company, with a minimum of 1% held in deposits in current accounts in the
      Central Bank. Additional reserves for obligations in foreign currency are
      determined as the average daily balance during December 2004 (previously
      September 2004), and are subject to a 45% reserve requirement (30% until 2007).
      Additional reserves for obligations in local currency are determined as the
      average daily balance during December 2004, are subject to a 25% reserve
      requirement. Previously, there was no requirement for additional reserve in
      local currency. The legal reserve (8.5%) and the additional reserve must be
      calculated in Nuevos Soles for obligations in local currency and in U.S. Dollars
      for obligations in foreign currency. Additional reserves in local currency
      for
      deposits of non-Peruvian residents increased from 40% to 120%. The Central
      Bank
      oversees compliance with the reserve requirements.




The
      Central Bank also establishes the interest rate payable on the reserves that
      exceed the legal 8.5% requirement, which are mainly on foreign currency
      deposits . The
      Central Bank periodically increased the applicable interest rate during 2005,
      from 3.00% as of 2004 to 3.25% as of December 31, 2005. After six consecutive
      increases between December 2005 and May 2006, the Central Bank’s Board of
      Directors decided to maintain the applicable interest rate at 4.5%. The interest
      rate was increased to 5.5% as of May 2008. The interest rate is expected to
      be
      periodically revised by the Central Bank in accordance with monetary policy
      objectives.




In
      the
      past few years, the Central Bank has on numerous occasions changed the deposit
      reserve requirements applicable to Peruvian commercial banks and both the rate
      of interest paid on deposit reserves and the amount of deposit reserves on
      which
      no interest is payable by the Central Bank. Changes in the supervision and
      regulation of BCP, such as changes in deposit reserve requirements or in the
      amount of interest payable on deposit reserve requirements, may adversely affect
      the business, financial condition and results of operations of
      Credicorp.




*Lending
      Activities*




Law
      26702
      sets maximum amounts of credit that each financial institution may extend to
      a
      single borrower. For purposes of Law 26702, a single borrower includes an
      individual or an economic group. An economic group constituting a single or
      common risk, according to Law 26702, includes a person, such person’s close
      relatives and companies in which such person or close relatives have significant
      share ownership or decision-making capability. According to current regulations,
      shareholders who own or control directly or indirectly at least one-tenth of
      a
      company’s shares are considered significant shareholders. Significant
      decision-making capability is deemed to be present when, among other factors,
      a
      person or group can exercise material and continuous influence upon 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 beneficial recipient of credit
      facilities granted to another company.




The
      limits for credit extended to one borrower vary according to the type of
      borrower and the collateral received. The limit applicable to credit for any
      Peruvian borrower is 10% of the 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 26702. If a
      financial institution exceeds these limits, the SBS may impose a fine on the
      institution. As of December 31, 2007, the 10.0% credit limit per borrower
      of BCP, unconsolidated, was S/.315.7 million (US$105.4 million) for
      unsecured loans, and the 30.0% limit amounted to S/.947.1 million
      (US$316.1 million) for secured loans.


63


In
      certain limited circumstances, the Central Bank has the authority to establish
      maximum limits on the interest rates that commercial banks and other financial
      institutions may charge on loans pursuant to Article 52 of the organic law
      of
      the Central Bank. No such limits are currently in place. However, there can
      be
      no assurance that in the future the Central Bank will not establish maximum
      limits on the interest rates that commercial banks or other financial
      institutions may charge.




*Related
      Party Transactions*




Law
      26702
      regulates and limits transactions with related parties and affiliates of
      financial institutions. In 1997, the SBS and CONASEV enacted regulations with
      precise definitions of indirect ownership, related parties and economic groups,
      which serve as the basis for determining limits on transactions with related
      parties and affiliates. These regulations also provide the basis for the
      subsequent development of specific 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 paid-in capital in the aggregate. All loans made
      to any single related party borrower may not exceed 0.35% of paid-in capital
      ( *i.e.* ,
      5% of
      the overall 7% limit).




In
      addition, under Law 26702, as amended by Law 27102, the aggregate amount of
      loans to related party borrowers considered to be an economic group may not
      exceed 30% (previously 75%) of a bank’s regulatory capital. For purposes of this
      test, related party borrowers include any corporation holding, directly or
      indirectly, 4% or more of a bank’s shares, directors, certain of a bank’s
      principal executive officers or persons affiliated with the administrators
      of
      the bank. See “—Lending Activities” above for the meaning of “economic group”
under Law 26702. Loans to individual related party borrowers are also subject
      to
      the limits on lending to a single borrower described under “—Lending Activities”
above. All loans to related parties must be made on terms no more favorable
      than
      the best terms that BCP offers to the public.




*Ownership
      Restrictions*




Law
      26702
      establishes certain restrictions on the ownership of a bank’s shares. Banks must
      have at least two unrelated shareholders at all times. Restrictions are placed
      on the ownership of shares of any bank by persons that have committed certain
      crimes, as well as by public officials who have supervisory powers over banks
      or
      who are majority shareholders of an enterprise of a similar nature. All
      transfers of shares in a bank must be reported after the fact to the SBS by
      the
      bank. Transfers involving the acquisition by any individual or corporation,
      whether directly or indirectly, of more than 10% of a bank’s capital stock must
      receive prior authorization from the SBS. The SBS may deny authorization to
      such
      transfer of shares if the purchasers (or their shareholders in the case of
      juridical persons) are legally disabled, 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. The decision
      of the SBS on this matter is final, and cannot be overturned in the courts.
      If a
      transfer is effected without obtaining the prior approval of the SBS, the
      purchaser may be fined an amount equivalent to the value of the securities
      transferred. In addition, the purchaser will be required to sell the securities
      within 30 days, or the fine will double, and the purchaser is disqualified
      from
      exercising its voting rights at shareholders’ meetings. Foreign investors
      receive the same treatment as Peruvian nationals and are subject to the
      limitations described above.


64


*Risk
      Rating*




Law
      26702
      and SBS Resolution No. 672, require that all financial companies be rated by
      at
      least two risk rating companies on a semi-annual basis (updated in March and
      September), in addition to the SBS’s own 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 letter. As of December 2007, BCP was assigned
      the
“A+” risk category by its two rating agencies, Equilibrium Clasificadora de
      Riesgo and Apoyo and Associates International.




*Deposit
      Fund*




Law
      26702
      provides for mandatory deposit insurance to protect all types of deposits of
      financial institutions by establishing the *Fondo
      de Seguro de Depósitos* (Deposit
      Insurance Fund, or the “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
      premiums begin at 0.45% of total funds on deposit under the coverage of the
      Fund, if BCP is classified in the lowest risk category, and increase to 1.45%
      applicable to banks in the highest risk category. The maximum amount that a
      customer is entitled to recover from the Fund is S/.82,845 from June through
      August 2008.




*Intervention
      by the SBS*




Pursuant
      to Law 26702, as amended by Law 27102, the SBS has the power to seize the
      operations and assets of a bank. These laws provide for three levels of
      intervention by the SBS: a supervisory regime, an intervention regime and the
      liquidation of the bank. Any of these actions may be taken upon the occurrence
      of certain events, including if such bank: (i) interrupts payments on its
      liabilities; (ii) repeatedly fails to comply with the instructions of the SBS
      or
      the Central Bank; (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%. Rather than seizing the operations and assets of a bank, the SBS
      may
      adopt other measures, including (i) placing additional requirements on a
      commercial 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 BCP must adhere to a financial restructuring plan.




The
      SBS
      intervention regime halts a bank’s operations and may last for a maximum of 45
      days, which may be extended for a second period of up to 45 additional days,
      during which 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 another acquiring institution
      according to the program established by Urgent Decree No. 108-2000, enacted
      in
      November 2000. After the intervention, the SBS will proceed to liquidate BCP
      except if the preceding option (iii) was applied.




**(iii)**
            **ASHC**




*General*




Atlantic
      Security Bank (“ASB”), a subsidiary of ASHC, is a Cayman Islands bank with a
      branch in Panama. ASB is regulated by the regulatory authorities of the Cayman
      Islands and the Panama branch is regulated by the banking authorities of Panama.
      The supervision of ASB by Cayman Islands and Panamanian regulatory authorities
      is less extensive than the supervision and regulation of U.S. banks by U.S.
      banking authorities. In particular, ASB does not have a lender of last resort
      and its deposits are not guaranteed by any government agency.


65


ASB
        is
        registered as an exempted company and licensed in the Cayman Islands pursuant
        to
        the Banks and Trust Companies Law (2003 Revision) (the “Cayman Banking Law”).
        ASB holds an unrestricted Category B Banking License and a Trust 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 or an exempted
        or an
        ordinary non-resident company which is not carrying on business in the Cayman
        Islands.





ASB
      also
      may not invest in any asset which represents a claim on any person resident
      in
      the Cayman Islands except a claim resulting from: (i) a loan to an exempted
      or
      an ordinary non-resident company not carrying on business in the Cayman Islands;
      (ii) a loan by way of 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 Cayman Islands Monetary Authority (the “Authority”), carry on
      any business in the Cayman Islands other than for which the “B” license has been
      obtained.




There
      are
      no specified ratio or liquidity requirements under the Cayman Banking Law,
      but
      the Authority expects observance of prudent banking practices. As a matter
      of
      general practice, the ratio of liabilities to capital and surplus should not
      exceed 40-to-1 and the ratio of risk-weighted assets to capital and surplus
      should not exceed 8.33-to-1 (12%). There is a statutory minimum net worth
      requirement of US$480,000, but, in the normal course of events, the Authority
      will require a bank or trust company to maintain a higher paid-in capital
      appropriate to its business. It is the practice of the Authority to require
      compliance with the guidelines promulgated by the Basel Accord on Banking
      Regulations and Supervisory Practices although, in special circumstances,
      different gearing and/or capital risk asset ratios may be negotiated. Compliance
      with the Cayman Banking Law is monitored by the Authority.




*Continuing
      Requirements*




Under
      the
      law of the Cayman Islands, ASB is subject to the following continuing
      requirements: (i) to ensure 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 particulars of any change
      in
      the information or documents required to be supplied to him and to pay annual
      fees; (iii) to file quarterly with the Authority certain prescribed forms;
      (iv)
      to file with the Authority 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, current practice is also to request
      a
      senior officer or board member to discuss these accounts each year personally
      at
      a meeting with the Authority); and (v) to file an annual
      questionnaire.




ASB
      is
      required by the Cayman Banking Law to have at least two directors. Additionally,
      ASB must receive prior approval from the Authority (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 even 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
      in
      respect of 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 filing of 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 the Authority to change its name and must also notify the
      Authority of any change in the principal office and authorized agents in the
      Cayman Islands.


66


**(iv)**
            **BCB**




The
      Bolivian banking system operates under the *Ley
      de Bancos y Entidades Financieras* (the Law
      of Banks and Financial Entities) No. 1488, enacted on April 14, 1993, and
      modified by Law 2297, of December 20, 2001, which grants supervisory powers
      to
      the Superintendency of Banks and Financial Entities. Additionally, Banco Central
      de Bolivia (the Central Bank of Bolivia) regulates financial intermediation
      and
      deposit gathering activities, determines monetary and foreign exchange policies,
      and establishes reserve requirements on deposits and capital adequacy guidelines
      that banks and financial companies must follow. The *Superintendencia
      de Pensiones, Valores y Seguros* (the
      Pensions, Securities and Insurance Superintendency) supervises brokerage
      activities and mutual funds management, as conducted through BCB’s subsidiaries
      Credibolsa S.A. and Credifondo S.A., respectively, which operate under the *Ley
      del Mercado de Valores* (the
      Securities Markets Law) No. 1834, enacted on March 31, 1998.




**(v)**
            **PPS**




*Overview*




The
      operations of PPS are regulated by Law 26702 and the SBS. Peruvian insurance
      companies must regularly submit reports to the SBS regarding their operations.
      In addition, the SBS conducts on-sight reviews of the performance of insurance
      companies at least on an annual basis, primarily to review compliance with
      the
      solvency margin and reserve requirements, investment requirements and the 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 come 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 prohibited from having an ownership interest in other
      insurance or reinsurance companies or in private pension funds.




*Establishment
      of an Insurance Company*




Insurance
      companies must seek the authorization of the SBS before commencing operations.
      Peruvian law establishes certain minimum capital requirements for insurance
      and
      reinsurance companies. These requirements must be met through cash investments
      in the company. The statutory amounts are expressed in constant value.




*Solvency
      Requirements*




Pursuant
      to Law 26702, the SBS regulates the solvency margin of Peruvian insurance
      companies. The solvency margin is based upon calculations that take into account
      the amount of premiums written and losses incurred during a specified period
      prior to date on which the calculation is made.




Insurance
      companies must also maintain “solvency equity,” which must be the greater of (a)
      the solvency margin, or (b) the minimum capital requirement, as established
      by
      law. The required amount of solvency equity is recalculated at least quarterly.
      If the insurance company has outstanding credit risk operations, part of the
      solvency equity should be segregated for their coverage.


67


*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.




*Reserve
      Requirements*




Pursuant
      to Law 26702 and regulations issued by the SBS, Peruvian insurance companies
      must establish Technical Reserves. See “—(6) Pacífico Peruano Suiza—(ii) Claims
      and Reserves.” Law 26702 also requires insurance companies to create a reserve
      for IBNR claims, which are reflected as a liability, net of recoveries and
      reinsurance, in the Credicorp Consolidated Financial Statements, and estimated
      by using generally accepted actuarial reserving methods. See Note 3(e) to the
      Credicorp Consolidated Financial Statements. Finally, PPS is required by the
      SBS
      to establish pre-event reserves for risk of catastrophes, which, in accordance
      with IFRS principles, are not considered in Credicorp’s financial statements.
      See “—(6) Pacífico Peruano Suiza —(ii) Claims and Reserves.”




*Investment
      Requirements*




Pursuant
      to Law 26702, 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
      specify that deposits in and bonds of one financial institution together cannot
      exceed 10% of the total of an insurer’s “solvency equity” and Technical Reserves
      combined. In general, no more than 20% of an insurance company’s “solvency
      equity” and Technical Reserves combined may be invested in instruments
      (including stocks and bonds) issued by a company or group of companies. In
      addition, in order for an insurance company to invest in non-Peruvian
      securities, such securities must be rated by an internationally recognized
      credit rating company. Securities owned by insurance companies must be
      registered in the Public Registry of Securities of Peru or the analogous
      registry of their respective country.




*Related
      Party Transactions*




Law
      26702
      generally provides that insurance companies may not extend credit to or
      guarantee the obligations of employees or members of the Board of Directors,
      except for home mortgage loans to employees.




*Ownership
      Restrictions*




Law
      26702
      establishes the same types of restrictions with respect to the ownership and
      transfer of insurance company shares as it does with respect to the ownership
      and transfer of shares in banks. See “—(11) Supervision and Regulation—(ii)
      BCP—Overview.”




**(12)**  **Selected
      Statistical Information**




The
      following tables present certain selected statistical information and ratios
      for
      Credicorp for the periods indicated. The selected statistical information should
      be read in conjunction with the information included in “Item 5. Operating and
      Financial Review and Prospects—(A) Operating Results” and the Credicorp
      Consolidated Financial Statements and the notes thereto. The statistical
      information and discussion and analysis presented below for, 2003, 2004, 2005,
      2006 and 2007 reflect the consolidated financial position of Credicorp and
      its
      subsidiaries, including BCP, ASHC, PPS and Grupo Crédito, as of December 31,
      2003, 2004, 2005, 2006 and 2007 and the results of operations for 2003, 2004,
      2005, 2006 and 2007.


68


**(i)**
            **Average
                Balance Sheets and Income from Interest-Earning
                Assets**




The
      tables below set forth selected statistical information based on Credicorp’s
      average balance sheets prepared on a consolidated basis. Except as otherwise
      indicated, average balances, when used, have been classified by currency (Nuevos
      Soles or foreign currency (primarily U.S. Dollars)), rather than by the domestic
      or international nature of the balance. In addition, except where noted, such
      average balances are based on the quarterly ending balances in each year, with
      any such quarter-end balance denominated in Nuevos Soles having been converted
      into U.S. Dollars using the applicable SBS exchange rate as of the date of
      such
      balance. Nominal average interest rates have, in certain cases, been restated
      as
      real average interest rates using the formula described below. Credicorp
      management believes that adjusting average balances and average interest rates
      for inflation in this manner provides more meaningful information for investors
      than unadjusted average balances and rates and does not believe that the stated
      averages present trends materially different from those that would be presented
      by daily averages.




*Real
      Average Interest Rates*




The
      real
      average interest rates set forth in the tables below have been calculated by
      adjusting the nominal average interest rates on Nuevo Sol-denominated assets
      and
      liabilities using the following formula:










Where:


R(s)  =
      real
      average interest rate on Nuevo Sol-denominated assets and liabilities for the
      period.


N(s)  =
      nominal
      average interest rate on Nuevo Sol-denominated assets and liabilities for the
      period.


I  =
      inflation rate in Peru for the period (based on the Peruvian consumer price
      index).




Under
      this adjustment formulas, assuming positive nominal average interest rates,
      the
      real average interest rate on a portfolio of Nuevo Sol-denominated assets or
      liabilities would be equal to the nominal average interest rate on that
      portfolio if the inflation rate were zero. The real average interest rate would
      be less than the nominal average interest rate if the inflation rate were
      positive, and the real average interest rate would be greater than the nominal
      average interest rate if the inflation rate were negative ( *i.e.* ,
      becomes
      a deflation rate). In addition, the real average interest rate would be negative
      if the inflation rate were greater than the average nominal interest
      rate.




The
      following tables show average balances for all of Credicorp’s assets and
      liabilities, interest earned and paid amounts, and nominal rates and real rates
      for Credicorp’s interest-earning assets and interest-bearing liabilities, all
      for the years ended December 31, 2005, 2006 and 2007.


69


**Average
      Balance Sheets**


**Assets,
      Interest Earned and Average Interest Rates**




**Year ended December 31,****2005**
            
            **2006**
            
            **2007****ASSETS:**
            
            **Average**
              **Balance**
            
            **Interest**
              **Earned**
            
            **Real**
              **Avg.**
              **Rate**
            
            **Nominal**
              **Avg.**
              **Rate**
            
            **Average**
              **Balance**
            
            **Interest**
              **Earned**
            
            **Real**
              **Avg.**
              **Rate**
            
            **Nominal**
              **Avg.**
              **Rate**
            
            **Average**
              **Balance**
            
            **Interest**
              **Earned**
            
            **Real**
              **Avg.**
              **Rate**
            
            **Nominal**
              **Avg.**
              **Rate***(U.S.
                Dollars in thousands, except percentages)**Interest-earning
                assets:*Deposits
                in Central BankNuevos
                Soles
            
            US$
            5,361
            
            US$
            50
            
            
            -0.55
            %
            
            0.93
            %
            US$
            13,346
            
            US$
            157
            
            
            0.16
            %
            
            1.18
            %
            US$
            16,559
            
            US$
            339
            
            
            1.00
            %
            
            2.05
            %Foreign
                Currency
            
            
            1,118,471
            
            
            24,004
            
            
            2.15
            
            
            2.15
            
            
            1,763,854
            
            
            56,813
            
            
            3.22
            
            
            3.22
            
            
            1,422,395
            
            
            46,582
            
            
            3.27
            
            
            3.27Total
            
            
            1,123,832
            
            
            24,054
            
            
            2.13
            
            
            2.14
            
            
            1,777,200
            
            
            56,970
            
            
            3.20
            
            
            3.21
            
            
            1,438,954
            
            
            46,921
            
            
            3.25
            
            
            3.26Deposits
                in other banksNuevos
                Soles
            
            
            31,926
            
            
            1,073
            
            
            1.84
            
            
            3.36
            
            
            43,684
            
            
            1,762
            
            
            2.99
            
            
            4.03
            
            
            30,337
            
            
            1,224
            
            
            2.99
            
            
            4.04Foreign
                Currency
            
            
            443,948
            
            
            12,000
            
            
            2.70
            
            
            2.70
            
            
            711,694
            
            
            35,154
            
            
            4.94
            
            
            4.94
            
            
            1,002,633
            
            
            57,672
            
            
            5.75
            
            
            5.75Total
            
            
            475,874
            
            
            13,073
            
            
            2.65
            
            
            2.75
            
            
            755,378
            
            
            36,916
            
            
            4.83
            
            
            4.89
            
            
            1,032,970
            
            
            58,896
            
            
            5.67
            
            
            5.70Investment
                securitiesNuevos
                Soles
            
            
            1,221,669
            
            
            51,222
            
            
            2.66
            
            
            4.19
            
            
            985,054
            
            
            51,545
            
            
            4.18
            
            
            5.23
            
            
            2,110,943
            
            
            140,094
            
            
            5.57
            
            
            6.64Foreign
                Currency
            
            
            1,290,919
            
            
            73,138
            
            
            5.67
            
            
            5.67
            
            
            1,589,978
            
            
            89,760
            
            
            5.65
            
            
            5.65
            
            
            2,131,911
            
            
            109,508
            
            
            5.14
            
            
            5.14Total
            
            
            2,512,588
            
            
            124,360
            
            
            4.21
            
            
            4.95
            
            
            2,575,032
            
            
            141,305
            
            
            5.08
            
            
            5.49
            
            
            4,242,854
            
            
            249,602
            
            
            5.35
            
            
            5.88Total
                loans (1)Nuevos
                Soles
            
            
            831,393
            
            
            132,692
            
            
            14.26
            
            
            15.96
            
            
            1,307,784
            
            
            178,469
            
            
            12.51
            
            
            13.65
            
            
            1,942,261
            
            
            262,402
            
            
            12.37
            
            
            13.51Foreign
                Currency
            
            
            3,888,576
            
            
            314,700
            
            
            8.09
            
            
            8.09
            
            
            4,104,477
            
            
            359,202
            
            
            8.75
            
            
            8.75
            
            
            5,101,392
            
            
            439,070
            
            
            8.61
            
            
            8.61Total
            
            
            4,719,969
            
            
            447,392
            
            
            9.18
            
            
            9.48
            
            
            5,412,261
            
            
            537,671
            
            
            9.66
            
            
            9.93
            
            
            7,043,653
            
            
            701,472
            
            
            9.65
            
            
            9.96Total
                dividend-earning assetsNuevos
                Soles
            
            
            65,234
            
            
            2,252
            
            
            1.93
            
            
            3.45
            
            
            119,106
            
            
            6,171
            
            
            4.13
            
            
            5.18
            
            
            215,100
            
            
            6,004
            
            
            1.76
            
            
            2.79Foreign
                Currency
            
            
            65,511
            
            
            1,301
            
            
            1.99
            
            
            1.99
            
            
            109,129
            
            
            2,970
            
            
            2.72
            
            
            2.72
            
            
            118,334
            
            
            3,079
            
            
            2.60
            
            
            2.60Total
            
            
            130,745
            
            
            3,553
            
            
            1.96
            
            
            2.72
            
            
            228,235
            
            
            9,141
            
            
            3.46
            
            
            4.01
            
            
            333,434
            
            
            9,083
            
            
            2.06
            
            
            2.72Total
                interest-earning assetsNuevos
                Soles
            
            
            2,155,583
            
            
            187,289
            
            
            7.09
            
            
            8.69
            
            
            2,468,974
            
            
            238,104
            
            
            8.55
            
            
            9.64
            
            
            4,315,200
            
            
            410,063
            
            
            8.41
            
            
            9.50Foreign
                Currency
            
            
            6,807,425
            
            
            425,143
            
            
            6.25
            
            
            6.25
            
            
            8,279,132
            
            
            543,899
            
            
            6.57
            
            
            6.57
            
            
            9,776,665
            
            
            655,911
            
            
            6.71
            
            
            6.71Total
            
            
            8,963,008
            
            
            612,432
            
            
            6.45
            
            
            6.83
            
            
            10,748,106
            
            
            782,003
            
            
            7.02
            
            
            7.28
            
            
            14,091,865
            
            
            1,065,974
            
            
            7.23
            
            
            7.56*Noninterest-earning
                assets:*Cash
                and due from banksNuevos
                Soles
            
            
            135,168
            
            
            
            
            
            
            
            
            
            
            
            168,332
            
            
            
            
            
            
            
            
            
            
            
            250,118Foreign
                Currency
            
            
            179,250
            
            
            
            
            
            
            
            
            
            
            
            200,523
            
            
            
            
            
            
            
            
            
            
            
            255,715Total
            
            
            314,418
            
            
            
            
            
            
            
            
            
            
            
            368,855
            
            
            
            
            
            
            
            
            
            
            
            505,833Reserves
                for loan lossesNuevos
                Soles
            
            
            (33,020
            )
            
            
            
            
            
            
            
            
            
            
            (33,859
            )
            
            
            
            
            
            
            
            
            
            
            (37,601
            )Foreign
                Currency
            
            
            (191,132
            )
            
            
            
            
            
            
            
            
            
            
            (167,337
            )
            
            
            
            
            
            
            
            
            
            
            (154,917
            )Total
            
            
            (224,152
            )
            
            
            
            
            
            
            
            
            
            
            (201,196
            )
            
            
            
            
            
            
            
            
            
            
            (192,518
            )Premises
                and equipmentNuevos
                Soles
            
            
            177,012
            
            
            
            
            
            
            
            
            
            
            
            165,610
            
            
            
            
            
            
            
            
            
            
            
            182,308Foreign
                Currency
            
            
            66,559
            
            
            
            
            
            
            
            
            
            
            
            79,281
            
            
            
            
            
            
            
            
            
            
            
            73,948Total
            
            
            243,571
            
            
            
            
            
            
            
            
            
            
            
            244,891
            
            
            
            
            
            
            
            
            
            
            
            256,256Other
                non-interest-earning assetsNuevos
                Soles
            
            
            141,397
            
            
            
            
            
            
            
            
            
            
            
            84,716
            
            
            
            
            
            
            
            
            
            
            
            334,653Foreign
                Currency
            
            
            320,424
            
            
            
            
            
            
            
            
            
            
            
            412,659
            
            
            
            
            
            
            
            
            
            
            
            561,477Total
            
            
            461,821
            
            
            
            
            
            
            
            
            
            
            
            497,375
            
            
            
            
            
            
            
            
            
            
            
            896,130Total
                non-interest-earning assetsNuevos
                Soles
            
            
            420,557
            
            
            
            
            
            
            
            
            
            
            
            384,799
            
            
            
            
            
            
            
            
            
            
            
            729,478Foreign
                Currency
            
            
            375,101
            
            
            
            
            
            
            
            
            
            
            
            525,126
            
            
            
            
            
            
            
            
            
            
            
            736,223Total
            
            
            795,658
            
            
            
            
            
            
            
            
            
            
            
            909,925
            
            
            
            
            
            
            
            
            
            
            
            1,465,701Total
                average assetsNuevos
                Soles
            
            
            2,576,140
            
            
            187,289
            
            
            5.70
            
            
            7.27
            
            
            2,853,773
            
            
            238,104
            
            
            7.26
            
            
            8.34
            
            
            5,044,678
            
            
            410,063
            
            
            7.05
            
            
            8.13Foreign
                Currency
            
            
            7,182,526
            
            
            425,143
            
            
            5.92
            
            
            5.92
            
            
            8,804,258
            
            
            543,899
            
            
            6.18
            
            
            6.18
            
            
            10,512,888
            
            
            655,911
            
            
            6.24
            
            
            6.24Total
            
            
            9,758,666
            
            
            612,432
            
            
            5.86
            
            
            6.28
            
            
            11,658,031
            
            
            782,003
            
            
            6.44
            
            
            6.71
            
            
            15,557,566
            
            
            1,065,974
            
            
            6.50
            
            
            6.85





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


70





**Average
      Balance Sheets**


**Liabilities,
      Interest Paid and Average Interest Rates**





**Year ended December 31,****2005**
            
            **2006**
            
            **2007****LIABILITIES**
            
            **Average**
              **Balance**
            
            **Interest**
              **Paid**
            
            **Real**
              **Avg.**
              **Rate**
            
            **Nominal**
              **Avg.**
              **Rate**
            
            **Average**
              **Balance**
            
            **Interest**
              **Paid**
            
            **Real**
              **Avg.**
              **Rate**
            
            **Nominal**
              **Avg. Rate**
            
            **Average**
              **Balance**
            
            **Interest**
              **Paid**
            
            **Real**
              **Avg.**
              **Rate**
            
            **Nominal**
              **Avg.**
              **Rate***(U.S.
                Dollars in thousands, except percentages)**Interest-bearing
                liabilities:*Demand
                depositsNuevos
                Soles(1)
            
            US$
            641,920
            
            US$
            6,056
            
            
            -0.54
            %
            
            0.94
            %
            US$
            776,964
            
            US$
            8,631
            
            
            0.10
            %
            
            1.11
            %
            US$
            1,120,416
            
            US$
            12,761
            
            
            0.10
            %
            
            1.14
            %Foreign
                Currency(1)
            
            
            926,710
            
            
            10,861
            
            
            1.17
            
            
            1.17
            
            
            1,512,284
            
            
            16,150
            
            
            1.07
            
            
            1.07
            
            
            2,206,983
            
            
            12,362
            
            
            0.56
            
            
            0.56Total
            
            
            1,568,630
            
            
            16,917
            
            
            0.47
            
            
            1.08
            
            
            2,289,248
            
            
            24,781
            
            
            0.74
            
            
            1.08
            
            
            3,327,399
            
            
            25,123
            
            
            0.40
            
            
            0.76Savings
                depositsNuevos
                Soles(1)
            
            
            452,826
            
            
            3,495
            
            
            -0.71
            
            
            0.77
            
            
            518,859
            
            
            4,917
            
            
            -0.06
            
            
            0.95
            
            
            711,641
            
            
            8,550
            
            
            0.16
            
            
            1.20Foreign
                Currency(1)
            
            
            1,118,117
            
            
            5,739
            
            
            0.51
            
            
            0.51
            
            
            1,238,890
            
            
            7,919
            
            
            0.64
            
            
            0.64
            
            
            1,396,318
            
            
            11,319
            
            
            0.81
            
            
            0.81Total
            
            
            1,570,943
            
            
            9,234
            
            
            0.16
            
            
            0.59
            
            
            1,757,749
            
            
            12,836
            
            
            0.43
            
            
            0.73
            
            
            2,107,959
            
            
            19,869
            
            
            0.59
            
            
            0.94Time
                depositsNuevos
                Soles(1)
            
            
            562,148
            
            
            24,300
            
            
            2.79
            
            
            4.32
            
            
            709,208
            
            
            36,221
            
            
            4.05
            
            
            5.11
            
            
            1,440,081
            
            
            82,746
            
            
            4.66
            
            
            5.75Foreign
                Currency(1)
            
            
            2,944,558
            
            
            76,954
            
            
            2.61
            
            
            2.61
            
            
            3,068,947
            
            
            124,344
            
            
            4.05
            
            
            4.05
            
            
            3,613,304
            
            
            180,741
            
            
            5.00
            
            
            5.00Total
            
            
            3,506,706
            
            
            101,254
            
            
            2.64
            
            
            2.89
            
            
            3,778,155
            
            
            160,565
            
            
            4.05
            
            
            4.25
            
            
            5,053,385
            
            
            263,487
            
            
            4.90
            
            
            5.21Due
                to banks and correspondentsNuevos
                Soles
            
            
            159,892
            
            
            3,162
            
            
            0.48
            
            
            1.98
            
            
            249,212
            
            
            14,870
            
            
            4.91
            
            
            5.97
            
            
            153,258
            
            
            8,719
            
            
            4.60
            
            
            5.69Foreign
                Currency
            
            
            448,419
            
            
            18,260
            
            
            4.07
            
            
            4.07
            
            
            865,365
            
            
            45,143
            
            
            5.22
            
            
            5.22
            
            
            1,411,710
            
            
            81,210
            
            
            5.75
            
            
            5.75Total
            
            
            608,311
            
            
            21,422
            
            
            3.13
            
            
            3.52
            
            
            1,114,577
            
            
            60,013
            
            
            5.15
            
            
            5.38
            
            
            1,564,968
            
            
            89,929
            
            
            5.64
            
            
            5.75BondsNuevos
                Soles
            
            
            122,521
            
            
            9,655
            
            
            6.30
            
            
            7.88
            
            
            153,178
            
            
            11,041
            
            
            6.13
            
            
            7.21
            
            
            201,787
            
            
            12,954
            
            
            5.33
            
            
            6.42Foreign
                Currency
            
            
            295,821
            
            
            14,677
            
            
            4.96
            
            
            4.96
            
            
            292,984
            
            
            14,242
            
            
            4.86
            
            
            4.86
            
            
            341,643
            
            
            20,638
            
            
            6.04
            
            
            6.04Total
            
            
            418,342
            
            
            24,332
            
            
            5.35
            
            
            5.82
            
            
            446,162
            
            
            25,283
            
            
            5.30
            
            
            5.67
            
            
            543,430
            
            
            33,592
            
            
            5.78
            
            
            6.18Total
                interest-bearing liabilitiesNuevos
                Soles
            
            
            1,939,307
            
            
            46,668
            
            
            0.90
            
            
            2.41
            
            
            2,407,421
            
            
            75,680
            
            
            2.11
            
            
            3.14
            
            
            3,627,183
            
            
            125,730
            
            
            2.40
            
            
            3.47Foreign
                Currency
            
            
            5,733,625
            
            
            126,491
            
            
            2.21
            
            
            2.21
            
            
            6,978,470
            
            
            207,798
            
            
            2.98
            
            
            2.98
            
            
            8,969,958
            
            
            306,270
            
            
            3.41
            
            
            3.41Total
            
            
            7,672,932
            
            
            173,159
            
            
            1.88
            
            
            2.26
            
            
            9,385,891
            
            
            283,478
            
            
            2.76
            
            
            3.02
            
            
            12,597,141
            
            
            432,000
            
            
            3.12
            
            
            3.43*Non-interest-bearing
                liabilities and net equity:*Other
                liabilitiesNuevos
                Soles
            
            
            108,140
            
            
            
            
            
            
            
            
            
            
            
            56,016
            
            
            
            
            
            
            
            
            
            
            
            157,062Foreign
                Currency
            
            
            770,712
            
            
            
            
            
            
            
            
            
            
            
            862,715
            
            
            
            
            
            
            
            
            
            
            
            1,123,751Total
            
            
            878,852
            
            
            
            
            
            
            
            
            
            
            
            918,731
            
            
            
            
            
            
            
            
            
            
            
            1,280,813Equity
                attributable to Credicorp equity holdersNuevos
                Soles
            
            
            —
            
            
            
            
            
            
            
            
            
            
            
            —
            
            
            
            
            
            
            
            
            
            
            
            -Foreign
                Currency
            
            
            1,133,773
            
            
            
            
            
            
            
            
            
            
            
            1,247,195
            
            
            
            
            
            
            
            
            
            
            
            1,547,283Total
            
            
            1,133,773
            
            
            
            
            
            
            
            
            
            
            
            1,247,195
            
            
            
            
            
            
            
            
            
            
            
            1,547,283Minority
                InterestNuevos
                Soles
            
            
            —Foreign
                Currency
            
            
            93,109
            
            
            
            
            
            
            
            
            
            
            
            106,214
            
            
            
            
            
            
            
            
            
            
            
            132,329Total
            
            
            93,109
            
            
            
            
            
            
            
            
            
            
            
            106,214
            
            
            
            
            
            
            
            
            
            
            
            132,329Total
                non-interest-bearing liabilities and equityNuevos
                Soles
            
            
            108,140
            
            
            
            
            
            
            
            
            
            
            
            56,016
            
            
            
            
            
            
            
            
            
            
            
            157,062Foreign
                Currency
            
            
            1,977,594
            
            
            
            
            
            
            
            
            
            
            
            2,216,124
            
            
            
            
            
            
            
            
            
            
            
            2,803,363Total
            
            
            2,085,734
            
            
            
            
            
            
            
            
            
            
            
            2,272,140
            
            
            
            
            
            
            
            
            
            
            
            2,960,425Total
                average liabilities and equityNuevos
                Soles
            
            
            2,047,447
            
            
            46,668
            
            
            0.78
            
            
            2.28
            
            
            2,463,437
            
            
            75,680
            
            
            2.04
            
            
            3.07
            
            
            3,784,245
            
            
            125,730
            
            
            2.26
            
            
            3.32Foreign
                Currency
            
            
            7,711,219
            
            
            126,491
            
            
            1.64
            
            
            1.64
            
            
            9,194,594
            
            
            207,798
            
            
            2.20
            
            
            2.26
            
            
            11,773,321
            
            
            306,270
            
            
            2.60
            
            
            2.60Total
            
            
            9,758,666
            
            
            173,159
            
            
            1.46
            
            
            1.77
            
            
            11,658,031
            
            
            283,478
            
            
            2.21
            
            
            2.43
            
            
            15,557,566
            
            
            432,000
            
            
            2.52
            
            
            2.78








(1)
            Includes
                the amount paid to Central Bank for the deposit insurance
                fund.


71


*Changes
      in Net Interest Income and Expense: Volume and Rate Analysis*





**2006/2005**
            
            **2007/2006****Increase/(Decrease) due to changes in:**
            
            **Increase/(Decrease) due to changes in:****Volume**
            
            **Rate**
            
            **Net Change**
            
            **Volume**
            
            **Rate**
            
            **Net Change***(U.S. Dollars in thousands)***Interest Income:**Interest-earning
                deposits in Central BankNuevos
                Soles
            
            
            74
            
            
            33
            
            
            107
            
            
            38
            
            
            144
            
            
            182Foreign
                Currency
            
            
            13,851
            
            
            18,958
            
            
            32,809
            
            
            (10,998
            )
            
            767
            
            
            (10,231
            )Total
            
            
            13,925
            
            
            18,991
            
            
            32,916
            
            
            (10,960
            )
            
            911
            
            
            (10,049
            )Deposits
                in other banksNuevos
                Soles
            
            
            395
            
            
            294
            
            
            689
            
            
            (538
            )
            
            -
            
            
            (538
            )Foreign
                Currency
            
            
            7,237
            
            
            15,917
            
            
            23,154
            
            
            14,371
            
            
            8,147
            
            
            22,518Total
            
            
            7,632
            
            
            16,211
            
            
            23,843
            
            
            13,833
            
            
            8,147
            
            
            21,980Investment
                securitiesNuevos
                Soles
            
            
            (9,921
            )
            
            10,244
            
            
            323
            
            
            58,914
            
            
            29,635
            
            
            88,549Foreign
                Currency
            
            
            16,943
            
            
            (321
            )
            
            16,622
            
            
            30,594
            
            
            (10,846
            )
            
            19,748Total
            
            
            7,022
            
            
            9,923
            
            
            16,945
            
            
            89,508
            
            
            18,789
            
            
            108,297Total
                loans(1)Nuevos
                Soles
            
            
            76,033
            
            
            (30,256
            )
            
            45,777
            
            
            86,585
            
            
            (2,652
            )
            
            83,933Foreign
                Currency
            
            
            17,473
            
            
            27,029
            
            
            44,502
            
            
            87,245
            
            
            (7,377
            )
            
            79,868Total
            
            
            93,506
            
            
            (3,227
            )
            
            90,279
            
            
            173,830
            
            
            (10,029
            )
            
            163,801Total
                dividend-earning assetsNuevos
                Soles
            
            
            1,860
            
            
            2,059
            
            
            3,919
            
            
            4,974
            
            
            (5,141
            )
            
            (167
            )Foreign
                Currency
            
            
            866
            
            
            803
            
            
            1,669
            
            
            251
            
            
            (142
            )
            
            109Total
            
            
            2,726
            
            
            2,862
            
            
            5,588
            
            
            5,225
            
            
            (5,283
            )
            
            (58
            )Total
                interest-earning assetsNuevos
                Soles
            
            
            27,229
            
            
            23,586
            
            
            50,815
            
            
            178,047
            
            
            (6,088
            )
            
            171,959Foreign
                Currency
            
            
            91,912
            
            
            26,844
            
            
            118,756
            
            
            98,381
            
            
            13,631
            
            
            112,012Total
            
            
            119,141
            
            
            50,430
            
            
            169,571
            
            
            276,428
            
            
            7,543
            
            
            283,971**Interest
                Expense:**Demand
                depositsNuevos
                Soles
            
            
            1,274
            
            
            1,301
            
            
            2,575
            
            
            3,815
            
            
            315
            
            
            4,130Foreign
                Currency
            
            
            6,863
            
            
            (1,574
            )
            
            5,289
            
            
            7,419
            
            
            (11,207
            )
            
            (3,788
            )Total
            
            
            8,137
            
            
            (273
            )
            
            7,864
            
            
            11,234
            
            
            (10,892
            )
            
            342Savings
                depositsNuevos
                Soles
            
            
            510
            
            
            912
            
            
            1,422
            
            
            1,827
            
            
            1,806
            
            
            3,633Foreign
                Currency
            
            
            620
            
            
            1,560
            
            
            2,180
            
            
            1,006
            
            
            2,394
            
            
            3,400Total
            
            
            1,130
            
            
            2,472
            
            
            3,602
            
            
            2,833
            
            
            4,200
            
            
            7,033Time
                depositsNuevos
                Soles
            
            
            6,357
            
            
            5,564
            
            
            11,921
            
            
            37,327
            
            
            9,198
            
            
            46,525Foreign
                Currency
            
            
            3,251
            
            
            44,139
            
            
            47,390
            
            
            22,056
            
            
            34,341
            
            
            56,397Total
            
            
            9,608
            
            
            49,703
            
            
            59,311
            
            
            59,383
            
            
            43,539
            
            
            102,922Due
                to banks and correspondents and issued bondsNuevos
                Soles
            
            
            1,766
            
            
            9,942
            
            
            11,708
            
            
            (5,725
            )
            
            (426
            )
            
            (6,151
            )Foreign
                Currency
            
            
            16,978
            
            
            9,905
            
            
            26,883
            
            
            28,501
            
            
            7,566
            
            
            36,067Total
            
            
            18,744
            
            
            19,847
            
            
            38,591
            
            
            22,776
            
            
            7,140
            
            
            29,916BondsNuevos
                Soles
            
            
            2,416
            
            
            (1,030
            )
            
            1,386
            
            
            3,504
            
            
            (1,591
            )
            
            1,913Foreign
                Currency
            
            
            (141
            )
            
            (294
            )
            
            (435
            )
            
            2,365
            
            
            4,031
            
            
            6,396Total
            
            
            2,275
            
            
            (1,324
            )
            
            951
            
            
            5,869
            
            
            2,440
            
            
            8,309Total
                interest-bearing liabilitiesNuevos
                Soles
            
            
            11,265
            
            
            17,747
            
            
            29,012
            
            
            38,345
            
            
            11,705
            
            
            50,050Foreign
                Currency
            
            
            27,463
            
            
            53,844
            
            
            81,307
            
            
            59,301
            
            
            39,171
            
            
            98,472Total
            
            
            38,728
            
            
            71,591
            
            
            110,319
            
            
            97,646
            
            
            50,876
            
            
            148,522





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


72


*Interest-Earning
      Assets, Net Interest Margin 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, net
      interest margin and yield spread, all on a nominal basis.





**Year ended December 31,****2005**
            
            **2006**
            
            **2007***(U.S. Dollars in thousands, except percentages)*Average
                interest-earning assetsNuevos
                Soles
            
            
            2,155,583
            
            
            2,468,974
            
            
            4,315,200Foreign
                Currency
            
            
            6,807,425
            
            
            8,279,132
            
            
            9,776,665Total
            
            
            8,963,008
            
            
            10,748,106
            
            
            14,091,865Net
                interest incomeNuevos
                Soles
            
            
            140,621
            
            
            162,424
            
            
            284,333Foreign
                Currency
            
            
            298,652
            
            
            336,101
            
            
            349,641Total
            
            
            439,273
            
            
            498,525
            
            
            633,974Gross
                yield (1)Nuevos
                Soles
            
            
            8.69
            %
            
            9.64
            %
            
            9.50
            %Foreign
                Currency
            
            
            6.25
            %
            
            6.57
            %
            
            6.71
            %Weighted-average
                rate
            
            
            6.83
            %
            
            7.28
            %
            
            7.56
            %Net
                interest margin (2)Nuevos
                Soles
            
            
            6.52
            %
            
            6.58
            %
            
            6.59
            %Foreign
                Currency
            
            
            4.39
            %
            
            4.06
            %
            
            3.58
            %Weighted-average
                rate
            
            
            4.90
            %
            
            4.64
            %
            
            4.50
            %Yield
                spread (3)Nuevos
                Soles
            
            
            6.28
            %
            
            6.50
            %
            
            6.04
            %Foreign
                Currency
            
            
            4.04
            %
            
            3.59
            %
            
            3.29
            %Weighted-average
                rate
            
            
            4.58
            %
            
            4.26
            %
            
            4.14
            %


_________________________________


(1)
              Gross
                  yield is interest income divided by average interest-earning
                  assets.


(2)
              Net
                  interest margin represents net interest income divided by average
                  interest-earning assets.


(3)
                  Yield
                      spread, on a nominal basis, represents the difference between
                      gross yield
                      on average interest-earning assets and average cost of interest-bearing
                      liabilities.




*Interest-Earning
      Deposits With Other Banks*




The
      following table shows the short-term funds deposited with other banks broken
      down by currency as of the dates indicated. Deposits held in countries other
      than Peru are denominated in several currencies; however, the substantial
      majority of such deposits are denominated in U.S. Dollars. These currencies
      were
      converted to U.S. Dollars using the applicable SBS exchange rate as of the
      date
      of relevant balance.


73




**Year ended December 31,****2005**
            
            **2006**
            
            **2007***(U.S. Dollars in thousands*)Nuevo
                Sol-denominated:Peruvian
                Central Bank
            
            US$
            —
            
            US$
            37,547
            
            US$
            —Commercial
                banks
            
            
            55,941
            
            
            55,819
            
            
            41,826Total
                Nuevo Sol-denominated
            
            US$
            55,941
            
            US$
            93,366
            
            US$
            41,826Foreign
                Currency-denominated:Peruvian
                Central Bank (U.S. Dollars)
            
            US$
            1,275,965
            
            US$
            1.105,921
            
            US$
            1,000,000U.S.
                Dollars, other
            
            
            632,698
            
            
            739,028
            
            
            1,360,649Other
            
            
            8,076
            
            
            55,506
            
            
            50,472Total
                Foreign Currency-denominated
            
            US$
            1,916,739
            
            US$
            1,900,455
            
            US$
            2,411,121Total
            
            US$
            1,972,680
            
            US$
            1,993,821
            
            US$
            2,452,947





**(ii)**
            **Investment
                Portfolio**




The
      following table shows the fair value of Credicorp’s trading and
      available-for-sale investment securities by type at the dates indicated. See
      Notes 5 and 6 to the Credicorp Consolidated Financial Statements.




On December 31,2005
            
            2006
            
            2007*(U.S. Dollars in thousands)***Nuevo
                Sol-denominated:**Peruvian
                Government bonds
            
            US$
            129,137
            
            US$
            156,890
            
            US$
            274,391Equity
                securities
            
            
            144,919
            
            
            148,333
            
            
            227,751Bonds
            
            
            91,065
            
            
            74,010
            
            
            110,916Peruvian
                Central Bank certif. notes
            
            
            835,287
            
            
            1,277,613
            
            
            2,407,005Other
                investments
            
            
            40,287
            
            
            264,112
            
            
            132,788Total
                Nuevo Sol-denominated
            
            US$
            1,240,695
            
            
            1,920,958
            
            
            3,152,851**Foreign
                Currency-denominated:**Equity
                securities
            
            US$
            63,332
            
            US$
            102,543
            
            US$
            118,313Bonds
            
            
            891,666
            
            
            1,114,211
            
            
            1,198,073Investment
                in Peruvian debt
            
            
            185,138
            
            
            268,235
            
            
            362,603Peruvian
                Central Bank certif. notes
            
            
            310,528
            
            
            —
            
            
            —Other
                investment
            
            
            163,894
            
            
            61,634
            
            
            406,262Total
                Foreign Currency-denominated
            
            US$
            1,614,558
            
            US$
            1,546,623
            
            US$
            2,085,251Total
                securities holdings
            
            US$
            2,855,253
            
            US$
            3,467,581
            
            US$
            5,238,102





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





The
      weighted-average yield on Credicorp’s Nuevo Sol-denominated interest-earning
      investment securities was 4.2% in 2005, 5.2% in 2006 and 6.6% in 2007. The
      weighted-average yield on Credicorp’s foreign currency-denominated portfolio was
      5.7% in 2005 and 2006 and 5.1% in 2007. The total weighted-average yield of
      Credicorp’s investment securities was 5.0% in 2005, 5.5% in 2006 and 5.9% in
      2007.




The
      weighted-average yield on Credicorp’s Nuevo Sol-denominated dividend-earning
      assets was 3.5% in 2005, 5.2% in 2006 and 2.8% in 2007. The weighted-average
      yield on Credicorp’s foreign currency-denominated portfolio was 2.0% in 2005,
      2.7% in 2006 and 2.6% in 2007. The total weighted-average yield of Credicorp’s
      dividend –earning assets was 2.7% in 2005, 4.0% in 2006 and 2.7% in
      2007.




74


The
      following table shows the maturities of Credicorp’s trading and
      available-for-sale investment securities by type on December 31,
      2007:





**Within**
              **1 year**
            
            **After 1 year**
              **but within**
              **3years**
            
            **Maturing**
              **After 3**
              **years but**
              **within 5**
              **years**
            
            **Maturing**
              **After 5**
              **years but**
              **within**
              **10 years**
            
            **After 10**
              **Years**
            
            **Total***(U.S. Dollars in thousands, except percentages)***Nuevo
                Sol-denominated:**Peruvian
                government bonds
            
            US$
            104,856
            
            US$
            38,228
            
            US$
            —
            
            US$
            38,211
            
            US$
            93,096
            
            US$
            274,391Equity
                securities (1)
            
            
            227,751
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            227,751Bonds
                and debentures
            
            
            20,097
            
            
            21,045
            
            
            2,891
            
            
            12,124
            
            
            54,759
            
            
            110,916Peruvian
                Central Bank certif. notes
            
            
            1,971,161
            
            
            435,844
            
            
            —
            
            
            —
            
            
            —
            
            
            2,407,005Other
                investments
            
            
            96,048
            
            
            12,074
            
            
            2,290
            
            
            15,354
            
            
            7,022
            
            
            132,788Total
                Nuevo Sol-denominated
            
            US$
            2,419,913
            
            US$
            507,191
            
            US$
            5,181
            
            US$
            65,689
            
            US$
            154,877
            
            US$
            3,152,851**Foreign
                Currency-denominated:**Peruvian
                Government Bonds
            
            
            73,004
            
            
            1,363
            
            
            26,981
            
            
            92,648
            
            
            168,607
            
            
            362,603Equity
                securities (1)
            
            
            118,313
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            118,313Bonds
                Peruvian Central Bank certificates notes
            
            
            164,559
            
            
            409,755
            
            
            139,752
            
            
            176,081
            
            
            307,926
            
            
            1,198,073Other
                investments
            
            
            384,124
            
            
            7,020
            
            
            3,618
            
            
            7,351
            
            
            4,149
            
            
            406,262Total
                Foreign Currency-denominated
            
            US$
            740,000
            
            US$
            418,138
            
            US$
            170,351
            
            US$
            276,080
            
            US$
            480,682
            
            US$
            2,085,251Total
                securities holdings:
            
            US$
            3,159,1913
            
            US$
            925,329
            
            US$
            175,532
            
            US$
            341,769
            
            US$
            635,559
            
            US$
            5,238,102Weighted
                average yield
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            5.65
            %







(1)
            Equity
                securities in Credicorp’s account are categorized as maturing within one
                year.




Maturities
      of Credicorp’s investments securities classified by trading and
      available-for-sale, as of December 31, 2007 are described in “Item 11.
      Quantitative and Qualitative Disclosures about Market Risk.”




All
      realized and unrealized gains and losses related to the trading of securities
      are included in the income statement. Unrealized gains and losses arising from
      changes in the fair value of securities classified as investments
      available-for-sale are recognized in equity, net of the related deferred income
      taxes. Unrealized gains or losses are recognized in income of the year when
      the
      investments available-for-sale are sold.





Credicorp
      determines that an available-for-sale investment is impaired when there has
      been
      a significant or prolonged decline in the fair value below its cost. The
      determination of what is significant or prolonged requires the management’s
      judgment. In making this judgment, Credicorp evaluates among other factors,
      the
      normal volatility in share price, evidence of deterioration in the financial
      health of the investee, industry and sector performance, changes in technology,
      and operational and financing cash flows. When a permanent impairment is
      present, the related unrealized loss is recognized in the consolidated income
      statement.




**(iii)**
            **Loan
                Portfolio**




*Loans
      by Type of Loan*




The
      following table shows Credicorp’s loans by type of loan, at the dates
      indicated:


**On December 31,****2003**
              
              **2004**
              
              **2005**
              
              **2006**
              
              **2007***(U.S. Dollars in thousands)*Loans
              
              US$
              3,284,141
              
              US$
              3,507,831
              
              US$
              3,865,643
              
              
              4,662,730
              
              
              6,520,116Leasing
                  transactions
              
              
              452,635
              
              
              424,902
              
              
              564,575
              
              
              675,804
              
              
              1,118,301Discounted
                  notes
              
              
              176,991
              
              
              183,519
              
              
              213,232
              
              
              256,534
              
              
              325,047Factoring
              
              
              56,446
              
              
              58,116
              
              
              87,757
              
              
              89,171
              
              
              109,928Advances
                  and overdrafts
              
              
              45,827
              
              
              48,506
              
              
              49,283
              
              
              84,262
              
              
              127,486Refinanced
                  loans
              
              
              296,116
              
              
              243,892
              
              
              175,211
              
              
              126,006
              
              
              88,451Past
                  due loans
              
              
              256,208
              
              
              159,057
              
              
              95,769
              
              
              76,770
              
              
              61,488Unearned
                  interest
              
              
              (86,868
              )
              
              (66,805
              )
              
              (78,495
              )
              
              (93,916
              )
              
              (166,972
              )Total
                  loans:
              
              US$
              4,481,496
              
              US$
              4,559,018
              
              US$
              4,972,975
              
              US$
              5,877,361
              
              US$
              8,183,845Total
                  past due loans amounts
              
              
              (256,208
              )
              
              (159,057
              )
              
              (95,769
              )
              
              (76,770
              )
              
              (61,488
              )Total
                  performing loans
              
              US$
              4,225,288
              
              US$
              4,399,961
              
              US$
              4,877,206
              
              US$
              5,800,591
              
              US$
              8,122,357


75





The
      categorization of the loan portfolio as set forth in the table above is based
      on
      the regulations of the SBS, which Credicorp has applied to loans generated
      by
      BCP and ASHC. These categories do not correspond to the classifications used
      in
      preparing the breakdown of the loan portfolio by business area set forth under
      “Item 4. Information on the Company—(B) Business Overview—(3) Commercial
      Banking.” Pursuant to the guidelines of the SBS, loans are categorized 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
      transactions:* Involve
      the acquisition by Credicorp of an asset and the leasing of that asset to
      Credicorp’s 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 Credicorp makes a loan supported
      by a draft signed by one party and discounted by another party, with recourse
      to
      both parties.




*Factoring* :
      Involves the sale of title of a company’s accounts receivables to a bank (or
      financial company). The receivables are sold without recourse and the bank
      cannot turn to the seller in the event that the accounts prove uncollectible.
      Factoring involves the receipt of funds by the seller from the bank prior to
      the
      average maturity date, based on the invoice amount of the receivable, less
      cash
      discounts, less an allowance for estimated claims and returns, among other
      items.




*Advances
      and overdrafts:* 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:* Includes
      loans that were refinanced because the client was unable to pay at maturity.
      A
      loan is categorized as a refinanced loan when a debtor is experiencing payment
      problems, unless the debtor is current on all interest payments and pays down
      at
      least 20% of the principal amount of the original loan. Credicorp distinguished
      a sub-group entitled *Restructured
      Loans* ,
      defined
      as those loans extended under the bankruptcy protection procedures established
      in the Equity Restructuring Law.




*Past
      due loans:* Includes
      overdue loans. See “— Past Due Loan Portfolio” for further
      detail.


76


*Loans
      by Economic Activity*




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


**At December 31,****2003**
              
              **2004**
              
              **2005***(U.S. Dollars in thousands, except percentages)*Economic Activity
              
              Amount
              
              % Total
              
              Amount
              
              % Total
              
              Amount
              
              % TotalManufacturing
              
              US$
              1,461,350
              
              
              32.61
              %
              US$
              1,376,874
              
              
              30.20
              %
              US$
              1,430,559
              
              
              28.77
              %Consumer
                  Loans (1)
              
              
              1,033,881
              
              
              23.07
              
              
              1,187,378
              
              
              26.04
              
              
              1,364,910
              
              
              27.45Commerce
              
              
              560,052
              
              
              12.50
              
              
              523,574
              
              
              11.48
              
              
              625,908
              
              
              12.59Realty
                  Businesses and Leasing Services
              
              
              233,506
              
              
              5.21
              
              
              224,745
              
              
              4.93
              
              
              216,095
              
              
              4.35Mining
              
              
              233,355
              
              
              5.21
              
              
              194,022
              
              
              4.26
              
              
              223,156
              
              
              4.49Communication,
                  Storage and Transportation
              
              
              189,612
              
              
              4.23
              
              
              181,018
              
              
              3.97
              
              
              210,002
              
              
              4.22Electricity,
                  Gas and Water
              
              
              211,610
              
              
              4.72
              
              
              248,571
              
              
              5.45
              
              
              192,096
              
              
              3.86Agriculture
              
              
              142,697
              
              
              3.18
              
              
              160,167
              
              
              3.51
              
              
              153,410
              
              
              3.08Fishing
              
              
              90,786
              
              
              2.03
              
              
              68,604
              
              
              1.50
              
              
              117,104
              
              
              2.35Financial
                  Services
              
              
              96,371
              
              
              2.15
              
              
              90,042
              
              
              1.98
              
              
              105,484
              
              
              2.12Education,
                  Health and Other Services
              
              
              99,702
              
              
              2.22
              
              
              62,341
              
              
              1.37
              
              
              69,468
              
              
              1.40Construction
              
              
              70,676
              
              
              1.58
              
              
              72,879
              
              
              1.60
              
              
              68,217
              
              
              1.37Others
                  (2)
              
              
              144,766
              
              
              3.23
              
              
              235,608
              
              
              5.17
              
              
              275,061
              
              
              5.53Sub
                  total
              
              
              4,568,364
              
              
              101.94
              
              
              4,625,823
              
              
              101.47
              
              
              5,051,470
              
              
              101.58Unearned
                  interest
              
              
              (86,868
              )
              
              -1.94
              
              
              (66,805
              )
              
              -1.47
              
              
              (78,495
              )
              
              -1.58Total
              
              US$
              4,481,496
              
              
              100.00
              %
              US$
              4,559,018
              
              
              100.00
              %
              US$
              4,972,975
              
              
              100.00
              %








(1)
            Includes
                credit card and mortgage loans, other consumer loans and small
                business.


(2)
            Includes
                personal banking and small business loans and other
                sectors.




**At December 31,****2006**
              
              **2007***(U.S. Dollars in thousands, except percentages)***Economy Activity**
              
              **Amount**
              
              **% Total**
              
              **Amount**
              
              **% Total**Manufacturing
              
              US$
              1,624,765
              
              
              27.65
              %
              US$
              2,204,481
              
              
              26.94
              %Consumer
                  Loans (1)
              
              
              1,729,682
              
              
              29.43
              
              
              2,480,916
              
              
              30.31Commerce
              
              
              686,291
              
              
              11.68
              
              
              884,253
              
              
              10.80Realty
                  Businesses and Leasing Services
              
              
              236,445
              
              
              5.16
              
              
              387,180
              
              
              4.73Mining
              
              
              303,238
              
              
              4.36
              
              
              463,577
              
              
              5.66Communication,
                  Storage and Transportation
              
              
              255,730
              
              
              2.55
              
              
              394,986
              
              
              4.83Electricity,
                  Gas and Water
              
              
              256,541
              
              
              4.02
              
              
              341,718
              
              
              4.18Agriculture
              
              
              150,020
              
              
              2.79
              
              
              179,509
              
              
              2.19Fishing
              
              
              152,538
              
              
              1.27
              
              
              134,235
              
              
              1.64Financial
                  Services
              
              
              163,946
              
              
              4.35
              
              
              219,850
              
              
              2.69Education,
                  Health and Other Services
              
              
              75,376
              
              
              1.28
              
              
              106,423
              
              
              1.30Construction
              
              
              74,482
              
              
              2.60
              
              
              201,298
              
              
              2.46Others
                  (2)
              
              
              262,223
              
              
              4.46
              
              
              352,391
              
              
              4.31Sub
                  total
              
              
              5,971,277
              
              
              101.60
              
              
              8,350,817
              
              
              102.04Unearned
                  interest
              
              
              (93,916
              )
              
              -1.60
              
              
              (166,972
              )
              
              -2.04Total
              
              
              5,877,361
              
              
              100.00
              %
              
              8,183,845
              
              
              100.00
              %





(1)
            Includes
                credit card and mortgage loans, other consumer loans and small
                business.


(2)
            Includes
                personal banking and small business loans and other
                sectors.





As
      of
      December 31, 2007, 70.8% of the loan portfolio was concentrated in Lima and
      93.10% was concentrated in Peru. An additional 5.32% of the loan portfolio
      was
      concentrated in Bolivia.


77


*Concentrations
      of Loan Portfolio and Lending Limits*




Credicorp’s
      loans and other contingent credits to the 20 customers (considered as economic
      groups) to which it had the largest exposure as of December 31, 2007 were
      US$1,932.0 million, of which US$1,700.6 million were outstanding loans
      representing 23.2% of the total loan portfolio. See “—(11) Supervision and
      Regulation—(ii) BCP—Lending Activities” for the definition of economic
      group. Total loans and other contingent credits outstanding to these customers
      ranged from US$158.3 million to US$55.4 million, including fifteen customers
      with over US$75.0 million. Total loans and other contingent credits outstanding
      to Credicorp’s 20 largest customers were ranked in the following risk categories
      as of December 31, 2007: Class A (normal)—92.8%; Class B (potential
      problems)—7.2%; Class C (substandard)—0%; Class D (doubtful)—0%; and Class E
      (loss)—0%. See “—Classification of the Loan Portfolio.”




BCP’s
      loans to a single borrower are subject to lending limits imposed by Law 26702.
      See “—(11) Supervision and Regulation—(ii)BCP—Lending Activities.” The
      applicable Law 26702 lending limits depend on the nature of the borrower
      involved and the type of collateral received. The sum of loans to and deposits
      in either another Peruvian universal bank or Peruvian financial institution,
      plus any guarantees of third party performance received by BCP from such
      institution, may not exceed 30% of BCP’s regulatory capital, as defined by the
      SBS. The sum of loans to and deposits in non-Peruvian financial institutions,
      plus any guarantees of third party performance received by BCP from such
      institutions, are limited to 5%, 10% or 30% of BCP’s regulatory capital,
      depending upon the governmental supervision to which the institution is subject
      and upon whether it is recognized by the Central Bank as an international bank
      of prime credit quality. The limits on lending to non-Peruvian financial
      institutions increase to 50% of BCP’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’s
      loans to Directors and employees and relatives have a global limit of 7% of
      capital stock and reserves 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’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. Lending on an unsecured basis to
      individuals or companies residing in Peru that are not financial institutions
      is
      limited to 10% of BCP’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 Central Bank of prime credit quality, or by other highly liquid
      securities at market value. Finally, the single borrower lending limit for
      loans
      backed by a cash deposit at BCP or by debt obligations of the Central Bank
      is
      30% of BCP’s regulatory capital. With
      an
      unconsolidated regulatory capital of S/.3,157.1 million (US$1,053.9 million)
      on
      December 31, 2007 BCP’s legal lending limits vary from S/.315.7 million
      (US$105.4 million) to S/.1,578.6 million (US$527.0 million). Credicorp’s
      consolidated lending limits, based on its regulatory capital on a consolidated
      basis of US$1,420.2 million on December 31, 2007, would range from
      US$71.0 million to US$710.1 million. As of December 31, 2007, BCP was in
      compliance with all Law 26702 lending limits.




As
      of
      December 31, 2007, Credicorp complied with the applicable legal lending limits
      in each of the jurisdictions in which it operates. Such limit is calculated
      quarterly based on Credicorp’s consolidated equity plus reserves for impaired
      loans not specifically identified at quarter-end. A limited number of exceptions
      to Credicorp’s internal limits have been authorized by the Board of Directors
      from time to time, based on the credit quality of the borrower, the term of
      the
      loan and the amount and quality of collateral taken by Credicorp. Credicorp
      may,
      in appropriate and limited circumstances, increase or choose to exceed this
      limit in the future.


78


In
      the
      event that customers to which Credicorp has significant credit exposure are
      not
      able to meet their obligations to Credicorp, and any related collateral is
      not
      sufficient to cover such obligations, or if a reclassification of one or more
      of
      such loans or other contingent credits results in an increase in provisions
      for
      loan losses, there may be an adverse impact on the financial condition and
      results of operations of Credicorp.




*Loan
      Portfolio Denomination*




The
      following table presents Credicorp’s Nuevo Sol and foreign currency-denominated
      loan portfolio at the dates indicated.


**At December 31,****2003**
              
              **2004**
              
              **2005***(U.S. Dollars in thousands, except percentages)*Total loan
                  portfolio:Nuevo
                  Sol-denominated
              
              US$
              723,955
              
              
              16.15
              %
              US$
              662,058
              
              
              14.52
              %
              US$
              1,032,481
              
              
              20.76
              %Foreign
                  Currency-denominated
              
              
              3,757,541
              
              
              83.85
              %
              
              3,896,960
              
              
              85.48
              %
              
              3,940,494
              
              
              79.24
              %Total
                  loans (1)
              
              US$
              4,481,496
              
              
              100.00
              %
              US$
              4,559,018
              
              
              100.00
              %
              US$
              4,972,975
              
              
              100.00
              %





**At December 31,****2006**
            
            **2007***(U.S. Dollars in thousands, except percentages)*Total loan portfolio:Nuevo
                Sol-denominated
            
            US$
            1503,306
            
            
            25.58
            %
            US$
            2,461,787
            
            
            30.08
            %Foreign
                Currency-denominated
            
            
            4,374,055
            
            
            74.42
            %
            
            5,722,058
            
            
            69.92
            %Total
                loans (1)
            
            US$
            5,877,361
            
            
            100.00
            %
            US$
            8,183,845
            
            
            100.00
            %




(1)
            Net
                of unearned interest.




*Maturity
      Composition of the Performing Loan Portfolio*




The
      following table sets forth an analysis of Credicorp’s performing loan portfolio
      on December 31, 2007, by type and by time remaining to maturity. Loans are
      stated before deduction of the reserves for loan losses.




**Maturing****Amount at**
                  **December 31,**
                  **2007**
                
                **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***(U.S. Dollars in thousands, except percentages)*Loans
                
                US$
                6,520,116
                
                US$
                2,581,571
                
                US$
                1,373,870
                
                US$
                990,849
                
                US$
                457,089
                
                US$
                1,116,736Leasing
                    transactions
                
                
                1,118,301
                
                
                268,338
                
                
                159,508
                
                
                432,984
                
                
                197,334
                
                
                60,136Discounted
                    notes
                
                
                325,047
                
                
                310,585
                
                
                14,386
                
                
                75
                
                
                —
                
                
                —Refinanced
                    loans
                
                
                88,451
                
                
                20,672
                
                
                14,106
                
                
                18,731
                
                
                12,247
                
                
                22,695Factoring
                
                
                109,928
                
                
                108,466
                
                
                1,032
                
                
                430
                
                
                —
                
                
                —Advances
                    and overdrafts
                
                
                127,486
                
                
                126,905
                
                
                581
                
                
                —
                
                
                —
                
                
                —Total.
                
                US$
                8,289,329
                
                US$
                3,416,537
                
                US$
                1,583,484
                
                US$
                1,443,070
                
                US$
                666,670
                
                US$
                1,199,568Percentage
                    of total performingloan
                    portfolio
                
                
                100.00
                %
                
                41.22
                %
                
                18.86
                %
                
                17.41
                %
                
                8.04
                %
                
                14.47
                %




*Interest
      Rate Sensitivity of the Loan Portfolio*




The
      following table sets forth the interest rate sensitivity of the loan portfolio
      on December 31, 2007, by currency and by the time remaining to maturity
      over one year:




79






**Amount at**
              **December 31,**
              **2007**
            
            **Maturing After**
              **1 year***(U.S. Dollars in thousands)***Variable
                Rate**Nuevo
                Sol-denominated
            
            US$
            309,781
            
            US$
            221,015Foreign
                Currency-denominated
            
            
            1,292,134
            
            
            992,355Total
            
            
            1,601,914
            
            
            1,213,370**Fixed
                Rate (2)**Nuevo
                Sol-denominated
            
            
            2,152,006
            
            
            473,955Foreign
                Currency-denominated
            
            
            4,429,924
            
            
            1,457,076Total
            
            
            6,581,930
            
            
            1,931,031Total
                (1)
            
            US$
            8,183,845
            
            US$
            3,144,401







(1)
            Net
                of unearned interest


(2)
            Most
                of financial products with fixed rates can be switched to variable
                rates
                according to market conditions as specified on the contracts with
                clients.




*Classification
      of the Loan Portfolio*




Credicorp
      classifies BCP’s loan portfolio (which includes the loan portfolio of BCB) and
      ASHC’s loan portfolio in accordance with SBS regulations. According to SBS
      Resolution No. 808-2003, banks must classify all loans and other credits into
      one of four categories based upon the purpose of the loan; these categories
      are
      commercial, micro-business, consumer and residential mortgage. 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. Micro-business loans, exclusively targeted for the production
      and sale of goods and services, are made to individuals or companies with no
      more than US$30,000 in total loans received from the financial system. 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. Residential
      mortgage loans are all loans to individuals for the purchase, construction,
      remodeling, subdivision or improvement of the individual’s own 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 the bank is required to reserve should the borrower fail to make payments
      as they become due.




Regulations
      promulgated by the SBS also require Peruvian banks to classify all loans into
      one of five other categories depending upon the degree of risk of nonpayment
      of
      each loan. Credicorp reviews its loan portfolio on a continuing basis, and
      the
      SBS reviews the portfolio as it deems necessary or prudent. In classifying
      its
      loans based upon risk of nonpayment, Credicorp, in compliance with SBS
      guidelines, assesses the following factors: the payment history of the
      particular loans, the history of Credicorp’s dealings with the borrower,
      management, operating history, repayment capability and availability of funds
      of
      the borrower, status of any collateral or guarantee, the borrower’s financial
      statements, general risk of the sector in which the borrower operates, the
      borrower’s risk classification made by other financial institutions, and other
      relevant factors. The classification of the loan determines the amount of the
      required loan loss provision. Law 26702 further requires banks to establish
      a
      loan loss provision of up to 1% of the bank’s loan and credit portfolio
      classified as A (Normal) for losses not specifically identified on the loan
      portfolio.




80


The
      following table sets forth a breakdown of the loan portfolio using the
      categories specified in SBS Resolution No. 808-2003 as of December 31 of each
      of
      the last five years.





**At December 31,****2003**
            
            **2004**
            
            **2005**
            
            **2006**
            
            **2007***(U.S.
                Dollars in thousands)*Commercial
                loans
            
            US$
            3,680,491
            
            US$
            3,625,678
            
            US$
            3,771,488
            
            US$
            4,390,547
            
            US$
            6,055,206Consumer
                loans
            
            
            251,785
            
            
            283,410
            
            
            356,595
            
            
            506,184
            
            
            874,804Residential
                mortgage loans
            
            
            549,220
            
            
            649,930
            
            
            844,892
            
            
            980,630
            
            
            1,253,835Total
                performing loans (1)
            
            US$
            4,481,496
            
            US$
            4,559,018
            
            US$
            4,972,975
            
            US$
            5,877,361
            
            US$
            8,183,845








(1)
            Net
                of unearned interest.




Under
      current regulations, collateral is not subtracted from the amount of the loan
      or
      credit outstanding to determine the amount of the loan or credit to be reserved
      against. Instead, a lower loan provision is allowed to be reserved on the
      portion of the loan or credit that is secured. For the purpose of determining
      the reservable amount, collateral is valued according to SBS regulations which
      require that an appraisal be determined based on expected market valuation.
      Only
      assets classified as (i) “preferred,” (ii) “highly liquid preferred,” or (iii)
“self-liquidating preferred” are acceptable as collateral. Such collateral must,
      according to SBS regulations, (1) be relatively liquid, (2) have legally
      documented ownership, (3) have no liens outstanding and (4) have constantly
      updated appraisals. Examples of “preferred” or “highly liquid preferred” assets
      include, among others, cash deposits, real estate mortgages and pledges on
      securities or on other goods. “Self-liquidating preferred” assets include solely
      cash deposits in local banks or stand-by letters of credit from first-level
      foreign institutions.




SBS
      regulations require the following minimum reserves to be recorded for statutory
      purposes for commercial, micro-business and mortgage loans: a 1% reserve on
      not
      specifically identified loans and credits classified in the A (Normal) category,
      and a 5%, 25%, 60% and 100% specific reserve on loans and credits in risk
      categories B, C, D and E, respectively. Whenever such loans or credits, or
      the
      portions thereof, are secured with “preferred” collateral, required reserves for
      risk categories B, C, D and E are: 2.5%, 12.5%, 30% and 60%, respectively.
      Loans
      or credits, or portions thereof, secured with “highly liquid preferred”
collateral require at least one half of the amount established in the case
      of
      the “preferred” collateral. Loans or credits, or the portions thereof, secured
      with “self-liquidating preferred” collateral require at least a 1% reserve. When
      the collateral is insufficient to secure the outstanding balances, the higher
      percentage requirements are applicable on the unsecured portion of the loans
      or
      credits. In the case of consumer loans, the required reserves for local porpuses
      are as follows: a 1% reserve on not specifically identified loans classified
      in
      the A (Normal) category, and a 5%, 25%, 60% and 100% specific reserve on loans
      in risk categories B, C, D and E, respectively.




The
      five
      loan risk categories have the following characteristics:




*Class
      “A.”* Loans or
      credits in this category are known as “normal” credits. Debtors of commercial
      loans or credits that fall into this category have complied on a timely basis
      with their obligations and at the time of evaluation of the credit do not
      present any reason for doubt with respect to repayment of interest and principal
      on the loan on the agreed upon dates, and Credicorp must have no reason to
      believe that the status will change before the next evaluation. To place a
      loan
      or credit in Class A, a clear understanding of the use to be made of the funds
      and the origin of the cash flows to be used by the debtor to repay the loan
      or
      credit is required. Micro-business and consumer loans warrant Class A
      classification if payments are current or up to eight days past-due. Residential
      mortgage loans warrant Class A classification if payments are current or up
      to
      thirty days past-due. Loans or credits in this category require for local
      porpuses a reserve for losses not specifically identified of 1% of the total
      of
      such loans or credits outstanding. The required reserve may be reduced by up
      to
      0.5% if certain conditions that ensure that the client has a low probability
      of
      default are met.


81


*Class
      “B.”* Loans or
      credits in this category are known as credits with “potential problems.” Debtors
      of commercial loans or credits included in this category are those that at
      the
      time of the evaluation of the credit demonstrate certain deficiencies, which,
      if
      not corrected in a timely manner, imply risks with respect to the recovery
      of
      the loan. Certain common characteristics of loans or credits in the category
      include: delays in loan payments which are promptly covered; a general lack
      of
      information required to analyze the credit; out-of-date financial information;
      temporary economic or financial imbalances on the part of the debtor which
      could
      effect its ability to repay the loan; market conditions that could affect the
      economic sector in which the debtor is active; material overdue debts or pending
      judicial collection actions initiated by other financial institutions;
      noncompliance with originally contracted conditions; conflicts of interest
      within the debtor company; labor problems; unfavorable credit history;
      noncompliance with internal policies of the debtor company; excessive reliance
      on one source of raw materials or one buyer of the debtor’s products; and low
      inventory turnover ratios or large inventories that are subject to competitive
      challenges or technological obsolescence. Micro-business and consumer loans
      are
      categorized as Class B if payments are between nine and 30 days late.
      Residential mortgage loans become Class B when payments are between 31 and
      90
      days late. For local porpuses, a 5% specific reserve on total loans outstanding
      in this category is required. Except for consumer loans, when the loan, or
      a
      portion thereof, is secured with “preferred” collateral, the required reserve is
      2.5%, and when secured with “highly liquid preferred” collateral, the required
      reserve is 1.25%.




*Class
      “C.”* Loans or
      credits in this category are known as “substandard” credits. Debtors of
      commercial loans or credits whose loans or credits are placed in this category
      demonstrate serious financial weakness, often with operating profits or
      available income insufficient to cover financial obligations on agreed upon
      terms, with no reasonable short-term prospects for a strengthening of the
      debtor’s financial capacity. Loans or credits demonstrating the same
      deficiencies that warrant classification as category B credits warrant
      classification as Class C credits if those deficiencies are such that if they
      are not corrected in the near term, they could impede the recovery of principal
      and interest on the loan on the originally agreed terms. Additionally,
      commercial loans are classified in this category when payments are between
      60
      and 120 days late. If payments on a micro-business or consumer loan are between
      31 and 60 days late, such loans are classified as Class C. Residential mortgage
      loans are classified as Class C when payments are between 91 and 120 days late.
      Commercial, micro-business and mortgage loans or credits included in this class
      require for local porpuses a specific provision of 25% of the outstanding amount
      (12.5% when secured with “preferred” collateral and 6.25 % when secured with
“highly liquid preferred” collateral).




*Class
      “D.”* Loans or
      credits included in this category are known as “doubtful” credits. Debtors of
      commercial loans or credits included in this classification present
      characteristics of actual credit risk that make doubtful the recovery of the
      loan. Although the loan recovery is doubtful, if there is a reasonable
      possibility that in the near future the creditworthiness of the debtor might
      improve, a Class D categorization is appropriate. These credits are
      distinguished from Class E credits by the requirement that the debtor remain
      in
      operation, generate cash flow, and make payments on the loan, albeit at a rate
      less than that specified in its contractual obligations. Additionally,
      commercial loans are classified in this category when payments are between
      121
      and 365 days late. Micro-business and consumer loans are categorized as Class
      D
      if payments are between 61 and 120 days late. Residential mortgage loans are
      Class D when payments are between 121 and 365 days late. Loans or credits
      included in this class require for local porpuses a specific provision of 60%
      of
      the outstanding amount. Except for consumer loans, when the loan, or a portion
      thereof, is secured with “preferred” collateral, the required reserve is 30%,
      and when secured with “highly liquid preferred” collateral, the required reserve
      is 15%.


82


*Class
      “E.”* Loans or
      credits in this class are known as “loss” credits. Commercial loans or credits
      which are considered unrecoverable or which for any other reason should not
      appear on Credicorp’s books as an asset based on the originally contracted terms
      fall into this category. Additionally, commercial loans are classified in this
      category when payments are more than 365 days late. Micro-business and consumer
      loans are categorized as Class E if payments are more than 120 days late.
      Residential mortgage loans are moved into Class E when payments are more than
      365 days late. Loans or credits included in this class require for local
      porpuses a specific provision of 100% of the outstanding amount. Except for
      consumer loans, when the loan is secured with “preferred” collateral, the
      required reserve is 60%, and when secured with “highly liquid preferred”
collateral, the required reserve is 30%.




To
      record
      the allowance for loan losses, Credicorp uses IAS 39, for which all loans in
      Classes C, D and E are considered impaired, and they are analyzed taking into
      consideration the present value of their expected cash flows, including the
      recoverable amounts of the guarantees and collateral, discounted at the original
      effective interest rate of each loan. The calculation of the present value
      of
      the estimated future cash flows of a collateralized financial asset reflects
      the
      cash flows that may result from foreclosure less cost for obtaining and selling
      the collateral. The methodology and assumptions used for estimating future
      cash
      flows are reviewed regularly by Credicorp in order to reduce any differences
      between loss estimates and actual loss experience. The allowance for credit
      losses also covers incurred losses for impaired loans not specifically
      identified in Classes A and B. In the case of borrowers in countries where
      there
      is an increased risk of difficulties in servicing external debt, an assessment
      of the political and economic situation is made, and, if necessary, an
      additional country risk provision is provided.




The
      following table shows Credicorp’s direct loan portfolio at the dates
      indicated:





**At December 31,****2003**
            
            **2004**
            
            **2005***(U.S. Dollars in thousands, except percentages)*Level of RiskClassification
            
            **Amount**
            
            **% Total**
            
            **Amount**
            
            **% Total**
            
            **Amount**
            
            **% Total**A:
                Normal
            
            US$
            3,393,833
            
            
            75.7
            %
            US$
            3,719,973
            
            
            81.6
            %
            US$
            4,273,719
            
            
            85.9
            %B:
                Potential Problems
            
            
            437,682
            
            
            9.8
            
            
            336,619
            
            
            7.4
            
            
            397,387
            
            
            8.0
            %C:
                Substandard
            
            
            240,316
            
            
            5.4
            
            
            195,062
            
            
            4.3
            
            
            82,858
            
            
            1.7
            %D:
                Doubtful
            
            
            266,723
            
            
            6.0
            
            
            184,206
            
            
            4.0
            
            
            146,898
            
            
            3.0
            %E:
                Loss
            
            
            142,942
            
            
            3.1
            
            
            123,158
            
            
            2.7
            
            
            72,113
            
            
            1.4
            %Total
                (1)
            
            US$
            4,481,496
            
            
            100.00
            %
            US$
            4,559,018
            
            
            100.0
            %
            US$
            4,972,975
            
            
            100.0
            %C+D+E
            
            US$
            649,981
            
            
            14.5
            %
            US$
            502,426
            
            
            11.0
            %
            US$
            301,869
            
            
            6.1
            %





**At December 31,****2006**
            
            **2007**Level of RiskClassification
            
            **Amount**
            
            **% Total**
            
            **Amount**
            
            **% Total**A:
                Normal
            
            US$
            5,296,653
            
            
            90.1
            %
            US$
            7,602,347
            
            
            92.9
            %B:
                Potential Problems
            
            
            337,497
            
            
            5.7
            %
            
            371,119
            
            
            4.5
            %C:
                Substandard
            
            
            62,192
            
            
            1.1
            %
            
            71,340
            
            
            0.9
            %D:
                Doubtful
            
            
            122,215
            
            
            2.1
            %
            
            88,540
            
            
            1.1
            %E:
                Loss
            
            
            58,804
            
            
            1.0
            %
            
            50,499
            
            
            0.6
            %Total
                (1)
            
            US$
            5,877,361
            
            
            100.0
            %
            US$
            8,183,845
            
            
            100.0
            %C+D+E
            
            US$
            243,211
            
            
            4.1
            %
            US$
            210,379
            
            
            2.6
            %


(1)
      Net
      of unearned interest


83


All
      of
      the Class E loans and substantially all of the Class D loans are past due.
      Class
      C loans, although generally not past due, have demonstrated credit deterioration
      such that management has serious doubts as to the ability of the borrower to
      comply with the present loan repayment terms. The majority of these Class C
      loans are to companies in the Peruvian manufacturing sector and, to a lesser
      extent, the agricultural sector. The manufacturing sector loans are primarily
      secured by warrants and liens on goods or by mortgages, whereas the agricultural
      credits tend to be secured by trade bills and marketable securities. The Class
      C
      loans reflect the financial weakness of the individual borrower rather than
      any
      trend in the Peruvian manufacturing or agricultural industries in general.




*Classification
      of the Loan Portfolio Based on the Borrower’s Payment
      Performance*




Credicorp
      considers loans to be past due depending on their type. BCP considers loans
      past
      due for consumer mortgage and leasing loans, and loans to micro-businesses
      after
      90 days. Beginning January 1, 2001, the SBS issued accounting rules requiring
      Peruvian banks to consider overdrafts past due after 30 days. ASHC considers
      past due all overdue loans except for consumer loans, which are considered
      past
      due when the scheduled principal and/or interest payments are overdue for more
      than 90 days. BCB considers loans past due after 30 days. For IFRS 7
      disclosure requirements on past due loans, see Note 31.1 to the Credicorp
      Consolidated Financial Statements.




Interest
      income is suspended when collection of loans becomes doubtful, such as when
      overdue by more than 90 days or when the borrower or securities’ issuer
      defaults, if earlier than 90 days, and such income is excluded from interest
      income until received. Uncollected income on such loans is reversed against
      income. When management determines that the debtor’s financial condition has
      improved, the recording of interest thereon is reestablished on an accrual
      basis. Therefore, Credicorp does not accrue interest on past due loans. Instead,
      interest on past due loans is recognized only when and to the extent received.
      Over the past five years, Credicorp has recognized interest income on these
      loans of US$11.0 million in 2003, US$6.2 million in 2004, US$5.5 million in
      2005, US$4.8 million in 2006 and US$3.6 million in 2007. Accrued interest on
      past due loans is recognized only when and to the extent received. With the
      exception of discounted notes and overdrafts, accrued but unpaid interest is
      reversed for past due loans. The following table sets forth the repayment status
      of Credicorp’s loan portfolio as of December 31 of each of the last five
      years:




**At December 31,****2003**
            
            **2004**
            
            **2005**
            
            **2006**
            
            **2007***(U.S. Dollars in thousands, except percentages)*Current
            
            US$
            4,225,288
            
            US$
            4,399,961
            
            US$
            4,877,206
            
            US$
            5,800,591
            
            US$
            8,122,357Past
                due:Overdue
                16-119 days
            
            
            50,981
            
            
            11,572
            
            
            10,860
            
            
            20,655
            
            
            20,825Overdue
                120 days or more
            
            
            205,227
            
            
            147,485
            
            
            84,909
            
            
            56,115
            
            
            40,663Subtotal
            
            US$
            256,208
            
            US$
            159,057
            
            US$
            95,769
            
            US$
            76,770
            
            US$
            61,488Total
                loans
            
            US$
            4,481,496
            
            US$
            4,559,018
            
            US$
            4,972,975
            
            US$
            5,877,361
            
            US$
            8,183,845Past
                due loan amounts as a percentage of total loans
            
            
            5.72
            %
            
            3.49
            %
            
            1.93
            %
            
            1.31
            %
            
            0.75
            %




With
      respect to consumer, mortgage and leasing loans, BCP, in accordance with SBS
      regulations, only recognizes as past due installments for these loans that
      are
      past due for fewer than 90 days. The entire amount of these loans will be
      considered past due if any amount is past due more than 90 days. For IFRS 7
      disclosure requirements on past due loans, see Note 31.1 to the Credicorp
      Consolidated Financial Statements.




84




*Past
      Due Loan Portfolio*




The
      following table analyzes Credicorp’s past due loan portfolio by type of loan at
      the dates indicated:





**At December 31,****2003**
            
            **2004**
            
            **2005**
            
            **2006**
            
            **2007****Past due loan amounts:**
            
            *(U.S. Dollars in thousands)*Loans
            
            US$
            194,761
            
            US$
            85,467
            
            US$
            63,889
            
            US$
            57,345
            
            US$
            48,088Discounted
                notes
            
            
            1,531
            
            
            776
            
            
            1,124
            
            
            596
            
            
            636Advances
                and overdrafts in demand deposits
            
            
            3,400
            
            
            4,157
            
            
            3,412
            
            
            1,844
            
            
            3,974Leasing
                transactions
            
            
            8,716
            
            
            9,387
            
            
            6,412
            
            
            5,237
            
            
            2,110Refinanced
                loans
            
            
            47,800
            
            
            59,270
            
            
            20,932
            
            
            11,748
            
            
            6,680Total
                past due portfolio
            
            US$
            256,208
            
            US$
            159,057
            
            US$
            95,769
            
            US$
            76,770
            
            US$
            61,488Less:
                Reserves for loan losses(1)
            
            US$
            326,677
            
            US$
            271,873
            
            US$
            218,636
            
            US$
            210,586
            
            US$
            229,700Total
                past due portfolio net of reserves
            
            US$
            (70,469
            )
            US$
            (112,816
            )
            US$
            (122,867
            )
            US$
            (133,816
            )
            US$
            (168,212
            )








(1)
            Includes
                reserves for indirect credits (see -Loan Loss
                Reserves).





Interest
      on past due loans and loans in legal collection is recognized when collected.
      The interest income that would have been recorded for these credits in
      accordance with the terms of the original contract amount is approximately
      US$15.0 million and US$28.1 million as of December 31, 2007 and 2006,
      respectively.




**Loan
      Loss Reserves**




The
      following table shows the changes in Credicorp’s reserves for loan losses and
      movements at the dates indicated:




**Year ended December 31,****2003**
            
            **2004**
            
            **2005**
            
            **2006**
            
            **2007***(U.S. Dollars in thousands)*Reserves
                for loan losses at the beginning of the year
            
            US$
            424,031
            
            US$
            326,677
            
            US$
            271,873
            
            US$
            218,636
            
            US$
            210,586Additional
                provisions (reversals)
            
            
            66,421
            
            
            16,131
            
            
            (6,356
            )
            
            (4,243
            )
            
            28,439Acquisitions
                and transfers
            
            
            —
            
            
            —
            
            
            (9,024
            )
            
            —
            
            
            —Recoveries
                of write-offs
            
            
            17,416
            
            
            32,287
            
            
            35,032
            
            
            44,284
            
            
            34,084Write-offs
            
            
            (185,688
            )
            
            (105,267
            )
            
            (71,405
            )
            
            (49,859
            )
            
            (47,266
            )Monetary
                correction and other
            
            
            4,497
            
            
            2,045
            
            
            (1,484
            )
            
            1,768
            
            
            3,857Total
                reserves for loan losses at the end of the year
            
            US$
            326,677
            
            US$
            271,873
            
            US$
            218,636
            
            US$
            210,586
            
            US$
            229,700





For
      a
      discussion of the risk elements in the loan portfolio and the factors considered
      in determining the amount of specific reserves, see “—Classification of the Loan
      Portfolio”. Also, as required by IFRS 7, the balance of the reserve for loan
      losses for the years 2005, 2006 and 2007 are included in Note 7(d) to the
      Credicorp Consolidated Financial Statements.




Reserves
      for loan losses as of December 31, 2007 include US$211.3 million of reserves
      for
      credit losses and US$18.4 million of reserves for indirect or contingent credit
      losses (US$190.3 million and US$20.3 million as of December 31, 2006,
      respectively). The reserves for indirect credit losses are included in the *Other
      liabilities* caption
      of Credicorp’s consolidated balance sheet (see Notes 7(d) and 13(a) to the
      Credicorp Consolidated Financial Statements).


85


The
      charge-off process is performed with prior approval of the Board of Directors
      and of SBS, which is considered on a case-by-case basis.




Credicorp
      sells certain of its fully provisioned past due loans to wholly-owned
      subsidiaries (Soluciones en Procesamiento and BCP Sociedad de Propósito
      Especial) for a nominal amount with the same effect as if the loans had been
      charged-off. Accordingly, Credicorp believes that its past due loan amounts
      are
      not materially different from what they would be were it permitted to charge-off
      loans prior to demonstrating the absolute non-collectibility of the loan. In
      addition, BCP sells employees’ mortgages loans to its subsidiary Financiera de
      Crédito Solución.




*Allocation
      of Loan Loss Reserves*




The
      following table sets forth the amounts of reserves for loan losses attributable
      to commercial, consumer and residential mortgage loans at the dates indicated
      (see also Note 7(d) to the Credicorp Consolidated Financial
      Statements):




**At December 31,****2003**
            
            **2004**
            
            **2005**
            
            **2006**
            
            **2007***(U.S. Dollars in thousands)*Commercial loans
            
            US$
            287,784
            
            US$
            236,419
            
            US$
            196,059
            
            US$
            183,374
            
            US$
            184,584Consumer
                loans
            
            
            14,479
            
            
            14,079
            
            
            14,409
            
            
            17,959
            
            
            30,662Residential
                mortgage loans
            
            
            24,414
            
            
            21,375
            
            
            8,528
            
            
            9,253
            
            
            14,454Total
                reserves
            
            US$
            326,677
            
            US$
            271,873
            
            US$
            218,636
            
            US$
            210,586
            
            US$
            229,700


86




**(iv)**
            **Deposits**




The
      following table presents the components of Credicorp’s deposit base at the dates
      indicated:




**At December 31,****2005**
            
            **2006**
            
            **2007***(U.S. Dollars in thousands)*Demand
                deposits:Nuevo
                Sol-denominated
            
            US$
            725,878
            
            US$
            996,246
            
            US$
            1,457,155Foreign
                Currency-denominated
            
            
            1,075,436
            
            
            1,796,187
            
            
            2,507,346Total
            
            US$
            1,801,314
            
            
            2,792,433
            
            
            3,964,501Savings
                deposits:Nuevo
                Sol-denominated
            
            US$
            483,695
            
            US$
            610,292
            
            US$
            877,205Foreign
                Currency-denominated
            
            
            1,621,669
            
            
            1,341,686
            
            
            1,503,699Total
            
            US$
            2,105,364
            
            US$
            1,951,978
            
            US$
            2,380,904Time
                deposits:Nuevo
                Sol-denominated
            
            US$
            391,374
            
            US$
            862,901
            
            US$
            1,391,008Foreign
                Currency-denominated
            
            
            2,068,533
            
            
            2,355,256
            
            
            2,576,856Total
            
            US$
            2,459,907
            
            US$
            3,218,157
            
            US$
            3,967,864Foreign
                Currency Bank Certificates Foreign Currency-denominated
            
            US$
            46,378
            
            US$
            61,539
            
            US$
            90,119Severance
                Indemnity Deposits (CTS):Nuevo
                Sol-denominated
            
            US$
            70,435
            
            US$
            103,282
            
            US$
            149,308Foreign
                Currency-denominated
            
            
            584,356
            
            
            671,745
            
            
            746,975Total
            
            US$
            654,791
            
            US$
            775,027
            
            US$
            896,283Total
                deposits:Nuevo
                Sol-denominated
            
            US$
            1,671,382
            
            US$
            2,572,721
            
            US$
            3,874,676Foreign
                Currency-denominated
            
            
            5,396,372
            
            
            6,226,413
            
            
            7,424,995Total
            
            US$
            7,067,754
            
            US$
            8,799,134
            
            US$
            11,299,671





The
      following table sets forth information regarding the maturity of Credicorp’s
      time deposits in denominations of US$100,000 or more on December 31,
      2007:




At December 31, 2007(U.S. Dollars in thousands)Certificates
                of deposit:Maturing
                within 30 days
            
            US$
            3,949Maturing
                after 30 but within 60 days
            
            
            1,853Maturing
                after 60 but within 90 days
            
            
            1,421Maturing
                after 90 but within 180 days
            
            
            9,449Maturing
                after 180 but within 360 days
            
            
            4,045Maturing
                after 360 days
            
            
            32,655Total
                certificates of deposits
            
            US$
            53,372Time
                deposits:Maturing
                within 30 days
            
            US$
            1,939,402Maturing
                after 30 but within 60 days
            
            
            428,989Maturing
                after 60 but within 90 days
            
            
            324,879Maturing
                after 90 but within 180 days
            
            
            338,271Maturing
                after 180 but within 360 days
            
            
            315,006Maturing
                after 360 days
            
            
            306,398Total
                time deposits
            
            US$
            3,652,945Total
            
            US$
            3,706,317




87




·
            **Return
                on Equity and Assets**




**At December 31,****2005**
            
            **2006**
            
            **2007**Return
                on assets (1)
            
            
            1.81
            %
            
            1.92
            %
            
            2.29
            %Return
                on equity (2)
            
            
            16.39
            %
            
            18.47
            %
            
            22.67
            %Dividend
                payout ratio (3)
            
            
            48.24
            %
            
            45.08
            %
            
            34.11
            %Equity
                to assets ratio (4)
            
            
            12.37
            %
            
            11.61
            %
            
            10.80
            %Shareholders’
                equity to assets ratio (5)
            
            
            11.41
            %
            
            10.70
            %
            
            9.95
            %







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


(2)
            Net
                income attributable to equity holders of Credicorp as a percentage
                of
                average net equity attributable to Credicorp’s equity holders, computed as
                the average of monthly balances.


(3)
            Dividends
                declared per share divided by net income attributable to Credicorp’s
                equity holders per share.


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


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





**(vi)**  **Short-Term
      Borrowings**




Credicorp’s
      short-term borrowings, other than deposits, amounted to US$878.2 million,
      US$360.8 million and US$775.7 million as of December 31, 2005, 2006 and 2007,
      respectively. Average balances of borrowed amounts increased in 2007 due to
      higher loans received to finance trade operations. The outstanding balance
      on
      December 31, 2005 includes BCRP-Repo transactions entered into with the Central
      Bank, representing US$510.6 million, which earned annual interest rates between
      3.23% and 3.32%, with 3 day maturities. As of December 31, 2006 and 2007, no
      BCRP-Repo transactions exist in the outstanding balance.




The
      following table sets forth Credicorp’s short-term borrowings:





**At December 31,****2005**
            
            **2006**
            
            **2007***(U.S. Dollars in thousands)*Year-end
                balance
            
            US$
            878,237
            
            US$
            360,801
            
            US$
            878,183Average
                balance
            
            US$
            307,930
            
            US$
            479,657
            
            US$
            247,437Maximum
                quarter-end balance
            
            US$
            878,237
            
            US$
            792,609
            
            US$
            878,183Weighted
                average nominal Year-end interest rate
            
            
            4.38
            %
            
            5.00
            %
            
            4.70
            %Weighted
                average nominal Interest rate
            
            
            4.69
            %
            
            4.81
            %
            
            4.87
            %







**(C)**
            **Organizational
                Structure**




Although
      historically there has been substantial overlap among the shareholders of BCP,
      ASHC and PPS, for reasons related to the regulatory, political and economic
      environment in Peru, they have been managed independently from one another.
      Credicorp was formed in 1995 by the management of BCP for the purpose of
      acquiring, pursuant to the Exchange Offer, the common shares of BCP, ASHC and
      PPS. In the October 1995 Exchange Offer, Credicorp acquired 90.1% of BCP
      (391,973,951 shares), 98.2% of ASHC (39,346,169 shares), and 75.8% of PPS
      (5,537,474 shares) in exchange for 60,815,152 Common Shares at a ratio of
      0.10401, 0.33708 and 1.2249 Common Shares per common share of BCP, ASHC and
      PPS,
      respectively. The Common Shares commenced trading on the New York Stock Exchange
      immediately upon consummation of the Exchange Offer, with a closing price on
      such day of US$11.61 (adjusted to reflect stock dividends through May
      1999) .


88


On
      March
      19, 1996, Credicorp acquired pursuant to an exchange offer with the same terms
      as the Exchange Offer the remaining 1.8% of the outstanding shares of ASHC
      (702,674 shares) in exchange for 237,859 Common Shares at a ratio of 0.33708
      Common Shares per common share of ASHC. The closing price of the Common Shares
      on the New York Stock Exchange on the date of consummation of that exchange
      offer was US$10.98 (adjusted to reflect stock dividends). See “Item 9. The Offer
      and Listing—(A) Offer and Listing Details—Price History of Credicorp’s Stock”
and “Item 8. Financial Information—Dividend Policy.”




Credicorp
      management, which consists of certain principal executive officers of BCP,
      ASHC
      and PPS, believes that a unified financial group with a coordinated strategy
      is
      best able to take advantage of growth in the Peruvian economy and deregulation
      of the financial services sector, and to achieve synergies from the
      cross-selling of financial services and products ( *e.g.* ,
      through
      BCP’s extensive branch network). Credicorp, through its subsidiaries, is the
      largest Peruvian provider of financial services in Peru.




BCP
      began
      operations in 1889 as Banco Italiano and changed its name to Banco de Crédito
      del Perú in 1941. BCP has been the largest commercial bank in Peru since the
      1920s. Members of the Romero family have been shareholders of BCP since 1918
      and
      became the controlling shareholders in 1979. Mr. Dionisio Romero, Chairman
      of the Board and Chief Executive Officer of Credicorp, was a member of the
      Board
      of Directors of BCP from 1966 to 1987, becoming Chairman in 1979. In response
      to
      then President of Peru, Alan García’s 1987 attempt to nationalize the Peruvian
      banking industry, the majority shareholders at that time, including
      Mr. Romero, sold a controlling interest in BCP and transferred management
      to its employees, which prevented the government from gaining control of BCP.
      Upon the election of Alberto Fujimori as President of Peru in 1990 and the
      introduction of market reforms, the Romero family reestablished its shareholding
      in BCP and Mr. Romero and several former key managers of BCP returned to
      BCP. See “—(9) Peruvian Government and Economy—(i) Peruvian Government.” Members
      of the Romero family exchanged their BCP shares in the Exchange Offer, and
      now
      hold 15.8% of the Common Shares of Credicorp. As of December 31, 2007, Credicorp
      holds 97.33% of BCP’s total shares. See “Item 7. Major Shareholders and Related
      Party Transactions—(A) Major Shareholders.”




ASHC
      was
      incorporated in December 1981 as a wholly-owned subsidiary of BCP, under the
      name Crédito del Perú Holding Corporation (“BCP International”), in the Cayman
      Islands and became the first Peruvian bank to establish an offshore banking
      presence to serve its Peruvian customers. In 1983, BCP distributed the shares
      of
      BCP International to the shareholders of BCP as dividend to protect its
      privately held status in the event that BCP was nationalized. BCP International
      established its first physical presence offshore (previously having been
      operated through BCP’s corporate offices) by opening an office in Panama in
      1984, and opening an agency in Miami in 1986. Also in 1986, BCP International
      changed its name to ASCH. As a result of the attempted expropriation by the
      government in 1987, ASHC’s operations and management were made independent of
      BCP. In 2002, ASHC closed its Miami agency at the same time that BCP opened
      its
      agency in the same city. Also in Miami, Credicorp Securities was established
      as
      a wholly-owned subsidiary of Credicorp and began operating in early 2003
      serviced by former ASHC personnel.


89


Credicorp
      owns 75.74% of PPS, which was formed in 1992 as a result of a merger between
      El
      Pacífico Compañía de Seguros y Reaseguros S.A. and Compañía de Seguros y
      Reaseguros Peruano-Suiza S.A., and is the second largest Peruvian insurance
      company in terms of premiums sold and health fees. PPS’s major subsidiaries are
      Pacífico Vida, which specializes in life and pension fund insurance, and
      Pacífico Salud, which provides health insurance as an alternative to public
      social security.




Credicorp
      owns 99.99% of Grupo Crédito S.A., which is the principal shareholder in Prima
      AFP and holds equity shares in Peruvian electric utilities and other
      non-financial companies.




BCB
      (formerly Banco Popular S.A., Bolivia), another Credicorp subsidiary, was
      acquired by BCP for US$6.2 million in November 1993. After transferring to
      BCP a
      53.1% stake in November 2001, Credicorp holds directly 2.7% of BCB’s equity with
      the rest held through BCP. In December 2002, BCP acquired BSCH-Perú, which was
      merged into BCP on February 28, 2003.




During
      2003, BCP converted BCOL, its offshore bank in the Bahamas, into a vehicle
      to
      conduct investments and sold it to ASHC. ASHC subsequently consolidated BCOL
      into its operations during 2004. BCOL’s business of taking offshore U.S. Dollar
      deposits and making U.S. Dollar-denominated loans to large Peruvian customers
      has been taken over by both BCP’s Panama branch and by ASHC.




Credileasing
      conducts lease financing operations and began operating in July 1996, taking
      over the operations previously managed by Financiera de Crédito, which
      simultaneously became Solución, specializing in consumer and micro-business
      lending.




Solución
      was spun off into two companies, one of which retained only cash and equity
      which the other was merged into BCP’s Peruvian banking operations in March 2004
      after becoming a wholly-owned subsidiary of BCP in March 2003 as a result of
      BCP
      acquiring the remaining 45% of Solución’s equity interests.




In
      March
      2005, Credicorp completed the sale of Banco Tequendama to a Colombian bank.
      The
      effective date of the sale was January 1, 2005, and Credicorp did not record
      any
      significant gain as a result of the transaction. On December 31, 2004, Banco
      Tequendama had US$306.7 million in loans and US$290.5 million in deposits.
      Banco
      Tequendama was acquired by Credicorp in January 1997 from the *Fondo de Garantía de Depósitos y Protección Bancaria* (“FOGADE”), the Venezuelan government entity responsible for the
      re-privatization of assets seized by that government in connection with the
      widespread problems faced by the Venezuelan banking sector beginning in 1994.
      Credicorp, along with FOGADE and FOGADE’s financial adviser, were sued in Aruba
      by the former owners of Banco Tequendama, who are seeking compensation for
      damages. The Judge in the Court of first instance in Aruba dismissed the claim
      and the plaintiff appealed. In April 2004, the Court of Appeals in Aruba
      rejected all claims from the former owners. The former owners had originally
      sued unsuccessfully in Colombia.




On
      August
      24, 2006, Credicorp, through its subsidiary Prima AFP, acquired from Grupo
      Santander Perú S.A. the shares that this company had in AFP Unión Vida S.A., a
      pension fund management company that operates in Peru, representing 99.97%
      of
      its capital stock and made a tender offer to the minority shareholders in order
      to acquire the remaining 0.03 percent of the capital stock. The total purchase
      price amounted to approximately US$141.5 million. **** At
      the
      general shareholder’s meeting of Prima AFP, held on September 6, 2006, the
      merger with AFP Unión Vida S.A. was approved, with effective date of December 1,
      2006.


90




**(D)**
            **Property,
                Plants and Equipment**




On
      December 31, 2007, Credicorp had 414 branches, representative and similar
      offices, of which 157 were branch offices of BCP in Lima. Credicorp’s principal
      properties include the headquarters of BCP, at Calle Centenario 156, La Molina,
      Lima 12, Perú, and the headquarters of PPS at Juan de Arona 830, Lima, Perú.
      Credicorp owns these properties, with the exception of approximately 319
      properties which it holds under leases. There are no material encumbrances
      on
      any of Credicorp’s properties.




**ITEM
      4A.**  **UNRESOLVED
      STAFF COMMENTS**




Not
      applicable.




**ITEM
      5.**  **OPERATING
      AND FINANCIAL REVIEW AND PROSPECTS**




**(A)**
            **Operating
                Results**




**(1)**  **Critical
      Accounting Policies**




Credicorp’s
      accounting policies are integral to the understanding of its results of
      operations and financial condition. The accounting policies are described in
      Note 3 to the Credicorp Consolidated Financial Statements (Significant
      Accounting Policies to the Credicorp Consolidated Financial Statements), which
      are prepared in accordance with IFRS.




*Income
      and expense recognition from banking activities*




Interest
      income and expense for all interest-bearing financial instruments, including
      those related to financial instruments classified as held for trading or
      designated at fair value through profit or loss, are recognized within “Interest
      and dividend income” and “Interest expense” in the consolidated income statement
      using the effective interest rate, which is the rate that discounts estimated
      future cash payments or receipts throughout the expected life of the financial
      instrument or a shorter period, where appropriate, to the net carrying amount
      of
      the financial asset or financial liability. Interest rates are determined based
      on negotiations with clients.




Interest
      income is suspended when collection of loans becomes doubtful, such as when
      overdue by more than 90 days or when the borrower or securities’ issuer
      defaults, even if earlier than 90 days, and such income is excluded from
      interest income until received. Uncollected income on such loans is reversed
      against income. When Management determines that the debtor’s financial condition
      has improved, the recording of interest thereon is reestablished on an accrual
      basis.




Interest
      income includes coupons earned on fixed income investment and trading securities
      and the accrued discount and premium on financial instruments. Dividends are
      recognized as income when they are declared.




Fees
      and
      commission income are recognized on an accrual basis when earned. Contingent
      credit fees for loans that are likely to be drawn down and other credit related
      fees are deferred (together with any direct incremental costs) and recognized
      in
      straight-line basis as an adjustment to the effective interest rate on the
      loan.




All
      other
      revenues and expenses are recognized on an accrual basis as earned or
      incurred.


91


*Recognition
      of income and expenses of insurance activities*




The
      premiums related to life insurance policies and others, of both long and short
      duration, are recognized as income when they accrue. A reserve for unearned
      premiums is recorded for the unexpired portion of the premiums.




The
      claims reserves are constituted under different methodologies depending on
      the
      type of reserve, line of business, type of product and type of
      coverage.




In
      the
      case of life insurance, the claims reserves are calculated by taking into
      account an estimation of the mortality (for life insurance), survival (life
      annuities, death and disability pension system insurance and complementary
      insurance for work risk for higher risk occupations or incidence (personal
      injury) and the interest established when the product was designed. The reserves
      are calculated as the present value of the probable cash flows for pension
      payments, using mortality tables for the policyholders, beneficiaries and
      disabled who are covered at the consolidated balance sheet date as well as
      interest rates determined based on the performance of the corresponding
      portfolio of investments. In the case of individual life insurance, the reserves
      are determined according to the mortality tables adjusted in variable
      percentages according to the product characteristics, as well as the established
      interest and the type of investment involved according to the type of product.




The
      reserves corresponding to the universal life insurance policies form part of
      the
      technical life insurance reserves. The additional benefits granted to the
      policyholders originating from this type of policy are shown in net premiums
      earned for life and health insurance contract, which include the surplus and
      interest accrued during the period which is credited to the balance of the
      policyholder. See Note 24 to the Credicorp Consolidated Financial Statements.




The
      insurance claims are recorded when the event occurs. The incurred but
      non-reported claims (IBNR) are estimated and included in the provision
      (liabilities). The reserves for IBNR on December 31, 2007 and 2006 have been
      estimated considering generally accepted actuarial methods, which take into
      consideration the statistical analysis of the recorded loss history, the use
      of
      projection methods and when appropriate, qualitative factors used to reflect
      the
      effect of the present conditions or trends that affect historical data.
      Management believes that the estimated reserve is sufficient to cover liability
      for IBNR occurred as of December 31, 2007 and 2006.




Credicorp
      carries out a continuous review of its overall position as well as its
      techniques for computing the claim reserves and its reinsurance in order to
      determine the reserves for life, property and casualty and health insurance.
      The
      provisions are reviewed periodically by qualified actuaries contracted by
      Credicorp. Additionally, for those cases where Credicorp considers an additional
      reserve is necessary, a calculation based on the claims past experience using
      the chain-ladder methodology or a percentage of the related premium is carried
      out. The technical provisions recorded are subject to a liability adequacy
      test
      to determine its sufficiency based on the future cash flow projections of the
      contracts in force. If, as a consequence of this test, the reserves prove to
      be
      insufficient, they are adjusted and the amounts are included in the results
      of
      operations for the period.




The
      costs
      for acquiring the policies (commissions) that are variable and that are
      primarily related to the acquisition and renewal of insurance contracts
      (universal life) are deferred and amortized during the period of the policy
      (Deferred Acquisition Costs or “DAC”). The recoverability of these deferred
      acquisition costs are reviewed annually.




Based
      on
      the periodic reviews of the client portfolio, Management determines the
      provision for bad debt related to premiums and quotas
      receivable.


92


An
      impairment review is performed at each reporting date or more frequently when
      an
      indication of impairment arises. When the recoverable amount is less than the
      carrying value, an impairment loss is recognized in the income statement. DAC
      is
      also considered in the liability adequacy test for each reporting
      period.




*Financial
      Instruments: Initial recognition and subsequent measurement*




Purchases
      or sales of financial assets that require delivery of assets within the time
      frame generally established by regulation or convention in the marketplace
      are
      recorded on the trade date, *i.e.* the date
      Credicorp will purchase or sell the asset. Derivatives are recognized on a
      trade
      date basis.




The
      classification of financial instruments at initial recognition depends on the
      purpose for which the financial instruments were acquired and their
      characteristics. All financial instruments are measured initially at their
      fair
      value plus, in the case of financial assets and financial liabilities not at
      fair value, any directly attributable incremental costs of acquisition or
      issue.




Credicorp
      classifies its financial instruments in the following categories as defined
      by
      IAS 39: financial assets and liabilities at fair value through profit or loss;
      loans and receivables; available-for-sale financial investments and other
      liabilities. Management determinates the classification of its investments
      at
      initial recognition.




Financial
      assets and financial liabilities at fair value through profit or
      loss:




This
      category has two sub-categories: financial assets held for trading and financial
      assets and liabilities designated at fair value through profit or loss at
      inception. A financial asset is classified as held for trading if it is acquired
      or incurred principally for the purpose of selling or repurchasing in the near
      term or if it is part of a portfolio of identified financial instruments that
      are managed together and for which there is evidence of a recent actual pattern
      of short-term profit-taking. Derivatives are also categorized as held for
      trading unless they are designated as hedging instruments. Financial assets
      and
      financial liabilities are designated at fair value through profit or loss when
      the following criteria are met:




-
      The
      designation eliminates or significantly reduces the inconsistent treatment
      that
      would otherwise arise from measuring the assets or liabilities or recognizing
      gains or losses on them on a different basis;




-
      The
      assets and liabilities are part of a group of financial assets, financial
      liabilities or both which performance is evaluated on a fair value basis, in
      accordance with a documented risk management or investment strategy;
      or




-
      The
      financial instrument contains an embedded derivative, unless the embedded
      derivative does not significantly modify the cash flows, or it is clear, with
      little or no analysis, that it would not be separately recorded.




Financial
      assets and financial liabilities at fair value through profit or loss are
      recorded in the consolidated balance sheet at fair value. Changes in fair value
      are recorded in the consolidated income statement under the caption “Net gain on
      financial assets and liabilities designated at fair value through profit and
      loss”. Interest earned or incurred is accrued in the consolidated income
      statement under the captions “Interest and dividend income” or “Interest
      expense”, respectively, according to the terms of the contract. Dividend income
      is recorded when the right to the payment has been established.


93


Loans
      and
      receivables:




Loans
      and
      receivables are non-derivative financial assets with fixed or determinable
      payments that are not quoted in an active market, other than: those that the
      entity intend to sell immediately or in the short term, those that the entity
      upon initial recognition designates as available for sale; or those for which
      the holder may not recover substantially all of its initial investment, other
      than because of credit deterioration.




After
      initial measurement, loans and receivables are subsequently measured at
      amortized cost using the effective interest rate method, less allowance for
      impairment. Amortized cost is calculated by taking into account any discount
      or
      premium on acquisition and fees and costs that are an integral part of the
      effective interest rate. The losses arising from impairment are recognized
      in
      the consolidated income statement in the caption “Provision for loan
      losses”.




Direct
      loans are recorded when disbursement of funds are made to the clients. Indirect
      (off-balance sheet) loans are recorded when documents supporting such facilities
      are issued. Likewise, Credicorp considers as refinanced or restructured those
      loans that change their payment schedules due to difficulties in the debtor’s
      ability to repay the loan.




An
      allowance for loan losses is established if there is objective evidence that
      Credicorp will not be able to collect all amounts due according to the original
      contractual terms of the loan. The allowance for loan losses is established
      based on the internal risk classification and taking into consideration the
      guarantees and collaterals obtained by Credicorp.




Available-for-sale
      financial investments:




Available-for-sale
      financial investments are those which are designated as such (held for an
      indefinite period, and may be sold in response to liquidity needs or changes
      in
      the interest rates, exchange rates or equity price) or do not qualify to be
      classified as designated at fair value through profit or loss, held-to-maturity
      or loans and receivables. They include equity instruments, investments in mutual
      funds and money market and other debt instruments.




After
      initial measurement, available-for-sale financial investments are subsequently
      measured at fair value. Unrealized gains and losses are recognized directly
      in
      equity in the “Other reserves”, net of its corresponding tax and minority
      interest. When the security is disposed of, the cumulative gain or loss
      previously recognized in equity is recognized in the consolidated income
      statement in the caption “Net gain on sales of securities”. Where Credicorp
      holds more than one investment in the same security they are deemed to be
      disposed using the average cost basis. Interest and dividends earned whilst
      holding available-for-sale financial investments are recognized in the
      consolidated income statement in the caption “Interest and dividend income”.
      Interest earned is reported as interest income using the effective interest
      rate
      and dividends earned are recognized when the right of the payment has been
      established.




Estimated
      fair values are based primarily on quoted prices or, if quoted market prices
      are
      not available, discounted expected cash flows using market rates commensurate
      with the credit quality and maturity of the investment.




The
      losses arising from impairment of such investments are recognized in the
      consolidated income statement and removed from the “Other reserves”. Credicorp
      determines that an available-for-sale investment is impaired when there has
      been
      a significant or prolonged decline in the fair value below its
      cost.


94


Other
      financial liabilities:




After
      initial measurement, other financial liabilities are subsequently measured
      at
      amortized cost using the effective interest rate method. Amortized cost is
      calculated by taking into account any discount or premium on the issue and
      costs
      that are an integral part of the effective interest rate.




*Derecognition
      of financial assets and financial liabilities*




A
      financial asset (or, where applicable, a part of a financial asset or part
      of a
      group of similar financial assets) is derecognized where:




(i)
      the
      rights to receive cash flows from the asset have expired; or




(ii)
      Credicorp has transferred its rights to receive cash flows from the asset or
      has
      assumed an obligation to pay the received cash flows in full without material
      delay to a third party under a “pass-through” arrangement; and




(iii)
      either Credicorp has transferred substantially all the risks and rewards of
      the
      asset, or Credicorp has neither transferred nor retained substantially all
      the
      risks and rewards of the asset, but has transferred control of the
      asset.




A
      financial liability is derecognized when the obligation under the liability
      is
      discharged, cancelled or expires. Where an existing financial liability is
      replaced by another from the same lender on substantially different terms,
      or
      the terms of an existing liability are substantially modified, such an exchange
      or modification is treated as a derecognition of the original liability and
      the
      recognition of a new liability, and the difference in the respective carrying
      amounts is recognized in profit or loss.




*Impairment
      of financial assets*




Credicorp
      assesses at each balance sheet date whether there is any objective evidence
      that
      a financial asset or a group of financial assets is impaired. A financial asset
      or a group of financial assets is deemed to be impaired if, and only if, there
      is objective evidence of impairment as a result of one or more events that
      has
      occurred after the initial recognition of the asset (an incurred loss event)
      and
      that loss event (or events) has an impact on the estimated future cash flows
      of
      the financial asset or the group of financial assets that can be reliably
      estimated. Evidence of impairment may include indications that the borrower
      or a
      group of borrowers is experiencing significant financial difficulty, default
      or
      delinquency in interest or principal payments, the probability that they will
      enter bankruptcy or other financial reorganization and where observable data
      indicate that there is a measurable decrease in the estimated future cash flows,
      such as changes in arrears or economic conditions that correlate with defaults.
      The criteria used for each category of financial assets are as
      follows:




Loans
      and
      receivables:




For
      loans
      and receivables that are carried at amortized cost, Credicorp first assesses
      whether objective evidence of impairment exists individually for financial
      assets that are individually significant, or collectively for financial assets
      that are not individually significant. If Credicorp determines that no objective
      evidence of impairment exists for an individually assessed financial asset,
      whether significant or not, it includes the asset in a group of financial assets
      with similar credit risk characteristics and collectively assesses them for
      impairment. Assets that are individually assessed for impairment and for which
      an impairment loss is, or continues to be, recognized are not included in a
      collective assessment of impairment.


95


If
      there
      is objective evidence that an impairment loss has been incurred, the amount
      of
      the loss is measured as the difference between the asset carrying amount and
      the
      present value of estimated future cash flows. The carrying amount of the asset
      is reduced through the use of an allowance account and the amount of the loss
      is
      recognized in the income statement. Interest income continues to be accrued
      on
      the reduced carrying amount based on the original effective interest rate of
      the
      asset. Loans, together with the associated allowance, are written off when
      there
      is no realistic prospect of future recovery and all collateral has been realized
      or has been transferred to Credicorp. If, in a subsequent year, the amount
      of
      the estimated impairment loss increases or decreases because of an event
      occurring after the impairment was recognized, the previously recognized
      impairment loss is increased or reduced by adjusting the allowance account.
      If a
      future write-off is later recovered, the recovery is credited to the provision
      for loan losses.




The
      present value of the estimated future cash flows is discounted at the financial
      asset’s original effective interest rate. If a loan has a variable interest
      rate, the discount rate for measuring any impairment loss is the current
      effective interest rate. The calculation of the present value of the estimated
      future cash flows of a collateralized financial asset reflects the cash flows
      that may result from foreclosure less costs for obtaining and selling the
      collateral, whether or not foreclosure is probable.




For
      the
      purpose of a collective evaluation of impairment, financial assets are grouped
      on the basis of Credicorp’s internal credit grading system that considers credit
      risk characteristics such as asset type, industry, geographical location,
      collateral type, past-due status and other relevant factors.




Future
      cash flows on a group of financial assets that are collectively evaluated for
      impairment are estimated on the basis of historical loss experience for assets
      with credit risk characteristics similar to those in the group. Historical
      loss
      experience is adjusted on the basis of current observable data to reflect the
      effects of current conditions that did not affect the years on which the
      historical loss experience is based and to remove the effects of conditions
      in
      the historical period that do not exist currently. The methodology and
      assumptions used for estimating future cash flows are reviewed regularly to
      reduce any differences between loss estimates and actual loss
      experience.




Available-for-sale
      financial investments:




For
      available-for-sale financial investments, Credicorp assesses at each
      consolidated balance sheet date whether there is objective evidence that an
      investment or a group of investments is impaired. In the case of equity
      investments classified as available-for-sale, objective evidence would include
      a
      significant or prolonged decline in the fair value of the investment below
      its
      cost. Where there is evidence of impairment, the cumulative loss (measured
      as
      the difference between the acquisition cost and the current fair value, less
      any
      impairment loss on that investment previously recognized in the consolidated
      income statement) is removed from equity and recognized in the consolidated
      income statement. Impairment losses on equity investments are not reversed
      through the consolidated income statement; increases in their fair value after
      impairment are recognized directly in equity.




In
      the
      case of debt instruments classified as available-for-sale, impairment is
      assessed based on the same criteria as financial assets carried at amortized
      cost. Future interest income is based on the reduced carrying amount and is
      accrued using the rate of interest used to discount the future cash flows for
      the purpose of measuring the impairment loss. The interest income is recorded
      as
      part of “Interest and dividend income”. If, in a subsequent year, the fair value
      of a debt instrument increases and the increase can be objectively related
      to an
      event occurring after the impairment loss was recognized in the consolidated
      income statement, the impairment loss is reversed through the consolidated
      income statement.


96


Renegotiated
      loans:




Where
      possible, Credicorp seeks to refinance or restructure loans rather than to
      take
      possession of collateral. This may involve extending the payment arrangements
      and the agreement of new loan conditions. Once the terms have been renegotiated,
      the loan is no longer considered past due. Management continuously reviews
      refinanced and restructured loans to ensure that all criteria are met and that
      future payments are likely to occur. The loans continue to be subject to an
      individual or collective impairment assessment, calculated using the loan’s
      original effective interest rate.




*Leases*




Operating
      leases:




Leases
      in
      which a significant portion of the risks and relative benefits of the property
      are held by the lessor are classified as operating leases. By this concept,
      Credicorp principally maintains leases used as offices and agencies for the
      Bank.




When
      an
      operating lease is terminated before the lease period has expired, any payment
      required to be made to the lessor by way of penalty is recognized as an expense
      in the period in which termination takes place.




Finance
      leases:




Credicorp
      grants finance leases; therefore, it recognizes the present value of the lease
      payments as an asset. The difference between the gross receivable amount and
      the
      present value of the loan is recognized as unearned interest. Lease income
      is
      recognized over the term of the lease using the effective interest method,
      which
      reflects a constant periodic rate of return.




*Goodwill*




Goodwill
      represents the excess of the cost of acquisition of a subsidiary over the fair
      value of the net identifiable assets of the acquired subsidiary at the date
      of
      acquisition. Goodwill is tested annually for impairment to assess whether the
      carrying amount is fully recoverable. An impairment loss is recognized if the
      carrying amount exceeds the recoverable amount. Goodwill is allocated to
      cash-generating units for impairment testing purposes.




In
      accordance with IFRS 3, since January 1st, 2005, Credicorp has ceased the
      amortization of goodwill.




*Impairment
      of non-financial assets*




Credicorp
      assesses at each reporting date, or more frequently if events or changes in
      circumstances indicate that the carrying value may be impaired, whether there
      is
      an indication that a non-financial asset may be impaired. If any such indication
      exists, or when annual impairment testing for an asset is required, the group
      makes an estimate of the asset’s recoverable amount. Where the carrying amount
      of an asset (or cash-generating unit) exceeds its recoverable amount, the asset
      (or cash-generating unit) is considered impaired and is written down to its
      recoverable amount.




For
      non-financial assets, excluding goodwill, an assessment is made at each
      reporting date as to whether there is any indication that previously recognized
      impairment losses may no longer exist or may have decreased. If such indication
      exists, the recoverable amount is estimated. A previously recognized impairment
      loss is reversed only if there has been a change in the estimates used to
      determine the asset’s recoverable amount since the last impairment loss was
      recognized. If that is the case, the carrying amount of the asset is increased
      to its recoverable amount. Impairment losses relating to goodwill cannot be
      reversed for subsequent increases in its recoverable amount in future
      periods.


97




*Income
        tax and workers’ profit sharing*
  Income
        tax and workers’ profit sharing are computed based on individual financial
        statements of Credicorp and each one of its subsidiaries.
  Deferred
        income tax and deferred workers’ profit sharing reflect the effects of temporary
        differences between the carrying amounts of assets and liabilities for
        accounting purposes and the amounts determined for tax purposes. Deferred
        assets
        and liabilities are measured using the tax rates expected to be applied to
        taxable income in the years in which temporary differences are expected to
        be
        recovered or eliminated. The measurement of deferred assets and deferred
        liabilities reflects the tax consequences that arise from the manner in which
        Credicorp and its Subsidiaries expect, at the consolidated balance sheet
        date,
        to recover or settle the carrying amount of its assets and
        liabilities.
  Deferred
        tax assets and liabilities are recognized regardless of when the timing
        differences are likely to reverse. Deferred tax assets are recognized when
        it is
        more likely than not that future taxable profit will be available against
        which
        the temporary difference can be utilized. At the consolidated balance sheet
        date, Credicorp assesses unrecognized deferred assets and the carrying amount
        of
        recognized deferred assets.
  Credicorp
        determines its deferred income tax considering the tax rate applicable to
        its
        undistributed earnings; any additional tax on dividends distribution is recorded
        on the date a liability is recognized.
  *Stock
        appreciation rights*
  Credicorp
        has granted supplementary profit sharing participation to certain executives
        and
        employees who have at least one year of service in Credicorp or any of its
        subsidiaries, in the form of stock appreciation rights (SARs) over a certain
        number of Credicorp’s shares. Such SARs options are granted at the market price
        of the shares of Credicorp on the date of the grant and are exercisable at
        that
        price, allowing the worker to obtain a gain from the difference between the
        fixed exercise price of the share at the date of execution and the fixed
        exercise price. Credicorp has estimated the fair value of the SARs using
        the
        binomial option pricing model, with assumptions obtained from available relevant
        market information. See Note 20 to the Credicorp Consolidated Financial
        Statements.
  The
        recorded expense in each year for this participation corresponds to the
        estimated market value of the rights that can be exercised by the beneficiaries
        at the consolidated balance sheets date. When Credicorp changes the price
        or the
        terms of the SARs, the additional compensation expense is recorded for an
        amount
        equal to the difference between the new exercise price and the market price
        of
        the underlying shares.
  *Derivative
        financial instruments*
  Trading:
  Most
        transactions with derivatives, while providing effective economic hedges
        under
        the Group’s risk management positions, do not qualify for hedge accounting under
        the specific rules of IAS 39 and are therefore treated as trading
        derivatives.
  98
  Derivative
        financial instruments are initially recognized in the consolidated balance
        sheet
        at cost and subsequently are re-measured at their fair value. Fair values
        are
        obtained based on the market exchange rates and interest rates. All derivatives
        are carried as assets when fair value is positive and as liabilities when
        fair
        value is negative. Gain and losses for changes in their fair value are recorded
        in the consolidated income statements.
  Hedge:
  Credicorp
        makes use of derivative instruments to manage exposure to interest rates
        and
        foreign currency. In order to manage particular risks, Credicorp applies
        hedge
        accounting for transactions which meet the specified criteria.
  At
        the
        inception of the hedge relationship, Credicorp formally documents the
        relationship between the hedged item and the hedging instrument, including
        the
        nature of the risk, the objective and strategy for undertaking the hedge
        and the
        method that will be used to assess the effectiveness of the hedging
        relationship.
  Also
        at
        the inception of the hedge relationship, a formal assessment is undertaken
        to
        ensure the hedging instrument is expected to be highly effective in offsetting
        the designated risk in the hedged item. Hedges are formally assessed each
        quarter. A hedge is regarded as highly effective if the changes in fair value
        or
        cash flows attributable to the hedged risk during the period for which the
        hedge
        is designated are expected to offset in a range of 80 percent to 125
        percent.
  As
        of
        December 31, 2007, Credicorp had only interest rate swaps and cross currency
        interest rate swap derivatives that qualify for hedge purposes classified
        as
        cash flow hedge and fair value hedge, respectively (only an interest rate
        swap
        derivative classified as a cash flow hedge as of December 31, 2006). The
        effective portion of changes in the fair value of these derivatives is
        recognized in equity and profit and loss, respectively. The gain or loss
        relating to the ineffective portion is recognized immediately in the
        consolidated income statements. Amounts accumulated in equity for the cash
        flow
        hedges are recycled to the income statement in the periods in which the hedged
        item affects profit or loss.
  For
        designated and qualifying cash flow hedges, the effective portion of the
        gain or
        loss on the hedging instrument is initially recognized directly in equity
        in
“Other reserves”. The ineffective portion of the gain or loss on the hedging
        instrument is recognized immediately in the consolidated income statement
        in the
        caption “Interest and dividend income”. When the hedged cash flow affects the
        consolidated income statement, the gain or loss on the hedging instrument
        is
        recycled in the corresponding income or expense line of the consolidated
        income
        statement.
  For
        designated and qualifying fair value hedge, the change in the fair value
        of a
        hedging derivative is recognized in the consolidated income statement in
        the
        caption “Interest and dividend income”. Meanwhile, the change in the fair value
        of the hedged item attributable to the risk hedged is recorded as part of
        the
        carrying value of the hedged item and is also recognized in the consolidated
        income statement in the caption “Interest and dividend income”. If the hedging
        instrument expires or is sold, terminated or exercised, or where the hedge
        no
        longer meets the criteria for hedge accounting, the hedge relationship is
        terminated.
  99
  **(2)**  **Historical
        Discussion and Analysis**
  The
        following discussion is based upon information contained in the Credicorp
        Consolidated Financial Statements and should be read in conjunction therewith.
        The discussion in this section regarding interest rates is based on nominal
        interest rates. For a comparison of nominal interest rates with real interest
        rates, see “Item 4. Information on the Company—(B) Business Overview—(12)
        Selected Statistical Information—(i) Average Balance Sheets and Income from
        Interest-Earning Assets—Real Average Interest Rates.”
  The
        financial information and discussion and analysis presented below for 2005,
        2006
        and 2007 reflect the financial position and results of operations for 2005,
        2006
        and 2007 of Credicorp’s subsidiaries. See “Item 3. Key Information—(A) Selected
        Financial Data.”
  On
        December 31, 2007, approximately 65.7% of Credicorp’s deposits and 69.9% of its
        loans were denominated in foreign currencies. Despite its high proportions,
        foreign currency deposits and loans has decreased from the previous year
        (70.8%
        and 74.6%, respectively) due to reduction in the rate of inflation.
        Nevertheless, Credicorp expects the majority of its deposits and loans to
        continue to be denominated in foreign currencies.
  100
  *Results
        of Operations for the Three Years Ended December 31, 2007*
  The
        following table sets forth, for the years 2005, 2006 and 2007, the principal
        components of Credicorp’s net income:
  **Year ended December 31,****2005**
              
              **2006**
              
              **2007***(U.S.
                  Dollars in thousands)*Interest
                  income
              
              US$
              612,432
              
              US$
              782,002
              
              US$
              1,065,974Interest
                  expense
              
              
              (173,159
              )
              
              (283,478
              )
              
              (432,000
              )Net
                  interest income
              
              US$
              439,273
              
              US$
              498,524
              
              US$
              633,974Provision
                  for loan losses
              
              
              6,356
              
              
              4,243
              
              
              (28,439
              )Net
                  interest income after Provision
              
              US$
              445,629
              
              US$
              502,767
              
              US$
              605,535Noninterest
                  income
              
              
              265,985
              
              
              338,894
              
              
              517,920Insurance
                  premiums earned net of claims on insurance activities
              
              
              43,455
              
              
              64,739
              
              
              58,672Other
                  expenses
              
              
              (477,073
              )
              
              (585,058
              )
              
              (742,072
              )Merger
                  costs
              
              
              —
              
              
              (5,706
              )
              
              —Income
                  before translation result and income tax
              
              US$
              277,996
              
              US$
              315,636
              
              US$
              440,055Translation
                  result (loss) gain
              
              US$
              (9,597
              )
              US$
              15,216
              
              US$
              34,627Income
                  tax
              
              
              (73,546
              )
              
              (83,587
              )
              
              (102,287
              )**Net
                  income**
              
              **US$**
              **194,853**
              
              **US$**
              **247,265**
              
              **US$**
              **372,395**Net
                  income attributable to:Credicorp’s
                  shareholders
              
              
              181,885
              
              
              230,013
              
              
              350,735Minority
                  interests
              
              
              12,968
              
              
              17,252
              
              
              21,660**Net
                  income**
              
              **US$**
              **194,853**
              
              **US$**
              **247,265**
              
              **US$**
              **372,395**
  Consolidated
        net income attributable to Credicorp’s shareholders increased from US$230.0
        million in 2006 to US$350.7 million in 2007. Credicorp’s consolidated net income
        increased from 2006 to 2007 principally due to: (i) higher average volumes
        in
        interest-earning assets mainly as a consequence of the strong expansion in
        the
        BCP banking business with the robust loan growth; (ii) greater commissions
        for
        financial services and higher gains on foreign exchange transactions and
        sale of
        securities; and (iii) higher net gain on financial assets and liabilities
        designated at fair value, mainly related to the economic hedge of the stock
        appreciation rights mentioned below.
  On
        the
        other hand, operating expenses increased 26.8% in 2006 to US$742.1 million,
        principally as a result of increased expense on salaries and benefits. The
        increase in personnel expenses during 2007 was principally due to increases
        in
        salaries and stock appreciation rights (see Note 20 to the Credicorp
        Consolidated Financial Statements), as well as increase in the number of
        personnel.
  *Net
        Interest Income*
  Net
        interest income represents the difference between interest income on
        interest-earning assets and the interest paid on interest bearing liabilities.
        The following table sets forth the components of net interest
        income:
  101
  **Year ended December 31,****2005**
              
              **2006**
              
              **2007***(U.S.
                  Dollars in thousands)***Interest
                  income:**Loans
              
              US$
              447,392
              
              US$
              537,670
              
              US$
              701,471Deposits
                  in banks
              
              
              13,073
              
              
              36,916
              
              
              58,896Deposits
                  in Central Bank
              
              
              24,054
              
              
              56,970
              
              
              46,921Investment
                  securities and others
              
              
              124,360
              
              
              141,305
              
              
              249,603Dividends
              
              
              3,553
              
              
              9,141
              
              
              9,083Total
                  interest income
              
              US$
              612,432
              
              US$
              782,002
              
              US$
              1,065,974**Interest
                  expense:**Saving
                  deposits
              
              US$
              9,234
              
              US$
              12,836
              
              US$
              19,869Time
                  deposits
              
              
              101,254
              
              
              160,565
              
              
              263,487Issued
                  bonds
              
              
              24,332
              
              
              25,283
              
              
              33,592Borrowing
                  from other financial institutions and others
              
              
              21,422
              
              
              60,013
              
              
              89,929Demand
                  deposits
              
              
              16,917
              
              
              24,781
              
              
              25,123Total
                  interest expense
              
              US$
              173,159
              
              US$
              283,478
              
              US$
              432,000Net
                  interest income
              
              US$
              439,273
              
              US$
              498,524
              
              US$
              633,974
 
 Credicorp’s
        net interest income increased 27.2% in 2007 compared to 2006, which in turn
        increased 13.5% compared to 2005.
  *Interest
        Income* .
        Interest income increased 36.3% in 2007, after increasing 27.7% in 2006 compared
        to 2005. The increase in 2007 was principally due to higher averages volumes
        in
        loans and trading securities and investments available for sale. Loan increase
        was mainly related to retail banking growth, while investments securities
        increase was due to gains related to BCRP certificates of deposit.
  Credicorp’s
        average nominal interest rates earned on its loans increased to 10.0% in
        2007
        from 9.9% in 2006 and from 9.5% in 2005. The average nominal interest rate
        for
        foreign currency-denominated loans increased from 8.1% in 2005 to 8.8% in
        2006
        and decrease to 8.6% in 2007. Interest rates for Nuevo Sol-denominated loans
        decreased from 16.0% in 2005 to 13.7% in 2006 and further to 13.5% in
        2007.
  The
        average balance of Credicorp’s foreign currency-denominated loan portfolio
        increased 24.3% to US$5,101.4 million in 2007 from US$4,104.5 million in
        2006,
        which in turn increased 5.6% from US$3,888.6 million in 2005. The average
        balance of Credicorp’s Nuevo Sol-denominated loan portfolio increased 57.3% from
        US$831.4 million in 2005 to US$1,307.8 million in 2006, and by 48.5% to
        US$1,942.3 million in 2007. Credicorp’s excess liquidity has continued through
        2007. During 2007, an increasing proportion of loans went to manufacturing,
        consumer, leasing, commerce and small business sectors presenting higher
        risk,
        but these sectors also yielded higher margins. See “Item 4. Information on the
        Company—(B) Business Overview—(12) Selected Statistical
        Information.”
  *Interest
        expense.* Interest
        expense increased in 2007 by 52.4% compared to 2006, and by 63.7% in 2006
        compared to 2005. Higher interest expense in 2007 and 2006 were principally
        due
        to increases in the volume of deposits and variable market rates on deposits.
        Average nominal interest rates paid on foreign currency-denominated deposits
        increased from 1.9% in 2005 to 2.6% in 2006, and further to 2.8% in 2007.
        Average nominal interest paid on Nuevo Sol-denominated deposits increased
        from
        2.0% in 2005 to 2.5% in 2006, and further to 3.2% in 2007. The higher
        increase **** in
        the
        average nominal interest rate paid in Nuevo Sol-denominated deposits indicates
        the effect caused by the appreciation of Nuevo Sol. See “Item 4. Information on
        the Company—(B) Business Overview—(8) Competition” and “—(12) Selected
        Statistical Information.”
  102
  Credicorp’s
        average foreign currency-denominated deposits increased 24.0% to US$7,216.6
        million in 2007 from US$5,820.1 million in 2006, which in turn increased
        16.7%
        from US$4,989.4 million in 2005. Credicorp’s average Nuevo Sol-denominated
        deposits increased 63.2% in 2007 to US$3,272.1 million from US$2,005.0 million
        in 2006, which in turn increased 21.0% from US$1,656.9 million in 2005. See
        “Item 4. Information on the Company—(B) Business Overview—(12) Selected
        Statistical Information.”
  *Net
        interest margin.* Credicorp’s
        net interest margin (net interest income divided by average interest-earning
        assets) decreased to 4.5% in 2007 compared to 4.64% in 2006 and 4.90% in
        2005 as
        returns declined on interest-earning assets, mainly securities and Nuevo
        Sol-denominated loans, while funding costs remained relatively unchanged.
        See ”Item 4. Information on the Company—(B) Business Overview—(12) Selected
        Statistical Information.”
  *Provision
        for Loan Losses*
  Credicorp
        classifies all of its loans and other credits by risk category. Credicorp
        establishes its loan loss reserves based on criteria established by IAS 39
        (see
“Item 4. Information on the Company—(B) Business Overview—(12) Selected
        Statistical Information—(iii) Loan Portfolio—Classification of the Loan
        Portfolio”). Credicorp does not anticipate that the expansion of its loan
        portfolio or the consolidation of the activities of its subsidiaries will
        necessitate a change in its reserve policy.
  The
        following table sets forth the movements in Credicorp’s reserve for loan
        losses:
  **Year ended December 31,****2003**
              
              **2004**
              
              **2005**
              
              **2006**
              
              **2007***(U.S.
                  Dollars in thousands)*Reserves
                  for loan losses at the beginning of the year
              
              US$
              424,031
              
              US$
              326,677
              
              US$
              271,873
              
              US$
              218,636
              
              US$
              210,586Provisions
              
              
              66,421
              
              
              16,131
              
              
              (6,356
              )
              
              (4,243
              )
              
              28,439Acquisitions
                  and sales
              
              
              —
              
              
              —
              
              
              (9,024
              )
              
              —
              
              
              —Recoveries
                  of write-offs
              
              
              17,416
              
              
              32,287
              
              
              35,032
              
              
              44,284
              
              
              34,084Write-offs
              
              
              (185,688
              )
              
              (105,267
              )
              
              (71,405
              )
              
              (49,859
              )
              
              (47,266
              )Monetary
                  Correction and Other
              
              
              4,497
              
              
              2,045
              
              
              (1,484
              )
              
              1,768
              
              
              3,857Reserves
                  for loan losses at the End of the year
              
              US$
              326,677
              
              US$
              271,873
              
              US$
              218,636
              
              US$
              210,586
              
              
              229,700
  In
        2007,
        Credicorp recorded US$28.4 million of loan loss provision, while in 2006
        it
        recorded a US$4.2 million of net loan recoveries. Total write offs amounted
        to
        US$47.3 million in 2007 and US$49.9 million in 2006. Total recoveries of
        write-offs reached US$34.1 in 2007 and US$44.3 million in 2006, decreasing
        23.0%
        and increasing 26.4% in 2006. Provision expense in 2007 included US$3.5 million
        required by BCB (compared to US$2.5 million in 2006). Provisions made in
        2007
        were mainly related to consumer loans. Balance of recoveries of previously
        charged-off accounts in 2007 amounted to US$34.1 million (compared to US$44.3
        million in 2006). The middle market and small business sectors continued
        to
        require a majority of the provisions made during 2007 and 2006. Provisions
        net
        of recoveries for middle market and small businesses were US$13.4 million
        in
        2007 and US$16.8 million in 2006 (see also Note 7 to the Consolidated Financial
        Statements).
  103
  Total
        reserves, which amounted to US$229.7 million in 2007 include the allowance
        for
        direct and indirect credits for approximately US$211.3 million and US$18.4
        million, respectively.
  The
        effects of the increase in provisions were partly offset by write-offs of
        loans
        amounting to US$47.3 million in 2007, a 5.2% decrease from US$49.9 million
        in
        2006, which in turn decreased 30.2% from US$71.4 million in 2005. The loans
        charged off are primarily attributable to the removal of loans that were
        fully
        provided for and considered unrecoverable (see “Item 4. Information on the
        Company—(B) Business Overview—(12) Selected Statistical
        Information—(iii) Loan Portfolio—Loan Loss Reserves”).
  *Noninterest
        income*
  The
        following table reflects the components of Credicorp’s noninterest
        income:
  **Year ended December 31,****2005**
              
              **2006**
              
              **2007***(U.S.
                  Dollars in thousands)*Fees
                  and commissions from banking services
              
              US$
              206,163
              
              US$
              243,778
              
              US$
              324,761Net
                  gains from sales of securities
              
              
              8,965
              
              
              27,281
              
              
              41,359Net
                  gains on foreign exchange transactions
              
              
              29,286
              
              
              41,638
              
              
              61,778Other
                  income
              
              
              21,571
              
              
              26,197
              
              
              90,022Total
                  non-interest income
              
              US$
              265,985
              
              US$
              338,894
              
              US$
              517,920
 
 Credicorp’s
        noninterest income, without including net premiums earned, increased 52.8%
        to
        US$517.9 million in 2007 from US$338.9 million in 2006, which in turn increased
        27.4% from US$266.0 million in 2005. The revenue increase in 2007 was
        principally due to an increase in fees and commissions from banking services,
        net gains from sales of securities and other gains.
  Fees
        and
        commissions income from banking services increased 33.2% to US$324.8 million
        in
        2007 from US$243.8 million in 2006, following a 18.2% increase in 2006 from
        US$206.2 million in 2005. The increase in fees and commissions income from
        banking services in 2007 was principally due to growth in account maintenance,
        money transfers, funds administration, commissions for collection, in 2006,
        due
        to growth in credit card fees, fund transfer fees and collections, and in
        2005,
        due to growth in credit card and debit card fees, commissions for money orders
        and transfers and current and saving accounts.
  Net
        gains
        from sales of securities increased 51.6% to US$41.4 million in 2007 from
        US$27.3
        million in 2006, following an increase from US$9.0 million in 2005. The increase
        in 2007 was principally due to gains from market value fluctuation on sales
        of
        investments due to high returns on the Lima Stock Exchange.
  Net
        gains
        on foreign exchange transactions increased 48.4% to US$61.8 million in 2007
        from
        US$41.6 million in 2006, which in turn increased 42.2% from US$29.3 million
        in
        2005. Net gains from foreign exchange transactions are not attributable to
        proprietary trading on the part of Credicorp. Higher gains in 2007 and 2006
        were
        principally due to an increase in trading volume. This increase is caused
        by the
        constant growth of Peruvian economy and strengthened Nuevo-Sol, as well as
        an
        effect of increasing the quantity of branches and Internet transactions.
  Other
        income increased 243.6% to US$90.0 million in 2007 from US$26.2 million in
        2006,
        after increasing 21.4% from US$21.6 million in 2005. Other income principally
        consists of valuation of assets and liabilities designated at fair value,
        sales
        of assets seized, recoveries of other accounts receivable and other assets
        and
        other income. The increase in other income in 2006 was mainly due to revenues
        from the sale of assets seized (a gain of US$10.7 million in 2007 compared
        to a
        gain of US$9.2 million in 2006), net of recoveries of other accounts receivable
        and other assets (US$3.1 million in 2007 compared to US$1.8 million in
        2006) ,
        principally from valuation of Indexed certificates issued by Citigroup, which
        amounted to US$65.1 million. See Note
        26 to the Credicorp Consolidated Financial Statements.
  104
  *Insurance
        premiums and claims on insurance activities*
  The
        following table reflects the premiums earned and claims incurred in connection
        with Credicorp’s insurance activities:
  **Year
                  ended December 31,****2005**
              
              **2006**
              
              **2007***(U.S.
                  Dollars in thousands)*Net
                  premiums earned
              
              US$
              218,955
              
              US$
              251,261
              
              US$
              297,272Net
                  claims incurred
              
              
              (42,569
              )
              
              (46,587
              )
              
              (67,689
              )Increase
                  in costs for future benefits for life and health policies
              
              
              (132,931
              )
              
              (139,935
              )
              
              (170,911
              )Total
                  net premiums and claims
              
              US$
              43,455
              
              US$
              64,739
              
              US$
              58,672
  Net
        premiums and claims in 2007 were below 2006 and significantly over those
        reached
        in 2005. See “Item 4. Information on the Company—(B) Business Overview—(6)
        Pacífico Peruano Suiza.” Net premiums increased 18.3% to US$297.3 million in
        2007 from US$251.3 million in 2006.
  Gross
        premiums (including premium transfer and reserve adjustments) increased 25.4%
        to
        US$467.2 million in 2007 from US$372.6 million in 2006 after increasing 3.8%
        from 2005.
  Premiums
        for general insurance lines, which accounted for 51.3% of total premiums,
        increased 34.7% in 2007 after a 3.2% increase in 2006, mainly by automobiles
        which represented 15.3% of general insurance premiums in 2007 (13.3% in 2006)
        and which increased 54.6% from 2006. Technical lines, which represented 9.4%
        (8.2% in 2006), increased 55.3% from 2006, and medical assistance which
        represented 17.1% (19.0% in 2006), increased 21.4% from 2006. It is important
        to
        mention the increase of mandatory automobile line (SOAT), which represented
        3.4%
        (1.8% in 2006) and increased 154.3% from 2006.
  Life
        insurance lines, (29.2% of total premiums in 2007) increased 16.6% from 2006,
        mainly due to a better performance in the Life products which represented
        49.7%
        of life insurance premiums (43.3% in 2006) and which increased 33.8% from
        2006.
        The Pension fund products, which represented 28.1% of life insurance premiums
        (25.4% in 2006), increased by 29.0% from 2006.
  Health
        insurance lines (19.5% of total premiums in 2007) increased by 17.5% from
        2006,
        mainly due to the 17.4% increase in Regular insurance premiums which represented
        87.7% of health insurance premiums (87.8% in 2006).
  During
        2007, claims on insurance activities increased by 27.9% to US$238.6 million
        from
        US$186.5 million in 2006, mainly as
        a
        consequence of the business growth and the earthquake that affected the south
        of
        Peru in August 2007. Therefore, the net loss ratio, defined as net claims paid as a percentage
        of net
        premiums earned, reached
        64.5% in 2007, increasing from 60.3% in both 2005 and 2006 .
  105
  *Other
        Expenses*
  The
        following table reflects the components of Credicorp’s other
        expenses:
  **Year ended December 31,****2005**
              
              **2006**
              
              **2007***(U.S.
                  Dollars in thousands)*Salaries
                  and employee benefits
              
              US$
              236,347
              
              US$
              303,332
              
              US$
              409,037General
                  and administrative
              
              
              138,294
              
              
              172,304
              
              
              206,966Depreciation
                  and amortization
              
              
              38,728
              
              
              50,317
              
              
              51,013Provision
                  for assets seized
              
              
              16,959
              
              
              6,387
              
              
              3,057Other
              
              
              46,745
              
              
              52,718
              
              
              71,999Merger
                  costs
              
              
              —
              
              
              5,706
              
              
              —Total
                  other expenses and merger costs
              
              US$
              477,073
              
              US$
              590,764
              
              US$
              742,072
  Personnel
        expenses increased 34.8% in 2007 compared to 2006, after a 28.3% increase
        in
        2006, compared to 2005. The number of Credicorp personnel increased to 16,380
        in
        2007 from 15,213 in 2006, which in turn increased from 11,863 in 2005.
        Considering only BCP, the number of personnel increased to 11,132 in 2007
        from
        9,540 in 2006, after an increase from 8,161 in 2005. The increase in personnel
        expenses during 2007 was principally due to increases in salaries and stock
        appreciation rights (see Note 20 to the Credicorp Consolidated Financial
        Statements). Certain salaries are based on local currency, and therefore
        a
        revaluation of Nuevo Soles results in a higher amount when translated into
        U.S.
        Dollars.
  Credicorp’s
        general and administrative expenses (which include taxes other than income
        taxes) increased 20.1% in 2007 compared to 2006, after increasing 24.6% compared
        to 2005. Higher expenses in 2006 were principally the result of increases
        in
        marketing expenses for ad campaigns and customer loyalty-building programs,
        system expenses, such as maintenance, licenses and projects, and transportation
        expenses. Additionally, after the merger with Unión Vida, Prima AFP incurred
        higher expenses in respect of its sales force. Higher expenses were also
        incurred in 2007 from increases in systems, marketing and transportation,
        as
        part of the bank’s efforts to broaden its network.
 
 Provision
        for assets seized decreased 52.1% to US$3.1 million in 2007 from US$6.4 million
        in 2006. This decrease was due to higher rotation in seizing and sales of
        assets. The decrease in provision is directly related to a higher volume
        of
        seized assets sales.
  Other
        expenses increased 36.6% to US$72.0 million in 2007, after an increase of
        12.8%
        in 2006, compared to 2005. Other expenses increased during 2007 principally
        due
        to commissions in insurance (US$29.1 million in 2007 compared to US$25.6
        million
        in 2006) and sundry technical insurance expense (US$21.9 million in 2007
        compared to US$10.9 million in 2006). In 2006, Credicorp recorded US$5.7
        million
        as merger costs following the acquisition of AFP Unión Vida by Credicorp’s
        subsidiary Prima AFP.
  *Translation
        Result*
  The
        translation result reflects exposure to revaluation of net monetary positions
        in
        Nuevo Soles. Credicorp recognized a US$34.6 million translation gain in 2007,
        a
        US$15.2 million translation gain in 2006 and a US$9.6 million translation
        loss
        in 2005. In 2007 and 2006 translation gain was mainly due to gains recorded
        from
        exposure to the Nuevo Sol which strengthened against U.S. Dollar.
  106
  *Income
        Taxes*
  Credicorp
        is not subject to income taxes or taxes on capital gains, capital transfers
        or
        equity or estates duty under Bermuda law; however, certain of its subsidiaries
        are subject to income tax and taxes on dividends paid to Credicorp, depending
        on
        the legislation applicable to the jurisdictions in which they generate
        income.
  Credicorp’s
        Peruvian subsidiaries, including BCP, are subject to corporate taxation on
        income under the Peruvian tax law. The statutory income tax rate payable
        in Peru
        in 2003 was 27% of taxable income, which includes the result of exposure
        to
        inflation. Since 2004, the statutory income tax rate payable in Peru is 30%
        of
        taxable profits. An additional 4.1% withholding tax is applied on dividends,
        which Credicorp registers as income tax based on the liquid amount received
        from
        BCP and PPS.
  For
        fiscal years 1998 and 1999, companies were subject to an extraordinary tax
        on
        net assets of 0.5%, and 0.2%, respectively. In the case of banks, such asset
        taxes were calculated based on 50% of assets (net of depreciation, reserve
        for
        loan losses and common stock investments in Peruvian corporations) as of
        December 31 of the relevant fiscal year. Amounts required to be held by BCP
        in
        the Central Bank as reserve deposits could be deducted from the asset
        calculation for determination of the alternative minimum tax and the
        extraordinary tax. Starting in 2003, and applying rates on substantially
        the
        same net assets, a procedure is applied to make advance payments of the income
        tax liability corresponding to the ongoing fiscal year. Both the asset based
        taxes and the advance payment procedure are payable even if no tax liability
        results in the tax year in question. The advanced payment procedure was repealed
        in December 2004 and replaced by a temporary net assets tax of 0.6%, with
        substantially the same effect.
  Peruvian
        tax legislation is applicable to legal entities established in Peru, and
        on an
        individual (not consolidated) basis. Credicorp’s non-Peruvian subsidiaries are
        not subject to taxation in Peru and their assets are not included in the
        calculation of the Peruvian extraordinary tax on net assets.
  ASHC
        is
        not subject to taxation in Panama since its operations are undertaken
“offshore.” The Cayman Islands currently have no income, corporation or capital
        gains tax and no estate duty, inheritance or gift tax. Prior to 1995, there
        was
        no corporate income tax in Bolivia. Although Bolivia adopted an income tax
        regime starting in 1995, due to BCB’s ability to offset taxes paid other than
        income taxes from any income tax liability, no Bolivian income taxes have
        been
        payable.
  Income
        tax expense by Credicorp increased to US$102.3 million in 2007 from US$83.6
        million in 2006, which in turn increased from US$73.5 million in 2005. Income
        tax growth in these periods reflects increases in Credicorp’s taxable income.
        Since 1994, Credicorp has paid the Peruvian income tax at the statutory rate.
        The effective tax rates in 2005, 2006 and 2007 were 27.40%, 25.26%, and 21.55%,
        respectively.
  **(3)
                  Financial Condition**
  *Total
        Assets*
  As
        of
        December 31, 2007, Credicorp had total assets of US$17.7 billion, increasing
        37.5% compared to total assets of US$12.9 billion as of December 31, 2006,
        with
        cash and due from banks increasing 12.5%, investments increasing 51.0% and
        loans, net of provisions, increasing 40.1%. From December 31, 2006 through
        December 31, 2007, the Peruvian financial system grew 22.2% in terms of
        deposits and 35.4% in terms of total loans, comparing balances translated
        to
        U.S. Dollars, while GDP grew 9.0%. The ratio of financial intermediation,
        as
        measured by the sum of currency in circulation, bank deposits and other bank
        obligations to the public, divided by GDP, was 5.2% in 1990 and, although
        this
        ratio reached approximately 25.5% in 2001 and 2002, it declined to 23.1%
        in
        2004, and in turn increased to 23.5 %
        in 2005
        and decreased to 22.6% in 2006. In 2007, the ratio of financial intermediation
        decreased slightly to 21.7% .
        Although the ratio of financial intermediation is still below the 26.7% peak
        in
        the early 1970s, Credicorp expects the rate of growth in total assets to
        remain
        at moderate levels.
  107
  Improved
        finances among companies and individuals supported by a favorable economic
        environment and sustained increases in loan placements resulted in significant
        improvements in loan portfolio quality in recent years further accelerating
        the
        decrease in delinquency rates, which decreased from 1.9% in 2005 to 1.3%
        in 2006
        and further to 1.1% in 2007. BCP’s coverage ratios also improved significantly
        in recent years from 207.7% in 2005 to 249.5% in 2006 and further to 351.8%
        in
        2007, despite lower increases in provisions due to improving loan portfolio
        quality **.**
  As
        of
        December 31, 2007, Credicorp’s total loans were US$8,250.8 million, which
        represented 46.6% of total assets, and net of reserves for loan losses, loans
        were US$8,039.5 million. As of December 31, 2006, Credicorp’s total loans were
        US$5,927.1 million, which represented 46.0% of total assets, and net of reserves
        for loan losses, loans were US$5,736.8 million. Credicorp’s total loans
        increased from December 31, 2006 to December 31, 2007 by 39.2%, and net of
        loan
        loss reserves by 40.1% in the same period.
  Credicorp’s
        total deposits with the Central Bank increased from US$1,405.9 million as
        of
        December 31, 2006 to US$1,798.6 million as of December 31, 2007. Credicorp’s
        securities holdings (which include marketable securities and investments)
        increased 51.0% to US$5,279.6 million on December 31, 2007 from US$3,495.8
        million on December 31, 2006. The securities portfolio increase in 2007 was
        principally due to increased investments in Central Bank certificates,
        corporate, leasing subordinated bonds and in treasury bonds of various
        governments.
  *Total
        Liabilities*
  As
        of
        December 31, 2007, Credicorp had total liabilities of US$15.9 billion, a
        40.0%
        increase from total liabilities of US$11.3 billion as of December 31, 2006.
        As
        of December 31, 2007, Credicorp had total deposits of US$11,350.7 million,
        a 28.4% increase from total deposits of US$8,839.0 million on December 31,
        2006. Credicorp believes that its extensive branch network and reputation
        in the
        Peruvian market have allowed it to compete effectively for new deposits and
        to
        attract stable, low cost savings deposits.
  Credicorp’s
        funding strategy has been structured around maintaining a diversified deposit
        base. During 2007, demand deposits grew by 41.9% and time deposits by 23.3%,
        while saving deposits increased by 22.0%. As of December 31, 2006, Credicorp,
        through BCP unconsolidated, had 42.4% of total savings deposits in the Peruvian
        banking system, 42.4% of demand deposits and 36.2% of total deposits, the
        highest of any Peruvian bank in all three categories. An important
        characteristic of Credicorp’s deposit base is that, as of December 31,
        2007, it included 53.0% of the entire Peruvian banking system’s CTS deposits,
        decreasing from 55.3% as of December 31, 2006. Credicorp believes that it
        traditionally has attracted a high percentage of the savings and CTS deposit
        market because of its reputation as a sound institution, its extensive branch
        network and the quality of its service. The decrease is due to the fact that
        new
        financial institutions have taken a small market share from BCP in this type
        of
        deposits. Credicorp’s core deposits (savings, CTS and demand deposits) accounted
        for 64.1% of its total deposits as of December 31, 2007.
  108
  **(B)**  **Liquidity
        and Capital Resources**
  *Regulatory
        Capital and Capital Adequacy Ratios*
  **As of December 31,****2005**
              
              **2006**
              
              **2007***(U.S. Dollars in thousands, except percentages)*Capital stock
              
              
              539,498
              
              
              539,498
              
              
              539,498Legal
                  and other reserves
              
              
              269,527
              
              
              479,902
              
              
              587,218Capital
                  stock, reserves and retained earnings of minority interest
              
              
              61,251
              
              
              37,281
              
              
              38,929Accepted
                  Provisions for loan losses
              
              
              49,169
              
              
              58,562
              
              
              82,261Subordinated
                  debt
              
              
              31,276
              
              
              140,086
              
              
              294,648Total
              
              
              950,721
              
              
              1,255,329
              
              
              1,542,554Less:
                  investment in multilateral organizations, banks and insurance companies
                  and goodwill
              
              
              (69,254
              )
              
              (118,917
              )
              
              (122,387
              )Total
                  Regulatory Capital(1)
              
              
              881,467
              
              
              1,136,412
              
              
              1,420,167Financial
                    Entities Capital RatioRegulatory
                  Capital attributable to Financial Entities(1)
              
              
              761,342
              
              
              871,377
              
              
              1,320,068Risk-weighted
                  Assets From Financial Entities(3)
              
              
              5,810,046
              
              
              7,273,023
              
              
              10,313,188Capital
                  Ratio for Financial Entities(1)
                  / (3)
              
              
              13.10
              %
              
              11.98
              %
              
              12.80
              %Minimum
                  Regulatory Capital Required (MRCR)(2)MRCR
                  for Financial Entities(3)
              
              
              559,074
              
              
              690,045
              
              
              890,643MRCR
                  for Insurance Entities(3)
              
              
              88,019
              
              
              100,447
              
              
              112,261MRCR
                  for Other Entities(3)
              
              
              101,348
              
              
              60,437
              
              
              66,849Total
                  Minimum Regulatory Capital Required
              
              
              748,441
              
              
              850,959
              
              
              1,069,753Regulatory
                  capital as percentage of Minimum Regulatory Capital
                  Required
              
              
              117.77
              %
              
              133.54
              %
              
              123.76
              %
 ____________________________
 (1)
              Total
                  Regulatory Capital and Financial Entities Regulatory Capital is
                  prepared
                  under the guidelines of the BIS I Accord (by the Basel Committee)
                  as
                  adopted by the SBS.
  (2)
              The
                  Minimum Regulatory Capital Required (MRCR) is prepared under the
                  guidelines of the BIS I Accord (by the Basel Committee) as adopted
                  by the
                  SBS, and must not exceed from the Total Regulatory Capital calculated.
                  The
                  Consolidated MRCR is calculated by the addition of the MRCR of
                  each one of
                  the entities.
  (3)
              Peruvian
                  Financial entities (BCP, Credileasing and Solución) has a MRCR of 9.09% of
                  the Risk-Weighted Assets (RWA). For ASB (Panama), the MRCR is 8%
                  of the
                  RWA. For ASHC (Cayman Islands), the MRCR is 15% of the RWA. For
                  BCB
                  (Bolivia), the MRCR is 10% of the RWA. For the Insurance companies,
                  MRCR
                  is calculated on the basis of the Solvency Margin, the guarantee
                  funds and
                  the credit risk. Other entities, with no MRCR must be considered
                  by the
                  sum of the capital, reserves and retained
                  earnings.
  *Liquidity
                  Risk*
  Credicorp
        manages its assets and liabilities to ensure that it has sufficient liquidity
        to
        meet its present and future financial obligations and that it is able to
        take
        advantage of appropriate business opportunities as they arise. Liquidity
        risk
        represents the potential for loss as a result of limitations on Credicorp’s
        ability to adjust future cash flows to meet the needs of depositors and
        borrowers and to fund operations on a timely and cost-effective basis. Financial
        obligations arise from withdrawals of deposits, repayment on maturity of
        purchased funds, extensions of loans or other forms of credit, and working
        capital needs.
  109
  The
        growth of Credicorp’s deposit base over the past years has enabled Credicorp to
        significantly increase its lending activity. BCP is subject to SBS Resolution
        No. 622-98, enacted in July 1998, which made its Market Risk Area responsible
        for liquidity management, and by which minimum liquidity ratios were
        established. The ratio of liquid assets as a percentage of short-term
        liabilities, as strictly defined by the SBS, must exceed 8% for Nuevos
        Soles-based transactions, and 20% for foreign exchange-based transactions.
        BCP’s
        daily average ratios during the month of December 2007 were 71.72% and 42.39%
        for Nuevos Soles and foreign exchange-based transactions, respectively (56.91%
        and 51.99% respectively, in December 2006), demonstrating Credicorp’s continuing
        excess liquidity.  Credicorp
        has never defaulted on any of its debt or been forced to reschedule any of
        its
        obligations. Even during the early 1980s, when the government of Peru and
        many
        Peruvian companies and banks were forced to restructure their debt as a result
        of the Latin American debt crisis and government restrictions, BCP and PPS
        complied with all of their payment obligations.
  The
        capability of replacing interest bearing deposits at their maturity is a
        key
        factor in determining liquidity requirements, as well as the exposure to
        interest and exchange rate risks. Credicorp’s principal source of funding is
        customer deposits with BCP’s Retail Banking Group and ASHC’s Private Banking
        Group, and premiums and amounts earned on invested assets at PPS. Credicorp
        believes that funds from its deposit-taking operations generally will continue
        to meet Credicorp’s liquidity needs for the foreseeable future.
  BCP’s
        Retail Banking Group has developed a diversified and stable deposit base
        and the
        Private Banking Group has developed a stable deposit base that, in each case,
        provides Credicorp with a low-cost source of funding. This deposit base has
        traditionally been one of Credicorp’s greatest strengths. The deposit gathering
        strategy has focused on products considered as BCP’s core deposits: demand
        deposits, savings, time deposits and CTS deposits. Other sources of funds
        and
        liquidity, mostly short- and long-term borrowings from correspondent banks
        and
        other financial institutions, issued bonds and subordinated debt, are of
        a
        considerably lower significance compared to Credicorp’s core deposits. See Notes
        14 and 15 to the Credicorp Consolidated Financial Statements.
  In
        2007,
        BCP successfully carried out the plan to expand the physical infrastructure
        of
        its operations in Peru. BCP opened 36 new offices, 93 ATMs and 670 Agentes
        BCP,
        and updated its technological equipment, for a total investment of US$70
        million. BCP have budgeted investments worth US$150 million for 2008. It
        is our
        intention to open 75 new offices, install 150 ATMs and launch 350 new Agentes
        BCP nationwide. A significant amount will be spent by the IT department in
        2008
        to buy new equipment and applications. Also, the expansion of the La Molina
        administrative headquarters and the construction in phases of two alternate
        computer centers as processing back-up facilities (one in Chorrillos and
        the
        other in Trujillo) are planned by 2010.
  During
        2007, Credicorp loans grew significantly, compared with a smaller increase
        in
        deposits. Therefore, capital markets and external banks contributed to the
        funding of the Bank’s operations. Foreign banks’ short-term funding expanded
        significantly and was allocated to foreign exchange operations, working capital
        and derivative hedging. Two important funding operations were carried out:
        an
        issuance of US$35 million in foreign currencies in the local market and an
        issuance of S/.180 million in domestic currency. In July 2007, US$500 million
        worth of securitized notes were issued, the largest issue carried out in
        the
        international market by a Peruvian company. Likewise, subordinate bonds were
        issued for S/.483 million, representing the first subordinated issue in local
        currency in the international market. Both issues were successful despite
        incipient signs of volatility and the deterioration in the international
        market.
  Treasury
        monetary surpluses are invested in a variety of financial instruments in
        Peru
        and in the main international financial markets. Good credit quality, adequate
        liquidity levels and high returns are always sought through diversification.
        During 2007, Credicorp’s investments were focused principally on instruments
        denominated in Nuevos Soles and turned Credicorp’s treasury into the principal
        investor in these instruments in Peru. The investments exceeded S/.9,500
        million, as much in BCR’s Certificates of Deposit as in sovereign bonds, where
        Credicorp participated actively through a successful market makers program.
        Likewise, during the year Credicorp carried out sovereign debt operations
        on our
        clients’ account for more than S/. 13 billion, demonstrating market
        leadership.
  110
  The
        following table presents Credicorp’s core deposits, other deposits and other
        sources of funds:
 
 **At December 31,****2005**
              
              **2006**
              
              **2007***(U.S.
                  Dollars in thousands)***Core
                  Deposits**:Demand
                  deposits
              
              US$
              1,801,314
              
              US$
              2,792,433
              
              US$
              3,964,501Savings
                  deposits
              
              
              2,105,364
              
              
              1,951,978
              
              
              2,380,904Severance
                  indemnity deposits
              
              
              654,791
              
              
              775,027
              
              
              896,283**Total
                  core deposits**
              
              **US$**
              **4,561,469**
              
              **US$**
              **5,519,438**
              
              **US$**
              **7,241,688****Other
                  Deposits**:Time
                  deposits
              
              
              2,459,907
              
              
              3,218,157
              
              
              3,967,864Bank
                  certificates
              
              
              46,378
              
              
              61,539
              
              
              90,119**Total
                  deposits**
              
              **US$**
              **7,067,754**
              
              **US$**
              **8,799,134**
              
              **US$**
              **11,299,671**Due
                  to banks and correspondents
              
              US$
              1,301,295
              
              US$
              936,534
              
              US$
              2,314,418Issued
                  bonds
              
              
              425,611
              
              
              508,493
              
              
              694,982**Total
                  sources of funds**
              
              **US$**
              **8,794,660**
              
              **US$**
              **10,244,161**
              
              **US$**
              **14,309,071****Core
                  deposits as a percent of total deposits**
              
              
              **64.5**
              **%**
              
              **62.7**
              **%**
              
              **64.1**
              **%****Core
                  deposits as a percent of****total
                  sources of liquid funds**
              
              
              **51.9**
              **%**
              
              **53.9**
              **%**
              
              **50.6**
              **%**
  BCP
        is
        required to keep deposits with the Central Bank, as legal reserves, determined
        as a percentage of the deposits and other liabilities owed to its clients.
        The
        requirement is currently approximately 8.5% of Nuevos Soles-denominated deposits
        and U.S. Dollar-denominated deposits, increasing from the requirement of
        6.0%
        which was effective until December 2007. Legal reserves are meant to ensure
        the
        availability of liquid funds to cover withdrawals of deposits. See “Item 4.
        Information on the Company—(B) Business Overview—(11) Supervision and
        Regulation—(ii) BCP—Central Bank Reserve Requirements.” Additionally, Credicorp
        has significant investments of excess liquid funds in short-term Central
        Bank
        certificates of deposits.
  111
  The
        following table presents Credicorp’s deposits at the Central Bank, and its
        investments in Central Bank certificates:
  **At December 31,****2005**
              
              **2006**
              
              **2007***(U.S.
                  Dollars in thousands)***Funds
                  at Central Bank**Deposits
              
              US$
              1,599,153
              
              US$
              1,405,853
              
              US$
              1,798,581Certificates
                  of deposits
              
              US$
              554,530
              
              US$
              1,110,002
              
              US$
              2,164,188BCRP-Repo
                  Transactions
              
              US$
              591,285
              
              
              167,611
              
              
              242,817**Total
                  funds at Central Bank**
              
              **US$**
              **2,744,968**
              
              **US$**
              **2,683,466**
              
              **US$**
              **4,502,586**Total
                  funds at Central Bank of Perú as a percent of total
                  deposits
              
              
              38.8
              %
              
              30.5
              %
              
              37.2
              %
  BCP
        at
        times has accessed Peru’s short-term interbank deposit market, although it is
        generally a lender in this market. The Central Bank’s discount window, which
        makes short-term loans to banks at premium rates, is also available as a
        short-term funding source, but has been used infrequently by BCP. ASHC also
        has
        the ability to borrow from correspondent banks on an overnight basis at rates
        tied to the Federal Funds rate as well as funding lines from international
        financial institutions.
  On
        December 31, 2007, Credicorp had uncommitted credit lines with various banks,
        including long-term facilities that are mainly used for project financing,
        of
        which no significant amount was drawn down. The long-term facilities include
        funding from COFIDE, Corporación Andina de Fomento (CAF), sindicated loans, and
        other international lenders. The transactions relating to these credit lines
        include import and export transactions and average annual rates (including
        Libor) vary from 5.73% to 7.75%. In 1998 and 2001, a total of approximately
        US$200 million of funding was received through the securitization of certain
        credit card receivables and diversified payment rights, with BCP as the
        originator of such assets. As of December 31, 2005, the funding received
        in 1998
        was paid off and the funding received in 2001 was pre-paid with the proceeds
        of
        new securitizations of diversified payment rights, which amounted to US$870.4
        million. See Note 15 (a) and (b) to the Credicorp Consolidated Financial
        Statements. As of December 31, 2007, borrowed funds and due to banks and
        correspondants amounted to US$2,323.7 million (includes US$870 million and
        US$1,453 million, respectively) as compared to US$941.6 million in 2006
        (includes US$571 million and US$371 million, respectively) and US$1,303.4
        million in 2005.
  In
        addition, mortgage loans may be funded by mortgage funding notes and, since
        2001, mortgage bonds that are sold by BCP in the market. Mortgage funding
        notes
        are instruments sold by BCP with payment terms that are matched to the related
        mortgage loans, thereby reducing BCP’s exposure to interest rate fluctuations
        and inflation. Mortgage bonds are mainly U.S. Dollar-denominated and have
        been
        issued with ten-year terms, with collateral established by real estate acquired
        through funded home mortgage loans. As of December 31, 2007, BCP had US$20.7
        million of outstanding mortgage bonds and notes (US$23.6 million in 2006
        and
        US$27.6 million in 2005). A source of funds specific to leasing operations
        are
        leasing bonds issued by lease financing companies, the terms of which are
        specified in the Peruvian leasing regulations. As of December 31, 2007, BCP
        had
        US$167.3 million of outstanding leasing bonds (US$178.0 million in 2006 and
        US$219.6 million in 2005). These bonds have maturities up to three years
        and
        bear higher interest than 360-day time deposits (6.10% versus 5.96%). See
        Note
        17 to the Credicorp Consolidated Financial Statements for a detailed breakdown
        of Credicorp’s issued bonds.
  112
  The
        following table presents Credicorp’s issued bonds:
 
 **Years ended December 31,****2005**
              
              **2006**
              
              **2007***(U.S.
                  Dollars in millions)***Issued
                  bonds**Corporate
                  Bonds
              
              US$
              35.0
              
              US$
              47.2
              
              US$
              50.1Leasing
                  Bonds
              
              
              40.0
              
              
              0.0
              
              
              39.6Subordinated
                  bonds
              
              
              0.0
              
              
              0.0
              
              
              5.0Subordinated
                  debt
              
              
              0.0
              
              
              120.0
              
              
              161.3**Total
                  issuance**
              
              **US$**
              **75.0**
              
              **US$**
              **167.2**
              
              **US$**
              **256.0**
  In
        November 2006 and October 2007, BCP, through its Panama branch, issued on
        the
        international market subordinated negotiable certificates notes in an aggregate
        amount of US$120.0 million due 2021 and US$161.3 million due 2022, respectively.
        These notes accrue a fixed annual interest rate of 6.95% and 7.17%, respectively
        for the first 10 years with interest payments every six months. After the
        first
        10 years, the interest rate will change to a variable interest rate of Libor
        plus 2.79% and as established by the market interest rate of the Peruvian
        Government-issued sovereign bonds maturing in 2037 plus 150 basis points,
        respectively, with quarterly and semi-annual payments. At the end of the
        first
        10 years, the Bank may redeem 100% of the debt without penalty. These
        subordinated debt certificates include certain financial and operating
        covenants. In Credicorp management’s opinion, BCP is not in violation of any of
        these covenants as of the date of the consolidated balance sheet date.
  Among
        the
        policies that Credicorp follows to ensure sufficient liquidity are the active
        management of interest rates and the active monitoring of market trends,
        in
        order to identify and provide for changes in the supply of deposits or the
        demand for loans.
  The
        principal sources of funds for PPS’s insurance operations are premiums and
        amounts earned on invested assets. The major uses of these funds are the
        payment
        of policyholder claims, benefits and related expenses, reinsurance costs,
        commissions and other operating costs. In general, PPS’s insurance operations
        generate substantial cash flow because most premiums are received in advance
        of
        the time when claim payments are required. Positive operating cash flows,
        along
        with that portion of the investment portfolio that is held in cash and highly
        liquid securities, historically have met the liquidity requirements of PPS’s
        insurance operations.
  **(C)**
              **Research
                  and Development, Patents and Licenses,
                  Etc.**
  Not
        applicable.
  **(D)**
              **Trend
                  Information**
  Credicorp
        expects that 2008 will continue the positive economic trend; however,
        international environment suggests some increase in uncertainty. In particular,
        Credicorp expects that financial income will increase, mainly as a result
        of
        prioritizing retail operations with individuals and small companies, as well
        as
        improving strategies followed in 2007. In addition, credit risk is expected
        to
        remain low despite planned positive loan evolution and provision. Furthermore,
        Credicorp plans to invest mainly in systems in order to improve the bank’s
        network to serve clients and optimize processes. See “Item 4. Information on the
        Company—(B) Business Overview—(1) Introduction – Review of 2007” and “—(2)
        Strategy.”
  113
  In
        Bolivia, Credicorp expects that BCB will continue to increase its profitability
        as a result of increased deposits and loans and the expansion into the personal
        banking niche. We hope that the positive environment is preserved in 2008,
        as
        this would be helpful to manage risk, in addition to the improvement in the
        quality of loans and deposits.
  Credicorp
        expects that in 2008, ASHC will maintain its low-risk investment strategy.
        Credicorp expects continued growth of the assets under management, given
        the
        high quality service it offers.
  In
        its
        insurance business, Credicorp expects to raise the profitability of each
        product
        branch, especially in the retail business. The insurance business continues
        growing; the industry experienced a significant increase in casualties which
        effected different insurance business, and led to the continuing weak results.
        It is PPS’s strategy to work towards a re-composition of its risk portfolio
        favoring the retail business of Property and Casualty which offer more
        retention, diversification and predictability of risk. In 2007, life and
        health
        insurance recorded significant growth rates and returns. Conversely, results
        in
        the general insurance business were compromised by the impact of August’s
        devastating earthquake and some severe claims in the fire, technical and
        dishonesty line businesses. Nevertheless, the Company has succeeded in
        increasing sales of personal products, in an effort to diversify its risk
        portfolio, transfer exposure towards risk that may be covered in the optional
        reinsurance international market and reduce volatility.
 
 The
        production, employment, and formalization expectations for the Peruvian economy
        lead us to foresee a positive scenario for the Peruvian pensions market in
        2008.
        Therefore, we expect to replicate the growth ratios of contributions and
        remunerations experienced in 2007. In market terms, the competitive dynamics
        will follow a downward trend, but are expected to keep their moderate levels,
        anticipating the potential entry of new competitors into the market. In this
        context, in Prima AFP, we expect to preserve our share of expanding mandatory
        contributions, and reinforce our image by developing a focus on pension and
        investment advice, and by assigning significant resources to maintain our
        leadership in investments.
  **(E)**  **Off-Balance
        Sheet Arrangements**
  Credicorp
        has various contractual obligations that are recorded as liabilities in its
        financial statements. Other contractual arrangements, such as contingent
        credits
        contracts, are not recognized as liabilities in Credicorp’s financial statements
        but are required to be registered in off-balance sheet accounts. Credicorp
        enters into these off-balance sheet arrangements in the ordinary course of
        business in order to provide support to its clients and hedge some risks
        in its
        balance sheet and uses guarantees, letters of credit, derivatives and
        swaps.
  The
        following table reflects Credicorp’s off-balance sheet arrangements as of
        December 31, 2005, 2006 and 2007:
  114
 
 **At December 31,****Year ended December
                  31,****2005**
              
              **2006**
              
              **2007***(U.S.
                  Dollars in thousands)***Contingent
                  Credits**Guarantees
                  and stand by letters
              
              US$
              982,044
              
              US$
              1,204,500
              
              US$
              1,133,476Import
                  and export letters of credit
              
              
              238,902
              
              
              250,876
              
              
              431,049**Sub
                  Total**
              
              
              1,220,946
              
              
              1,455,376
              
              
              1,564,525Responsibilities
                  under credit line agreements
              
              
              531,816
              
              
              814,746
              
              
              1,082,115Financial
                  derivative contracts, net
              
              
              310,944
              
              
              (30,970
              )
              
              (331,117
              )Swap
                  contracts
              
              
              572,160
              
              
              543,041
              
              
              1,446,813**Total**
              
              **US$**
              **2,635,866**
              
              **US$**
              **2,782,193**
              
              **US$**
              **3,762,336**
 
 In
        the
        normal course of its business, Credicorp’s banking subsidiaries are party to
        transactions with off-balance sheet risk. These transactions expose Credicorp’s
        banking subsidiaries to credit risk in addition to the amounts recognized
        in the
        consolidated balance sheets. Credit risk for off-balance sheet financial
        instruments is defined as the possibility of sustaining a loss because any
        other
        party to a financial instrument fails to perform in accordance with the terms
        of
        the contract. The exposure to losses under commitments to guarantees, stand
        by
        letters, extend credit, provide export and import letters of credit and
        guarantees are represented by the contractual amount specified in these
        instruments. Credicorp applies the same credit policies in making commitments
        and conditional obligations as it does for on-balance sheet instruments,
        including  the
        requirement to obtain collateral to support off-balance sheet  financial
        instruments (see Note 7(a) to the Credicorp Consolidated Financial Statement)
        when it is deemed necessary. Collateral held varies, but may include deposits
        held in financial institutions, securities or other assets.
 
 Due
        to
        the fact that many of the contingent transactions are expected to expire
        without
        any payment being required from Credicorp, the total committed amounts do
        not
        necessarily represent future cash requirements.
  Export
        and import letters of credit and guarantees and stand-by letters of credit
        are
        conditional commitments issued by Credicorp to guarantee the performance
        of a
        customer to a third party. Export and import letters of credit are mainly
        issued
        as credit enhancements for overseas commercial transactions. Risks associated
        with these credits are reduced by the participation of third
        parties.
  Foreign
        currency forwards are commitments to buy or sell currency on a future date
        at a
        contracted price. Risk arises from the possibility that the counter-party
        to the
        transaction does not perform as agreed and the change in the prices of the
        underlying currencies. As of December 31, 2007 and 2006, Credicorp had foreign
        currency forwards derivatives and a minor position on options for exchange
        rates. As of December 31, 2007 and 2006, forward foreign currency purchase
        and
        sale agreements referred to above included nominal amounts of approximately
        US$2,210.2 million and US$1,153.2 million, respectively, which have maturities
        of less than a year. These agreements are executed to satisfy client
        requirements and are recorded by Credicorp in the financial statements at
        fair
        market value. The
        forward contracts net position as of December 31, 2007 and 2006 was an overbuy
        of approximately US$331.1 million and an overbuy of approximately US$31.0
        million, respectively.
  Interest
        rate swaps are derivatives contracts, where counter parties exchange variable
        interest rates for fixed interest rates, in the terms and conditions established
        at the contract inception. The risk arises each time the projected level
        of the
        variable rate during the term of the contract is higher than the swap rate,
        as
        well as from non-compliance with contractual terms by one of the parties.
        As of
        December 31, 2007, the notional amount of outstanding interest rate swap
        contracts was approximately US$1,446.8 million (approximately US$543.0 million
        as of December 31, 2006). These contracts are recorded by Credicorp at fair
        market value, recording both realized and unrealized gains and losses in
        the
        consolidated income statements.
  115
  As
        of
        December 31, 2006, Credicorp held one interest rate swap contract for a notional
        amount of US$196.0 million designated as a cash flow hedge, because it reduced
        the exposure to the variable interest rate risk of a portion of the loan
        transaction entered into by Credicorp in November 2005 (See Note 15(b) to
        the
        Credicorp Consolidated Financial Statements). In accordance with the hedge
        operation, which matures in November 2012, Credicorp pays a fixed rate of
        4.57%
        and receives a variable rate equal to the monthly Libor interest rate over
        the
        notional amount and the settlements are made on a monthly basis. The loan
        and
        the interest rate swap have the same critical terms.
  As
        of
        December 31, 2007, Credicorp had three interest rate swaps, which, in the
        aggregate amounted to a total of US$500 million (US$250, US$100 and US$150
        million), designated as a cash flow hedge to reduce Credicorp’s interest rate
        risk exposure arising from the transaction entered into by Credicorp in July
        2007 (see Note 15(b) to the Credicorp Consolidated Financial Statements).
        Based
        on the hedge terms and conditions, Credicorp pays a fixed rate of 5.4775%,
        5.59%
        and 5.495%, respectively, and exchanges it by a floating interest rate
        equivalent to a monthly Libor on the nominal amount. Payments are made monthly.
        The maturity date of the interest rate swap of US$150 million is July 2014
        and
        the maturity of the US$250 and US$100 million swaps is July 2017. The loan
        and
        the interest rate swaps agreements have the same critical terms.
  As
        of
        December 31, 2007, Credicorp has signed one cross currency swap contract
        for a
        notional amount of US$50.4 million designated as a fair value hedge, because
        it
        reduces the exposure to the change in the fair value of the corporate bonds
        issued in Peruvian currency (Note 17(a)(i) to the Credicorp Consolidated
        Financial Statements). In accordance with the hedge transaction, the bonds
        were
        converted from Peruvian currency to US Dollars. Likewise, the fixed annual
        nominal interest rate of 6.84% has been changed to a variable rate of Libor
        plus
        84 basis points. The bonds and the cross currency swap have the same critical
        terms.
  The
        fair
        value of the forward contracts and swaps as of December 31, 2007 amounted
        to
        approximately US$45.8 million and US$69.7 million of assets and liabilities,
        respectively (approximately US$19.1 million and US$7.8 million as of December
        31, 2006), and are included under the caption “Other assets and other
        liabilities” of the consolidated balance sheet, respectively, see Note 13 (b) to
        the Credicorp Consolidated Financial Statements. As of December 31, 2007
        and
        2006, the fair value of the cash flow hedge amounted to US$-37.4 million
        and
        US$2.9 million, respectively, and it is included in the net equity.
  The
        responsibilities under credit line agreements do not correspond to commitment
        to
        grant credit and include credit lines and other consumer loans that are
        cancelable upon notification to the consumer.
  **(F)**
              **Tabular
                  Disclosure of Contractual
                  Obligations**
  Credicorp
        enters into various contractual obligations that may require future cash
        payments. The following table summarizes Credicorp’s contractual obligations by
        remaining maturity as of December 31, 2007. See ”Item 4. Information on the
        Company—(B) Business Overview—(1) Introduction – Review of
        2007.”
  116
 **Payments due by period****Total at**
                  **December 31,**
                  **2007**
                
                **Less than**
                  **1 year**
                
                **1–3**
                  **years**
                
                **3–5**
                  **years**
                
                **More than**
                  **5 years***(U.S.
                    Dollars in thousands)*Borrowed
                    funds
                
                US$
                2,015,744
                
                US$
                784,643
                
                US$
                416,623
                
                US$
                404,636
                
                US$
                409,842Promotional
                    credit lines
                
                
                196,204
                
                
                98,375
                
                
                71,100
                
                
                4,534
                
                
                22,195Interbank
                    funds
                
                
                102,470
                
                
                102,470
                
                
                —
                
                
                —
                
                
                —Time
                    deposits
                
                
                3,967,863
                
                
                3,643,668
                
                
                254,750
                
                
                30,743
                
                
                38,702Operating
                    lease obligations
                
                
                54,806
                
                
                9,270
                
                
                14,471
                
                
                11,491
                
                
                19,574Total.
                
                US$
                6,337,087
                
                US$
                4,638,426
                
                US$
                756,944
                
                US$
                451,404
                
                US$
                490,313
  The
        balance of the “Borrowed funds” caption in the table above corresponds to
“borrowed funds” and “International funds and others”:
  ·
              In
                  November 2005 BCP entered into a loan transaction for US$230.0
                  million,
                  related to Series 2005-A Floating Rate Certificates due 2012, and
                  US$50.0
                  million related to Series 2005-B Floating Rate Certificates due
                  2009. The
                  loan is secured by the collection of BCP’s future inflows from electronic
                  messages sent through the Society for Worldwide Interbank Financial
                  Telecommunications network and utilized within the network to instruct
                  the
                  corresponding bank to make payments to beneficiaries that are not
                  financial institutions. In this transaction, Wilmington Trust Company
                  acted as trustee under the trust agreement and The Bank of New
                  York acted
                  as indenture trustee and administrator of the contract. The certificates
                  bear a variable interest rate of one month Libor plus 0.21% for
                  the 2005-A
                  Series and one month Libor plus 0.60% for the Series 2005-B. As
                  of
                  December 31, 2007 and 2006, the balance of this obligation amounted
                  to
                  US$280.0 million. A portion (70%), of the loan, subject to variable
                  interest rate risk, has been hedged through an interest rate swap
                  hedge
                  operation for a notional amount of US$196.0 million (see Note 21(d)
                  to the
                  Credicorp Consolidated Financial
                  Statements).
  In
        March
        2006, BCP entered into a loan transaction for US$100.0 million, related to
        Series 2006-A Floating Rate Certificates due 2016. Like the November 2005
        loan,
        the loan is secured by the future inflows from electronic messages sent through
        the Society for Worldwide Interbank Financial Telecommunications network
        instruct the corresponding bank to make payments to beneficiaries that are
        not
        financial institutions. Wilmington Trust Company acted as Trustee under the
        trust agreement and The Bank of New York acted as indenture trustee and
        administrator of the contract. The certificates bear a variable interest
        rate of
        one month Libor plus 0.24%, as of December 31, 2007, and the balance of this
        obligation amounts to US$90.4 million.
  For
        the
        US$100 million of the Series 2006-A and the US$230 and US$50 million of the
        Series 2005-A and 2005-B, BCP has signed an insurance policy with AMBAC
        Assurance Corporation which guarantees the timely payment of scheduled principal
        and certain accrued interest monthly payments with maturities in 2016, 2012
        and
        2009, respectively.
  In
        July
        2007, BCP entered into loan transactions for US$350 million and US$150 million,
        related to Series 2007-A Floating Rate Certificates due 2017 and Series 2007-B
        Floating Rate Certificates due 2014. The series 2007-A and 2007-B certificates
        bear a variable interest rate of one month Libor plus 0.28% and 0.25%,
        respectively. These loans, subject to variable interest rate risk, have been
        hedged through three interest rate swap hedge operations for a notional amount
        of US$500 million. (See Note 21 (d) to the Credicorp Consolidated Financial
        Statements).
  For
        the
        US$350 million of the Series 2007-A floating Rates Certificates and the US$150
        million of the Series 2007-B Floating Rates Certificates, BCP has signed
        an
        insurance policy with AMBAC Assurance Corporation which guarantees the timely
        payment of scheduled principal and certain accrued interest monthly
        payments.
  117
  The
        “international funds and others” received by Credicorp are loans used mainly for
        financing foreign trade operations and working capital. As of December 31,
        2007,
        these loans have maturities between January 2008 and February 2011. The interest
        rates range between 4.88% and 5.73%. As of December 31, 2007, the balance
        of
        these obligations is US$1,145.3 million (See Note 15 (a) to the Credicorp
        Consolidated Financial Statements).
  ·
              The
                  promotional credit lines represent loans granted to BCP by Corporación
                  Financiera de Desarrollo (COFIDE) and Banco Interamericano de Desarrollo
                  (Inter-American Development Bank or IDB), to promote the development
                  of
                  Peru, have maturities between March 2008 and December 2027 and
                  their
                  interest rates range between 5.73 and 7.75%. These credit lines
                  are
                  secured by a loan portfolio totaling US$196.2 million and US$177.9
                  million
                  as of December 31, 2007 and December 31, 2006, respectively. These
                  lines
                  include covenants specifying the use of the funds, financial conditions
                  that the borrower must maintain and other administrative matters.
                  In
                  Management’s opinion, these covenants do not limit Credicorp’s operations
                  and at the balance sheet date, Credicorp is not in violation of
                  these
                  covenants.
  118
  **ITEM
                  6.**
              **DIRECTORS,
                  SENIOR MANAGEMENT AND
                  EMPLOYEES**
  **(A)**
              **Directors
                  and Senior Management**
  ***Board
                  of Directors***
  The
        following table sets forth the current Directors of Credicorp.
  **Name**
              
              **Position**
              
              **Years served as a**
                **Director**(1)Dionisio Romero
              
              
              Chairman
              
              
              38Luis
                  Nicolini
              
              
              Vice
                  Chairman
              
              
              32
              (2)Fernando
                  Fort
              
              
              Director
              
              
              26Reynaldo
                  Llosa
              
              
              Director
              
              
              25Juan
                  Carlos Verme
              
              
              Director
              
              
              18Luis
                  Enrique Yarur
              
              
              Director
              
              
              12Felipe
                  Ortiz de Zevallos
              
              
              Director
              
              
              3
              (3)Germán
                  Suárez
              
              
              Director
              
              
              3
              (3)
 ______________________________________________
 (1)
              Of
                  Credicorp, its subsidiaries and their predecessors as of December 31,
                  2007.
 (2)
              Mr.
                  Nicolini resigned as a Director in April 2008 and was replaced
                  by Mr.
                  Raimundo Morales.
 (3)
              Elected
                  at the Annual General Shareholders’ Meeting on March 31,
                  2005.
 
 *Dionisio
        Romero* is an
        economist with a Master’s degree in Business Administration from Stanford
        University. Mr. Romero was the Chairman of Banco de Crédito del Perú from 1966
        to 1987 and has served as a Board Member from December 1990 to the present.
        He
        is the Chairman of Credicorp and has held this position since August 1995.
        He is
        also Chairman of ASCH, BCB, Grupo Crédito, BCP’s subsidiaries and Deputy
        Chairman of PPS. Additionally, he serves as a Director on the Board of Banco
        de
        Crédito e Inversiones Chile.
  *Luis
        Nicolini* ,
        an
        industrial banker by profession, served as Vice Chairman of Banco de Crédito del
        Perú from August 1995 to April 2008. He is also a Director on the Boards of
        Inversiones Centenario, Alicorp, PPS, and is Chairman of the textile company
        Fábrica de Tejidos La Bellota. He has also served as Vice Chairman of ASB.
        He is
        also Deputy Chairman and Director of BCB and BCP’s subsidiaries. In April 2008,
        the Board of Directors was informed of Mr. Nicolini’s decision to resign as a
        member of the Board. Mr. Raimundo Morales was appointed as Director and Vice
        Chairman of Credicorp in April 2008, to replace Luis Nicolini.
  *Raimundo
        Morales* ,
        is the
        Vice Chairman of Credicorp since April 2008. Prior to accepting his election
        to
        the Board of Directors of Credicorp, he served as the Chief Operating Officer
        of
        Credicorp and the General Manager of Banco de Crédito del Perú, having joined
        BCP in 1980. Previously, Mr. Morales held various positions during his ten
        years
        at Wells Fargo Bank in its San Francisco, São Paulo, Caracas, Miami and Buenos
        Aires offices. His last position was Vice President for the Southern Region
        of
        Wells Fargo. From 1980 to 1987, Mr. Morales was Executive Vice President
        in
        charge of BCP’s Wholesale Banking Group. From 1987 to 1990 he was the General
        Manager of ASB in Miami. He rejoined BCP as General Manager in 1990. Mr.
        Morales
        received his Master’s degree in Finance from the Wharton School of Business in
        the United States.
  *Fernando
        Fort* is a
        lawyer and Partner at the law firm of Fort Bertorini Godoy Pollari &
Carcelen Abogados S.A. Mr. Fort has served as a Director of Banco de
        Crédito del Perú from 1979 to 1987 and from March 1990 to the present. He is a
        Director of Credicorp (since March 1999), ASB, BCB and BCP’s subsidiaries.
        Additionally, Mr. Fort serves as a Director on the Board of Inversiones
        Centenario and the Boards of various other companies.
  119
  *Reynaldo
        Llosa* is a
        business manager and served as a Director of Banco de Crédito del Perú’s from
        1980 to October 1987 and from March 1990 to the present. He has been a Director
        of Credicorp since August 1995, Atlantic Security Bank, Banco de Crédito de
        Bolivia and BCP’s subsidiaries. Mr. Llosa is also the main partner and
        general manager of the company F.N. Jones S.R. Ltda., and serves as a Director
        on the Boards of various other companies.
  *Juan
        Carlos Verme* is a
        businessman and has served as Director of Banco de Crédito del Perú since March
        1990 and as a Director of Credicorp since August 1995. He is also Director,
        Banco de Crédito de Bolivia, Atlantic Security Bank and BCP’s subsidiaries. Mr.
        Verme is Chairman of Inversiones Centenario and also serves as a Director
        on the
        Boards of various other companies. He is a member of the Asamblea General
        de
        Asociados del Patronato del Museo de Arte de Lima and Vice President of
        Asociación Cultural Filarmonía.
  *Luis
        Enrique Yarur* is a
        businessman with an undergraduate degree in law and graduate degrees in
        economics and management. He has served as Director of Banco de Crédito del Perú
since February 1995 and as a Director of Credicorp on October 31, 2002. Mr.
        Yarur is Chairman of the Board of Empresas Juan Yarur S. A. C, Banco de Crédito
        e Inversiones, of Chile, and member of the Boards of various other Chilean
        companies. He is Vice-President of the Asociación de Bancos e Instituciones
        Financieras A. G., a member of the International Advisory Board IESE, España and
        Director of the Bolsa de Comercio de Santiago.
  *Felipe
        Ortiz de Zevallos* is an
        industrial engineer with a Master’s degree in Management Science from Rochester
        University and a Management Program degree from Harvard Business School.
        Mr.
        Ortiz de Zevallos became a Director of Credicorp on March 31, 2005. Mr. Ortiz
        de
        Zevallos serves as Director on the Boards of various other companies, among
        which are Grupo Apoyo (Chairman), Compañía de Minas Buenaventura S.A. and
        Universia. Felipe Ortiz de Zevallos is currently Peru’s Ambassador to the United
        States. Until he was appointed as Peru’s Ambassador to the United States, Mr.
        Zevallos served as the President of Universidad del Pacífico in Lima (elected
        for the period 2004-2009).
  *Germán
        Suárez* is an
        economist, and received his Master’s degree in economics from Columbia
        University. Mr. Suárez became a Director of Credicorp on March 31, 2005. Mr.
        Suárez was President and Chairman of the Board of Banco Central de Reserva del
        Perú from 1992 to 2001, and serves as Director on the Boards of various other
        companies, among which are Compañía de Minas Buenaventura S.A.
  At
        the
        Annual General Shareholders’ Meeting held on March 31, 2005, an amendment to the
  Bye-laws
        was adopted whereby the number of Directors was increased from six to eight
        and
        the classification of Directors and the staggering of their terms was removed
        and replaced with three-year terms to be served until the end of the Annual
        General Shareholders’ Meeting for the year in which their respective terms
        expire. The main reasons for these amendments were to give more stability
        to the
        administration of Credicorp and to give pension funds AFPs, whose ownership
        of
        Common Shares has steadily increased (see “Item 7. Major Shareholders and
        Related Party Transactions—(A) Major Shareholders”), direct representation on
        the Board of Directors. Mr. Ortiz de Zevallos and Mr. Suárez were elected to the
        two newly created directorships to represent the pension funds.
  The
        Secretary of Credicorp is Dawna L. Ferguson. The Assistant Secretary of
        Credicorp is Fernando Palao. The Resident Representative of Credicorp in
        Bermuda
        is Nicholas G. Trollope.
  120
  ***Executive
        Officers***
  Pursuant
        to Credicorp’s Bye-laws, the Board of Directors has the power to delegate its
        power over day-to-day management to one or more Directors, officers, employees
        or agents. The following table sets forth information concerning the principal
        executive officers of Credicorp.
  **Name**
              
              **Position**
              
              **Years Served as**
                **an Officer**(1)Dionisio
                  Romero
              
              
              Chief
                  Executive Officer
              
              
              38
              (2)Raimundo
                  Morales
              
              
              Chief
                  Operating Officer (until April 2008)
              
              
              28
              (3)Walter
                  Bayly
              
              
              Chief
                  Operating Officer (from April 2008)
                Chief
                  Financial and Accounting Officer (until April 2008)
              
              
              15Carlos
                  Muñoz
              
              
              Executive
                  Vice President (until April 2008)
              
              
              27Alvaro
                  Correa
              
              
              Chief
                  Financial and Accounting Officer (from April 2008)
              
              
              15
              (4)José
                  Luis Gagliardi
              
              
              Senior
                  Vice President, Administration and Human Resources
              
              
              27
              (5)David
                  Saettone
              
              
              Senior
                  Vice President, Insurance
              
              
              10
  ________________________
 (1)
              Of
                  Credicorp, its subsidiaries and their predecessors as of December
                  31,
                  2007.
 (2)
              Mr.
                  Romero served as an officer of BCP from 1966 through 1987 and from
                  1990 to
                  the present. Mr. Romero has been an officer of PPS since
                  1972.
 (3)
              Mr.
                  Morales resigned as COO of Credicorp in October 2007 and was appointed
                  Director and Vice Chairman of Credicorp in April
                  2008.
 (4)
              As
                  of April 2008, Mr. Alvaro Correa is the Chief Financial and Accounting
                  Officer.
 (5)
              Mr.
                  Gagliardi served as an officer of BCP from 1981 through
                  1988.
 
 *Dionisio
        Romero* ,
        the
        Chief Executive Officer of Credicorp, also serves on Credicorp’s Board of
        Directors. See “—Directors.”
  *Raimundo
        Morales* ,
        the
        former Chief Operating Officer of Credicorp and the General Manager of Banco
        de
        Crédito del Perú resigned as COO of Credicorp In October 2007 and was appointed
        Director and Vice President of Credicorp in April 2008. See
“—Directors.”
  *Carlos
        Muñoz* ,
        the
        former Executive Vice President of Credicorp, Deputy General Manager of Banco
        de
        Crédito del Perú and President of ASB, resigned from BCP and Credicorp in
        October 2007 effective as of April 2008. He had previously served as Senior
        Vice
        President and Manager of BCP’s Metropolitan group and later managed the Retail
        Banking Group as an Executive Vice President. Previously, Mr. Muñoz held
        positions as an Investment Officer for the International Finance Corporation
        (World Bank Group) in Washington, D.C. and with the Philadelphia National
        Bank
        in Philadelphia, Paris and Buenos Aires, where his last position was Assistant
        Vice President and Regional Representative. From 1988 to 1990, Mr. Muñoz served
        as Executive Vice President of ASB. Mr. Muñoz received his Master’s degree in
        Finance from the Wharton School of Business in the United States.
  *Walter
        Bayly* was
        named the Chief Operating Officer of Credicorp and General Manager of BCP
        in
        October 2007, effective April 2008. Since April 2004, he was the Chief Financial
        and Accounting Officer of Credicorp and Executive Vice President of Planning
        and
        Finance of Banco de Crédito del Perú. Previously, Mr. Bayly held various other
        management positions within BCP, having managed the Wholesale Banking Group
        as
        well as various Areas of BCP. Mr. Bayly joined BCP in 1993, after three years
        at
        Casa Bolsa México where he was Partner and Managing Director in Corporate
        Finance and after ten years at Citibank in Lima, New York, México, and Caracas,
        where he worked primarily in the Corporate Finance and Loan Syndication groups.
        Mr. Bayly received a Bachelor degree in Business Administration from Universidad
        del Pacífico in Lima, Perú, and a Master’s degree in Management from Arthur D.
        Little Management in Cambridge, Massachusetts.
  121
  *Alvaro
        Correa* is
        the
        Chief Financial and Accounting Officer of Credicorp and Executive Vice President
        of Planning and Finance of Banco de Crédito del Perú. Mr. Correa was appointed
        CFO of Credicorp and Executive Vice President of Planning and Finance of
        Banco
        de Crédito del Perú in October 2007, effective April 2008. Mr. Correa has a B.S.
        in Industrial Engineering from the Pontificia Universidad Católica del Perú. He
        also holds a Master’s in Business Administration from Harvard Business School.
        In 1997, he joined BCP as Retail Risk Manager, serving later as IT Solution
        Manager under the Systems and Organization Division. He then served as General
        Manager of Atlantic Security Bank, Credicorp Securities and BCP’s Miami Agency
        for the last three years.
  *José
        Luis Gagliardi* ,
        the
        Senior Vice President, Administration and Human Resources of Credicorp and
        Executive Vice President of Administration of Banco de Crédito del Perú, first
        joined BCP in 1981. From March 1981 until December 1988 he served as the
        Manager
        of Human Resources and Central Manager of Resources and Administration. In
        1988,
        Mr. Gagliardi left BCP to manage Human Resources for Bank of America’s Latin
        American Group. He rejoined BCP in November 1990.
  *David
        Saettone* is the
        Senior Vice President, Insurance of Credicorp and the General Manager of
        PPS. He
        is an economist with a Masters degree and PhD from Princeton University in
        the
        United States. He was the General Manager of BCB and Chief of the Gabinete
        de
        Asesores y Unidad de Coordinación de Préstamos Sectoriales of the Economy and
        Finance Office, Perú. He was also Manager of the Corporate Finance Area of
        BCP.
  ********(B)**
              **Compensation**
  The
        aggregate amount of compensation paid by Credicorp to all Directors and
        executive officers for 2007 was US$46.8 million. Credicorp does not
        disclose to its shareholders or otherwise make available to the public
        information as to the compensation of its individual directors or executive
        officers.
  Pursuant
        to the Credicorp Stock Appreciation Rights (SARs) Plan (the “Plan”) which
        Credicorp instituted beginning in fiscal year 1999, Credicorp granted SARs
        to
        certain key executives and employees (Directors and administrative, supervisory
        and management personnel) who have at least one year’s service in Credicorp or
        any of its subsidiaries during each year since 1999. Each SAR expires eight
        years after the date of grant. The rights vest in 25% increments during the
        first four years following the date of grant. From the end of the fourth
        year
        after the grant of a SAR until the expiration date of it, all or a portion
        of
        such right still outstanding under the Plan may be exercised at any time.
        The
        following table shows the number of SARs granted and corresponding exercise
        price for each year.
  Year
              
              Number of Outstanding
                SARs granted
              
              Exercise
                price in US$2000
              
              
              509,000
              
              
              8.502001
              
              
              555,000
              
              
              5.302002
              
              
              558,750
              
              
              6.982003
              
              
              562,500
              
              
              8.172004
              
              
              570,000
              
              
              10.992005
              
              
              585,000
              
              
              16.002006
              
              
              621,000
              
              
              25.322007
              
              
              689,500
              
              
              48.50
  In
        2003,
        2004, 2005 and 2006, prices of the SARs were modified. The exercise prices
        of
        the SARs are reduced by an amount equal to the excess over US$0.70 of total
        dividends paid per share in a given year. As of December 31, 2007, Options
        on
        410,700 Common Shares had been exercised (948,925 as of December 31, 2006)
        for
        an approximate amount of US$18.8 million in 2007 (US$29.3 million in
        2006). See Note 20 to the Credicorp Consolidated Financial Statements.
  122
 During
        2006 and 2007, Credicorp signed a contract to acquire certificates indexed
        to
        the performance of Credicorp’s stocks as a means to hedging the SARs delivered
        to the executives of Credicorp. See Note 8 to the Credicorp Consolidated
        Financial Statements.
  The
        following table sets forth the movement of the SARs for the periods
        indicated:
  **2007**
              
              **2006****Outstanding**
                **SARs**
              
              **Vested**
                **SARs**
              
              **Outstanding**
                **SARs**
              
              **Vested**
                **SARs**Number
              
              Number
              
              Amount
              
              Number
              
              Number
              
              AmountUS$(000)
              
              
              
              
              
              US$(000)Balance
                  as of January 1st
              
              
              1,858,350
              
              
              1,301,928
              
              
              38,761
              
              
              2,201,275
              
              
              1,658,932
              
              
              22,813Granted
                  and vested
              
              
              689,500
              
              
              647,610
              
              
              22,248
              
              
              621,000
              
              
              600,046
              
              
              12,838Exercised
              
              
              (410,700
              )
              
              (410,700
              )
              
              (18,801
              )
              
              (948,925
              )
              
              (948,925
              )
              
              (29,292
              )Decrease
              
              
              (2,500
              )
              
              (1,719
              )
              
              (88
              )
              
              (15,000
              )
              
              (8,125
              )
              
              (232
              )Increase
                  in theoption
                  fair value
              
              
              -
              
              
              -
              
              
              47,482
              
              
              -
              
              
              -
              
              
              32,634Balance
                  as of December 31
              
              
              2,134,650
              
              
              1,537,119
              
              
              89,602
              
              
              1,858,350
              
              
              1,301,928
              
              
              38,761
 
 The
        following table sets forth the number of SARs vested and the price of such
        SARs
        for the periods indicated:
 
 **Year of**
                **Insurance**
              
              **Number**
                **of outstanding**
                **SARs as of**
                **December 31,**
                **2007**
              
              **Number of Vested SARs**
                **as of December 31**
              
              **Exercise price****2007**
              
              **2006**
              
              **2007**
              
              **2006**US$
              
              US$2000
              
              
              49,750
              
              
              49,750
              
              
              68,750
              
              
              8.50
              
              
              8.802001
              
              
              73,000
              
              
              73,000
              
              
              81,500
              
              
              5.30
              
              
              5.602002
              
              
              92,500
              
              
              92,500
              
              
              117,500
              
              
              6.98
              
              
              7.282003
              
              
              151,900
              
              
              151,900
              
              
              220,000
              
              
              8.17
              
              
              8.472004
              
              
              237,700
              
              
              237,700
              
              
              317,984
              
              
              10.99
              
              
              11.292005
              
              
              384,500
              
              
              349,813
              
              
              281,038
              
              
              16.00
              
              
              16.302006
              
              
              497,050
              
              
              310,800
              
              
              215,156
              
              
              25.32
              
              
              25.622007
              
              
              648,250
              
              
              271,656
              
              
              -
              
              
              48.50
              
              
              -2,134,650
              
              
              1,537,119
              
              
              1,301,928
  **(C)**
              **Board
                  Practices**
  The
        management of Credicorp is the responsibility of the Board of Directors,
        which,
        pursuant to the Bye-laws, is composed of eight persons. Directors need not
        be
        shareholders. Directors are elected and their remuneration is determined
        at
        Annual General Shareholders’ Meetings. Directors hold office for three-year
        terms. The date of expiration of the current Board is March 31, 2011.
        Credicorp’s current Directors have no benefits in addition to the remuneration
        agreed at the Annual General Shareholders’ Meetings, nor benefits that could be
        enjoyed at the termination of their service terms.
  123
  Pursuant
        to the Bye-laws, the number of Directors required to constitute a quorum
        is a
        majority of the Directors. A quorum must exist throughout any meeting of
        Directors. A Director can appoint another Director to act as his representative
        at a meeting of the Board of Directors. The Board of Directors may act by
        the
        unanimous written consent of all Directors.
  The
        Audit
        Committee is responsible for assisting in the recommendation of independent
        auditors to be appointed at the Annual General Shareholders’ Meeting of
        Credicorp and reviewing the scope of internal and external audits. The Audit
        Committee also reviews compliance with internal control systems, reviews
        Credicorp’s annual and quarterly financial statements before their presentation
        to regulatory bodies and maintains the integrity of the preparation of audits.
        Until March 2008 the members of the Audit Committee were Messrs. Yarur
        (Chairman), Nicolini, Llosa and Verme. In its session held on March 28, 2008
        the
        Board of Directors elected the members of the new Audit Committee as follows:
        Mr. Germán Suarez as President and financial expert and Mr. Reynaldo Llosa. The
        Audit Committee has designated as advisors Mr. Benedicto Cigüeñas and Mr. Luis
        Nicolini.
  Credicorp’s
        Audit Committee has also been assigned by the Board of Directors to oversee
        the
        internal audit departments at BCP and PPS. As permitted by SBS Resolution
        No.
        1041-99, BCP’s internal audit department has responsibility over all financial
        activities of its subsidiaries.
  In
        accordance with Section 303A.11 of the New York Stock Exchange (“NYSE”) Listed
        Company Manual, Credicorp has disclosed on its website
        (www.credicorpnet.com) the significant ways in which its corporate
        governance practices differ from those required of U.S. domestic companies
        under
        the NYSE’s corporate governance standards.
  **(D)**
              **Employees**
  On
        December 31, 2007, Credicorp had 13,149 full time employees, distributed
        as set
        forth in the following table:
 **At December 31,****2005**
                  
                  **2006**
                  
                  **2007***(Full-time employees)*BCP
                  
                  
                  7,568
                  
                  
                  8,243
                  
                  
                  9,593PPS
                  
                  
                  1,099
                  
                  
                  1,159
                  
                  
                  1,665ASHC
                  
                  
                  57
                  
                  
                  61
                  
                  
                  65Prima
                      AFP
                  
                  
                  457
                  
                  
                  1,729
                  
                  
                  1,464Others
                  
                  
                  363
                  
                  
                  340
                  
                  
                  350Total
                      Credicorp
                  
                  
                  9,544
                  
                  
                  11,532
                  
                  
                  13,149
  All
        employees of banks in Peru are given the option of belonging to an employee
        union, and such employee unions are collectively represented by the *Federación
        de Empleados Bancarios* (the
        Federation of Banking Employees, or “FEB”). In order to negotiate a collective
        agreement on behalf of its members, FEB must have as members over 50% of
        all
        Peruvian banking employees. Because the representation of banking employees
        members of FEB declined to below 50%, the most recent collective bargaining
        agreement, which expired on June 30, 1995, was not renewed.
  124
  BCP
        was
        granted permission by the Peruvian Ministry of Labor to cancel the registration
        of BCP’s union in 1996 due to limited participation. As of December 31, 2007, no
        BCP employees belonged to a union. The last strike by union employees occurred
        in 1991 and did not interfere with BCP’s operations.
  **(E)**
              **Share
                  Ownership**
  As
          of
          September 30, 2008, the Romero family (represented by Mr. Dionisio Romero)
          owned
          14.9 million (15.82%) Credicorp Common Shares and Mr. Luis Yarur owned
          approximately 1.495 million (1.58%) Credicorp Common Shares. No other director
          or executive officer of Credicorp beneficially owns more than one percent
          of
          Credicorp's Common Shares. See “Item 7. Major Shareholders and Related Party
          Transactions-(A) Major Shareholders.” In addition, other members of the Board of
          Directors that own Credicorp Common Shares are: Mr. Luis Nicolini, Mr.
          Fernando
          Fort, Mr. Reynaldo Llosa and Mr. Juan Carlos Verme, in each case less than
          one
          percent of Credicorp's total outstanding Common Shares.
  **ITEM
                  7.**
              **MAJOR
                  SHAREHOLDERS AND RELATED PARTY
                  TRANSACTIONS**
  **(A)**
              **Major
                  Shareholders**
  As
        of
        December 31, 2007, there were 94,382,317 Common Shares issued, of which 14,620,845 Common Shares were held by ASHC.
        Under Bermuda law, ASHC has the right to vote the Common Shares it owns.
        In
        order to restructure long term holdings, substantially all of the Common
        Shares
        held by BCP and PPS were transferred to ASHC in April 2004.
  The
        table
        below provides details about the percentage of Common Shares owned by holders
        of
        5% or more of Common Shares, of April 30, 2008.
  **Owner**
              
              **Common**
                **Shares**
              
              **Percent of**
                **Class**(1)Romero family(2)
              
              
              14,930,289
              
              
              15.82
              %Atlantic
                  Security Holding Corporation
              
              
              14,620,845
              
              
              15.49
              %AFP
                  Integra
              
              
              5,901,429
              
              
              6.25
              %AFP
                  Prima
              
              
              5,842,328
              
              
              6.19
              %
 _______________________
 (1)
              As
                  a percentage of issued and outstanding shares (including shares
                  held by
                  ASHC).
 (2)
              Includes
                  Common Shares directly or indirectly owned by Dionisio Romero and
                  his
                  family or companies owned or controlled by him. Mr. Romero is the
                  Chairman
                  and Chief Executive Officer of
                  Credicorp.
 
 Approximately
        22.48% of the total issued and outstanding Common Shares of Credicorp are
        currently held in 2,750 individual accounts with Cavali, a Peruvian securities
        clearing company.
  As
        of
        April 30, 2008, 79,761,475 Common Shares of Credicorp (excluding the 14,620,842
        shares held by ASHC) were outstanding, of which approximately 48% were held
        in
        the United States. As of such date, there were 66 registered holders of Common
        Shares in the United States. Because certain of these Common Shares were
        held by
        brokers or other nominees and due to the impracticability of obtaining accurate
        residence information for all beneficial shareholders, the number of holders
        of
        record or registered holders of the United States is not representative of
        the
        number of beneficial holders or of the residence of beneficial holders.
        Credicorp is not directly or indirectly controlled by another corporation
        or by
        any foreign government.
  125
  **(B)**
              **Related
                  Party Transactions**
  ***(i)***
                  ***Credicorp***
  Under
        Bermuda law, Credicorp is not subject to any restrictions on transactions
        with
        affiliates, other than such restrictions as are applicable to Bermuda companies
        generally. Credicorp’s Bye-laws provide that a Director may not vote in respect
        of any contract or proposed contract or arrangement in which such Director
        has
        an interest or in which such Director has a conflict of interest. Credicorp
        has
        not engaged in any transactions with related parties except through its
        subsidiaries.
  The
        consolidated financial statements of the Credicorp as of December 31, 2005,
        2006
        and 2007 include the transactions with related parties. For its 2005, 2006
        and
        2007 consolidated financial statements, Credicorp defines related parties
        as
        related companies, the Board of Directors, Credicorp’s key executives (defined
        as the management of Credicorp’s Holding) and enterprises that which are
        controlled by these individuals or entities through majority shareholding
        or
        their role as chairman or principal executive officer in those companies.
 
 The
        following table shows the main transactions with related companies as of
        December 31, 2005, 2006, and 2007.
 
 Related companies2005
              
              2006
              
              2007US$(000)
              
              US$(000)
              
              US$(000)Direct
                  loans
              
              
              48,533
              
              
              70,636
              
              
              94,102Investments
                  available-for-sale
              
              
              45,208
              
              
              62,125
              
              
              90,396Deposits
              
              
              21,305
              
              
              25,074
              
              
              31,689Contingent
                  credits
              
              
              8,379
              
              
              13,925
              
              
              14,026Interest
                  income related to loans
              
              
              1,991
              
              
              2,097
              
              
              2,288Interest
                  expense related to deposits
              
              
              991
              
              
              1,505
              
              
              2,009Investments
                  available-for-sale cost
              
              
              -
              
              
              -
              
              
              1,673Derivatives
                  at fair value
              
              
              388
              
              
              179
              
              
              386Other
                  income
              
              
              546
              
              
              953
              
              
              1,192
 
 The
        loans, contingent operations and derivative contracts with related parties
        were
        made in the ordinary course of business and are made in accordance with the
        normal market terms available to other customers. Outstanding loans balances
        at
        the year-end are granted by collaterals given by the related part. The loans
        to
        related companies as of December 31, 2007 maturity dates ranging between
        January
        2008 and September 2017 and an accrued annual interest average of 6.79% (as
        of
        December 31, 2006 had a maturity between January 2007 and August 2012 and
        an
        accrued annual interest average of 7.71%). As of December 31, 2007, the
        provision for doubtful debts due to related parties amounted to US$0.2 million
        (US$0.1 million as of December 31, 2006 and US$1.4 million as of December
        31,
        2005). This amount is established based on an assessment performed on a
        continuous basis in the financial position of the related party and the market
        where it operates.
 
 As
        of
        December 31, 2005, 2006 and 2007, directors, officers and employees of Credicorp
        had been involved, directly and indirectly, in credit transactions with certain
        subsidiaries of Credicorp, as permitted by Peruvian Law No 26702, which
        regulates and limits certain transactions with employees, directors and officers
        of banks and insurance companies in Peru. As of December 31, 2005, 2006 and
        2007, direct loans to employees, directors and key management amounted to
        US$25.1 million, US$59.5 million and US$82.5 million, respectively, and are
        paid
        monthly during their loan and earn interest at similar market rates for these
        loans.
 
 126
  Credicorp
        does not grant directors or key personnel loans that are guaranteed with
        shares
        of Credicorp or other companies of Credicorp.
 
 Credicorp’s
        executives compensation as of December 31, 2005, 2006 and 2007, was comprised
        of
        the following:
  2005
              
              2006
              
              2007US$(000)
              
              US$(000)
              
              US$(000)Stock
                  appreciation rights
              
              
              7,284
              
              
              23,206
              
              
              27,113Salaries
              
              
              4,357
              
              
              4,824
              
              
              5,535Director
                  compensations
              
              
              1,115
              
              
              1,173
              
              
              1,162Other
              
              
              2,185
              
              
              6,962
              
              
              12,947Total
              
              
              14,941
              
              
              36,165
              
              
              46,757
 
 Credicorp’s
        key executives compensation comprises all the payments received by them,
        including the taxes assumed by Credicorp.
  127
  **(C)**
              **Interests
                  of Experts and Counsel**
  Not
        applicable.
  **ITEM
                  8.**
              **FINANCIAL
                  INFORMATION**
  **(A)**
              **Consolidated
                  Statements and Other Financial
                  Information**
  ***Consolidated
        Financial Statements***
  See
“Item
        18. Financial Statements”.
  ***Legal
                  Proceedings***
  Credicorp
        and its subsidiaries are involved in certain legal proceedings incidental
        to the
        normal conduct of their businesses. In addition, Credicorp was involved in
        certain legal proceedings in connection with its acquisition of Banco
        Tequendama. See “Item 4. Information on the Company—(C) Organizational
        Structure.” Credicorp does not believe that any potential liabilities resulting
        from such proceedings would have a material adverse effect on the financial
        condition or results of operation of Credicorp or any of its
        subsidiaries.
  ***Government
        Investigations***
  Credicorp
        and its subsidiaries are not involved in government investigations.
  ***Dividend
        Policy***
  Pursuant
        to Bermuda law, dividends may be declared and paid from time to time provided
        Credicorp is able to pay its liabilities as they become due and the realizable
        value of Credicorp’s assets would not be less than the aggregate of its
        liabilities and issued share capital and share premium accounts after the
        payment of such dividend. Although there can be no assurance that any dividends
        will be paid or as to the amount of dividends, if any, to be paid, Credicorp
        currently intends to declare and pay dividends annually and Credicorp’s Board of
        Directors currently expects to authorize the payment to the shareholders
        of an
        annual dividend of no less than 25% of consolidated net profits. However,
        the
        payment of dividends is subject to Bermuda law and the discretion of the
        Board
        of Directors of Credicorp and will depend upon general business conditions,
        the
        financial performance of Credicorp, the availability of dividends from
        Credicorp’s subsidiaries and restrictions on their payment, and other factors
        that Credicorp’s Board of Directors may deem relevant.
  128
  Credicorp
        will rely almost exclusively on dividends from its subsidiaries for the payment
        of dividends to holders of Common Shares and for corporate expenses, and
        is able
        to cause its subsidiaries to declare dividends, subject to certain reserve
        and
        capital adequacy requirements under applicable banking and insurance
        regulations. To the extent Credicorp’s subsidiaries do not have funds available
        or are otherwise restricted from paying dividends to Credicorp, Credicorp’s
        ability to pay dividends on the Common Shares will be adversely affected.
        Currently, there are no restrictions on the ability of BCP, ASHC, PPS, or
        any
        other Credicorp subsidiary to remit dividends abroad. In addition, BCP and
        PPS
        intend to declare and pay dividends in Nuevos Soles, whereas Credicorp intends
        to declare and pay dividends in U.S. Dollars. If the value of the Nuevo Sol
        falls relative to the U.S. Dollar between the date of declaration and the
        date
        of payment of dividends, the value of such dividends to Credicorp would be
        adversely affected. See “Item 3. Key Information—(A) Selected Financial
        Data—Exchange Controls.”
  The
        following table shows cash and stock dividends paid by Credicorp in the periods
        indicated:
  **Year ended December 31,**
              
              **Number of Shares**
                **Entitled**
                **to Dividends**
              
              **Cash Dividends**
                **Per Share**
              
              **Stock Dividends**
                **Per Share**1999
              
              
              94,382,317
              
              US$
              0.20
              
              
              0.002000
              
              
              94,382,317
              
              US$
              0.10
              
              
              0.002001
              
              
              94,382,317
              
              US$
              0.10
              
              
              0.002002
              
              
              94,382,317
              
              US$
              0.40
              
              
              0.002003
              
              
              94,382,317
              
              US$
              0.30
              
              
              0.002004
              
              
              94,382,317
              
              US$
              0.40
              
              
              0.002005
              
              
              94,382,317
              
              US$
              0.80
              
              
              0.002006
              
              
              94,382,317
              
              US$
              1.10
              
              
              0.002007
              
              
              94,382,317
              
              US$
              1.30
              
              
              0.00
  On
        February 27, 2008, the Board declared a cash dividend of US$1.50 per Common
        Share held at the close of business on April 16, 2008, which was distributed
        on
        May 7, 2008 and approved by the Annual General Meeting held on March 28,
        2008.
  129
  **ITEM
        9.**  **THE
        OFFER AND LISTING**
  **(A)**
              **Offer
                  and Listing Details**
  ***Price
        History of Credicorp’s Stock***
  Credicorp’s
        Common Shares have been traded on the New York Stock Exchange since October
        25,
        1995 under the symbol “BAP.” The Common Shares also trade on the Lima Stock
        Exchange. The Common Shares are quoted in U.S. Dollars on both the New York
        Stock Exchange and the Lima Stock Exchange. The table below sets forth, for
        the
        periods indicated, the reported high and low closing prices and average daily
        trading volume for the Common Shares on the New York Stock Exchange.
  **High**
              
              **Low**
              
              **Average**
                **Daily**
                **Volume**2003
              
              US$
              13.38
              
              US$
              9.35
              
              
              41,9312004
              
              US$
              15.87
              
              US$
              12.00
              
              
              22,1842005
              
              US$
              28.81
              
              US$
              14.41
              
              
              82,3382006
              
              US$
              45.42
              
              US$
              21.88
              
              
              176,3882007
              
              US$
              76.81
              
              US$
              38.04
              
              
              279,6022006First
                  quarter
              
              US$
              28.99
              
              US$
              21.88
              
              
              145,969Second
                  quarter
              
              US$
              29.21
              
              US$
              24.81
              
              
              178.809Third
                  quarter
              
              US$
              41.17
              
              US$
              28.13
              
              
              206,243Fourth
                  quarter
              
              US$
              45.42
              
              US$
              38.42
              
              
              154,5152007First
                  quarter
              
              US$
              51.68
              
              US$
              38.80
              
              
              283,922Second
                  quarter
              
              US$
              61.95
              
              US$
              47.92
              
              
              277,383Third
                  quarter
              
              US$
              66.39
              
              US$
              55.50
              
              
              303,425Fourth
                  quarter
              
              US$
              76.81
              
              US$
              65.14
              
              
              244,4372008First
                  quarter
              
              US$
              78.69
              
              US$
              68.63
              
              
              356,633Second
                  quarter (through June 6)
              
              US$
              85.27
              
              US$
              73.56
              
              
              348,050
 
 
 Source
        :
        Bloomberg
 
 130
  The
        table
        below sets forth, for the periods indicated, the reported high and low closing
        prices and average daily trading volume for the Common Shares on the Lima
        Stock Exchange.
  **High**
              
              **Low**
              
              **Average**
                **Daily**
                **Volume***U.S.
                  Dollars*2003
              
              
              12.60
              
              
              9.38
              
              
              29,7012004
              
              
              15.70
              
              
              12.08
              
              
              21,5642005
              
              
              28.99
              
              
              14.33
              
              
              15,7442006
              
              
              45.58
              
              
              38.27
              
              
              16,9502007
              
              
              76.48
              
              
              38.24
              
              
              22,5532006First
                  quarter
              
              
              28.99
              
              
              22.41
              
              
              9,277Second
                  quarter
              
              
              28.96
              
              
              24.83
              
              
              19,336Third
                  quarter
              
              
              40.95
              
              
              27.96
              
              
              11,625Fourth
                  quarter
              
              
              45.58
              
              
              38.27
              
              
              27,5622007First
                  quarter
              
              
              51.68
              
              
              39.00
              
              
              14,553Second
                  quarter
              
              
              61.80
              
              
              47.93
              
              
              42,703Third
                  quarter
              
              
              65.99
              
              
              54.91
              
              
              19,282Fourth
                  quarter
              
              
              76.48
              
              
              65.20
              
              
              18,9342008First
                  quarter
              
              
              78.56
              
              
              68.64
              
              
              11,150Second
                  quarter (through June 6)
              
              
              84.80
              
              
              73.54
              
              
              12,763
 Source:  Bloomberg
  The
        table
        below sets forth, for the indicated months, the reported high and low closing
        prices for the Common Shares on the New York Stock Exchange.
  **High**
              
              **Low***U.S.
                  Dollars***2007**December
              
              
              76.81
              
              
              71.61**2008**January
              
              
              78.69
              
              
              68.63February
              
              
              74.21
              
              
              69.42March
              
              
              73.67
              
              
              69.87April
              
              
              80.36
              
              
              73.56May
              
              
              83.46
              
              
              80.49June
                  (through June 6)
              
              
              85.27
              
              
              83.11
 _____________________
 Source:  Bloomberg
 
 131
  The
        table
        below sets forth, for the indicated months, the reported high and low closing
        prices for the Common Shares on the Lima Stock Exchange.
  **High**
              
              **Low***U.S.
                  Dollars***2007**December
              
              
              76.48
              
              
              71.19**2008**January
              
              
              78.56
              
              
              68.64February
              
              
              74.52
              
              
              69.13March
              
              
              73.98
              
              
              70.12April
              
              
              80.90
              
              
              77.50May
              
              
              83.20
              
              
              80.25June
                  (through June 6)
              
              
              84.80
              
              
              84.00
 _____________________
 Source:  Bloomberg
  On
        June
        27, 2008, the last sale price of the Common Shares on the New York Stock
        Exchange was US$80.06 per share. On June 27, 2008, the closing price of the
        Common Shares on the Lima Stock Exchange was US$80.50.
  **(B)**
              **Plan
                  of Distribution**
  Not
        applicable.
  **(C)**
              **Markets**
  ***The
        Lima Stock Exchange***
  **(i)**
              **Trading**
  As
        of
        December 2007, there were 245 companies listed on the *Bolsa
        de Valores de Lima* (Lima
        Stock Exchange), Peru’s only securities exchange, which was established in 1970.
        Trading on the Lima Stock Exchange is primarily done on an electronic trading
        system that became operational in August 1995. Trading hours are Monday through
        Friday as follows: 9:00 a.m.-9:30 a.m. (pre-market ordering);
        9:30 a.m.-1:30 p.m. (trading); and 1:30 p.m.-2:00 p.m. (after
        market sales). Equity securities may also be traded in an open outcry auction
        floor session, which was the exclusive method of trading equity securities
        prior
        to the introduction of electronic trading. Nearly 100% of transactions currently
        take place on the electronic system.
  Transactions
        during both open outcry and electronic sessions are executed through brokerage
        firms and stock brokers on behalf of their clients. Brokers submit their
        orders
        in strict accordance with written instructions, following the chronological
        order of the receipt. The orders specify the type of security ordered or
        offered, the amounts and the price of the sale or purchase, as the case may
        be.
        In general, share prices are permitted to increase or decrease up to 10%
        within
        a single trading day.
  The
        Peruvian stock market capitalization increased, in U.S. Dollar terms, by
        27.7%
        in 2003, 25.0% in 2004, 80.0% in 2005, 65.8% in 2006 and 80.3% in 2007. Volume
        in the Peruvian market is highly concentrated, with the 10 most actively
        traded
        companies representing approximately 50.05% of total traded value of equity
        securities during 2007. Total traded volume was US$2.3 billion in 2003, but
        increased to US$2.5 billion in 2004, US$3.6 billion in 2005, US$6.3
        billion in 2006 and US$12.4 billion in 2007. Average daily traded volume
        was
        US$9.0 million in 2003, US$9.9 million in 2004, US$14.5 million in
        2005, US$25.1 million in 2006 and US$49.6 million in 2007.
  132
  The *Indice
        General de la Bolsa de Valores de Lima* (the
        General Index of the Lima Stock Exchange (IGBVL)) increased, in U.S. Dollar
        terms, 76.3% in 2003, 60.5% in 2004, 24.6% in 2005 and, 186.9% in 2006 and
        45.6%
        in 2007.
  **(ii)**  **Market
        Regulation**
  As
        of
        December 1996, a new Peruvian securities law, Legislative Decree 861 (the
        “Securities Market Law”), superseded Legislative Decree 755, which had been in
        effect since November 1991. The rapid development and internationalization
        of
        the Peruvian economy brought about the need to modernize Peru’s old securities
        law. The Securities Market Law addresses such matters as transparency and
        disclosure, takeovers and corporate actions, capital market instruments and
        operations, the securities markets and broker-dealers, and risk rating
        agencies.
  CONASEV,
        a public entity reporting to Peru’s Ministry of Economy and Finance, was given
        additional responsibilities relating to the supervision, regulation and
        development of the securities market, while a self-regulatory status was
        established for the Lima Stock Exchange and its member firms. Additionally,
        a
        unified system of guarantees and capital requirements was established for
        the
        Lima Stock Exchange and its member firms.
  CONASEV
        is governed by a nine-member board appointed by the government. CONASEV has
        broad regulatory powers, including supervision of all companies incorporated
        in
        Peru as well as Peruvian branches or agencies of foreign corporations, the
        process of admission of members to the Lima Stock Exchange, the authorization
        for the creation of exchanges, and the approval of the registration of offerings
        of securities. CONASEV supervises the securities markets and the dissemination
        of information to investors. It also governs the operations of the Public
        Registry of Securities and Brokers, regulates mutual funds and their management
        companies, monitors compliance with accounting regulations by companies under
        its supervision and the accuracy of financial statements, and registers and
        supervises auditors providing accounting services to those companies under
        CONASEV’s supervision. On August 22, 1995, CONASEV approved regulations
        governing the public offering of securities in Peru by entities organized
        outside of Peru and, for the first time, authorized foreign companies to
        be
        listed on the Lima Stock Exchange. On October 25, 1995, Credicorp became
        the
        first non-Peruvian company to list its shares on the Lima Stock Exchange.
        See ”Item 4. Information on the Company—(B) Business Overview—(11)
        Supervision and Regulation.”
  Pursuant
        to the Securities Market Law, a guarantee fund must be maintained by the
        Lima
        Stock Exchange and funded by its member firms. The actual contributions to
        be
        made by the 21 member firms of the Lima Stock Exchange are based on volume
        traded over the exchange. At present, the fund has approximately
        S/.25 million (US$8.79 million), which exceeds the target set by the
        regulations based on the exchange’s total traded volume. In addition to the
        guarantee fund managed by the Lima Stock Exchange, each member firm is required
        to maintain a guarantee for operations carried outside the exchange in favor
        of
        CONASEV. The manner in which such guarantees are generally established is
        through stand-by letters of credit issued by local banks.
  **(D)**
              **Selling
                  Shareholders**
  Not
        applicable.
  **(E)**
              **Dilution**
  Not
        applicable.
  **(F)**
              **Expenses
                  of the issue**
  Not
        applicable.
  133
  **ITEM
                  10.**
              **ADDITIONAL
                  INFORMATION**
  **(A)**
              **Share
                  Capital**
  Not
        applicable.
  **(B)**
              **Memorandum
                  and Articles of
                  Association**
  “Item
        10.
        Additional Information—Memorandum and Articles of Incorporation” from
        Credicorp’s Annual Report on Form 20-F dated June 27, 2003 is incorporated
        herein by reference.
  At
        the
        Annual General Shareholders’ Meeting held on March 31, 2005, an amendment to the
  Bye-laws
        was adopted whereby the number of Directors was increased from six to eight
        and
        the classification of Directors and the staggering of their terms was removed
        and replaced with three-year terms to be served until the end of the Annual
        General Shareholders’ Meeting for the year in which their respective terms
        expire. The main reasons for these amendments were to give more stability
        to the
        administration of Credicorp and to give AFPs, whose ownership of Common Shares
        has steadily increased (see “Item 7. Major Shareholders and Related Party
        Transactions—(A) Major Shareholders”), direct representation on the Board of
        Directors. Mr. Ortiz de Zevallos and Mr. Suárez were elected to the two newly
        created directorships to represent the pension funds.
  **(C)**
              **Material
                  Contracts**
  As
        of the
        date hereof, there are no material contracts entered into by Credicorp and/or
        its subsidiaries.
  **(D)**
              **Exchange
                  Controls**
  Credicorp
        has been designated as a non-resident for Bermuda exchange control purposes,
        and
        as such, there are no restrictions on its ability to transfer non-Bermuda
        funds
        in and out of Bermuda or to pay dividends to United States residents who
        are
        holders of Common Shares.
  As
        Credicorp relies almost exclusively on dividends from BCP, ASHC, PPS and
        its
        other subsidiaries for the payment of dividends to holders of Common Shares
        and
        corporate expenses, to the extent these subsidiaries are restricted by law
        from
        paying dividends to Credicorp, Credicorp’s ability to pay dividends on the
        Common Shares will be adversely affected.
  In
        addition, Credicorp presents its financial statements and pays dividends
        in U.S.
        Dollars. BCP and PPS prepare their financial statements and pay dividends
        in
        Nuevos Soles. The Peruvian currency has been devalued numerous times during
        the
        past two decades. If the value of the Nuevo Sol falls relative to the U.S.
        Dollar between the date of declaration and the date of payment of dividends,
        the
        value of such dividends to Credicorp would be adversely affected.
  134
  Although
        substantially all of the customers of BCP, ASHC and PPS are located in Peru,
        as
        of December 31, 2007, approximately 68% of BCP’s loan portfolio, 100% of
        ASHC’s loan portfolio and 84.0% of PPS’s premiums were denominated in U.S.
        Dollars. A devaluation of the Nuevo Sol would therefore have the effect of
        increasing the cost to the borrower or insured of repaying these loans or
        making
        premium payments, in Nuevo Sol terms, which is the currency in which most
        of the
        customers of BCP, ASHC and PPS generate revenues. As a result, a devaluation
        could lead to increased nonperforming loans or unpaid premiums.
  Among
        the
        economic circumstances that could lead to a devaluation would be a decline
        in
        Peruvian foreign reserves to inadequate levels. Although the current level
        of
        Peru’s foreign reserves compares favorably with those of other Latin American
        countries, there can be no assurance that Peru will be able to maintain adequate
        foreign reserves to meet its foreign currency denominated obligations or
        that
        Peru will not devalue its currency should its foreign reserves decline. See
        “Item 4. Information on the Company—(B) Business Overview—(9) Peruvian
        Government and Economy.”
  Since
        March 1991, there have been no exchange controls in Peru and all foreign
        exchange transactions are based on free market exchange rates. Prior to March
        1991, the Peruvian foreign exchange market consisted of several alternative
        exchange rates. Additionally, during the last two decades, the Peruvian currency
        has experienced a significant number of large devaluations and Peru has
        consequently adopted and operated under various exchange rate control practices
        and exchange rate determination policies, ranging from strict control over
        exchange rates to market determination of rates. Current Peruvian regulations
        on
        foreign investment allow the foreign holders of equity shares of Peruvian
        companies to receive and repatriate 100% of the cash dividends distributed
        by
        the company. Such investors are allowed to purchase foreign exchange at free
        market exchange rates through any member of the Peruvian banking
        system.
  **(E)**
              **Taxation**
  At
        the
        present time, there is no Bermuda income or profits tax, withholding tax,
        capital gains tax, capital transfer tax, estate duty or inheritance tax payable
        by Credicorp or by its shareholders in respect of its shares. Credicorp has
        obtained an assurance from the Minister of Finance of Bermuda under the Exempted
        Undertakings Tax Protection Act 1966 that, in the event that any legislation
        is
        enacted in Bermuda imposing any tax computed on profits or income, or computed
        on any capital asset, gain or appreciation or any tax in the nature of estate
        duty or inheritance tax, such tax shall not, until March 28, 2016, be applicable
        to it or to any of its operations or to its shares, debentures or other
        obligations except insofar as such tax applies to persons ordinarily resident
        in
        Bermuda or to any taxes payable by Credicorp in respect of real property
        owned
        or leased by it in Bermuda.
  As
        an
        exempted company, Credicorp is liable to pay in Bermuda an annual government
        fee
        based upon its authorized share capital and the premium on its issued Common
        Shares, which amounted to the approximate equivalent of US$16,695 in 2007,
        remaining unchanged from the amount paid in 2005.
  **(F)**
              **Dividends
                  and Paying Agents**
  Not
        applicable.
  **(G)**
              **Statement
                  by Experts**
  Not
        applicable.
 **(H)**
                **Documents
                    on Display**
  The
          documents referred to in this Annual Report are available for inspection
          at the
          Registered Office of the Company.
  **(I)**
                **Subsidiary
                    Information**
  Not
          applicable.
 135
  **ITEM
        11.**  **QUANTITATIVE
        AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**
  By
        their
        nature, Credicorp’s activities principally involve the use of financial
        instruments, including derivatives. Credicorp accepts deposits from customers
        at
        both fixed and floating rates, for various periods, and seeks to earn
        above-average interest margins by investing these funds in high-quality assets.
        Credicorp seeks to increase these margins by consolidating short-term funds
        and
        lending for longer periods at higher rates, while maintaining sufficient
        liquidity to meet all claims that might fall due.
  Credicorp
        also seeks to raise its interest margins through lending to commercial and
        retail borrowers with a range of credit standing. Such exposures involve
        not
        just on-balance sheet loans and advances; but also guarantees and other
        commitments, such as letters of credit and performance.
  In
        addition, Credicorp trades in financial instruments where it takes positions
        in
        traded and over-the-counter instruments, including derivatives, to take
        advantage of short-term market movements in equities, bonds, currency and
        interest rates.
  In
        this
        sense, risk is inherent in Credicorp’s activities but is managed through a
        process of ongoing identification, measurement and monitoring, subject to
        risk
        limits and other controls. This risk management process is critical to
        Credicorp’s continuing profitability and each individual within the group is
        accountable for the risk exposures relating to his or her
        responsibilities.
  (a)  Risk
        management structure
  The
        Board
        of Directors of Credicorp and of each subsidiary is ultimately responsible
        for
        identifying and controlling risks. However, there are separate independent
        bodies in the major subsidiaries (BCP, PPS and ASH) responsible for managing
        and
        monitoring risks, as further explained below:
  (i)  Board
        of
        Directors
  The
        Board
        of Directors of each major subsidiary is responsible for the overall risk
        management approach and responsible for the approval of the policies and
        strategies currently in place. The Board provides written principles for
        overall
        risk management, as well as written policies covering specific areas, such
        as
        foreign exchange risk, interest rate risk, credit risk, use of derivative
        financial instruments and non-derivative financial instruments.
  (ii)  Risk
        Management Committee
  The
        Risk
        Management Committee of each major subsidiary is responsible for the strategy
        of
        mitigating risks as well as setting forth the overall principles, policies
        and
        limits for the different type of risks faced by Credicorp. The Committee
        is
        responsible for monitoring fundamental risk issues and manages and monitors
        relevant risk decisions.
  136
  (iii)  Risk
        Management Department
  The
        Risk
        Management Department of each major subsidiary is responsible for developing,
        implementing and improving, on a continuous basis, Credicorp’s risk management
        infrastructure, by adopting and incorporating global best practices and
        following proven policies.
  (iv)  Internal
        Audit
  Risk
        management processes throughout Credicorp are monitored by the internal audit
        function, which examines both the adequacy of the procedures and the compliance
        therewith. Internal Audit discusses the results of all assessments with
        Management, and reports its findings and recommendations to Credicorp’s Audit
        Committee and to the Board of Directors.
  (v)  Treasury
        and Foreign Exchange Departments
  The
        Treasury Department is responsible for managing Credicorp’s assets and
        liabilities as well as its overall financial structure. It is also responsible
        for the management of funding and liquidity risks as well as the investment,
        forward and spot portfolios, considering the associated liquidity, interest
        rate
        and exchange rate risks, and subject to the policies and effective limits
        as
        established by Credicorp.
  (b)  Risk
        measurement and reporting systems-
  Credicorp’s
        risks are measured using a method which reflects the expected loss likely
        to
        arise under normal circumstances as well as unexpected losses, as an estimate
        of
        the ultimate actual loss based on statistical models. The models make use
        of
        probabilities derived from historical experience, adjusted to reflect the
        economic environment. Credicorp also runs worse case scenarios that would
        arise
        in the event that extreme events, which are unlikely to occur, do, in fact,
        occur.
  Monitoring
        and controlling risks are primarily performed based on limits established
        by
        Credicorp. These limits reflect the business strategy and market environment
        of
        Credicorp as well as the level of risk that Credicorp is willing to assume.
        In
        addition, Credicorp monitors and measures the overall risk bearing capacity
        in
        relation to the aggregate risk exposure across all risk types and
        activities.
  Information
        compiled from all of Credicorp’s subsidiaries is examined and processed in order
        to analyze, control and identify early risks. This information is reported
        and
        explained to the Board of Directors, the Risk Management Committee, and all
        relevant members of Credicorp. The report includes aggregate credit exposure,
        credit metric forecasts, hold limit exceptions, value at risk (VaR), liquidity
        ratios and risk profile changes. Senior management assesses the appropriateness
        of the allowance for credit losses on a quarterly basis.
  (c)  Risk
        mitigation
  As
        part
        of its overall risk management, Credicorp uses derivatives and other instruments
        to manage exposures resulting from change in interest rates, foreign currencies,
        equity risk and credit risk.
  The
        risk
        profile is assessed before entering into hedge transactions, which are
        authorized by the appropriate level of seniority within Credicorp. The
        effectiveness of hedges is assessed by the Risk Management Department (based
        on
        economic considerations, rather than IFRS hedge accounting regulations).
        The
        effectiveness of all hedge relationships is monitored by the unit monthly.
        In
        situations of ineffectiveness, Credicorp will enter into a new hedge
        relationship to mitigate risk on a continuous basis.
  137
  Credicorp
        actively uses collateral to reduce its credit risks.
  (d)  Excessive
        risk concentration
  Concentrations
        arise when a number of counterparties are engaged in similar business
        activities, activities in the same geographic region, or have similar economic,
        political or other conditions. Concentrations indicate the relative sensitivity
        of Credicorp’s performance to developments affecting a particular industry or
        geographical location.
  In
        order
        to avoid excessive concentrations of risk, Credicorp’s policies and procedures
        include specific guidelines to focus on maintaining a diversified portfolio.
        Identified concentrations of credit risks are controlled and managed
        accordingly.
  *Market
        Risk*
  Credicorp
        has specific risk management policies and procedures that structure and
        delineate exposures to credit risks, market risk, liquidity and, more recently,
        operational risks (see “Item 4. Information on the Company—(B) Business
        Overview—(11) Supervision and Regulation—(ii) BCP—Management of Operational
        Risk”).
  Credicorp
        takes on exposure to market risks, which is the risk that the fair value
        or
        future cash flows of a financial instrument will fluctuate because of changes
        in
        market prices. Market risks arise from open positions in interest rates,
        currency, commodities and equity products, all of which are exposed to general
        and specific market movements and changes in the level of price volatility,
        such
        as interest rates, credit spreads, foreign exchange rates and equity prices.
        Due
        to the nature of the group’s current activities, commodity price risk is not
        applicable.
  Credicorp
        separates exposure to market risk into two groups: (i) those that arise from
        value fluctuation of trading portfolios due to movements of market rates
        or
        prices (Trading Book); and (ii) those that arise from changes in the structural
        positions of non-trading portfolios due to movements of interest rates, prices
        and foreign exchange ratios (ALM Book).
  Trading
        portfolios include liquid positions arising from market-making transactions
        where the group acts as principal. Non-trading portfolios consist of relatively
        illiquid positions, mainly banking assets and liabilities (deposits and loans)
        and non-trading investments (available-for-sale). Trading activities are
        primarily conducted by BCP, the group’s major subsidiary.
  The
        risks
        that trading portfolios face are managed through VaR historical simulation
        techniques; while non-trading portfolios are managed using Asset Liability
        Management (ALM).
  *Trading
        Book*
  The
        trading book is made up of liquid investment instruments. The trading book
        is
        characterized by liquid positions in equities, bonds, foreign currencies,
        and
        derivatives. Certain limits have been set in order to control and monitor
        the
        risks undertaken. These risks arise from the size of the positions and/or
        from
        the volatility of the risk factors embedded in each financial instrument.
        Regular reports are prepared for the Risk Management Committees and top
        management. The major measurement technique used to measure and control market
        risk is Value at Risk (VaR).
  138
  Credicorp
        applies VaR to its trading portfolios to estimate its position’s market risk and
        the maximum potential losses, based upon a number of assumptions of changes
        in
        market conditions. The Risk Management Committee sets limits on the level
        of
        risk that may be assumed and reviews it on a daily basis.
  VaR
        is a
        statistically-based estimate of the potential loss from adverse market movements
        on the current portfolio. It expresses the “maximum” amount that the group might
        lose, but only to a certain level of confidence (99%). There is therefore
        a
        specified statistical probability (1%) that actual loss could be greater
        than
        the VaR estimate. The VaR model assumes a certain “holding period” until
        positions can be closed (1 day-10 days). The time horizon used to calculate
        VaR
        is one day. However, the 1-day VaR is amplified to a 10-day time frame and
        calculated by multiplying the 1-day VaR by the square root of 10. Results
        are
        presented in the tables below. The assessment of past movements has been
        based
        on historical 1-year data. Credicorp applies these historical changes in
        rates
        directly to its current positions (a method known as historical
        simulation).
  The
        use
        of this approach does not prevent losses outside of these limits in the event
        of
        more significant market movements.
  As
        of
        December 31, 2007, Credicorp’s VaR by type of asset is as follows:
  US$(000)Equity
                  securities
              
              
              5,211Fixed
                  Income
              
              
              567Derivatives
              
              
              626Consolidated
                  VaR by type of asset
              
              
              5,261
  As
        of
        December 31, 2007, Credicorp’s VaR by risk type is as follows:
  US$(000)Foreign
                  exchange risk
              
              
              133Interest
                  rate risk
              
              
              514Equity
                  risk
              
              
              4,879Consolidated
                  VaR by risk type
              
              
              5,261
  *ALM
        Book*
  The
        management of the risks associated with long-term and structural positions
        is
        called Asset and Liability Management (ALM). Non-trading portfolios which
        comprise the ALM Book are exposed to different sensitivities that can bring
        about a deterioration in the value of the assets compared to its liabilities
        and
        hence to a reduction of its net worth.
  139
  (i)  Interest
        risk
  Interest
        rate risk arises from the possibility that changes in interest rates will
        affect
        future cash flows or the fair value of financial instruments. Cash flow interest
        rate risk is the risk that the future cash flows of a financial instrument
        will
        fluctuate because of changes in market interest rates. Fair value interest
        rate
        risk is the risk that the value of a financial instrument will fluctuate
        because
        of changes in market interest rates. Credicorp takes on exposure to the effects
        of fluctuations in the prevailing levels of market interest rates on both
        its
        fair value and cash flow risks. Interest margins may increase as a result
        of
        such changes but may also decrease in the event that unexpected movements
        arise.
        The Board sets limits on the level of mismatch of interest rate re-pricing
        that
        may be undertaken, which is monitored daily by the Treasury
        Department.
  *Re-pricing
        gap*
  Gap
        analysis comprises aggregating re-pricing timeframes into buckets and checking
        whether each bucket nets to zero. Different bucketing schemes might be used.
        An
        interest rate gap is simply a positive or negative net re-pricing timeframe
        for
        one of the buckets.
  The
        table
        below summarizes Credicorp’s exposure to interest rate risks. It includes
        Credicorp’s financial instruments at carrying amounts, categorized by the
        earlier of contractual re-pricing or maturity dates:
  **As of December 31, 2007****Up to 1**
                **month**
              
              **1 to 3**
                **months**
              
              **3 to 12**
                **months**
              
              **1 to 5 years**
              
              **More than**
                **5 years**
              
              **Non-interest**
                **bearing**
              
              **Total**US$(000)
              
              US$(000)
              
              US$(000)
              
              US$(000)
              
              US$(000)
              
              US$(000)
              
              US$(000)AssetsCash
                  and due from banks
              
              
              2,331,637
              
              
              31,074
              
              
              48,172
              
              
              42,045
              
              
              19
              
              
              620,918
              
              
              3,073,865Investments
              
              
              567,613
              
              
              680,272
              
              
              1,974,368
              
              
              837,269
              
              
              842,317
              
              
              377,797
              
              
              5,279,636Loans
              
              
              2,078,657
              
              
              2,294,056
              
              
              1,499,311
              
              
              2,051,629
              
              
              115,847
              
              
              -
              
              
              8,039,500Assets
                  designated at fair value through profit and loss
              
              
              -
              
              
              -
              
              
              50,561
              
              
              -
              
              
              -
              
              
              162,592
              
              
              213,153Premiums
                  and other policies receivables
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              85,495
              
              
              85,495Accounts
                  receivable from re-insurers and co-insurers
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              116,141
              
              
              116,141Other
                  assets
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              898,108
              
              
              898,108Total
                  assets
              
              
              4,977,907
              
              
              3,005,402
              
              
              3,572,412
              
              
              2,930,943
              
              
              958,183
              
              
              2,261,051
              
              
              17,705,898LiabilitiesDeposits
                  and obligations
              
              
              3,358,599
              
              
              3,089,841
              
              
              1,709,965
              
              
              263,913
              
              
              2,088
              
              
              2,926,308
              
              
              11,350,714Financial
                  liabilities designated at fair value through profit and loss
              
              
              -
              
              
              -
              
              
              50,561
              
              
              -
              
              
              -
              
              
              -
              
              
              50,561Due
                  to banks and correspondents
              
              
              484,560
              
              
              437,345
              
              
              303,506
              
              
              198,357
              
              
              21,296
              
              
              8,197
              
              
              1,453,261Accounts
                  payable to re-insurers and co-insurers
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              21,914
              
              
              21,914Technical,
                  insurance claims reserves and reserves for unearned
                  premiums
              
              
              1,626
              
              
              4,878
              
              
              14,634
              
              
              95,017
              
              
              305,039
              
              
              394,333
              
              
              815,527Borrowed
                  funds
              
              
              -
              
              
              870,404
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              870,404Bonds
                  and subordinated notes issued
              
              
              101,521
              
              
              34,520
              
              
              54,546
              
              
              176,924
              
              
              328,147
              
              
              6,640
              
              
              702,298Other
                  liabilities
              
              
              -
              
              
              -
              
              
              8,275
              
              
              -
              
              
              -
              
              
              617,671
              
              
              625,946Equity
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              1,815,273
              
              
              1,815,273Total
                  liabilities and equity
              
              
              3,946,306
              
              
              4,436,988
              
              
              2,141,487
              
              
              734,211
              
              
              656,570
              
              
              5,790,336
              
              
              17,705,898Off-Balance
                  sheet itemsDerivatives
                  assets
              
              
              1,746,686
              
              
              724,850
              
              
              719,635
              
              
              349,552
              
              
              116,269
              
              
              -
              
              
              3,656,992Derivatives
                  liabilities
              
              
              967,415
              
              
              617,771
              
              
              801,599
              
              
              806,626
              
              
              463,581
              
              
              -
              
              
              3,656,992779,271
              
              
              107,079
              
              
              (81,964
              )
              
              (457,074
              )
              
              (347,312
              )
              
              -
              
              
              -Marginal
                  gap
              
              
              1,810,872
              
              
              (1,324,507
              )
              
              1,348,961
              
              
              1,739,658
              
              
              (45,699
              )
              
              (3,529,285
              )
              
              -Accumulated
                  gap
              
              
              1,810,872
              
              
              486,365
              
              
              1,835,326
              
              
              3,574,984
              
              
              3,529,285
              
              
              -
              
              
              -
 140
  *Sensitivity
        to changes in interest rates*
  The
        following table presents the sensitivity to reasonable possible change in
        interest rates, with all other variables held constant, of the group’s
        consolidated income statement and consolidated statements of change in equity,
        before income tax.
  The
        sensitivity of the consolidated income statement is the effect of the assumed
        changes in interest rates on the net interest income for one year before
        income
        tax, based on the floating rate non-trading financial assets and financial
        liabilities held as of December 31, 2007, including the effect of derivatives
        instruments. The sensitivity of equity is calculated by revaluing fixed rate
        available-for-sale financial assets, including the effect of any associated
        hedges, and swaps designated as cash flow hedges, as of December 31, 2007
        for
        the effects of the assumed changes in interest rates:
  **Currency**
              **Changes in basis**
                **points**
              
              **Sensitivity of net**
                **income**
              
              **Sensitivity of Equity**US$(000)
              
              US$(000)U.S.
                  Dollar
              +/-
              50
              
              +/-
              7,652
              
              -/+
              20,205U.S.
                  Dollar
              +/-
              75
              
              +/-
              11,479
              
              -/+
              30,307U.S.
                  Dollar
              +/-
              100
              
              +/-
              15,305
              
              -/+
              40,408U.S.
                  Dollar
              +/-
              150
              
              +/-
              22,957
              
              -/+
              60,613Peruvian
                  Currency
              +/-
              50
              
              -/+
              2,966
              
              -/+
              20,705Peruvian
                  Currency
              +/-
              75
              
              -/+
              4,448
              
              -/+
              31,056Peruvian
                  Currency
              +/-
              100
              
              -/+
              5,932
              
              -/+
              41,409Peruvian
                  Currency
              +/-
              150
              
              -/+
              8,897
              
              -/+
              62,114
  The
        interest rate sensitivities set out in the table above are illustrative only
        and
        are based on simplified scenarios. The figures represent the effect of the
        pro-forma movements in the net interest income based on the projected yield
        curve scenarios and Credicorp’s current interest rate risk profile. This effect,
        however, does not incorporate actions that would be taken by management to
        mitigate the impact of this interest rate risk. In addition, Credicorp seeks
        proactively to change the interest rate risk profile in order to minimize
        losses
        and optimize net revenues. The projections above also assume that interest
        rate
        of all maturities move by the same amount and, therefore, do not reflect
        the
        potential impact on net interest income of some rates changing while others
        remain unchanged. The projections make other simplifying assumptions as well,
        including that all positions run to maturity.
  Available-for-sale
        equity securities and mutual funds are not considered as part of the investment
        securities for sensitivity calculation purposes. However, a 10% and 15% change
        in market prices is made to these price-sensitive securities and the expected
        unrealized gain or loss (equity), respectively, before income tax, as presented
        below:
  **Market price sensitivity**
              **Changes in**
                **market prices**
              
              **As of December 31,**
                **2007**%
              
              US$(000)Equity
                  securities
              +/-
              10
              
              +/-
              32,088Equity
                  securities
              +/-
              15
              
              +/-
              48,132Mutual
                  funds
              +/-
              10
              
              +/-
              20,008Mutual
                  funds
              +/-
              15
              
              +/-
              30,013
  141
  (ii)  Foreign
        exchange risk
  Credicorp
        is exposed to foreign currency exchange rates on its financial position and
        cash
        flows. The Management sets limits on the level of exposure by currency and
        in
        total for both overnight and intra-day positions, which are monitored daily.
        Most assets and liabilities are denominated in U.S. Dollars.
  Foreign
        currency transactions are made at the free market exchange rates of the
        countries where Credicorp’s subsidiaries are established. As of December 31,
        2007, Credicorp’s assets and liabilities by currencies were as
        follows:
  **U.S. Dollars**
              
              **Peruvian**
                **currency**
              
              **Other**
                **currencies**
              
              **Total**US$(000)
              
              US$(000)
              
              US$(000)
              
              US$(000)**Monetary
                  assets -**Cash
                  and due from banks
              
              
              2,644,858
              
              
              311,828
              
              
              117,179
              
              
              3,073,865Trading
                  securities
              
              
              38,647
              
              
              11,463
              
              
              885
              
              
              50,995Available-for-sale
                  investments
              
              
              1,934,672
              
              
              3,129,351
              
              
              164,618
              
              
              5,228,641Loans,
                  net
              
              
              5,555,864
              
              
              2,450,297
              
              
              33,339
              
              
              8,039,500Financial
                  assets designated to fair value through profit and loss
              
              
              213,153
              
              
              -
              
              
              -
              
              
              213,153Other
                  assets
              
              
              261,102
              
              
              299,695
              
              
              9,745
              
              
              570,54210,648,296
              
              
              6,202,634
              
              
              325,766
              
              
              17,176,696**Monetary
                  liabilities -**Deposits
                  and obligations
              
              
              (7,173,362
              )
              
              (3,892,138
              )
              
              (285,214
              )
              
              (11,350,714
              )Due
                  to bank and correspondents and borrowed funds
              
              
              (2,071,882
              )
              
              (248,362
              )
              
              (3,421
              )
              
              (2,323,665
              )Financial
                  liabilities designated at fair value through profits and
                  loss
              
              
              (50,561
              )
              
              -
              
              
              -
              
              
              (50,561
              )Bonds
                  and subordinated notes issued
              
              
              (329,567
              )
              
              (372,731
              )
              
              -
              
              
              (702,298
              )Other
                  liabilities
              
              
              (1,040,179
              )
              
              (434,353
              )
              
              11,144
              
              
              (1,463,388
              )(10,665,551
              )
              
              (4,947,584
              )
              
              (277,491
              )
              
              (15,890,626
              )(17,255
              )
              
              1,255,050
              
              
              48,275
              
              
              1,286,070Forwards
                  position, net
              
              
              331,117
              
              
              (273,971
              )
              
              (57,146
              )
              
              -**Net
                  monetary position**
              
              
              313,862
              
              
              981,079
              
              
              (8,871
              )
              
              1,286,070
  Credicorp
        manages foreign exchange risk by monitoring and controlling non-U.S. Dollar
        position values due to changes in exchange rates. Credicorp measures its
        performance in U.S. Dollars, so if the net foreign exchange position is
        positive, any depreciation of the U.S. Dollar would affect Credicorp’s
        consolidated balance sheet positively. The current position in foreign currency
        is comprised of exchange rate-linked assets and liabilities in that currency.
        An
        institution’s open position in individual currencies is comprised of assets,
        liabilities and off-balance sheet items denominated in the respective foreign
        currency for which the institution itself bears the risk. Any
        appreciation/depreciation of foreign currency would affect the consolidated
        income statement.
  Credicorp’s
        net foreign exchange balance is the sum of its positive open non-U.S. Dollar
        positions (net long position) less the sum of its negative open non-U.S.
        Dollar
        positions (net short position), and any devaluation/revaluation of the foreign
        exchange position would affect the consolidated income statement. A currency
        mismatch would leave Credicorp’s consolidated balance sheet vulnerable to
        fluctuation of the foreign currency (exchange rate shock).
  142
  The
        table
        below shows the sensitivity analysis of the Peruvian Currency, the currency
        to
        which Credicorp had significant exposure as of December 31, 2007 on its
        non-trading monetary assets and liabilities and its forecast cash flows.
        The
        analysis calculates the effect of a reasonably possible movement of the currency
        rate against the U.S. Dollar, with all other variables held constant on the
        consolidated income statement, before income tax. A negative amount in the
        table
        reflects a potential net reduction in consolidated income statement, while
        a
        positive amount reflects a net potential increase:
  **Sensitivity Analysis**
              
              **Change in**
                **currency rates**
              
              **2007****%**
              
              US$(000)Devaluation
                  -Peruvian
                  Currency
              
              
              5
              
              
              (51,636
              )Peruvian
                  Currency
              
              
              10
              
              
              (109,009
              )Revaluation
                  -Peruvian
                  Currency
              
              
              5
              
              
              46,718Peruvian
                  Currency
              
              
              10
              
              
              89,189
  **ITEM
                  12.**
              **DESCRIPTION
                  OF SECURITIES OTHER THAN EQUITY
                  SECURITIES**
  Not
        applicable.
  **PART
        II**
  **ITEM
                  13.**
              **DEFAULTS,
                  DIVIDEND ARREARAGES AND
                  DELINQUENCIES**
  **(A)**
              **Material
                  Defaults**
  Credicorp
        and its subsidiaries have never defaulted on any of its debt or been forced
        to
        reschedule any of its obligations.
  **(B)**
              **Dividend
                  Arrearages and
                  Delinquencies**
  None.
  **ITEM
                  14.**
              **MATERIAL
                  MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
                  PROCEEDS**
  None.
  **ITEM
                  15.**
              **CONTROLS
                  AND PROCEDURES**
  **(A)**  **Disclosure
        Controls and Procedures**
  Credicorp’s
        management, with the participation of and under the supervision of Credicorp’s
        principal executive officer and principal financial officer, has evaluated
        the
        effectiveness of the design and operation of Credicorp’s disclosure controls and
        procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as
        of
        December 31, 2007. Based on that evaluation, Credicorp’s management, its
        principal executive officer and its principal financial officer have concluded
        that Credicorp’s disclosure controls and procedures are effective in ensuring
        that information required to be disclosed by Credicorp in reports that it
        files
        or submits under the Exchange Act is recorded, processed, summarized and
        reported within the time periods specified in U.S. Securities and Exchange
        Commission (the “SEC”) rules and forms.
  143
  **(B)**  **Management’s
        Annual Report on Internal Control over Financial Reporting**
  The
        Board
        of Directors and management of Credicorp Ltd. and Subsidiaries (Credicorp)
        are
        responsible for establishing and maintaining adequate internal control over
        financial reporting. Credicorp’s internal control over financial reporting is
        designed to provide reasonable assurance regarding the preparation and fair
        presentation of published financial statements in accordance with International
        Financial Reporting Standards (IFRS) as issued by the international Accounting
        Standards Board (IASB).
 
 Credicorp’s
        internal control over financial reporting includes those policies and procedures
        that:
 
 ·
              Pertain
                  to the maintenance of records that, in reasonable detail, accurately
                  and
                  fairly reflect transactions and dispositions of
                  assets;
 ·
              Provide
                  reasonable assurance that transactions are recorded as necessary
                  to permit
                  preparation and fair presentation of financial statements, and
                  the
                  receipts and expenditures of the company are being made only in
                  accordance
                  with authorizations of Credicorp management;
                  and
 ·
              Provide
                  reasonable assurance regarding prevention or timely detection of
                  unauthorized acquisition, use or disposition of the company’s assets that
                  could have a material effect on the financial
                  statements.
 
 Because
        of its inherent limitations, internal control over financial reporting may
        not
        prevent or detect misstatements. Also, projections of any evaluation of
        effectiveness to future periods are subject to the risk that controls may
        become
        inadequate because of changes in conditions, or that the degree of compliance
        with the policies or procedures may deteriorate.
 
 Credicorp
        management assessed the effectiveness of Credicorp’s internal control over
        financial reporting as of December 31, 2007 based on the criteria set forth
        by
        the Committee of Sponsoring Organizations of the Treadway Commission (COSO)
        in
        Internal Control-Integrated Framework. Based on this assessment, management
        believes that, as of December 31, 2007, Credicorp’s internal control over
        financial reporting was effective. Credicorp management also found no material
        weaknesses in Credicorp internal control over financial reporting and therefore
        no corrective actions were taken.
 
 The
        effectiveness of Credicorp’s internal control over financial reporting as of
        December 31, 2007 has been audited by Medina, Zaldívar, Paredes & Asociados,
        (member firm of Ernst & Young Global), Credicorp’s independent registered
        public accounting firm, as stated in their report included herein, and expressed
        an unqualified opinion on the effectiveness of Credicorp’s internal control over
        financial reporting as of December 31, 2007.
 By:
                /s/
                    DIONISIO ROMERO
                
                By:
                /s/
                    ALAVARO CORREAName:
                Dionisio
                    Romero
                
                Name:
                Alvaro
                    CorreaTitle:
                Chief
                    Executive Officer
                
                Title:
                Chief Financial and Accounting OfficerJune 11, 2008
 
 144
 **(C)**  **Attestation
          Report of the Registered Public Accounting Firm**
  
  145
  
 **(D)**  **Changes
          in Internal Control over Financial Reporting**
  During
          the period covered by this Annual Report, no changes were made to Credicorp’s
          internal controls over financial reporting that have materially affected,
          or are
          likely to materially affect, internal controls over financial reporting.
  **ITEM
                    16A.**
                **AUDIT
                    COMMITTEE FINANCIAL EXPERT**
  In
          its
          session held on March 28, 2008, Credicorp’s Board of Directors elected Mr.
          Germán Suárez and Mr. Reynaldo Llosa as members of the Audit Committee and
          determined that Mr. Germán Suárez is the Audit Committee Financial Expert, as
          that term is defined in the instructions to Item 16A of Form 20-F. Credicorp
          Board of Directors also determined that Mr. Suárez is “independent” as defined
          in Rule 10A-3 under the Exchange Act and in Section 303A.02 of The NYSE
          Listed
          Company Manual. Mr. Suárez is an economist, and received his Masters degree in
          economics from Columbia University. Mr. Suárez became a Director of Credicorp on
          March 31, 2005. Mr. Suárez was President and Chairman of the Board of Banco
          Central de Reserva del Perú from 1992 to 2001, and serves as director on the
          board of directors of various other companies, among which are Compañía de Minas
          Buenaventura S.A. and Refinería La Pampilla.
  146


**ITEM
                16B.**
            **CODE
                OF ETHICS**




Credicorp
      has adopted a code of ethics ( *Código
      de Etica* )
      that is
      applicable to the Board of Directors, including Credicorp’s Chief Executive
      Officer, Chief Financial and Accounting Officer and the other principal
      executive officers, as well as to all other employees. In addition, Credicorp
      has adopted a code of ethics for professionals with financial responsibility
      ( *Código
      de Etica Para Profesionales con Responsibilidad Financiera* )
      applicable to employees with financial management responsibilities. Credicorp’s
      code of ethics and code of ethics for professionals with financial
      responsibility are available on the Corporate Governance section of its web
      site
      at http://www.credicorpnet.com .




**ITEM
                16C.**
            **PRINCIPAL
                ACCOUNTANT FEES AND
                SERVICES**




The
      following table sets forth for each of the years indicated, the fees paid to
      Credicorp’s independent auditor Medina, Zaldívar, Paredes & Asociados,
      members of Ernst & Young Global, for the audit of Credicorp’s financial
      statements for the years ended December 31, 2005, 2006 and 2007, respectively.
      The Audit Committee recommends the appointment of the independent auditor every
      fiscal year, and the auditor is appointed at the Annual General Shareholders’
Meeting.





**Years
                ended December 31,****2005**
            
            **2006**
            
            **2007***(U.S.
                Dollars in thousands)*Audit
            
            US$
            1,293
            
            US$
            1,779
            
            
            2,264Audit
                – Related
            
            
            —
            
            
            61
            
            
            —Tax
            
            
            21
            
            
            15
            
            
            28All
                Other
            
            
            557
            
            
            29
            
            
            32**Total**
            
            **US$**
            **1,871**
            
            **US$**
            **1,884**
            
            **US$**
            **2,323**





*Audit
      fees* correspond to audit services performed (i) in the review of Credicorp’s
      consolidated financial statements, (ii) establishing the procedures that the
      independent auditor needs to perform in order to form an opinion about
      Credicorp’s consolidated financial statements, and (iii) to comply with the
      statutory requirements applicable to Credicorp’s subsidiaries. Audit fees also
      include expenses related to the audit work and comfort
      letters in connection with the issuance of long term debt.  In
      2007,
      Credicorp’s independent auditors performed tasks related to the delivery of a
      comfort letter in connection with the issuance of long term debt and
      subordinated debt by BCP. All
      fees
      were approved by the Audit Committee.




*Audit-related
      fees* relate
      to services that are similar to the execution of an audit or a review of
      Credicorp’s financial statements and which are traditionally performed by the
      independent auditor. Such audit-related services include; assistance in the
      understanding of new accounting and financial rules established by regulatory
      entities; audit related procedures on accounting matters previously agreed
      with
      Credicorp management; and special audit reviews of internal control procedures.
      There were no audit-related fees during 2007.




147


*Tax
      fees* relate
      to tax services which include all services performed by Credicorp’s independent
      auditor’s tax personnel, except those services specifically related to the
      review and preparation of Credicorp’s financial statements, and consisted
      principally of tax compliance and advisory services approved by the Audit
      Committee.




*All
      other fees* include
      mainly expenses related to training courses for the Accounting department of
      BCP
      and BCB in Bolivia prepared by the independent auditors.




*Audit
      Committee Pre-Approval Policies and Procedures*




The
      Audit
      Committee must approve all of the services the independent auditors provide
      as
      part of its responsibility in supervising their work. There are two types of
      approvals. The Audit Committee grants a “general approval” in advance to a list
      of services that the independent auditor may provide without further approval
      required by the Audit Committee. A general approval is valid for 12 months
      from
      the date of approval unless the Audit Committee determines a different period
      of
      validity should apply. The Audit Committee also grants “specific approval” for
      services that do not have general approval on a case-by-case basis. All of
      the
      services that do not have general approval need specific approval from the
      Audit
      Committee before any agreement is signed with the independent auditor to provide
      such services. Any service that exceeds approved costs or budgets will need
      specific approval from the Audit Committee. When considering granting any type
      of approval, the Audit Committee considers whether the requested services are
      consistent with the SEC’s rules regarding the independence of the independent
      auditors.




The
      Audit
      Committee supervises the execution of the independent audit services as
      necessary. It approves, when necessary, any modification in the terms,
      conditions, fees and extent of the audit services. The Audit Committee may
      give
      a general approval for other audit services where the independent auditor is
      in
      the best position to provide those services. Such services typically include:
      audit services required by regulations, financial audits for Credicorp’s
      subsidiaries or affiliates, and services associated with the presentation of
      documents to the SEC or other documents published in relation to the trading
      of
      Credicorp’s shares.




The
      Audit
      Committee may award a general approval to audit-related services if its members
      consider that these services do not negatively affect the integrity of the
      independent auditor and are consistent with the rules of the SEC.




The
      Audit
      Committee requires that all tax services provided by the independent auditors
      be
      brought to its approval, following the rules promulgated by the SEC. The Audit
      Committee may grant a specific approval to other services provided by the
      independent auditor so long as they do not impair the integrity of the
      independent auditor and are allowed by rules issued by the SEC concerning
      auditor independence.




**ITEM
                16D.**
            **EXEMPTIONS
                FROM THE LISTING STANDARDS FOR AUDIT
                COMMITTEES**




Not
      applicable.




**ITEM
                16E.**
            **PURCHASES
                OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED
                PURCHASERS**




Not
      applicable.




148


**PART
      III**




**ITEM
                17.**
            **FINANCIAL
                STATEMENTS**




Not
      applicable.




**ITEM
                18.**
            **FINANCIAL
                STATEMENTS**




Credicorp
      Consolidated Financial Statements and the report of the independent public
      accounting firm in connection therewith are filed as part of this Annual Report
      on Form 20-F, as noted below:




PageIndex
                  to Credicorp Consolidated Financial Statements
              
              
              F-2Report
                  of Medina, Zaldívar, Paredes & Asociados, members of Ernst & Young
                  Global, Independent Public Accountants
              
              
              F-3Consolidated
                  Balance Sheets as of December 31, 2007 and 2006
              
              
              F-5Consolidated
                  Income Statements for the Three Years in the Period Ended
                  December 31, 2007
              
              
              F-7Consolidated
                  Statements of Changes in Equity for the Three Years in the Period
                  Ended
                  December 31, 2007
              
              
              F-9Consolidated
                  Cash Flow Statements for the Three Years in the Period Ended
                  December 31, 2007
              
              
              F-11Notes
                  to Consolidated Financial Statements
              
              
              F-13




All
      supplementary schedules relating to the registrant are omitted because they
      are
      not required or because the required information, where material, is contained
      in the consolidated financial statements or notes thereto.




149


**ITEM
                19.**
            **EXHIBITS**




(a)
      Index
      to Exhibits





1.1
            Bye-laws
                of Credicorp Ltd., incorporated herein by reference to Exhibit 1.1
                to
                Credicorp’s Annual Report on Form 20-F dated June 30,
                20051.2
            Memorandum
                of Association of Credicorp Ltd., incorporated herein by reference
                to
                Exhibit 1.2 to Credicorp’s Annual Report on Form 20-F dated June 27,
                20038
            List
                of Subsidiaries, incorporated herein by reference to Exhibit 8 to
                Credicorp’s Annual Report on Form 20-F dated June 27,
                200312.1
            Certification
                by the Chief Executive Officer Pursuant to Section 302 of the U.S.
                Sarbanes-Oxley Act of 200212.2
            Certification
                by the Chief Financial and Accounting Officer Pursuant to Section
                302 of
                the U.S. Sarbanes-Oxley Act of 200213.1
            Certification
                by the Chief Executive Officer Pursuant to Section 906 of the U.S.
                Sarbanes-Oxley Act of 200213.2
            Certification
                by the Chief Financial and Accounting Officer Pursuant to Section
                906 of
                the U.S. Sarbanes-Oxley Act of 2002




150


**SIGNATURES**




The
      registrant hereby certifies that it meets all of the requirements for filing
      on
      Form 20-F and that it has duly caused and authorized the undersigned to sign
      this Annual Report on its behalf.





**CREDICORP
                LTD.**By:
            /s/
                ALVARO CORREAName:
            Alvaro
                CorreaTitle:
            Chief
                Financial and Accounting Officer





Dated:
        October 3, 2008


151













**Credicorp
      Ltd. and Subsidiaries**




Consolidated
      financial statements as of December 31, 2007 and 2006




**Content**


**Report
                  of Independent Registered Public Accounting Firm**
              F-3**Consolidated
                  financial statements**
              F-2Consolidated
                  balance sheets
              F-5Consolidated
                  income statementsConsolidated
                  statements of changes in equity
              F-7Consolidated
                  cash flows statementsNotes
                  to the consolidated financial
                  statements
              F-9


F-2








F-3





F-4


**Credicorp
      Ltd. and Subsidiaries**




Consolidated
      balance sheets


As
      of
      December 31, 2007 and 2006




**Note**
            
            **2007**
            
            **2006**US$(000)
            
            US$(000)**Assets****Cash
                and due from banks:**
            
            
            4Non-interest
                bearing
            
            
            
            
            
            620,918
            
            
            474,859Interest
                bearing
            
            
            
            
            
            2,452,947
            
            
            2,258,6713,073,865
            
            
            2,733,530**Investments:**Trading
                securities
            
            
            5
            
            
            50,995
            
            
            45,136Investments
                available-for-sale
            
            
            6
            
            
            5,228,641
            
            
            3,450,7115,279,636
            
            
            3,495,847**Loans,
                net:**
            
            
            7Loans,
                net of unearned income
            
            
            
            
            
            8,250,819
            
            
            5,927,101Allowance
                for loan losses
            
            
            
            
            
            (211,319
            )
            
            (190,278
            )8,039,500
            
            
            5,736,823Financial
                assets designated at fair value throughprofit
                or loss
            
            
            8
            
            
            213,153
            
            
            53,116Premiums
                and other policies receivable
            
            
            9
            
            
            85,495
            
            
            61,279Accounts
                receivable from re-insurers and co-insurers
            
            
            9
            
            
            116,141
            
            
            35,181Property,
                furniture and equipment, net
            
            
            10
            
            
            274,935
            
            
            255,478Due
                from customers on acceptances
            
            
            
            
            
            35,901
            
            
            45,129Assets
                seized, net
            
            
            11
            
            
            19,615
            
            
            29,427Intangible
                assets and goodwill, net
            
            
            12
            
            
            227,272
            
            
            215,647Other
                assets
            
            
            13
            
            
            340,385
            
            
            220,072**Total
                assets**
            
            
            
            
            
            17,705,898
            
            
            12,881,529




F-5


**Credicorp
      Ltd. and Subsidiaries**




Consolidated
      balance sheets


As
      of
      December 31, 2007 and 2006




**Note**
            
            **2007**
            
            **2006**US$(000)
            
            US$(000)**Liabilities
                and Equity****Deposits
                and obligations:**
            
            
            14Non-interest
                bearing
            
            
            
            
            
            2,926,308
            
            
            1,989,564Interest
                bearing
            
            
            
            
            
            8,424,406
            
            
            6,849,42711,350,714
            
            
            8,838,991Financial
                liabilities designated at fair value through profit or
                loss
            
            
            8
            
            
            50,561
            
            
            -Due
                to banks and correspondents
            
            
            15
            
            
            1,453,261
            
            
            570,989Bankers’
                acceptances outstanding
            
            
            
            
            
            35,901
            
            
            45,129Accounts
                payable to re-insurers and co-insurers
            
            
            9
            
            
            21,914
            
            
            25,134Technical,
                insurance claims reserves and reserves for unearned
                premiums
            
            
            16
            
            
            815,527
            
            
            628,221Borrowed
                funds
            
            
            15
            
            
            870,404
            
            
            370,612Bonds
                and subordinated notes issued
            
            
            17
            
            
            702,298
            
            
            512,572Other
                liabilities
            
            
            13
            
            
            590,045
            
            
            356,113**Total
                liabilities**
            
            
            
            
            
            15,890,625
            
            
            11,347,761**Equity**
            
            
            18**Capital
                and reserves attributable to Credicorp’s equity****holders:**Capital
                stock
            
            
            
            
            
            471,912
            
            
            471,912Treasury
                stock
            
            
            
            
            
            (73,107
            )
            
            (73,107
            )Capital
                surplus
            
            
            
            
            
            140,693
            
            
            140,693Reserves
            
            
            
            
            
            587,218
            
            
            479,902Other
                reserves
            
            
            
            
            
            179,550
            
            
            147,409Retained
                earnings
            
            
            
            
            
            369,743
            
            
            230,0131,676,009
            
            
            1,396,822Minority
                interest
            
            
            
            
            
            139,264
            
            
            136,946**Total
                equity**
            
            
            
            
            
            1,815,273
            
            
            1,533,768**Total
                liabilities and equity**
            
            
            
            
            
            17,705,898
            
            
            12,881,529




F-6


**Credicorp
      Ltd. and Subsidiaries**




Consolidated
      income statements


For
      the
      years ended December 31, 2007, 2006 and 2005




**Note**
            
            **2007**
            
            **2006**
            
            **2005**US$(000)
            
            US$(000)
            
            US$(000)Interest
                and dividend income
            
            
            22
            
            
            1,065,974
            
            
            782,002
            
            
            612,432Interest
                expense
            
            
            22
            
            
            (432,000
            )
            
            (283,478
            )
            
            (173,159
            )**Net
                interest and dividend income**
            
            
            
            
            
            633,974
            
            
            498,524
            
            
            439,273Provision
                for loan losses
            
            
            7(d)
            
            
            (28,439
            )
            
            4,243
            
            
            6,356**Net
                interest and dividend income after provision for loan
                losses**
            
            
            
            
            
            605,535
            
            
            502,767
            
            
            445,629**Other
                income**Banking
                services commissions
            
            
            23
            
            
            324,761
            
            
            243,778
            
            
            206,163Net
                gain on foreign exchange transactions
            
            
            
            
            
            61,778
            
            
            41,638
            
            
            29,286Net
                gain on sales of securities
            
            
            
            
            
            41,359
            
            
            27,281
            
            
            8,965Net
                gain on financial assets and liabilities designated at fair value
                through
                profit and loss
            
            
            8(b)
            
            
            65,088
            
            
            3,521
            
            
            -Other
            
            
            26
            
            
            24,934
            
            
            22,676
            
            
            21,571**Total
                other income**
            
            
            
            
            
            517,920
            
            
            338,894
            
            
            265,985**Insurance
                premiums and claims**Net
                premiums earned
            
            
            24
            
            
            297,272
            
            
            251,261
            
            
            218,955Net
                claims incurred for property and casualty insurance
                contracts
            
            
            25
            
            
            (67,689
            )
            
            (46,587
            )
            
            (42,569
            )Net
                claims incurred for life and health insurance contracts
            
            
            25
            
            
            (170,911
            )
            
            (139,935
            )
            
            (132,931
            )**Total
                premiums earned less claims**
            
            
            
            
            
            58,672
            
            
            64,739
            
            
            43,455


F-7


Consolidated
      income statements (continued)





**Note**
            
            **2007**
            
            **2006**
            
            **2005**US$(000)
            
            US$(000)
            
            US$(000)**Other
                expenses**Salaries
                and employees benefits
            
            
            
            
            
            (409,037
            )
            
            (303,332
            )
            
            (236,347
            )Administrative
                expenses
            
            
            
            
            
            (206,966
            )
            
            (172,304
            )
            
            (138,294
            )Depreciation
                and amortization
            
            
            10(a) and
                12(a)
            
            
            (51,013
            )
            
            (50,317
            )
            
            (38,728
            )Provision
                for assets seized
            
            
            11(b)
            
            
            (3,057
            )
            
            (6,387
            )
            
            (16,959
            )Merger
                expenses
            
            
            
            
            
            -
            
            
            (5,706
            )
            
            -Other
            
            
            26
            
            
            (71,999
            )
            
            (52,718
            )
            
            (46,745
            )**Total
                other expenses**
            
            
            
            
            
            (742,072
            )
            
            (590,764
            )
            
            (477,073
            )**Income
                before translation result and income tax**
            
            
            
            
            
            440,055
            
            
            315,636
            
            
            277,996Translation
                result
            
            
            
            
            
            34,627
            
            
            15,216
            
            
            (9,597
            )Income
                tax
            
            
            19(b)
            
            
            (102,287
            )
            
            (83,587
            )
            
            (73,546
            )Net
                income
            
            
            
            
            
            372,395
            
            
            247,265
            
            
            194,853**Attributable
                to:**Equityholders
                of Credicorp Ltd.
            
            
            
            
            
            350,735
            
            
            230,013
            
            
            181,885Minority
                interest
            
            
            
            
            
            21,660
            
            
            17,252
            
            
            12,968372,395
            
            
            247,265
            
            
            194,853**Basic
                and diluted earnings per share for net income attributable to equity
                holders of Credicorp Ltd. (in United States
                dollars)**
            
            
            27
            
            
            4.40
            
            
            2.88
            
            
            2.28





The
      accompanying notes are an integral part of these consolidated financial
      statements.


F-8


**Credicorp
      Ltd. and Subsidiaries**




Consolidated
      statements of changes in equity


For
      the
      years ended December 31, 2007, 2006 and 2005




**Attributable to the equity holders of Credicorp****Number of**
              **shares issued,**
              **note 27**
            
            **Capital**
              **stock**
            
            **Treasury**
              **stock**
            
            **Capital**
              **surplus**
            
            **Reserves**
            
            **Other**
              **reserves**
            
            **Retained**
              **earnings**
            
            **Total**
            
            **Minority**
              **interest**
            
            **Total**
              **net equity**(In thousands of
              units)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)**Balances
                as of January 1****st****, 2005**
            
            
            94,382
            
            
            471,912
            
            
            (73,107
            )
            
            140,693
            
            
            269,527
            
            
            76,131
            
            
            180,041
            
            
            1,065,197
            
            
            85,253
            
            
            1,150,450**Changes
                in equity for 2005 -**Net
                unrealized gain from investments available-for-sale, note 6(c) and
                18(c)
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            7,121
            
            
            -
            
            
            7,121
            
            
            4,764
            
            
            11,885Transfer
                of net realized gain from investments available-for-sale to the income
                statement, net of realized loss, note 6(c) and 18(c)
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (1,572
            )
            
            -
            
            
            (1,572
            )
            
            (165
            )
            
            (1,737
            )Net
                gain on cash flow hedge, note 18(c) and note 21(d)
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            1,622
            
            
            -
            
            
            1,622
            
            
            -
            
            
            1,622Income
                for the year recognized directly in equity
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            7,171
            
            
            -
            
            
            7,171
            
            
            4,599
            
            
            11,770Net
                income
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            181,885
            
            
            181,885
            
            
            12,968
            
            
            194,853Total
                recognized income for the period
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            7,171
            
            
            181,885
            
            
            189,056
            
            
            17,567
            
            
            206,623Cash
                dividends, note 18(d)
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (63,810
            )
            
            (63,810
            )
            
            -
            
            
            (63,810
            )Dividends
                of subsidiaries and other
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (3
            )
            
            (3
            )
            
            (1,305
            )
            
            (1,308
            )**Balances
                as of December 31, 2005 carried forward**
            
            
            94,382
            
            
            471,912
            
            
            (73,107
            )
            
            140,693
            
            
            269,527
            
            
            83,302
            
            
            298,113
            
            
            1,190,440
            
            
            101,515
            
            
            1,291,955**Changes
                in equity for 2006 -**Net
                unrealized gain from investments available-for-sale, note 6(c) and
                18(c)
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            69,411
            
            
            -
            
            
            69,411
            
            
            20,728
            
            
            90,139Transfer
                of net realized gain from investments available-for-sale to the income
                statement, net of realized loss, note 6(c) and 18(c)
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (6,620
            )
            
            -
            
            
            (6,620
            )
            
            (379
            )
            
            (6,999
            )Net
                gain on cash flow hedge, note 18(c) and 21(d)
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            1,316
            
            
            -
            
            
            1,316
            
            
            -
            
            
            1,316Income
                for the year recognized directly in equity
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            64,107
            
            
            -
            
            
            64,107
            
            
            20,349
            
            
            84,456Net
                income
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            230,013
            
            
            230,013
            
            
            17,252
            
            
            247,265Total
                recognized income for the period
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            64,107
            
            
            230,013
            
            
            294,120
            
            
            37,601
            
            
            331,721Transfer
                of retained earnings to reserves, note 18(c)
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            210,375
            
            
            -
            
            
            (210,375
            )
            
            -
            
            
            -
            
            
            -




F-9





Consolidated
      statements of changes in equity (continue)





Attributable to the equity holders of Credicorp**Number of**
              **shares issued,**
              **note 27**
            
            **Capital**
              **stock**
            
            **Treasury**
              **stock**
            
            **Capital**
              **surplus**
            
            **Reserves**
            
            **Other**
              **reserves**
            
            **Retained**
              **earnings**
            
            **Total**
            
            **Minority**
              **interest**
            
            **Total**
              **net equity**(In thousands of units)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)Cash dividends, note 18(d)
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (87,738
            )
            
            (87,738
            )
            
            -
            
            
            (87,738
            )Dividends of subsidiaries and other
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (2,170
            )
            
            (2,170
            )**Balances as
                of December 31, 2006 carried forward**
            
            
            94,382
            
            
            471,912
            
            
            (73,107
            )
            
            140,693
            
            
            479,902
            
            
            147,409
            
            
            230,013
            
            
            1,396,822
            
            
            136,946
            
            
            1,533,768**Changes
                in equity for 2007-**Net
                unrealized gain from investments available-for-sale, note 6(c) and
                18(c)
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            85,129
            
            
            -
            
            
            85,129
            
            
            (426
            )
            
            84,703Transfer
                of net realized gain from investments available-for-sale to the income
                statement, net of realized loss and impairment, note 6(c) and
                18(c)
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (12,617
            )
            
            -
            
            
            (12,617
            )
            
            -
            
            
            (12,617
            )Net
                loss on cash flow hedge, note 18(c) and 21(d)
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (40,371
            )
            
            -
            
            
            (40,371
            )
            
            -
            
            
            (40,371
            )Income
                for the year recognized directly in equity
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            32,141
            
            
            -
            
            
            32,141
            
            
            (426
            )
            
            31,715Net
                income
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            350,735
            
            
            350,735
            
            
            21,660
            
            
            372,395Total
                recognized income for the period
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            32,141
            
            
            350,735
            
            
            382,876
            
            
            21,234
            
            
            404,110Transfers
                of retained earnings to reserves, note 18(c)
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            107,316
            
            
            -
            
            
            (107,316
            )
            
            -
            
            
            -
            
            
            -Cash
                dividends, note 18(d)
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (103,690
            )
            
            (103,690
            )
            
            -
            
            
            (103,690
            )Dividends
                of subsidiaries and other
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            1
            
            
            1
            
            
            (18,916
            )
            
            (18,915
            )**Balances
                as of December 31, 2007**
            
            
            94,382
            
            
            471,912
            
            
            (73,107
            )
            
            140,693
            
            
            587,218
            
            
            179,550
            
            
            369,743
            
            
            1,676,009
            
            
            139,264
            
            
            1,815,273





The
      accompanying notes are an integral part of these consolidated financial
      statements.


F-10


**Credicorp
      Ltd. and Subsidiaries**




Consolidated
      cash flows statements


For
      the
      years ended December 2007, 2006 and 2005




**2007**
            
            **2006**
            
            **2005**US$(000)
            
            US$(000)
            
            US$(000)**Cash
                flows from operating activities**Net
                income
            
            
            372,395
            
            
            247,265
            
            
            194,853**Add
                (deduct)**Provision
                (recoveries) for loan losses
            
            
            28,439
            
            
            (4,243
            )
            
            (6,356
            )Depreciation
                and amortization
            
            
            51,013
            
            
            50,317
            
            
            38,728Provision
                for assets seized
            
            
            3,057
            
            
            6,387
            
            
            16,959Provision
                for sundry risks, note 26
            
            
            8,096
            
            
            6,461
            
            
            5,567Deferred
                income tax, note 19(b)
            
            
            (14,921
            )
            
            (4,786
            )
            
            (11,502
            )Net
                gain on sales of securities available-for-sale
            
            
            (41,359
            )
            
            (27,281
            )
            
            (8,965
            )Net
                gain on financial assets and liabilities designated at fair value
                through
                profit and loss
            
            
            (65,088
            )
            
            (3,521
            )
            
            -Gain
                on sales of property, furniture and equipment
            
            
            (42
            )
            
            (169
            )
            
            (1,875
            )Translation
                result
            
            
            (34,627
            )
            
            (15,216
            )
            
            9,597Purchase
                (sale) of trading securities, net
            
            
            (5,859
            )
            
            15,649
            
            
            22,843Purchase
                of loan portfolio, note 2(b)
            
            
            -
            
            
            -
            
            
            (353,769
            )**Changes
                in assets and liabilities:**(Increase)
                decrease in loans, net
            
            
            (2,172,418
            )
            
            (871,970
            )
            
            90,521Increase
                in other assets
            
            
            (404,175
            )
            
            (100,570
            )
            
            (15,062
            )Increase
                in deposits and obligations, net
            
            
            2,269,568
            
            
            1,632,960
            
            
            648,648Increase
                (decrease) in due to banks and correspondents, net
            
            
            875,447
            
            
            (455,381
            )
            
            540,824Increase
                in other liabilities, net
            
            
            470,963
            
            
            114,717
            
            
            149,920**Net
                cash provided by operating activities**
            
            
            1,340,489
            
            
            590,619
            
            
            1,320,931**Cash
                flows from investing activities**Acquisition
                of subsidiaries net of cash received,note
                2(a)
            
            
            -
            
            
            (140,085
            )
            
            -Disposal
                of subsidiaries, net of cash disposed, note 2(c)
            
            
            -
            
            
            -
            
            
            17,977Net
                purchase of investments available-for-sale
            
            
            (1,541,621
            )
            
            (433,702
            )
            
            (712,879
            )Purchase
                of property, furniture and equipment
            
            
            (53,901
            )
            
            (43,973
            )
            
            (48,769
            )Sales
                of property, furniture and equipment
            
            
            951
            
            
            7,546
            
            
            19,448**Net
                cash used in investing activities**
            
            
            (1,594,571
            )
            
            (610,214
            )
            
            (724,223
            )




F-11


Consolidated
      cash flow statements (continued)





**2007**
            
            **2006**
            
            **2005**US$(000)
            
            US$(000)
            
            US$(000)**Cash
                flows from financing activities**Issuance
                of bonds and subordinated debt
            
            
            256,014
            
            
            167,247
            
            
            74,985Redemption
                of bonds and subordinated debt
            
            
            (75,728
            )
            
            (91,925
            )
            
            (57,469
            )Increase
                in borrowed funds
            
            
            499,792
            
            
            90,612
            
            
            348,500Payments
                of borrowed funds
            
            
            -
            
            
            -
            
            
            (68,500
            )Cash
                dividends
            
            
            (103,690
            )
            
            (87,738
            )
            
            (63,810
            )**Net
                cash provided by (used in) financing activities**
            
            
            576,388
            
            
            78,196
            
            
            233,706Translation
                gain (loss) on cash and cash equivalents
            
            
            18,029
            
            
            14,114
            
            
            (15,060
            )**Net
                increase in cash and cash equivalents**
            
            
            340,335
            
            
            72,715
            
            
            815,354Cash
                and cash equivalents at the beginning of the year
            
            
            2,733,530
            
            
            2,660,815
            
            
            1,845,461**Cash
                and cash equivalents at the end of the year**
            
            
            3,073,865
            
            
            2,733,530
            
            
            2,660,815**Supplementary
                cash flows information:****Cash
                paid during the year for -**Interest
            
            
            415,157
            
            
            265,838
            
            
            171,495Income
                tax
            
            
            86,754
            
            
            96,284
            
            
            47,760**Cash
                received during the year for -**Interest
            
            
            1,106,972
            
            
            810,266
            
            
            628,508





The
      accompanying notes are an integral part of these consolidated financial
      statements.


F-12


**Credicorp
      Ltd. and Subsidiaries**




Notes
      to
      the consolidated financial statements


As
      of
      December 31, 2007 and 2006




**1.**
            **Operations**


Credicorp
      Ltd. (hereinafter “Credicorp” or “the Group”) is a limited liability company
      incorporated in Bermuda in 1995 to act as a holding company and to coordinate
      the policy and administration of its subsidiaries. It is also engaged in
      investing activities.





Credicorp
      Ltd., through its banking and non-banking subsidiaries, provides a wide range
      of
      financial services and products throughout Peru and in selected international
      markets. The major subsidiary of the Group is Banco de Crédito del Perú
(hereinafter “BCP” or the “Bank”), a Peruvian universal bank. The address of
      Credicorp’s main office is Claredon House 2 Church Street Hamilton, Bermuda;
      likewise, the Management and its administration offices are located in Calle
      Centenario No156, La Molina, Lima, Peru.





Credicorp
      is listed in both Lima and the New York Stock Exchanges.





The
      consolidated financial statements as of and for the year ended December 31,
      2006
      have been


approved
      in the General Shareholders’ Meeting of March 30, 2007. The accompanying
      consolidated financial statements as of and for the year ended December 31,
      2007, have been approved by the Board of Directors Meeting of February 27,
      2008
      and by the General Shareholders’ Meeting of March 28, 2008, without
      modifications.




**2.**
            **Business
                developments**


During
      2007, 2006 and 2005, the Group acquired subsidiaries recorded as business
      combinations, according to the guidelines of IFRS 3, and sold subsidiary. The
      descriptions of such transactions are described below:





(a)
            Acquisition
                of AFP Unión Vida S.A.-


On
      August
      24, 2006, Credicorp, through its subsidiary Prima AFP, acquired from Grupo
      Santander Perú S.A., the shares that this Company had in AFP Unión Vida S.A. (a
      pension fund management company that operates in Peru), which represented 99.97
      of its capital stock and made a Public Offering for the minority shareholders
      in
      order to acquire the remaining 0.03 percent of the capital stock. The amount
      paid for the purchase amounted to approximately US$ 141.5 million.





At
      the
      General Shareholder’s Meeting of Prima AFP, held on September 6, 2006, the
      merger with AFP Unión Vida S.A. was approved, with effective date of December
      1 st ,
      2006.




F-13


Notes
      to
      the consolidated financial statements (continued)





The
      acquisition of AFP Unión Vida S.A. was recorded using the purchase method, as
      required by IFRS 3, Business Combinations. The assets and liabilities were
      recorded at their estimated market values at the acquisition date, including
      the
      identified intangible assets acquired. The book value and the fair values for
      the identified assets and liabilities of the entity at acquisition date were
      as
      follows:





**Book value of the**
              **entity acquired**
            
            **Fair value**
              **recognition**
            
            **Fair value of the**
              **entity acquired**US$(000)
            
            US$(000)
            
            US$(000)**Assets
                -**Cash
                and cash equivalents
            
            
            1,428
            
            
            -
            
            
            1,428Restricted
                mutual fund
            
            
            32,265
            
            
            -
            
            
            32,265Client
                relationships
            
            
            -
            
            
            88,378
            
            
            88,378Other
                Intangibles
            
            
            3,424
            
            
            9,603
            
            
            13,027Property,
                furniture and equipment
            
            
            2,060
            
            
            -
            
            
            2,060Goodwill
            
            
            -
            
            
            49,047
            
            
            49,047Other
                assets
            
            
            5,605
            
            
            -
            
            
            5,605**Liabilities
                -**Trade
                accounts payable
            
            
            4,688
            
            
            -
            
            
            4,688Other
                accounts payable
            
            
            5,352
            
            
            -
            
            
            5,352Other
                liabilities
            
            
            7,433
            
            
            32,824
            
            
            40,257Net
                acquired assets
            
            
            27,309
            
            
            114,204
            
            
            141,513
            (*)





(*)
            Cash
                paid for the acquisition and related direct
                cost





The
      intangible assets recognized correspond mainly to “client relationships” and it
      has an assigned useful life of 20 years. Management of the Group has valued
      these intangible assets using the method of “Multiple Excess Earnings Method”.
      The goodwill generated is attributed to the high profitability of the acquired
      business and the significant synergies that are expected to be obtained after
      the acquisition of AFP Unión Vida by the Group, note 12(b).





In
      January 2007, the final purchase price determination was completed with the
      result of the arbitration proceeding between both parties. As result the Group
      received a reimbursement of approximately US$4.5 million, which has been record
      as a reduction of the goodwill.





The
      acquired business (AFP Unión Vida S.A.) has contributed gross revenues to the
      Group of approximately US$8.0 million and a net loss of approximately US$0.4
      million for the period between the acquisition date (August 24, 2006) and
      December 31, 2006. If this acquisition had been completed at January 1, 2006
      and
      2005, respectively, the gross revenues (pro-forma) of the Group would have
      been
      increased by US$27.5 and US$49.9 million, respectively, the net income
      attributable to Credicorp’s shareholders (pro-forma) would have been increased
      by approximately US$2.7 and US$15.6 million, respectively, and the net earning
      per share (pro-forma), basic and diluted attributable to Credicorp’s
      shareholders would have been increased by US$0.04 and US$0.20, respectively.
      This information is presented solely for comparison purposes and it does not
      mean to be an indicator of the results that would have been produced in the
      case
      the acquisition had occurred at the beginning of the period or be an indicator
      of future possible consolidated results.


F-14


Notes
      to
      the consolidated financial statements (continued)





As
      of
      December 31, 2007, the number of participants in the funds managed by Prima
      is
      1,023,482 (997,963 as December of 31, 2006) and the fair value of the funds
      under its administration amounts to approximately US$6,405.1 million (US$4,163.4
      million as December of 31, 2006).





(b)
            Acquisition
                of the loan portfolio of Bank Boston N.A. Peru Subsidiary
                -


On
      January 2005, the BCP and the Bank of America, principal shareholders of United
      States Fleet Boston agreed to sell the loans portfolio of the Bank Boston N.A.
      Peruvian branch and the loan portfolio of Peruvians in United States Fleet
      Boston N.A. The Group recorded this transaction at the acquisition cost. BCP
      paid in cash approximately US$353.8 million for the loan portfolio, which
      comprised commercial loans, mortgage and leasing operations. The acquisition
      date of the portfolio was January 24, 2005.





(c)
            Sale
                of Banco Tequendama S.A. -


In
      March
      2005, after the approval of the Colombian authorities, the Group completed
      the
      sale transaction of its 99.99 percent interest in its subsidiary Banco
      Tequendama S.A., for approximately US$32.5 million. The effective date for
      this
      transaction was January 1 st ,
      2005
      and as result of the transaction, the Group did not record any significant
      gain.





**3.**
            **Significant
                accounting policies**


Significant
      accounting principles used in the preparation of Credicorp’s consolidated
      financial statements are set out below. These policies have been consistently
      applied to all the years presented, unless otherwise stated.





(a)
            Basis
                of presentation and use of estimates
                -


The
      consolidated financial statements have been prepared in accordance with
      International Financial Reporting Standards (IFRS) as issued by the
      International Accounting Standards Board (IASB). The consolidated financial
      statements have been prepared on a historical cost basis, except for
      available-for-sale investments, derivative financial instruments and financial
      assets and financial liabilities designated at fair value through profit or
      loss, that have been measured at fair value. The consolidated financial
      statements are presented in United States dollar (U.S. Dollar or US$), and
      all
      values are rounded to the nearest US$ thousand, except when otherwise
      indicated.





The
      preparation of the consolidated financial statements in conformity with IFRS
      requires management to make estimates and assumptions that affect the reported
      amounts of assets and liabilities, revenues and expenses and disclosure of
      significant events in notes to the consolidated financial
      statements.





Estimates
      and judgments are continually evaluated and are based on historical experience
      and other factors, including expectations of future events that are believed
      to
      be reasonable under the current circumstances. Actual results could differ
      from
      those estimates. The most significant estimates comprised in the accompanying
      consolidated financial statements are related to the computation of the
      allowance for loan losses, the measurement of financial instruments, the
      technical reserves for claims and premiums, the provision for assets seized
      and
      the valuation of derivatives. The accounting criteria used for each of these
      items are described somewhere in this note.


F-15


Notes
      to
      the consolidated financial statements (continued)





The
      accounting policies adopted are consistent with those of the previous year,
      except that the Group has adopted those new IFRS and revised IAS mandatory
      for
      years beginning on or after January 1 st ,
      2007.
      The adoption of the new and revised standards did not have a significant effect
      in the consolidated financial statements of Credicorp and, as result, it has
      not
      been necessary to amend the comparative figures. In summary:





-
            IFRS
                7, “Financial instruments: Disclosures”, and the complementary amendment
                to IAS 1, “Presentation of financial statements - Capital disclosures”,
                introduces new disclosures relating to financial instruments and
                does not
                have any impact on the classification and valuation of the group’s
                financial instruments, or any effect on the net income and the equity
                of
                Credicorp and its Subsidiaries. The significant new disclosures required
                by IFRS 7 have been included in notes 30 and 31; the new disclosures
                of
                IAS 1 have been included in note
                31.





-
            IFRIC
                8, “Scope of IFRS 2”, requires IFRS 2 to be applied to any arrangements in
                which the entity cannot identify specifically some or all of the
                goods
                received, in particular where equity instruments are issued for
                consideration which appears to be less than fair value. Due to the
                fact
                that Credicorp does not have this type of transactions, this standard
                does
                not have any impact on the Group’s financial statements.





-
            IFRIC
                9 “Reassessment of Embedded Derivatives”, states that the date to assess
                the existence of an embedded derivative is the date that an entity
                first
                becomes a party to the contract, with reassessment only if there
                is a
                change to the contract that significantly modifies the cash flows.
                As the
                Group has designated its embedded derivatives as “Financial assets and
                liabilities at fair value through profit and lost”, the interpretation had
                no impact on the financial position or performance of the
                Group.





-
            IFRIC
                10, “Interim financial reporting and impairment”, prohibits the impairment
                losses recognized in an interim period for goodwill and investments
                in
                equity instruments and in financial assets carried at cost to be
                reversed
                at a subsequent interim or annual balance sheet date. This standard
                does
                not have any impact on the Group’s financial
                statements.





(b)
            Consolidation
                -


Subsidiaries:


Subsidiaries
      are all entities (including special purpose entities) over which the Group
      has
      the power to govern the financial and operating policies. This is generally
      evidenced by a shareholding of more than one half of the voting
      rights.





Subsidiaries
      are fully consolidated from the date on which effective control is transferred
      to the Group and are no longer consolidated from the date that control ceases.
      The consolidated financial statements include the assets, liabilities, income
      and expenses of Credicorp and its Subsidiaries. Inter-company transactions
      between Group Companies as balances, gains or losses are eliminated. The
      unrealized gains and losses between companies from the Group are eliminated,
      except for the losses that indicate an impairment in the value of the asset
      transferred.


F-16


Notes
      to
      the consolidated financial statements (continued)





Accounting
      policies of subsidiaries have been changed when necessary to ensure consistency
      with the policies adopted by the Group and the IFRS.





The
      Group
      uses the purchase method of accounting to record the acquisition of
      subsidiaries. The cost of an acquisition is measured as the fair value of the
      assets given, equity instruments issued and liabilities incurred or assumed
      at
      the date of exchange, plus costs directly attributable to the acquisition.
      The
      excess of the cost of acquisition over the fair value of the Group’s share of
      the identifiable net assets and intangible assets acquired is recorded as
      goodwill. If the acquisition cost is lower than the fair value of the net asset
      of the acquired subsidiary, the difference is recognized directly in the
      consolidated income statement.





Assets
      in
      custody or managed by the Group, the investment funds and the pension funds
      managed by the Group, are not part of the consolidated financial statement
      of
      the Group, note 3(z).





The
      net
      equity and the net income attributable to the minority interest are shown
      separately on the consolidated balance sheets and consolidated income
      statements.




F-17


Notes
      to
      the consolidated financial statements (continued)





Associates:




Associates
      are all the entities over which the Group has significant influence but not
      control. Generally investment in these entities represents shareholding between
      20 and 50 percent of the voting rights. The investments in associates are
      recognized initially at cost and then are accounted for by the equity method.
      The Group does not maintain a significant investment in associates; therefore
      these investments are recorded in the caption “Other assets” in the consolidated
      balance sheets and in the caption “Other income” of the consolidated income
      statements.





Minority
      interest:




The
      Group
      applies a policy of treating transactions with minority interests as
      transactions with parties external to the Group. Disposals to minority interests
      result in gains and losses for the Group that are recorded in the consolidated
      income statement. Purchases from minority interests result in goodwill, being
      the difference between any consideration paid and the relevant share acquired
      of
      the carrying value of net assets of the subsidiary.


F-18


Notes
      to
      the consolidated financial statements (continued)





The
      companies that comprise the Group as of December 31, 2007 and 2006, with an
      indication of the percentage owned directly and indirectly by Credicorp as
      of
      those dates, as well as other relevant information, based on the financial
      statements in accordance with IFRS and before the eliminations for
      consolidation, except for the elimination of Credicorp ́s treasury shares and the
      related dividends, are as follows:





**Entity**
            
            **Percentage of participation**
            
            **Assets**
            
            **Liabilities**
            
            **Equity**
            
            **Net
                income (loss)****2007**
            
            **2006**
            
            **2007**
            
            **2006**
            
            **2007**
            
            **2006**
            
            **2007**
            
            **2006**
            
            **2007**
            
            **2006**%
            
            %
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)Banco
                de Crédito del Perú and Subsidiaries (i)
            
            
            97.33
            
            
            97.24
            
            
            15,171,338
            
            
            10,802,737
            
            
            14,038,774
            
            
            9,838,881
            
            
            1,132,564
            
            
            963,856
            
            
            331,652
            
            
            247,756Atlantic
                Security Holding Corporation and Subsidiaries (ii)
            
            
            100.00
            
            
            100.00
            
            
            1,738,697
            
            
            1,320,535
            
            
            1,401,237
            
            
            1,200,170
            
            
            337,460
            
            
            120,365
            
            
            20,537
            
            
            15,402El
                Pacífico Peruano-Suiza Compañía de Seguros y Reaseguros and Subsidiaries
                (iii)
            
            
            75.74
            
            
            75.72
            
            
            1,197,943
            
            
            1,002,358
            
            
            932,765
            
            
            712,430
            
            
            265,178
            
            
            289,928
            
            
            21,979
            
            
            59,087Grupo
                Crédito S.A. and Subsidiaries (iv)
            
            
            100.00
            
            
            100.00
            
            
            389,577
            
            
            314,540
            
            
            125,089
            
            
            115,702
            
            
            264,488
            
            
            198,838
            
            
            7,662
            
            
            (12,380
            )CCR
                Inc. (v)
            
            
            99.99
            
            
            99.99
            
            
            879,997
            
            
            382,930
            
            
            917,655
            
            
            380,000
            
            
            (37,658
            )
            
            2,930
            
            
            (4
            )
            
            121Credicorp
                Securities Inc. (vi)
            
            
            99.99
            
            
            99.99
            
            
            2,047
            
            
            1,503
            
            
            215
            
            
            18
            
            
            1,832
            
            
            1,485
            
            
            347
            
            
            487





(i)
            Banco
                de Crédito (BCP) is a universal bank, incorporated in Peru in 1889,
                authorized to engage in banking activities by the Superintendence
                of
                Banking, Insurance and AFP (SBS), the Peruvian banking, insurance
                and AFP
                authority. During 2007 and 2006, Credicorp acquired equivalent to
                0.09
                percent and 0.25 percent of BCP shares, respectively, owned by minority
                interest. See (iii) below.





(ii)
            Atlantic
                Security Holding Corporation (ASHC) is incorporated in the Cayman
                Islands.
                Its main activity is to invest in the capital stock of companies.
                Its most
                significant subsidiary is Atlantic Security Bank (ASB). ASB is also
                incorporated in the Cayman Islands and began operations on December
                1981,
                carrying out its activities through branches and offices in Grand
                Cayman
                and the Republic of Panama, its main activity is private and institutional
                banking and trustee
                administration.


F-19


Notes
      to
      the consolidated financial statements (continued)





(iii)
            El
                Pacífico Peruano-Suiza Compañía de Seguros y Reaseguros (PPS) is a
                Peruvian corporation, whose main activity is the issuance and
                administration of insurance for property and casualty and related
                activities, and also provides insurance for life, health and personal
                accidents. Its main subsidiaries are El Pacífico Vida Compañía de Seguros
                y Reaseguros S.A. and Pacífico S.A. Entidad Prestadora de Salud (EPS), in
                which maintain a share of 61.99 percent and 100.00 percent, respectively.
                On November 2006, PPS sold to Credicorp 1.02 percent of BCP shares
                that
                maintained to that date, generating a goodwill for the purchase of
                the
                corresponding percentage of minority interest (0.25 percent) amounted
                to
                approximately US$7.2 million, note 12(b).





(iv)
            Grupo
                Crédito S.A. is a company incorporated in Peru on February 1987, whose
                main activity is to invest in listed and not listed securities in
                Peru.
                Since 2005, Group Crédito incorporated Prima AFP, a new subsidiary engaged
                in fund management activities. On August, 2006, Prima AFP acquired
                99.97
                percent of the representative capital shares of AFP Unión Vida S.A., which
                was merged on December 2006, note 2(a). As of December 31, 2007,
                Prima AFP
                total assets amount approximately US$246.4 million, liabilities for
                US$116.8 million and a net gain of US$3.0 million (US$233.9 million,
                US$115.4 million and US$20.7 million, respectively, as of December
                31,
                2006). Additionally, the Company owns 100.00 percent of the shares
                of
                Soluciones en Procesamiento S.A. (Servicorp), an entity specialized
                in
                collection services.





(v)
            CCR
                Inc., is a special purposes entity incorporated in Bahamas in 2001,
                whose
                main activity is to manage the loans granted to BCP from foreign
                financial
                entities, note 15(b). These loans are collateralized by transactions
                realized by the Bank. As of December 31, 2007, the negative equity
                is
                generated by the unrealized losses of the cash flow hedge derivatives,
                as
                it is explained in note 18(c) y
                21(d).





(vi)
            Credicorp
                Securities Inc., an entity incorporated in the United States of America
                on
                January 2003, whose main activity is to be engaged in brokerage activities
                in the securities market, directed principally to retail customers
                in
                Latin America.





(c)
            Foreign
                currency translation -


Functional
      and presentation currency:


The
      Group
      considers that its functional and presentation currency to be the United States
      Dollar (U.S. Dollar or US$), because it reflects the economic substance of
      the
      underlying events and the circumstances relevant to the Group; insofar as its
      main operations and/or transactions in the different countries where the Group
      operates such as, loans granted, financing obtained, sale of insurance premiums,
      interest income and expenses, an important percentage of salaries and purchases,
      are established and settled in U.S. Dollars. All resulting translation
      differences are recognized in the consolidated income statement.




F-20


Notes
      to
      the consolidated financial statements (continued)





Financial
      statements of each of the Credicorp’s subsidiaries are measured using the
      currency of the country in which each entity operates. Their financial
      statements are translated into U.S. Dollars (functional and presentation
      currency) as follows:





-
            Monetary
                assets and liabilities for each balance sheet presented are translated
                at
                the free market exchange rate at the date of the consolidated balance
                sheet.





-
            Non-monetary
                accounts for each balance sheet presented are translated at the free
                market exchange rate at the date of the
                transactions.





-
            Income
                and expenses, except for those related to non-monetary assets which
                are
                translated at the free market exchange rate at the date of the
                transaction, are translated monthly at the average exchange
                rate.





All
      resulting translation differences are recognized in the consolidated income
      statement.





(d)
            Income
                and expense recognition from banking activities
                -


Interest
      income and expense for all interest-bearing financial instruments, including
      those related to financial instruments classified as held for trading or
      designated at fair value through profit or loss, are recognized within “Interest
      and dividend income” and “Interest expense” in the consolidated income statement
      using the effective interest rate, which is the rate that exactly discounts
      estimated future cash payments or receipts through the expected life of the
      financial instrument or a shorter period, where appropriate, to the net carrying
      amount of the financial asset or financial liability. Interest rates are
      determined based on negotiations with clients.





Interest
      income is suspended when collection of loans become doubtful, such as when
      overdue by more than 90 days or when the borrower or securities’ issuer
      defaults, if earlier than 90 days, and such income is excluded from interest
      income until received. Uncollected income on such loans is reversed against
      income. When Management determines that the debtor’s financial condition has
      improved, the recording of interest thereon is reestablished on an accrual
      basis.





Interest
      income includes coupons earned on fixed income investment and trading securities
      and the accrued discount and premium on financial instruments. Dividends are
      recognized as income when they are declared.





Fees
      and
      commission income are recognized on an accrual basis when earned. Contingent
      credit fees for loans that are likely to be drawn down and other credit related
      fees are deferred (together with any direct incremental costs) and recognized
      as
      an adjustment to the effective interest rate on the loan.





All
      other
      revenues and expenses are recognized on an accrual basis as earned or
      incurred.




(e)
            Recognition
                of income and expenses of insurance activities
                -


The
      premiums related to life insurance policies and others, of both long and short
      duration, are recognized as income when they accrue. A reserve for unearned
      premiums is recorded for the unexpired portion of the premiums.


F-21


Notes
      to
      the consolidated financial statements (continued)





The
      claims reserves are constituted under different methodologies depending on
      the
      type of reserve, line of business, type of product and type of
      coverage.





In
      the
      case of life insurance, the claims reserves are calculated taking into account
      an estimation of the mortality (for life insurance), survival (life annuities,
      death and disability pension system insurance and complementary Insurance for
      work risk - a type of life insurance for certain types of higher risk
      occupations) or incidence (personal injury) and the interest established when
      the product was designed. The reserves are calculated as the present value
      of
      the probable cash flows for pension payments, using mortality tables for the
      policyholders, beneficiaries and disabled who are covered at the consolidated
      balance sheet date as well as interest rates determined based on the performance
      of the corresponding portfolio of investments. In the case of individual life
      insurance, the reserves are determined according to the mortality tables
      adjusted in variable percentages according to the product characteristics,
      as
      well as the established interest and the type of investment involved according
      to the type of product.





The
      reserves corresponding to the universal life insurance policies form part of
      the
      technical life insurance reserves. The additional benefits granted to the
      policyholders originating from this type of policy are shown in the footnote
      net
      premiums earned for life and health insurance contract, note 24, which include
      the surplus and interest accrued during the period which are credited to the
      balance of the policyholder.





The
      insurance claims are recorded when the event occurs. The incurred but
      non-reported claims (IBNR) are estimated and included in the provision
      (liabilities). The reserves for IBNR at December 31, 2007 and 2006 have been
      estimated considering generally accepted actuarial methods, which take into
      consideration the statistical analysis of the recorded loss history, the use
      of
      projection methods and when appropriate, qualitative factors used to reflect
      the
      effect of the present conditions or trends that affect historical data.
      Management believes that the estimated reserve is sufficient to cover liability
      for IBNR occurred at December 31, 2007 and 2006.





To
      determine the reserves for life, property and casualty and health insurance,
      the
      Group carries out a continuous review of its overall position as well as its
      techniques for computing the claim reserves and its reinsurance. The provisions
      are reviewed periodically by qualified actuaries contracted by the Group.
      Additionally, for those cases the Group considers an additional reserve is
      necessary, a calculation based on the claims past experience using the
      chain-ladder methodology or a percentage of the related premium is carried
      out.
      The technical provisions recorded are subject to a liability adequacy test
      to
      determine its sufficiency based on the future cash flow projections of the
      contracts in force. If as a consequence of this test, the reserves prove to
      be
      insufficient, they are adjusted and the amounts are included in the results
      of
      operations for the period.





The
      costs
      for acquiring the policies (commissions) that are variable and that are
      primarily related to the acquisition and renewal of insurance contracts
      (universal life) are deferred and amortized during the period of the policy
      (Deferred Acquisition Costs or “DAC”). The recoverability of these deferred
      acquisition costs are reviewed annually.


F-22


Notes
      to
      the consolidated financial statements (continued)





Based
      on
      the periodic reviews of the client portfolio, Management determines the
      provision for bad debt related to premiums and quotas receivable.





An
      impairment review is performed at each reporting date or more frequently when
      an
      indication of impairment arises. When the recoverable amounts is less than
      the
      carrying value an impairment loss is recognized in the income statement. DAC
      is
      also considered in the liability adequacy test for each reporting
      period.





(f)
            Financial
                Instruments: Initial recognition and subsequent measurement
                -


Purchases
      or sales of financial assets that require delivery of assets within the time
      frame generally established by regulation or convention in the marketplace
      are
      recorded on the trade date, i.e. the date that the Group commits to purchase
      or
      sell the asset. Derivatives are recognized on a trade date basis.





The
      classification of financial instruments at initial recognition depends on the
      purpose for which the financial instruments were acquired and their
      characteristics. All financial instruments are measured initially at their
      fair
      value plus, in the case of financial assets and financial liabilities not at
      fair value through profit or loss, any directly attributable incremental costs
      of acquisition or issue.





The
      Group
      classifies its financial instruments in the following categories as defined
      by
      IAS 39: financial assets and liabilities at fair value through profit or loss;
      loans and receivables; available-for-sale financial investments and other
      liabilities. Management determinates the classification of its investments
      at
      initial recognition.





(i)
            Financial
                assets and financial liabilities at fair value through profit or
                loss:


This
      category has two sub-categories: financial assets held for trading and financial
      assets and liabilities designated at fair value through profit or loss at
      inception. A financial asset is classified as held for trading if it is acquired
      or incurred principally for the purpose of selling or repurchasing in the near
      term or if it is part of a portfolio of identified financial instruments that
      are managed together and for which there is evidence of a recent actual pattern
      of short-term profit-taking. Derivatives are also categorized as held for
      trading unless they are designated as hedging instruments. Financial assets
      and
      financial liabilities are designated at fair value through profit or loss when
      the following criteria are met:





-
            The
                designation eliminates or significantly reduces the inconsistent
                treatment
                that would otherwise arise from measuring the assets or liabilities
                or
                recognizing gains or losses on them on a different basis;
                or





-
            The
                assets and liabilities are part of a group of financial assets, financial
                liabilities or both which are managed and their performance evaluated
                on a
                fair value basis, in accordance with a documented risk management
                or
                investment strategy; or





-
            The
                financial instrument contains an embedded derivative, unless the
                embedded
                derivative does not significantly modify the cash flows or it is
                clear,
                with little or no analysis, that it would not be separately
                recorded.


F-23


Notes
      to
      the consolidated financial statements (continued)





Financial
      assets and financial liabilities at fair value through profit or loss are
      recorded in the consolidated balance sheet at fair value. Changes in fair value
      are recorded in the consolidated income statement in the caption “Net gain on
      financial assets and liabilities designated at fair value through profit and
      loss”. Interest earned or incurred is accrued in the consolidated income
      statement in the captions “Interest and dividend income” or “Interest expense”,
      respectively, according to the terms of the contract. Dividend income is
      recorded when the right to the payment has been established.





(ii)
            Loans
                and receivables:


Loans
      and
      receivables are non-derivative financial assets with fixed or determinable
      payments that are not quoted in an active market, other than: those that the
      entity intend to sell immediately or in the short term, those that the entity
      upon initial recognition designates as available for sale; or those for which
      the holder may not recover substantially all of its initial investment, other
      than because of credit deterioration.





After
      initial measurement, loans and receivables are subsequently measured at
      amortized cost using the effective interest rate method, less allowance for
      impairment. Amortized cost is calculated by taking into account any discount
      or
      premium on acquisition and fees and costs that are an integral part of the
      effective interest rate. The losses arising from impairment are recognized
      in
      the consolidated income statement in the caption “Provision for loan
      losses”.





Direct
      loans are recorded when disbursement of funds to the clients are made. Indirect
      (off-balance sheet) loans are recorded when documents supporting such facilities
      are issued. Likewise, Credicorp considers as refinanced or restructured those
      loans that change their payment schedules due to difficulties in the debtor’s
      ability to repay the loan.


An
      allowance for loan losses is established if there is objective evidence that
      the
      Group will not be able to collect all amounts due according to the original
      contractual terms of the loan. The allowance for loan losses is established
      based in the internal risk classification and taking into consideration the
      guarantees and collaterals obtained by the Group, note 3(i) and
      31.1.





(iii)
            Available-for-sale
                financial investments:


Available-for-sale
      financial investments are those which are designated as such (to be held for
      an
      indefinite period, which may be sold in response to liquidity needs or changes
      in the interest rates, exchange rates or equity price); or do not qualify to
      be
      classified as designated at fair value through profit or loss, held-to-maturity
      or loans and receivables. They include equity instruments, investments in mutual
      funds and money market and other debt instruments.





After
      initial measurement, available-for-sale financial investments are subsequently
      measured at fair value. Unrealized gains and losses are recognized directly
      in
      equity in the “Other reserves”, net of its corresponding tax and minority
      interest. When the security is disposed of, the cumulative gain or loss
      previously recognized in equity is recognized in the consolidated income
      statement in the caption “Net gain on sales of securities”. Where the Group
      holds more than one investment in the same security they are deemed to be
      disposed using the average cost basis. Interest and dividends earned whilst
      holding available-for-sale financial investments are recognized in the
      consolidated income statement in the caption “Interest and dividend income”.
      Interest earned is reported as interest income using the effective interest
      rate
      and dividends earned are recognized when the right of the payment has been
      established.


F-24


Notes
      to
      the consolidated financial statements (continued)





Estimated
      fair values are based primarily on quoted prices or, if quoted market prices
      are
      not available, discounted expected cash flows using market rates commensurate
      with the credit quality and maturity of the investment.





The
      losses arising from impairment of such investments are recognized in the
      consolidated income statement and removed from the “Other reserves”. The Group
      determines that an available-for-sale investment is impaired when there has
      been
      a significant or prolonged decline in the fair value below its cost; as
      explained in more detail in note 3(i) below.





(iv)
            Other
                financial liabilities:


After
      initial measurement, other financial liabilities are subsequently measured
      at
      amortized cost using the effective interest rate method. Amortized cost is
      calculated by taking into account any discount or premium on the issue and
      costs
      that are an integral part of the effective interest rate.





See
      the
      carrying amounts of the financial assets and liabilities shown in the
      consolidated balance sheets by the aforementioned categories in note
      30.





(g)
            Derecognition
                of financial assets and financial liabilities -


Financial
      assets:


A
      financial asset (or, where applicable a part of a financial asset or part of
      a
      group of similar financial assets) is derecognized where: (i) the rights to
      receive cash flows from the asset have expired; or (ii) the Group has
      transferred its rights to receive cash flows from the asset or has assumed
      an
      obligation to pay the received cash flows in full without material delay to
      a
      third party under a “pass-through” arrangement; and (iii) either the Group has
      transferred substantially all the risks and rewards of the asset, or the Group
      has neither transferred nor retained substantially all the risks and rewards
      of
      the asset, but has transferred control of the asset.





Financial
      liabilities:


A
      financial liability is derecognized when the obligation under the liability
      is
      discharged or cancelled or expires. Where an existing financial liability is
      replaced by another from the same lender on substantially different terms,
      or
      the terms of an existing liability are substantially modified, such an exchange
      or modification is treated as a derecognition of the original liability and
      the
      recognition of a new liability, and the difference in the respective carrying
      amounts is recognized in profit or loss.





(h)
            Offsetting
                financial instruments -


Financial
      assets and liabilities are offset and the net amount is reported in the
      consolidated balance sheet when there is a legally enforceable right to offset
      the recognized amounts and Management has the intention to settle on a net
      basis, or realize the assets and settle the liability
      simultaneously.


F-25


Notes
      to
      the consolidated financial statements (continued)





(i)
            Impairment
                of financial assets -


The
      Group
      assesses at each balance sheet date whether there is any objective evidence
      that
      a financial asset or a group of financial assets is impaired. A financial asset
      or a group of financial assets is deemed to be impaired if, and only if, there
      is objective evidence of impairment as a result of one or more events that
      has
      occurred after the initial recognition of the asset (an incurred loss event)
      and
      that loss event (or events) has an impact on the estimated future cash flows
      of
      the financial asset or the group of financial assets that can be reliably
      estimated. Evidence of impairment may include indications that the borrower
      or a
      group of borrowers is experiencing significant financial difficulty, default
      or
      delinquency in interest or principal payments, the probability that they will
      enter bankruptcy or other financial reorganization and where observable data
      indicate that there is a measurable decrease in the estimated future cash flows,
      such as changes in arrears or economic conditions that correlate with defaults.
      The criteria used for each category of financial assets are as
      follows:





(i)
            Loans
                and receivables:


For
      loans
      and receivables that are carried at amortized cost, the Group first assesses
      individually whether objective evidence of impairment exists individually for
      financial assets that are individually significant, or collectively for
      financial assets that are not individually significant. If the Group determines
      that no objective evidence of impairment exists for an individually assessed
      financial asset, whether significant or not, it includes the asset in a group
      of
      financial assets with similar credit risk characteristics and collectively
      assesses them for impairment. Assets that are individually assessed for
      impairment and for which an impairment loss is, or continues to be, recognized
      are not included in a collective assessment of impairment.





If
      there
      is objective evidence that an impairment loss has been incurred, the amount
      of
      the loss is measured as the difference between the asset carrying amount and
      the
      present value of estimated future cash flows. The carrying amount of the asset
      is reduced through the use of an allowance account and the amount of the loss
      is
      recognized in the income statement. Interest income continues to be accrued
      on
      the reduced carrying amount based on the original effective interest rate of
      the
      asset. Loans, together with the associated allowance, are written off when
      there
      is no realistic prospect of future recovery and all collateral has been realized
      or has been transferred to the Group. If, in a subsequent year, the amount
      of
      the estimated impairment loss increases or decreases because of an event
      occurring after the impairment was recognized, the previously recognized
      impairment loss is increased or reduced by adjusting the allowance account.
      If a
      future write-off is later recovered, the recovery is credited to the provision
      for loan losses.





The
      present value of the estimated future cash flows is discounted at the financial
      asset’s original effective interest rate. If a loan has a variable interest
      rate, the discount rate for measuring any impairment loss is the current
      effective interest rate. The calculation of the present value of the estimated
      future cash flows of a collateralized financial asset reflects the cash flows
      that may result from foreclosure less costs for obtaining and selling the
      collateral, whether or not foreclosure is probable.


F-26


Notes
      to
      the consolidated financial statements (continued)





For
      the
      purpose of a collective evaluation of impairment, financial assets are grouped
      on the basis of the Group’s internal credit grading system that considers credit
      risk characteristics such as asset type, industry, geographical location,
      collateral type, past-due status and other relevant factors.





Future
      cash flows on a group of financial assets that are collectively evaluated for
      impairment are estimated on the basis of historical loss experience for assets
      with credit risk characteristics similar to those in the group. Historical
      loss
      experience is adjusted on the basis of current observable data to reflect the
      effects of current conditions that did not affect the years on which the
      historical loss experience is based and to remove the effects of conditions
      in
      the historical period that do not exist currently. The methodology and
      assumptions used for estimating future cash flows are reviewed regularly to
      reduce any differences between loss estimates and actual loss
      experience.





(ii)
            Available-for-sale
                financial investments:


For
      available-for-sale financial investments, the Group assesses at each
      consolidated balance sheet date whether there is objective evidence that an
      investment or a group of investments is impaired. In the case of equity
      investments classified as available-for-sale, objective evidence would include
      a
      significant or prolonged decline in the fair value of the investment below
      its
      cost. Where there is evidence of impairment, the cumulative loss (measured
      as
      the difference between the acquisition cost and the current fair value, less
      any
      impairment loss on that investment previously recognized in the consolidated
      income statement) is removed from equity and recognized in the consolidated
      income statement. Impairment losses on equity investments are not reversed
      through the consolidated income statement; increases in their fair value after
      impairment are recognized directly in equity.





In
      the
      case of debt instruments classified as available-for-sale, impairment is
      assessed based on the same criteria as financial assets carried at amortized
      cost. Future interest income is based on the reduced carrying amount and is
      accrued using the rate of interest used to discount the future cash flows for
      the purpose of measuring the impairment loss. The interest income is recorded
      as
      part of “Interest and dividend income”. If, in a subsequent year, the fair value
      of a debt instrument increases and the increase can be objectively related
      to an
      event occurring after the impairment loss was recognized in the consolidated
      income statement, the impairment loss is reversed through the consolidated
      income statement.





(iii)
            Renegotiated
                loans:


Where
      possible, the Group seeks to refinance or restructure loans rather than to
      take
      possession of collateral. This may involve extending the payment arrangements
      and the agreement of new loan conditions. Once the terms have been renegotiated,
      the loan is no longer considered past due. Management continuously reviews
      refinanced and restructured loans to ensure that all criteria are met and that
      future payments are likely to occur. The loans continue to be subject to an
      individual or collective impairment assessment, calculated using the loan’s
      original effective interest rate.




F-27


Notes
      to
      the consolidated financial statements (continued)





(j)
            Leases
                -


Operating
      leases:


Leases
      in
      which a significant portion of the risks and relative benefits of the property
      are hold by the lessor are classified as operating leases. By this concept,
      the
      Group maintains principally leases used as offices and agencies for the Bank.





When
      an
      operating lease is terminated before the lease period has expired, any payment
      required to be made to the lessor by way of penalty is recognized as an expense
      in the period in which termination takes place.





Finance
      leases:


The
      Group
      grants finance leases; therefore, it recognizes the present value of the lease
      payments as an asset. The difference between the gross receivable amount and
      the
      present value of the loan is recognized as unearned interest. Lease income
      is
      recognized over the term of the lease using the effective interest method,
      which
      reflects a constant periodic rate of return.





(k)
            Property,
                furniture and equipment -


Land
      and
      buildings comprise mainly branches and offices. All property, furniture and
      equipment are stated at historical acquisition cost less depreciation and
      impairment, if applicable. Historical acquisition costs include expenditures
      that are directly attributable to the acquisition of the items. Maintenance
      and
      repair costs are charged to the consolidated statement of income, and
      significant renewals and improvements are capitalized when it is probable that
      future economic benefits, in excess of the originally assessed standard of
      performance, will flow for the asset.





Land
      is
      not depreciated. Depreciation of other assets in this caption is calculated
      using the straight-line method over their estimated useful lives, as
      follows:





**Years**Buildings
                and other construction
            
            
            33Installations
            
            
            10Furniture
                and fixtures
            
            
            10Computer
                hardware
            
            
            4Vehicles
                and equipment
            
            
            5





The
      asset’s residual value, the useful life and the selected depreciation method are
      periodically reviewed to ensure that the method and period of depreciation
      chosen are consistent with the economic benefits and life expectations for
      use
      of property, furniture and equipment items.





(l)
            Assets
                seized -


Assets
      seized are recorded at the lower of cost or the estimated market value obtained
      from valuations made by independent appraisals.





Changes
      in market values are recorded in the consolidated income
      statements.




F-28


Notes
      to
      the consolidated financial statements (continued)





(m)
            Intangible
                assets -


Comprise
      internal development and acquired software licenses used by the Group. The
      software licenses acquired by the Group are measured on initial recognition
      at
      cost. These intangible assets are amortized using the straight-line method
      over
      their estimated useful life (between 3 and 5 years).





Additionally,
      it includes other intangible assets identified as a consequence of the
      acquisition AFP Unión Vida, note 2(a), mainly the client relationships. Such
      intangibles are recognized on the consolidated balance sheet at their fair
      values determine on the acquisition date and are amortized using the straight
      line method over their estimated useful life of 20 years for “client
      relationships” and 5 years for the other identified intangible
      assets.





(n)
            Goodwill
                -


Goodwill
      represents the excess of the cost of acquisition of a subsidiary over the fair
      value of the net identifiable assets of the acquired subsidiary at the date
      of
      acquisition. Goodwill is tested annually for impairment to assess whether the
      carrying amount is fully recoverable. An impairment loss is recognized if the
      carrying amount exceeds the recoverable amount. Goodwill is allocated to
      cash-generating units for impairment testing purposes.





In
      accordance with IFRS 3, since January 1 st ,
      2005,
      the Group has ceased the amortization of goodwill.





(o)
            Impairment
                of non-financial assets -


The
      Group
      assesses at each reporting date or more frequently if events or changes in
      circumstances indicate that the carrying value may be impaired, whether there
      is
      an indication that a non-financial asset may be impaired. If any such indication
      exists, or when annual impairment testing for an asset is required, the Group
      makes an estimate of the asset’s recoverable amount. Where the carrying amount
      of an asset (or cash-generating unit) exceeds its recoverable amount, the asset
      (or cash-generating unit) is considered impaired and is written down to its
      recoverable amount.





For
      non-financial assets, excluding goodwill, an assessment is made at each
      reporting date as to whether there is any indication that previously recognized
      impairment losses may no longer exist or may have decreased. If such indication
      exists, the recoverable amount is estimated. A previously recognized impairment
      loss is reversed only if there has been a change in the estimates used to
      determine the asset’s recoverable amount since the last impairment loss was
      recognized. If that is the case, the carrying amount of the asset is increased
      to its recoverable amount. Impairment losses relating to goodwill cannot be
      reversed for subsequent increases in its recoverable amount in future
      periods.




F-29


Notes
      to
      the consolidated financial statements (continued)





(p)
            Due
                from customers on acceptances -


Due
      from
      customers on acceptances corresponds to accounts receivable from customers
      for
      importation and exportation transactions, whose obligations have been accepted
      by the banks. The obligations that must be assumed by the Group for such
      transactions are recorded as liabilities.





(q)
            Financial
                guarantees -


In
      the
      ordinary course of business, the Group gives financial guarantees, consisting
      of
      letters of credit, guarantees and acceptances. Financial guarantees are
      initially recognized in the consolidated financial statements at fair value,
      in
“Other liabilities”, being the premium received. Subsequent to initial
      recognition, the Group’s liability under each guarantee is measured at the
      higher of the amortized premium and the best estimate of expenditure required
      to
      settle any financial obligation arising as a result of the
      guarantee.





Any
      increase in the liability relating to financial guarantees is taken to the
      income statement. The premium received is recognized in the income statement
      in
      the caption “Banking services commissions” on a straight line basis over the
      life of the guarantee.





(r)
            Defined
                contribution pension plan -


The
      Group
      only operates a defined contribution pension plan. The contribution payable
      to a
      defined contribution plan is in proportion to the services rendered to the
      Group
      by the employees and is recorded as an expense in the caption “Salaries and
      employees benefits” of the income statement. Unpaid contributions are recorded
      as a liability.




(s)
            Provisions
                -


Provisions
      for legal claims are recognized when the Group has a present (legal) or
      constructive obligation as a result of past events, it is probable that an
      outflow of resources will be required to settle the obligation; and the amount
      has been reliably estimated. The amount recorded as a provision is equal to
      the
      present value of future payments expected to be needed to settle the
      obligation.





(t)
            Contingencies
                -


Contingent
      liabilities are not recognized in the consolidated financial statements. They
      are disclosed in notes unless the possibility of an outflow of resources is
      remote.





(u)
            Income
                tax and workers’ profit sharing -


Income
      tax and workers’ profit sharing and are computed based on individual financial
      statements of Credicorp and each one of its subsidiaries.





Deferred
      income tax and deferred workers’ profit sharing reflect the effects of temporary
      differences between the carrying amounts of assets and liabilities for
      accounting purposes and the amounts determined for tax purposes. Deferred assets
      and liabilities are measured using the tax rates expected to be applied to
      taxable income in the years in which temporary differences are expected to
      be
      recovered or eliminated. The measurement of deferred assets and deferred
      liabilities reflects the tax consequences that arise from the manner in which
      Credicorp and its Subsidiaries expect, at the consolidated balance sheet date,
      to recover or settle the carrying amount of its assets and
      liabilities.


F-30


Notes
      to
      the consolidated financial statements (continued)





Deferred
      tax assets and liabilities are recognized regardless of when the timing
      differences are likely to reverse. Deferred tax assets are recognized when
      it is
      more likely than not that future taxable profit will be available against which
      the temporary difference can be utilized. At the consolidated balance sheet
      date, Credicorp assesses unrecognized deferred assets and the carrying amount
      of
      recognized deferred assets.





Credicorp
      determines its deferred income tax considering the tax rate applicable to its
      undistributed earnings; any additional tax on dividends distribution is recorded
      on the date a liability is recognized.





(v)
            Earnings
                per share -


Basic
      and
      diluted earnings per share are calculated by dividing the net profit
      attributable to Credicorp’s equity holders by the weighted average number of
      ordinary shares outstanding during the year, excluding the average number of
      ordinary shares purchased and held as treasury stock. For the years ending
      December 31, 2007, 2006 and 2005 Credicorp has no financial instruments with
      dilutive effects. Therefore, basic and diluted earnings per share are the same
      for all years presented.




(w)
            Stock
                appreciation rights -


The
      Group
      has granted supplementary profit sharing participation to certain executives
      and
      employees who have at least one year of service in Credicorp or any of its
      subsidiaries, in the form of stock appreciation rights (SARs) over a certain
      number of Credicorp’s shares. Such SARs options are granted at the market price
      of the shares of Credicorp on the date of the grant and are exercisable at
      that
      price, allowing the worker to obtain a gain from the difference between the
      fixed exercise price of the share at the date of execution and the fixed
      exercise price, note 20.





The
      recorded expense in each year for these participations corresponds to the
      estimated market value of the rights that can be exercised by the beneficiaries
      at the consolidated balance sheets date. When Credicorp changes the price or
      the
      terms of the SARs, the additional compensation expense is recorded for an amount
      equal to the difference between the new exercise price and the market price
      of
      the underlying shares.


F-31


Notes
      to
      the consolidated financial statements (continued)





(x)
            Derivative
                financial instruments -


Trading:


Most
      transactions with derivatives, while providing effective economic hedges under
      Group’s risk management positions, do not qualify for hedge accounting under the
      specific rules of IAS 39 and are therefore treated as trading
      derivatives.





Derivative
      financial instruments are initially recognized in the consolidated balance
      sheet
      at cost and subsequently are re-measured at their fair value. Fair values are
      obtained based on the market exchange rates and interest rates. All derivatives
      are carried as assets when fair value is positive and as liabilities when fair
      value is negative. Gain and losses for changes in their fair value are recorded
      in the consolidated income statements.





Hedge:


The
      Group
      makes use of derivative instruments to manage exposures to interest rate and
      foreign currency. In order to manage particular risks, the Group applies hedge
      accounting for transactions which meet the specified criteria.





At
      inception of the hedge relationship, the Group formally documents the
      relationship between the hedged item and the hedging instrument, including
      the
      nature of the risk, the objective and strategy for undertaking the hedge and
      the
      method that will be used to assess the effectiveness of the hedging
      relationship.





Also
      at
      the inception of the hedge relationship, a formal assessment is undertaken
      to
      ensure the hedging instrument is expected to be highly effective in offsetting
      the designated risk in the hedged item. Hedges are formally assessed each
      quarter. A hedge is regarded as highly effective if the changes in fair value
      or
      cash flows attributable to the hedged risk during the period for which the
      hedge
      is designated are expected to offset in a range of 80 percent to 125
      percent.





As
      of
      December 31, 2007, the Group has only interest rate swaps and a cross currency
      interest rate swap derivatives that qualify for hedge purposes, note 21(d),
      classified as cash flow hedge and fair value hedge, respectively (only an
      interest rate swap derivative classified as a cash flow hedge as of December
      31,
      2006). The effective portion of changes in the fair value of these derivatives
      is recognized in equity and profit and loss, respectively, the gain or loss
      relating to the ineffective portion is recognized immediately in the
      consolidated income statements. Amounts accumulated in equity for the cash
      flow
      hedges are recycled to the income statement in the periods in which the hedged
      item affects profit or loss.





For
      designated and qualifying cash flow hedges, the effective portion of the gain
      or
      loss on the hedging instrument is initially recognized directly in equity in
      “Other reserves”. The ineffective portion of the gain or loss on the hedging
      instrument is recognized “immediately in the consolidated income statement in
      the caption “Interest and dividend income”. When the hedged cash flow affects
      the consolidated income statement, the gain or loss on the hedging instrument
      is
      recycled in the corresponding income or expense line of the consolidated income
      statement.





For
      designated and qualifying fair value hedge, the change in the fair value of
      a
      hedging derivative is recognized in the consolidated income statement in the
      caption “Interest and dividend income”. Meanwhile, the change in the fair value
      of the hedged item attributable to the risk hedged is recorded as part of the
      carrying value of the hedged item and is also recognized in the consolidated
      income statement in the caption “Interest and dividend income”. If the hedging
      instrument expires or is sold, terminated or exercised, or where the hedge
      no
      longer meets the criteria for hedge accounting, the hedge relationship is
      terminated.


F-32


Notes
      to
      the consolidated financial statements (continued)





Embedded
      derivates:


Certain
      derivatives embedded in other financial instruments are treated as separate
      derivatives when their economic characteristics and risks are not closely
      related to those of the host contract and the host contract is not carried
      at
      fair value through profit or loss. These embedded derivatives are measured
      at
      fair value with changes in fair value recognized in the consolidated income
      statement unless the Group chooses to designate the hybrid contracts at fair
      value through profit and loss.





The
      Group
      has certificates indexed to its shares price that will be settled in cash and
      credit linked notes obtained to provide financial instruments in the same basis
      to its clients. These instruments have been classified at inception by the
      Group
      as a “financial instrument at fair value though profit or loss”, note
      8.





(y)
            Segment
                reporting -


The
      Group
      considers business segment as a group of assets and operations engaged in
      providing products or services that are subject to risks and returns that are
      different from those of other business segments. A geographical segment is
      engaged in providing products or services within a particular economic
      environment that are subject to risks and return that are different from those
      of segments operating in other economic environment, note 28.





(z)
            Fiduciary
                activities, management of investment and pension funds
                -


The
      Group
      provides custody, trustee, investment management and advisory services to third
      parties that result in the holding of assets on their behalf. These assets
      and
      income arising thereon are excluded from these consolidated financial
      statements, as they are not assets of the Group, note 31.8.





The
      commissions generated for these activities are included on the caption “Other
      income” in the consolidated income statements.


F-33


Notes
      to
      the consolidated financial statements (continued)





(aa)
            Sale
                and repurchase agreements -


Securities
      sold subject to repurchase agreements (‘Repos’) are presented as pledged assets
      when the transfer has the right to sell or repledge the collateral; the
      counterparty liability is included in the caption “Due to banks and
      correspondents”, or “Deposits and obligations”, as appropriate, in the
      consolidated balance sheets.





The
      difference between sale and repurchase price is treated as interest and accrued
      over the life of the agreements using the effective interest
      method.





(ab)
            Operations
                with reinsurers and coinsurers -


During
      the normal course of business, PPS, a subsidiary of Credicorp, is dedicated
      to
      insurance activities and cedes reinsurance to other insurance and reinsurance
      companies to distribute the risks of its insurance contracts and to limit the
      potential losses that might arise from the coverages. PPS is ultimately
      responsible for the payment of benefit payments to the policy holders if the
      reinsurer is not capable of fulfilling said obligation.





The
      accounts receivable from reinsurers and coinsurers originate from the incurred
      claims in which PPS assumes the responsibility for the indemnity in favor of
      the
      policyholder for the ceded reinsurance and coinsurance contracts; these accounts
      receivable are recognized based on contracts or coverage notes (with reinsurers)
      and clauses of coinsurance.





Claims
      originating from accepted reinsurance contracts and executed clauses of
      coinsurance are recognized each time a note of collection is received from
      reinsurance companies.





An
      impairment review is performed at each reporting date or more frequently when
      an
      indication of impairment arises during the reporting year. Impairment occurs
      when objective evidence exists that the Group may not recover outstanding
      amounts under the terms of the contract and when the impact on the amounts
      that
      the Group will receive from the reinsurer can be measured reliably. The
      impairment loss is recorded in the consolidated income statement. Gains or
      losses on buying reinsurance are recognized in the consolidated income statement
      immediately at the date of purchase.





The
      reinsurance and coinsurance include quota share of the excess of loss and
      facultative types of contracts . The
      amounts recoverable from the reinsurers and coinsurers are estimated in a manner
      consistent with the liabilities of the related claims and are presented as
      a
      component of reinsured and coinsured assets.





The
      Group
      also assumes reinsurance risk in the normal course of business for life
      insurance and non-life insurance contracts when applicable. Premiums and claims
      on assumed reinsurance are recognized as income and expenses in the same manner
      as they would be if the reinsurance were considered direct business, taking
      into
      account the product classification of the reinsured business. Reinsurance
      liabilities represent balances due to reinsurance companies. Amounts payable
      are
      estimated in a manner consistent with the associated reinsurance
      contract.


F-34


Notes
      to
      the consolidated financial statements (continued)





The
      accounts payable to reinsurers and coinsurers are based on the evaluation of
      the
      assumed risk, which is determined by PPS (reinsurance) and also includes the
      policyholder’s consent; and are based on contracts or notes of coverage with the
      reinsurer and/or clauses of ceded coinsurance.





Reinsurance
      assets or liabilities are derecognized when the contractual rights are
      extinguished or expire or when the contract is transferred to another
      party.





(ac)
            Cash
                and cash equivalents -


For
      the
      purposes of the consolidated cash flow statement, cash and cash equivalents
      comprise balances of cash and balances with central banks, overnight deposits
      and amounts due from banks with original maturities of three months or less.





(ad)
            Reclassifications
                -


When
      it
      is necessary, the comparative figures have been reclassified to conform to
      the
      current year presentation. The main reclassifications to the report as of
      December 31, 2006 and for the two years ended December 31, 2006 are the
      following:





Reclassifications
      in the consolidated Balance Sheet:




(i)
            As
                of December 31, 2006, the “Financial assets designated at fair value
                through profit or loss” were shown as part of the caption “Other assets”
                on the consolidated balance sheet. As of December 31, 2007, these
                concepts
                are shown separately for a better presentation in accordance with
                the
                accounting policies in force.





(ii)
            As
                of December 31, 2006, the “Financial liabilities designated at fair value
                through profit or loss” were shown as part of the caption “Other
                liabilities” on the consolidated balance sheet. As of December 31, 2007,
                these concepts are shown separately for a better presentation in
                accordance with the accounting policies in
                force.





Reclassifications
      in the consolidated Income statements:





(i)
            As
                of December 31, 2006, the “Net gain on financial assets and liabilities
                designated at fair value through profit and loss” amounted to US$3.5
                million was shown as part of the caption “Other income”; as of December
                31, 2007, this concept is shown separately in the consolidated Income
                statements.




(ii)
            As
                of December 31, 2006, the “Interest and dividend Income” and the “Interest
                expense” were shown in detail on the face of consolidated Income
                statement. As of December 31, 2007, the details of these concepts
                are
                shown as part of the note 22 of the consolidated Income
                statement.





Management
      considers that these reclassifications result in a better presentation of the
      Group activities.





(ae)
            Recently
                issued International Financial Reporting Standards but not yet effective
                -


The
      Group
      has decided not adopted the following standards and interpretations that have
      been issued but not have been effective as December 31, 2007:


F-35


Notes
      to
      the consolidated financial statements (continued)





-
            IFRS
                8, “Operating Segments”, effective for accounting periods beginning on or
                after January 1, 2009.





-
            IAS
                23 (Amendment), “Borrowing costs”, effective for annual periods beginning
                on or after January 1, 2009.





-
            IFRIC
                11, “IFRS 2 - Group Treasury Share Transactions”, effective for annual
                periods beginning on or after March 1,
                2007.





-
            IFRIC
                12, “Service concession arrangements”, effective for annual periods
                beginning on or after January 1,
                2008.





-
            IFRIC
                13, “Customer loyalty programmes”, effective for annual periods beginning
                on or after July 1, 2008.





-
            IFRS
                3 (revised) “Business Combination and Consolidation” and IAS 27 (revised)
                “Separated Financial Statements Consolidation”, effective modifications
                for periods on or after July 1, 2009. This Standard establishes that
                its
                application is not retroactive, therefore, it will not have effect
                on the
                2007 financial statements for the
                Group.





-
            IFRS
                2, “Share-based payments - Vesting conditions and cancellations”,
                effective for financial years beginning on or after January 1, 2009.
                The
                Standard restricts the definition of “vesting condition” to a condition
                that includes an explicit or implicit requirement to provide
                services.





-
            IAS
                1 (revised) “Presentation of financial statements”, effective for
                financial years beginning on or after January 1, 2009. The Standard
                separates owner and non owner-changes in equity. In addition, the
                Standard
                introduces the statement of comprehensive
                income.




-
            IAS
                32 (Amendment) and IAS 1 “Puttable Financial Instruments” (Amendment),
                effective for annual periods on or after January 1,
                2009.





The
      Group
      does not expect significant implications of these standards its financial
      statements.





**4.**
            **Cash
                and due from banks**


(a)
            This
                item is made up as follows:





**2007**
            
            **2006**US$(000)
            
            US$(000)Cash
                and clearing
            
            
            548,298
            
            
            470,584Deposits
                in Peruvian Central Bank - BCRP
            
            
            1,798,581
            
            
            1,405,853Deposits
                in banks
            
            
            720,992
            
            
            853,2033,067,871
            
            
            2,729,640Accrued
                interest
            
            
            5,994
            
            
            3,890**Total**
            
            
            3,073,865
            
            
            2,733,530




F-36


Notes
      to
      the consolidated financial statements (continued)





(b)
            As
                of December 31, 2007 and 2006, cash and due from banks balances include
                approximately US$1,191.2 and US$1,675.1 million, respectively, mainly
                from
                Banco de Crédito del Perú (BCP), which represent the legal reserve that
                the Peruvian banks must maintain for its obligations with the public.
                These funds are deposited in the vaults of the Bank and in the BCRP,
                and
                are within the limits established by prevailing legislation. In addition,
                as of December 31, 2007 the cash and due from banks caption includes
                US$1,000 million, corresponds to overnight operations deposited in
                the
                BCRP, this operation earned interest at a an effective rate of 4.45
                percent and had a 2 days maturity (approximately US$70.0 million
                and
                S/120.0 million, equivalent to US$37.5 million, interest at an annual
                nominal rate of 4.97 percent and an effective rate of 3.75 percent,
                respectively, and 4 days maturity as of December 31,
                2006).





The
      reserve funds maintained with BCRP are not interest-bearing, except for the
      part
      of the mandatory reserve in foreign currency that exceeds the minimum legal
      reserve. As of December 31, 2007, this excess amounts to approximately
      US$1,222.5 million and bear interest in U.S. Dollars at an average annual
      interest rate of 3.5 percent (approximately US$1,068.9 million and earn interest
      in U.S. Dollars at an annual average rate of 2.67 percent as of December 31,
      2006).





In
      January and February 2008, the BCRP modified the procedures and calculation
      basis for the legal reserve, as well as the interest rate that accrues the
      reserve in Peruvian currency and foreign currency that exceeds the minimum
      legal
      reserve. These modifications must be applied as from the legal reserve period
      correspondent to January and February 2008, respectively. In Management’s
      opinion these modifications will not have a significant impact on its
      operations.





**5.**
            **Trading
                securities**


(a)
            This
                item is made up as follows:





**2007**
            
            **2006**US$(000)
            
            US$(000)**Shares
                -**Listed
                equity securities
            
            
            24,947
            
            
            34,692**Bonds
                and similar instruments -**Sovereign
                bonds - Republic of Peru (b)
            
            
            18,806
            
            
            -Peruvian
                treasury bonds (b)
            
            
            2,119
            
            
            -Corporate
                and leasing bonds
            
            
            1,711
            
            
            2,260




F-37


Notes
      to
      the consolidated financial statements (continued)




**2007**
            
            **2006**US$(000)
            
            US$(000)Bank
                certificates
            
            
            1,400
            
            
            1,726Other
            
            
            1,476
            
            
            6,45625,512
            
            
            10,44250,459
            
            
            45,134Accrued
                interest
            
            
            536
            
            
            2**Total**
            
            
            50,995
            
            
            45,136





(b)
            The
                Sovereign bonds are issued in Peruvian currency by the Peruvian Goverment.
                As of December 31, 2007, these bonds accrue interest at annual rates
                that
                range between 5.96 and 6.44 percent and have maturities between February
                2009 and August 2026.





The
      Peruvian treasury bonds are Global bonds issued in foreign currency by the
      Peruvian Government. As of December 31, 2007, these bonds accrue interest at
      an
      annual rate of 6.17 percent and have maturities between May 2008 and May
      2018.


F-38


Notes
      to
      the consolidated financial statements (continued)





**6.**
            **Investments
                available-for-sale**


(a)
            This
                item is made up as follows:





**2007**
            
            **2006****Unrealized gross amount**
            
            
            
            
            
            **Unrealized gross amount****Amortized**
              **cost**
            
            **Gains**
            
            **Losses (b)**
            
            **Estimated**
              **market value**
            
            **Amortized**
              **cost**
            
            **Gains**
            
            **Losses (b)**
            
            **Estimated**
              **market value**US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)**Fixed
                maturity -**BCRP
                certificates of deposit (d)
            
            
            2,410,062
            
            
            224
            
            
            (3,281
            )
            
            2,407,005
            
            
            1,276,503
            
            
            1,143
            
            
            (33
            )
            
            1,277,613Corporate,
                leasing and subordinated bonds (e)
            
            
            1,052,039
            
            
            17,625
            
            
            (9,472
            )
            
            1,060,192
            
            
            845,644
            
            
            15,769
            
            
            (3,179
            )
            
            858,234Government
                treasury bonds (f)
            
            
            670,717
            
            
            59,316
            
            
            (403
            )
            
            729,630
            
            
            476,036
            
            
            59,564
            
            
            (1,620
            )
            
            533,980Participation
                in mutual funds
            
            
            186,311
            
            
            12,209
            
            
            (113
            )
            
            198,407
            
            
            86,422
            
            
            9,920
            
            
            (104
            )
            
            96,238Central
                Banks of Bolivia certificates of deposit
            
            
            121,706
            
            
            38
            
            
            (96
            )
            
            121,648
            
            
            27,833
            
            
            189
            
            
            (1
            )
            
            28,021US
                Government - Sponsored Enterprises (f)
            
            
            86,337
            
            
            2,337
            
            
            (427
            )
            
            88,247
            
            
            153,867
            
            
            1,661
            
            
            (1,299
            )
            
            154,229Restricted
                mutual funds (g)
            
            
            47,347
            
            
            18,255
            
            
            -
            
            
            65,602
            
            
            43,152
            
            
            6,085
            
            
            -
            
            
            49,237Participation
                in RAL’s funds (h)
            
            
            56,641
            
            
            -
            
            
            -
            
            
            56,641
            
            
            51,204
            
            
            -
            
            
            -
            
            
            51,204Negotiable
                certificates of deposit
            
            
            53,236
            
            
            1,850
            
            
            (1
            )
            
            55,085
            
            
            47,225
            
            
            1,104
            
            
            -
            
            
            48,329Bonds
                from international financial institutions (i)
            
            
            45,136
            
            
            143
            
            
            -
            
            
            45,279
            
            
            64,578
            
            
            89
            
            
            (24
            )
            
            64,643Commercial
                papers
            
            
            15,585
            
            
            27
            
            
            (9
            )
            
            15,603
            
            
            15,712
            
            
            35
            
            
            (6
            )
            
            15,741Other
            
            
            21,860
            
            
            1,348
            
            
            (21
            )
            
            23,187
            
            
            26,930
            
            
            2,015
            
            
            (150
            )
            
            28,7954,766,977
            
            
            113,372
            
            
            (13,823
            )
            
            4,866,526
            
            
            3,115,106
            
            
            97,574
            
            
            (6,416
            )
            
            3,206,264**Shares
                -**Listed
                securities (j)
            
            
            107,332
            
            
            167,578
            
            
            (1,701
            )
            
            273,209
            
            
            78,649
            
            
            112,025
            
            
            (235
            )
            
            190,439Non-listed
                securities
            
            
            19,568
            
            
            28,343
            
            
            (3
            )
            
            47,908
            
            
            17,837
            
            
            7,964
            
            
            (57
            )
            
            25,744126,900
            
            
            195,921
            
            
            (1,704
            )
            
            321,117
            
            
            96,486
            
            
            119,989
            
            
            (292
            )
            
            216,1834,893,877
            
            
            309,293
            
            
            (15,527
            )
            
            5,187,643
            
            
            3,211,592
            
            
            217,563
            
            
            (6,708
            )
            
            3,422,447Accrued
                interest
            
            
            
            
            
            
            
            
            
            
            
            40,998
            
            
            
            
            
            
            
            
            
            
            
            28,264**Total**
            
            
            
            
            
            
            
            
            
            
            
            5,228,641
            
            
            
            
            
            
            
            
            
            
            
            3,450,711




F-39


Notes
      to
      the consolidated financial statements (continued)





(b)
            The
                Group has determined that the unrealized losses as of December 31,
                2007
                and 2006, arise from the variation of the interest rates and not
                from
                changes in the risk classification of the investments. Moreover,
                the Group
                has decided and has the capacity to maintain these investments until
                the
                recovery of their fair value which can occur at their maturity; therefore,
                the Group has concluded that no impairment exists on the value of
                these
                investments.





The
      fair
      value and the gross unrealized losses of available-for-sale investments that
      are
      not considered as a permanent loss, classified by the date of such losses,
      are
      as follows:





**2007****Available-for-sale**
              **investments**
            
            **Up
                to 12 months**
            
            **More
                than 1 year**
            
            **Total****Estimate
                fair**
              **value**
            
            **Gross**
              **unrealized**
              **loss**
            
            **Estimate
                fair**
              **value**
            
            **Gross**
              **unrealized**
              **loss**
            
            **Estimate
                fair**
              **value**
            
            **Gross**
              **unrealized**
              **loss**US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)Fixed
                maturity
            
            
            2,044,311
            
            
            9,513
            
            
            140,237
            
            
            4,310
            
            
            2,184,548
            
            
            13,823Shares
            
            
            16,670
            
            
            1,704
            
            
            -
            
            
            -
            
            
            16,670
            
            
            1,704**Total**
            
            
            2,060,981
            
            
            11,217
            
            
            140,237
            
            
            4,310
            
            
            2,201,218
            
            
            15,527





**2006****Available-for-sale**
              **investments**
            
            **Up
                to 12 months**
            
            **More
                than 1 year**
            
            **Total****Estimate
                fair**
              **value**
            
            **Gross**
              **unrealized**
              **loss**
            
            **Estimate
                fair**
              **value**
            
            **Gross**
              **unrealized**
              **loss**
            
            **Estimate
                fair**
              **value**
            
            **Gross**
              **unrealized**
              **loss**US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)Fixed
                maturity
            
            
            571,882
            
            
            3,686
            
            
            214,692
            
            
            2,730
            
            
            786,574
            
            
            6,416Shares
            
            
            1,957
            
            
            29
            
            
            853
            
            
            263
            
            
            2,810
            
            
            292**Total**
            
            
            573,839
            
            
            3,715
            
            
            215,545
            
            
            2,993
            
            
            789,384
            
            
            6,708




F-40


Notes
      to
      the consolidated financial statements (continued)





(c)
            The
                movement of “Other reserves” in equity includes mainly the net change in
                the realized and unrealized gains and losses, net of deferred taxes
                and
                minority interest, and the provision for impairment. This caption
                is as
                follows:





**2007**
            
            **2006**
            
            **2005**US$(000)
            
            US$(000)
            
            US$(000)Net
                unrealized gains, net of taxes and minority interest, note
                18(c)
            
            
            85,129
            
            
            69,411
            
            
            7,121Net
                realized gains, net of taxes and minority interest, note
                18(c)
            
            
            17,634
            
            
            6,620
            
            
            1,572Impairment
                on investments, note 18(c)
            
            
            (5,017
            )
            
            -
            
            
            -





(d)
            BCRP
                certificates of deposit are discounted Peruvian currency instruments
                with
                maturities due within one year. These certificates have been acquired
                in
                public auctions. Annual interest rates in Peruvian currency range
                between
                4.93 and 6.01 percent as of December 31, 2007 (between 4.53 and 5.78
                annual percent as of December 31, 2006) with maturities between January
                2008 and April 2010 (between January 2007 and December 2009, of December
                31, 2006). As of December 31, 2007 and 2006, the Group has entered
                into
                BCRP - Repo transactions in Peruvian currency with its clients using
                these
                securities, for approximately US$242.8 and US$167.7 million, respectively.
                As of December 31, 2007, these operations earn an effective annual
                interest rate range between 5.04 and 6.00 percent and with maturities
                between January 2008 and December 2009 (annual interest rate range
                between
                4.08 and 5.26 percent and with maturities between January 2007 and
                June
                2007 as of December 31, 2006).





(e)
            As
                of December 31, 2007, comprise corporate bonds by US$1,053.7 million,
                leasing bonds by US$4.3 million and subordinated bonds by US$2.2
                million
                (US$849.9, US$3.9 and US$4.4 million, respectively, as of December
                31,
                2006), with maturities between January 2008 and November 2066 (between
                January 2007 and May 2049 as of December 31, 2006). These bonds accrue
                interests at annual effective rates that range between 2.79 and 6.87
                percent for the bonds denominated in Peruvian currency (between 3.36
                and
                7.71 percent as of December 31, 2006), and between 3.13 and 15.63
                percent
                for the bonds denominated in U.S. Dollars (between 2.88 and 11.00
                percent
                as of December 31, 2006).





(f)
            Includes
                principally debt instruments for US$88.2, US$616.1, US$85.4 and US$11.1
                million issued by US Government - Sponsored Enterprises, the Peruvian
                Government, the Colombian Government and the Government of El Salvador,
                respectively, as of December 31, 2007 (US$154.2, US$425.1, US$72.0
                and
                US$14.0 million issued by US Government - Sponsored Enterprises,
                the
                Peruvian Government, the Colombian Government and the Government
                of El
                Salvador, respectively, as of December 31, 2006). Their maturities
                are
                between January 2008 and August 2046 (between February 2007 and August
                2038 as of December 31, 2006) at annual interest rates that range
                between
                3.28 and 9.13 percent (between 2.38 and 11.75 percent as of December
                31,
                2006).


F-41


Notes
      to
      the consolidated financial statements (continued)





As
      of
      December 31, 2007, the Group has entered into Repo transactions in U.S. Dollars
      with its clients using Peruvian Treasury bonds and Colombian Government bonds
      for approximately US$38.9 million and US$59.3 million, respectively
      (approximately US$19.8 million using Peruvian Treasury bonds, as of December,
      31
      of 2006). Such transactions have maturities between October 2008 and December
      2008 (between January 2007 and September 2007, as of December 31, of 2006)
      and
      accrue interest at annual rates that ranges between 5.35 and 6.00 percent
      (between 5.40 and 8.00 percent as of December, 31 of 2006).





(g)
            The
                restricted mutual funds comprise participation quotas on the pension
                funds
                managed by the Group as required by the legal standards of Peru and
                they
                have a restricted disposal. The profitability obtained is the same
                as the
                obtained for the funds managed. The amount as of December 31, 2006,
                approximately US$32.3 million comes from the purchase of AFP Unión Vida
                S.A. as mentioned innote
                2(a).





(h)
            The
                participation quotas in the Fund “Requirement of Cash Assets” (RAL for its
                Spanish denomination), stated in Bolivian pesos, comprises investments
                made by the Group in the Central Bank of Bolivia as collateral for
                the
                deposits maintained with the public. Such fund has restrictions for
                its
                use and it is required for all the banks established in Bolivia.
                The fund
                accrues interest at an average annual rate of 5.42 and 5.61 as of
                December
                31, 2007 and 2006, respectively.





(i)
            Comprise
                mainly of US$32.8 and US$10.0 million of debt instruments issued
                by
                Corporación Andina de Fomento - CAF and by The World Bank, respectively
                (mainly of US$55.1 and US$9.5 million issued by Corporación Andina de
                Fomento - CAF and by The World Bank, respectively, as of December
                31,
                2006). Such bonds have maturities between April 2008 and November
                2011
                (between January 2007 and July 2009 as of December 31, 2006). Annual
                interest rates are between 3.81 and 6.31 percent (between 5.32 and
                5.92
                percent as of December 31, 2006).





As of
        December 31, 2006, the Group had Repo transactions in U.S. Dollars with its
        clients using these securities for approximately US$40.1 million. These
        transactions earned interests at effective rates between 5.32 and 5.92 percent
        and with maturity in January 2007.





(j)
            As
                December 31, 2007, the unrealized gains on trade shares comes principally
                from the shares of Banco de Crédito e Inversiones de Chile - BCI Chile,
                Inversiones Centenario S.A. and Alicorp S.A.A., which amounted to
                US$61.3,
                US$31.2 and US$29.0, respectively (amounted to US$60.2, US$6.2 and
                US$26.9
                million, respectively, as of December 31,
                2006).


F-42


Notes
      to
      the consolidated financial statements (continued)





(k)
            The
                amortized cost and market value of the investments available-for-sale
                classified by maturity are as follows:





**2007**
            
            **2006****Amortized**
              **cost**
            
            **Market**
              **value**
            
            **Amortized**
              **cost**
            
            **Market**
              **value**US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)Up
                to 3 months
            
            
            798,053
            
            
            828,839
            
            
            766,650
            
            
            781,657From
                3 months to 1 year
            
            
            1,961,129
            
            
            1,959,497
            
            
            866,811
            
            
            868,452From
                1 to 3 years
            
            
            922,822
            
            
            925,330
            
            
            458,796
            
            
            460,967From
                3 to 5 years
            
            
            170,413
            
            
            175,532
            
            
            222,215
            
            
            228,805Over
                5 years
            
            
            914,560
            
            
            977,328
            
            
            800,634
            
            
            866,383Without
                maturity (shares)
            
            
            126,900
            
            
            321,117
            
            
            96,486
            
            
            216,183**Total**
            
            
            4,893,877
            
            
            5,187,643
            
            
            3,211,592
            
            
            3,422,447





**7.**
            **Loans,
                net**


(a)
            This
                caption is made up as follows:





**2007**
            
            **2006**US$(000)
            
            US$(000)**Direct
                loans -**Loans
            
            
            5,842,934
            
            
            4,224,102Leasing
                receivables
            
            
            1,118,301
            
            
            675,804Credit
                card receivables
            
            
            677,182
            
            
            438,628Discount
                notes
            
            
            325,047
            
            
            256,534Advances
                and overdrafts
            
            
            127,486
            
            
            84,262Factoring
                receivables
            
            
            109,928
            
            
            89,171Refinanced
                and restructured loans
            
            
            88,451
            
            
            126,006Past
                due and under legal collection loans
            
            
            61,488
            
            
            76,7708,350,817
            
            
            5,971,277**Add
                (less) -**Accrued
                interest
            
            
            66,974
            
            
            49,740Unearned
                interest
            
            
            (166,972
            )
            
            (93,916
            )Allowance
                for loan losses (d)
            
            
            (211,319
            )
            
            (190,278
            )**Total
                direct loans, net**
            
            
            8,039,500
            
            
            5,736,823**Indirect
                loans, note 21(a)**
            
            
            1,564,525
            
            
            1,455,376




F-43




Notes
      to the consolidated financial statements(continued)





(b)
            Loans
                by class as of December 31, 2007 and 2006, are as follows:





**2007**
            
            **2006**US$(000)
            
            US$(000)Commercial
                loans
            
            
            6,222,178
            
            
            4,465,837Residential
                mortgage loans
            
            
            1,253,835
            
            
            981,273Consumer
                loans
            
            
            874,804
            
            
            524,167**Total**
            
            
            8,350,817
            
            
            5,971,277





(c)
            Interest
                rates on loans are set considering the rates prevailing in the markets
                where the Group’s subsidiaries
                operate.





(d)
            The
                movement in the allowance for loan losses (direct and indirect credits)
                is
                shown below:





**2007****Commercial**
              **loans**
            
            **Residential**
              **mortgage**
              **loans**
            
            **Consumer**
              **loans**
            
            **Total**US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)Beginning
                balances
            
            
            183,374
            
            
            9,253
            
            
            17,959
            
            
            210,586Provision
                (recoveries)
            
            
            (5,591
            )
            
            4,884
            
            
            29,146
            
            
            28,439Recoveries
                of written-off loans
            
            
            26,016
            
            
            2,587
            
            
            5,481
            
            
            34,084Loan
                portfolio written-off
            
            
            (22,079
            )
            
            (2,395
            )
            
            (22,792
            )
            
            (47,266
            )Translation
                result
            
            
            2,864
            
            
            125
            
            
            868
            
            
            3,857**Ending
                balances (*)**
            
            
            184,584
            
            
            14,454
            
            
            30,662
            
            
            229,700





**2006****Commercial**
              **loans**
            
            **Residential**
              **mortgage**
              **loans**
            
            **Consumer**
              **loans**
            
            **Total**US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)Beginning
                balances
            
            
            196,059
            
            
            8,528
            
            
            14,049
            
            
            218,636Provision
                (recoveries)
            
            
            (19,118
            )
            
            1,202
            
            
            13,673
            
            
            (4,243
            )Recoveries
                of written-off loans
            
            
            31,546
            
            
            1,064
            
            
            11,674
            
            
            44,284Loan
                portfolio written-off
            
            
            (25,971
            )
            
            (2,447
            )
            
            (21,441
            )
            
            (49,859
            )Translation
                result
            
            
            858
            
            
            906
            
            
            4
            
            
            1,768**Ending
                balances (*)**
            
            
            183,374
            
            
            9,253
            
            
            17,959
            
            
            210,586


F-44




Notes
      to the consolidated financial statements(continued)




**2005****Commercial**
              **loans**
            
            **Residential**
              **mortgage**
              **loans**
            
            **Consumer**
              **loans**
            
            **Total**US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)**Beginning
                balances**
            
            
            243,799
            
            
            10,604
            
            
            17,470
            
            
            271,873Provision
                (recoveries)
            
            
            (24,812
            )
            
            284
            
            
            18,172
            
            
            (6,356
            )Recoveries
                of written-off loans
            
            
            30,497
            
            
            737
            
            
            3,798
            
            
            35,032Allowance
                disposal related to the sale of Banco Tequendama, note
                2(c)
            
            
            (8,871
            )
            
            -
            
            
            (153
            )
            
            (9,024
            )Loan
                portfolio written-off
            
            
            (43,651
            )
            
            (3,094
            )
            
            (24,660
            )
            
            (71,405
            )Translation
                result
            
            
            (903
            )
            
            (3
            )
            
            (578
            )
            
            (1,484
            )**Ending
                balances (*)**
            
            
            196,059
            
            
            8,528
            
            
            14,049
            
            
            218,636





(*)
            The
                movement in the allowance for loan losses includes the allowance
                for
                direct and indirect credits for approximately US$211.3 and US$18.4
                million, respectively, as of December 31, 2007 (approximately US$190.3
                and
                US$20.3 million; and US$197.5 and US$21.1 million, as of December
                31, 2006
                and 2005, respectively). The allowance for indirect loan losses is
                included in the “Other liabilities” caption of the consolidated balance
                sheet, note 13(a).





In
      Management’s opinion, the allowance for loan losses recorded as of December 31,
      2007, 2006 and 2005 has been established in accordance with IAS 39 and it is
      sufficient to cover the losses on the loans portfolio, note 3(i).





(e)
            Part
                of the loan portfolio is collateralized with guarantees received
                from
                clients, which mainly consist of mortgages, trust assignments, credit
                instruments, financial instruments, industrial pledges and mercantile
                pledges.





(f)
                Interest
                    on past due loans and loans in legal collection are recognized
                    when
                    collected.


The
      interest income that would have been recorded for these credits in accordance
      with the terms of the original contract amount approximately US$15.0, US$28.1
      and US$25.8 million as of December 31, 2007, 2006 and 2005,
      respectively.


F-45




(continued)




(g)
            As
                of December 31, 2007 and 2006, the direct gross loan portfolio classified
                by maturity, based in the remaining period to the repayment date
                is as
                follows:





**2007**
            
            **2006**US$(000)
            
            US$(000)**Outstanding
                loans -**Up
                to 1 year
            
            
            4,980,021
            
            
            3,774,711From
                1 to 3 years
            
            
            1,443,070
            
            
            797,458From
                3 to 5 years
            
            
            666,670
            
            
            464,718Over
                5 years
            
            
            1,199,568
            
            
            857,620**Past
                due loans -**Up
                to 4 months
            
            
            20,825
            
            
            20,655Over
                4 months
            
            
            20,122
            
            
            21,613Under
                legal collection loans
            
            
            20,541
            
            
            34,502**Total**
            
            
            8,350,817
            
            
            5,971,277





**8.**
            **Financial
                assets and financial liabilities designated at fair value through
                profit
                and loss**


(a)
            This
                item is made up as follows:





**Assets**
            
            **Liabilities****2007**
            
            **2006**
            
            **2007**
            
            **2006**US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)Indexed
                certificates Citigroup (b)
            
            
            162,592
            
            
            53,116
            
            
            -
            
            
            -Credit
                linked notes (c)
            
            
            50,561
            
            
            -
            
            
            50,561
            
            
            -213,153
            
            
            53,116
            
            
            50,561
            
            
            -





(b)
            In
                July 2006, BCP signed a contract with Citigroup Global Markets Holdings
                Inc., Citigroup Capital Limited and Citigroup Capital Market Inc.,
                with
                the purpose of implementing an economic hedge to offset the volatility
                generated by the liabilities and related expenses that result from
                the
                stock appreciation rights (SARs) of Credicorp, note 20. Likewise,
                in March
                2007, the Bank signed an additional contract with similar conditions
                of
                the contract signed in July 2006.





F-46




(continued)




These
      transactions consist of the purchase of up to 2,100,000 certificates indexed
      to
      the performance of the shares of Credicorp Ltd. (BAP), in the form of
“warrants”, issued by Citigroup, which are equivalent to the same number of
      shares of Credicorp Ltd.. These certificates will be settled in cash only.
      At
      maturity, these certificates will pay a US$ amount equal to the final settlement
      price minus the strike price (US$ 0.0000001) plus the accrued dividend
      adjustment amount, minus the annual fee amount multiplied by the number of
      warrants underlying the certificate. The final settlement price is equivalent
      to
      the daily volume-weighted average of the per share price for the underlying
      equity on each business day, on which the Citigroup or an affiliate of the
      Citigroup effects any transactions with respect to the underlying equity in
      order to unwind its position established and maintained to hedge its price
      and
      market risk with respect to the certificate issued.





This
      program has a maturity of 5 years but can be settled at anytime before its
      maturity, partially or totally. As of December 31, 2007 and 2006, the Group
      has
      acquired 2,097,414 and 1,297,414 certificates, respectively, at a total cost
      of
      US$94.9 and US$49.7 million, respectively (US$45.3 and US$38.3 per certificate
      on average, respectively). As of December 31, 2007 and 2006, the estimate market
      value amounted to US$162.6 million and US$53.1 million, respectively (US$77.5
      and US$41.0 per certificate on average, as of December 31, 2007 and 2006,
      respectively). The difference between the cost and the estimated market value
      of
      approximately US$65.1 and US$3.5 million, respectively, has been recorded in
      the
      caption “Net gain on financial assets and liabilities designated at fair value
      through profit and loss” of the consolidated statements of income, according to
      the accounting principles described in note 3(x).





(c)
            During
                the year 2007, the Group has acquired debt instruments in the form
                of
                "Credit linked notes”, which have been issued by the Bear Stearns Global
                Asset Holdings Ltd. and are linked to debt instruments issued by
                the
                Republic of Peru or any successor of this (credit default swap);
                these
                instruments have been acquired for the purpose of providing financial
                instruments with the same terms, risk and benefits to certain
                clients.





As
      of
      December 31, 2007, the Group has purchased and, at the same time, has received
      deposits from its clients with the same terms of these instruments (“Credit
      linked deposits”) for an amount of approximately US$50.3 million, issued both in
      Peruvian Currency and U.S. Dollars. These instruments have a maturity of 5
      years
      from their issuance date and earn interests on Peruvian Currency at rates
      between 6.95 and 7.20 percent and in U.S. Dollars between 5.50 and 6.38 percent.
      The estimated market value of these instruments is US$50.6. The difference
      between the cost and the estimated market value of the assets and liabilities
      has been recorded in the caption "Net gain on financial assets and liabilities
      designated at fair value through profit and loss" of the consolidated income
      statement, according with the accounting principles described in note
      3(x).


F-47




(continued)




**9.**
            **Receivable
                and payable accounts from insurance
                contracts**


(a)
            This
                caption is made up as follows:





**2007**
            
            **2006**US$(000)
            
            US$(000)**Assets-**Premiums
                and other policies receivable (b)
            
            
            85,495
            
            
            61,279Accounts
                receivable from reinsurers and co-insurers (c)
            
            
            116,141
            
            
            35,181**Total**
            
            
            201,636
            
            
            96,460**Liabilities-**Accounts
                payable to re-insurers and co-insurers (c)
            
            
            21,914
            
            
            25,134





(b)
            The
                premiums and other polices receivable correspond
                to:





**2007**
            
            **2006**US$(000)
            
            US$(000)Property
                and casualty insurance
            
            
            73,524
            
            
            51,941Life
                insurance
            
            
            4,857
            
            
            4,974Health
                insurance
            
            
            7,114
            
            
            4,36485,495
            
            
            61,279





These
      accounts receivable are primarily due in a current period and there have been
      no
      guarantees provided for them.


F-48




(continued)




The
      aging
      detail of the accounts receivable is as follows:





**2007**
            
            **2006**US$(000)
            
            %
            
            US$(000)
            
            %**Non
                past due accounts receivable**
            
            
            71,830
            
            
            84
            
            
            50,521
            
            
            83**Past
                due accounts receivable**Up
                to 30 days
            
            
            6,793
            
            
            8
            
            
            7,117
            
            
            12From
                31 to 60 days
            
            
            2,016
            
            
            2
            
            
            1,379
            
            
            2From
                61 to 90 days
            
            
            1,748
            
            
            2
            
            
            239
            
            
            -More
                than 90 days
            
            
            3,108
            
            
            4
            
            
            2,023
            
            
            385,495
            
            
            100
            
            
            61,279
            
            
            100





(b)
            The
                movement and balance of accounts receivable and payable to reinsurers
                and
                coinsurers are as follows:





Accounts
      receivable:





**2007**
            
            **2006**US$(000)
            
            US$(000)**Beginning
                balances**
            
            
            35,181
            
            
            35,288Reported
                claims of premiums ceded
            
            
            86,458
            
            
            7,423Premiums
                ceded unearned during the year
            
            
            (14,538
            )
            
            (6,823
            )Premiums
                assumed
            
            
            15,811
            
            
            8,435Settled
                claims of premiums ceded
            
            
            14,213
            
            
            7,019Collections
                and other
            
            
            (20,984
            )
            
            (16,161
            )**Ending
                balances**
            
            
            116,141
            
            
            35,181





The
      accounts receivable as of December 31, 2007 include an amount to US$30.9 million
      (US$14.4 million as of December 31, 2006) which correspond to the unearned
      portion of the ceded premiums to the reinsurers.


F-49




(continued)




Accounts
      payable:





**2007**
            
            **2006**US$(000)
            
            US$(000)**Beginning
                balances**
            
            
            25,134
            
            
            36,580Premiums
                ceded to reinsurers
            
            
            53,180
            
            
            70,067Coinsurance
                granted
            
            
            8,153
            
            
            6,430Payments
                and other
            
            
            (64,553
            )
            
            (87,943
            )**Ending
                balances**
            
            
            21,914
            
            
            25,134





The
      accounts payable to reinsurers are primarily related to automatic
      non-proportional contracts (excess of loss) and the proportional facultative
      contracts for ceded premiums. For the facultative contracts, the Company
      transfers to the reinsurers a percentage or amount of an insurance contract
      or
      individual risk, based on the premium and the coverage period.





F-50




(continued)




**10.**
            **Property,
                furniture and equipment,
                net**


(a)
            The
                movement of property, furniture and equipment and accumulated
                depreciation, for the years ended December 31, 2007 and 2006, is
                as
                follows:





**Land**
            
            **Buildings and**
              **other**
              **construction**
            
            **Installations**
            
            **Furniture**
              **and fixtures**
            
            **Computer**
              **hardware**
            
            **Vehicles**
              **and**
              **equipment**
            
            **Work**
              **in progress**
            
            **2007**
            
            **2006**US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)**Cost -****Balance
                as of January 1****st**
            
            
            30,782
            
            
            250,817
            
            
            88,701
            
            
            69,065
            
            
            185,473
            
            
            17,123
            
            
            17,373
            
            
            659,334
            
            
            626,320Additions
            
            
            5,015
            
            
            585
            
            
            7,878
            
            
            3,922
            
            
            13,920
            
            
            3,847
            
            
            18,734
            
            
            53,901
            
            
            43,973Merger
                additions, note 2(a)
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            5,796Sales
                and transfers
            
            
            1,492
            
            
            11,839
            
            
            3,045
            
            
            550
            
            
            (2,261
            )
            
            (333
            )
            
            (19,084
            )
            
            (4,752
            )
            
            (16,755
            )**Balance
                as of December 31**
            
            
            37,289
            
            
            263,241
            
            
            99,624
            
            
            73,537
            
            
            197,132
            
            
            20,637
            
            
            17,023
            
            
            708,483
            
            
            659,334**Accumulated
                depreciation -****Balance
                as of January 1****st**
            
            
            -
            
            
            133,798
            
            
            57,008
            
            
            55,471
            
            
            151,457
            
            
            6,122
            
            
            -
            
            
            403,856
            
            
            378,021Additions
            
            
            -
            
            
            6,823
            
            
            7,192
            
            
            3,380
            
            
            14,299
            
            
            1,841
            
            
            -
            
            
            33,535
            
            
            31,477Merger
                additions, note 2(a)
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            3,736Sales
                and transfers
            
            
            -
            
            
            (575
            )
            
            (387
            )
            
            (422
            )
            
            (2,175
            )
            
            (284
            )
            
            -
            
            
            (3,843
            )
            
            (9,378
            )**Balance
                as of December 31**
            
            
            -
            
            
            140,046
            
            
            63,813
            
            
            58,429
            
            
            163,581
            
            
            7,679
            
            
            -
            
            
            433,548
            
            
            403,856**Net
                book value**
            
            
            37,289
            
            
            123,195
            
            
            35,811
            
            
            15,108
            
            
            33,551
            
            
            12,958
            
            
            17,023
            
            
            274,935
            
            
            255,478





(b)
            Banks,
                financial institutions and insurance companies located in Peru are
                not
                allowed to pledge their fixed assets.





F-51




(continued)




(c)
            As
                of December 31, 2007, Credicorp and its Subsidiaries have property
                available for sale for US$24.4 million approximately, net of its
                accumulated depreciation amounted US$7.3 million approximately (US$25.2
                and US$7.7 million, respectively, as of December 31,
                2006).





(d)
            Management
                periodically review the assets ́ residual value, the useful life and the
                method of depreciation to ensure that the method and period of
                depreciation chosen are consistent with the economic benefits and
                life
                expectations for use of property, furniture and equipment items.
                In
                Management’s opinion, there is no evidence of impairment of property,
                furniture and equipment as of December 31, 2007 and
                2006.





**11.**
            **Assets
                seized, net**


(a)
            The
                Group obtained assets by taking possession of collateral held as
                security,
                or calling upon other credit enhancements included in the caption
“Assets
                seized”. As of December 31, 2007 and 2006, this caption includes land,
                buildings, machinery and equipment received in payment of loans.
                Assets
                seized were recorded at the lower of cost or estimated fair values
                determined on the basis of technical third party appraisals. This
                item is
                made up as follows:





**2007**
            
            **2006**US$(000)
            
            US$(000)Assets
                seized
            
            
            36,481
            
            
            52,432Reserve
            
            
            (16,866
            )
            
            (23,005
            )**Total**
            
            
            19,615
            
            
            29,427





(b)
            The
                changes in the reserve for assets seized as of December 31, 2007,
                2006 and
                2005 are summarized as follows:





**2007**
            
            **2006**
            
            **2005**US$(000)
            
            US$(000)
            
            US$(000)**Opening
                balances**
            
            
            23,005
            
            
            32,096
            
            
            34,666Provision
            
            
            3,057
            
            
            6,387
            
            
            16,959Assets
                retired related to the sell of Banco Tequendama, note 2(c)
            
            
            -
            
            
            -
            
            
            (1,678
            )Sold
                assets
            
            
            (9,196
            )
            
            (15,478
            )
            
            (17,851
            )**Ending
                balances**
            
            
            16,866
            
            
            23,005
            
            
            32,096





F-52




(continued)




**12.**
            **Intangibles
                assets and goodwill, net**


(a)
            Intangibles
                -


Comprise
      mainly the identified intangible assets as result of the acquisition of the
      “client relationships” and other in the purchase of AFP Union Vida, note 2(a),
      and the incurred cost on the development and acquisition of software licenses
      used in the Group operations.





The
      movement of intangible assets for the years ended December 31, 2007 and 2006
      is
      as follows:





**Description**
            
            **Client**
              **Relationships**
            
            **Software**
            
            **Developments**
            
            **Others**
            
            **2007**
            
            **2006**US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)**Cost
                -****Balance
                as of January 1**st
            
            
            88,378
            
            
            40,917
            
            
            32,447
            
            
            10,283
            
            
            172,025
            
            
            51,082Additions
                (i)
            
            
            -
            
            
            14,706
            
            
            15,606
            
            
            92
            
            
            30,404
            
            
            19,767Business
                combination, note 2(a)
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            107,842Retirements
                and write - off (ii)
            
            
            -
            
            
            (7,436
            )
            
            (6,632
            )
            
            (1,124
            )
            
            (15,192
            )
            
            (6,666
            )**Balance
                as of December 31**
            
            
            88,378
            
            
            48,187
            
            
            41,421
            
            
            9,251
            
            
            187,237
            
            
            172,025**Accumulated
                amortization -****Balance
                as of January 1**st
            
            
            1,473
            
            
            20,665
            
            
            18,439
            
            
            4,643
            
            
            45,220
            
            
            26,422Amortization
                of the year
            
            
            3,544
            
            
            6,724
            
            
            4,780
            
            
            2,430
            
            
            17,478
            
            
            18,840Business
                combination, note 2(a)
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            6,437Retirements
                and write - off (ii)
            
            
            -
            
            
            (7,456
            )
            
            (6,677
            )
            
            (1,013
            )
            
            (15,146
            )
            
            (6,479
            )**Balance
                as of December 31**
            
            
            5,017
            
            
            19,933
            
            
            16,542
            
            
            6,060
            
            
            47,552
            
            
            45,220**Net
                book value**
            
            
            83,361
            
            
            28,254
            
            
            24,879
            
            
            3,191
            
            
            139,685
            
            
            126,805


F-53




(continued)




(i)
            During
                the year ended December 31, 2007 Credicorp has capitalized disbursements
                related to the implementation of diverse systems projects, mainly
                those
                related to the ERP project (aimed to the implementation and development
                of
                SAP System) and the SERIVA Project (aimed to the implementation and
                development of the integrated module for operations of Capital Market)
                of
                its subsidiary BCP.





(ii)
            During
                2007, the Group wrote off certain intangibles assets fully amortized
                and
                out of use for US$15.1 million.





(b)
            Goodwill
                -


The
      following is the composition of the caption by subsidiary:





**2007**
            
            **2006**US$(000)
            
            US$(000)**Goodwill
                -**Prima
                AFP (AFP Unión Vida S.A.), note 2(a)
            
            
            44,594
            
            
            49,047Banco
                de Crédito del Perú
            
            
            15,582
            
            
            12,300El
                Pacífico Peruano - Suiza
            
            
            13,007
            
            
            13,007Atlantic
                Security Holding Corporation
            
            
            10,660
            
            
            10,660Coporación
                Novasalud Perú S.A. EPS
            
            
            3,744
            
            
            3,828**Book
                value, net**
            
            
            87,587
            
            
            88,842





Goodwill
      is annually assessed by impairment by Management and the assumptions used for
      the impairment analysis are consistence with previous years. As of December
      31,
      2007 and 2006, it was not necessary to record a provision for impairment of
      goodwill on the Group.





The
      movement of goodwill for the years ended December 31, 2007, 2006 and 2005 as
      follows:





**2007**
            
            **2006**
            
            **2005**US$(000)
            
            US$(000)
            
            US$(000)**Cost
                -****Opening
                balance**
            
            
            88,842
            
            
            33,557
            
            
            33,557Acquisition,
                notes 2(a) and 3(b)
            
            
            3,282
            
            
            56,285
            
            
            -Decreases
            
            
            (4,537
            )
            
            (1,000
            )
            
            -**Final
                balance**
            
            
            87,587
            
            
            88,842
            
            
            33,557


F-54




(continued)




**13.**
            **Other
                assets and other
                liabilities**


(a)
            These
                items are made up as follows:





**2007**
            
            **2006**US$(000)
            
            US$(000)**Other
                assets -****Financial
                instruments:**Accounts
                receivable
            
            
            47,653
            
            
            48,149Derivatives
                receivable (b)
            
            
            45,843
            
            
            19,134Operations
                in process (d)
            
            
            35,786
            
            
            29,752Value
                added tax credit
            
            
            55,989
            
            
            6,220Income
                tax prepayments, net
            
            
            12,397
            
            
            14,509197,668
            
            
            117,764**Non-financial
                instruments:**Deferred
                expenses (c)
            
            
            24,468
            
            
            34,721Deferred
                income tax asset, note 19(c)
            
            
            66,856
            
            
            38,016Deferred
                fees
            
            
            30,634
            
            
            11,339Investments
                in related companies
            
            
            4,599
            
            
            5,657Other
            
            
            16,160
            
            
            12,575142,717
            
            
            102,308**Total**
            
            
            340,385
            
            
            220,072**Other
                liabilities -****Financial
                instruments:**Payroll,
                taxes, salaries and other personnel expenses
            
            
            181,223
            
            
            104,635Accounts
                payable
            
            
            122,029
            
            
            79,039Derivatives
                payable (b)
            
            
            69,662
            
            
            7,774Operations
                in process (d)
            
            
            36,063
            
            
            41,606Contributions
            
            
            31,618
            
            
            12,154Allowance
                for indirect loan losses, note 7(d)
            
            
            18,381
            
            
            20,308458,976
            
            
            265,516**Non-financial
                instruments:**Deferred
                income tax liability, note 19(c)
            
            
            89,825
            
            
            65,810Provision
                for sundry risks (e)
            
            
            24,038
            
            
            17,179Other
            
            
            17,206
            
            
            7,608131,069
            
            
            90,597**Total**
            
            
            590,045
            
            
            356,113




F-55




(continued)




(b)
            The
                table below shows the fair value of derivative financial instruments,
                recorded as assets or liabilities, together with their notional amounts.
                The notional amount, recorded gross, is the amount of a derivative’s
                underlying asset and is the basis upon which changes in the value
                of
                derivatives are measured. The notional amounts indicate the volume
                of
                transactions outstanding at the year end and are not indicative of
                the
                market risk nor the credit risk, note
                21(d).





**2007****Assets**
            
            **Liabilities**
            
            **Notional amount**US$(000)
            
            US$(000)
            
            US$(000)**Derivatives
                held for trading (i) -**Forward
                foreign exchange contracts
            
            
            36,546
            
            
            19,414
            
            
            2,210,179Interest
                rate swaps
            
            
            9,297
            
            
            10,986
            
            
            581,841Currency
                swaps
            
            
            -
            
            
            1,194
            
            
            118,552**Derivatives
                held as cash flow and fair value hedge (ii) -**Interest
                rate swaps
            
            
            -
            
            
            37,433
            
            
            696,000Cross
                Currency Swap
            
            
            -
            
            
            635
            
            
            50,42045,843
            
            
            69,662
            
            
            3,656,992





**2006****Assets**
            
            **Liabilities**
            
            **Notional amount**US$(000)
            
            US$(000)
            
            US$(000)**Derivatives
                held for trading (i) -**Forward
                foreign exchange contracts
            
            
            12,236
            
            
            4,491
            
            
            1,153,192Interest
                rate derivatives
            
            
            3,656
            
            
            1,590
            
            
            298,158Currency
                swaps
            
            
            304
            
            
            1,693
            
            
            48,883**Derivatives
                held as cash flow hedge (ii) -**Interest
                rate swaps
            
            
            2,938
            
            
            -
            
            
            196,00019,134
            
            
            7,774
            
            
            1,696,233





(i)
            The
                Group’s derivative trading activities mainly relate to deals with
                customers which are normally laid off with counterparties. The Group
                may
                also take positions with the expectation of profiting from favorable
                movements in prices, rates or indices. Also included under this heading
                are any derivatives which do not meet IAS 39 hedging
                requirement.




F-56




(continued)




(ii)
            The
                Group is exposed to variability in future interest cash flows on
                non-trading assets and liabilities which bear interest at a variable
                rate.
                The Group uses interest rate swaps as cash flow hedges of these interest
                rate risks. A schedule indicating as of December 31, 2007 the periods
                when
                the hedged cash flows are expected to occur and when they are expected
                to
                affect the consolidated income statement is as
                follows:





**Up to 1 year**
            
            **From 1 to 3**
              **years**
            
            **From 3 to 5**
              **years**
            
            **Over 5 years**US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)Cash
                outflows (liabilities)
            
            
            36,289
            
            
            64,233
            
            
            44,217
            
            
            34,684**Income
                statement**
            
            
            (6,693
            )
            
            (20,503
            )
            
            (7,560
            )
            
            (2,890
            )





As
      of
      December 31, 2007, the transfer of net gain on cash flow hedges to the
      consolidated income statement amounts to US$1.0 million (US$0.8 million as
      of
      December 31, 2006).





(c)
            As
                of December 31, 2007, this caption includes mainly prepaid insurance
                and
                prepaid premiums ceded to reinsurers for US$11.3 million and US$3.4
                million, respectively (US$10.5 million and US$2.0 million, respectively,
                as of December 31, 2006).





(d)
            Operations
                in process include deposits received, loans disbursed, payments collected,
                funds transferred and other similar types of transactions, which
                are
                realized at the end of the month and not reclassified to their final
                consolidated balance sheets accounts until the beginning days of
                the
                following month. These transactions do not affect the Group’s net
                income.





(e)
            The
                movement of the provision for sundry risks for the three years ended
                December 31, 2007, 2006 and 2005 is summarized as
                follows:





**2007**
            
            **2006**
            
            **2005**US$(000)
            
            US$(000)
            
            US$(000)**Beginning
                balances**
            
            
            17,179
            
            
            18,768
            
            
            19,379Provision,
                note 26
            
            
            8,096
            
            
            6,461
            
            
            5,567Decreases
            
            
            (1,237
            )
            
            (8,050
            )
            
            (6,178
            )**Ending
                balances**
            
            
            24,038
            
            
            17,179
            
            
            18,768


F-57




(continued)




Due
      to
      the nature of the business, Credicorp and its Subsidiaries have some pending
      legal claims (lawsuits) related to their activities. The Group records a
      provision for such cases when, in Management’s and its legal advisor’s opinion,
      they will result in additional liabilities for the Group and the amount of
      the
      provision can be fairly estimated. Regarding the other legal claims against
      the
      Group which have not been provided for, in Management’s and its legal advisor’s
      opinion, they will not have a material effect on the Group’s consolidated
      financial statements.





**14.**
            **Deposits
                and obligations**


(a)
            This
                item is made up as follows:





**2007**
            
            **2006**US$(000)
            
            US$(000)Non-interest
                bearing deposits and obligations -In
                Peru
            
            
            2,257,840
            
            
            1,577,315In
                other countries
            
            
            668,468
            
            
            412,2492,926,308
            
            
            1,989,564Interest
                bearing deposits and obligations -In
                Peru
            
            
            6,591,815
            
            
            5,213,044In
                other countries
            
            
            1,781,548
            
            
            1,596,5268,373,363
            
            
            6,809,57011,299,671
            
            
            8,799,134Interest
                payable
            
            
            51,043
            
            
            39,857**Total**
            
            
            11,350,714
            
            
            8,838,991





The
      Group
      has established a policy to remunerate demand deposits and savings accounts
      according to an interest rate scale, based on the average balance maintained
      in
      such accounts. Additionally, according to such policy, it was established that
      the balances that were lower than a specified amount, for each type of account,
      do not bear interest.


F-58




(continued)




(b)
            As
                of December 31, 2007 and 2006, the balance of deposits and obligations
                by
                type of transaction is made up as
                follows:





**2007**
            
            **2006**US$(000)
            
            US$(000)Time
                deposits
            
            
            3,967,864
            
            
            3,218,157Demand
                deposits
            
            
            3,638,593
            
            
            2,564,268Saving
                deposits
            
            
            2,380,904
            
            
            1,951,978Severance
                indemnity deposits
            
            
            896,283
            
            
            775,027Client
                - Repurchase agreements
            
            
            325,908
            
            
            228,165Bank’s
                negotiable certificates
            
            
            90,119
            
            
            61,539**Total**
            
            
            11,299,671
            
            
            8,799,134





(c)
            As
                of December 31, 2007, the total amount of individual time deposits
                and
                bank certificates that exceed US$100,000 are approximately US$3,706.3
                and
                US$49.0 million, respectively (US$2,722.6 and US$35.9 million,
                respectively, as of December 31,
                2006).





(d)
            Interest
                rates applied to different deposits and obligations accounts are
                determined by the Group considering interest rates prevailing in
                the
                market in which the subsidiaries operate.





(e)
            The
                time deposits balance classified by maturity is made up as
                follows:





**2007**
            
            **2006**US$(000)
            
            US$(000)Up
                to 3 months
            
            
            2,944,189
            
            
            2,219,948From
                3 months to 1 year
            
            
            699,479
            
            
            799,584From
                1 to 3 years
            
            
            254,750
            
            
            163,283From
                3 to 5 years
            
            
            30,743
            
            
            29,226More
                than 5 years
            
            
            38,703
            
            
            6,116**Total**
            
            
            3,967,864
            
            
            3,218,157


F-59




(continued)




**15.**
            **Due
                to banks and correspondents and borrowed funds**


(a)
            Due
                to bank and correspondents -


This
      item
      is made up as follows:





**2007**
            
            **2006**US$(000)
            
            US$(000)International
                funds and others (i)
            
            
            1,145,340
            
            
            346,945Promotional
                credit lines (ii)
            
            
            196,204
            
            
            177,900Inter-bank
                funds
            
            
            102,470
            
            
            41,0771,444,014
            
            
            565,922Interest
                payable
            
            
            9,247
            
            
            5,067**Total**
            
            
            1,453,261
            
            
            570,989





(i)
            The
                balance of international funds and others corresponds to the following
                operations:





**2007**
            
            **2006**US$(000)
            
            US$(000)Syndicated
                facility (*)
            
            
            300,000
            
            
            15,000Corporación
                Andina de Fomento - CAF
            
            
            150,000
            
            
            85,000Wachovia
                Bank
            
            
            145,000
            
            
            65,200Banco
                Latinoamericano de Exportaciones - BLADEX
            
            
            80,000
            
            
            105,000JP
                Morgan Chase & Co.
            
            
            50,000
            
            
            -Commerz
                Bank
            
            
            44,780
            
            
            -Citibank
            
            
            40,000
            
            
            -Bayerische
                Landersbank
            
            
            40,000
            
            
            -Scotiabank
                Peru S.A.A.
            
            
            -
            
            
            36,000Other
            
            
            295,560
            
            
            40,745**Total**
            
            
            1,145,340
            
            
            346,945





(*)
            This
                facility is related to three loans of US$100 million each one, with
                three
                months maturity; which will be replaced by a medium-term syndicated
                loan
                currently under negotiation.





These
      funds and other received by the Group, are obtained mainly to finance foreign
      trade operations and working capital, obtained from 31 foreign financial
      entities (11 as of December 31, 2006). As of December 31, 2007 these loans
      have
      maturities between January 2008 and February 2011 (between January and March
      2007 as of December 31, 2006). The annual interest rate range between 4.88
      and
      5.73 (between 3.73 and 5.76 as of December 2006).




F-60




(continued)




Some
      of
      these borrowings include standard covenants related to financial ratios, use
      of
      funds and other administrative matters. In management’s opinion, such covenants
      do not limit the Group’s operations and is in compliance with them as of the
      consolidated balance sheet date.





(ii)
            The
                promotional credit lines represent loans granted to BCP by Corporación
                Financiera de Desarrollo (COFIDE), to promote the development of
                Peru,
                have maturities between March 2008 and December 2027 and their interest
                rates fluctuated between 5.73 and 7.75 percent annual (between January
                2007 and December 2021 and their interest effective rate fluctuated
                between 5.65 and 7.90 percent annual as of December 31, 2006). These
                credit lines are secured by a loan portfolio amounting to US$196.2
                and
                US$177.9 million as of December 31, 2007 and 2006, respectively.
                These
                lines include covenants specifying the use of the funds, financial
                conditions that the borrower must maintain and other administrative
                matters. In Management’s opinion, these covenants do not limit the Group’s
                operations and the Group is in compliance at the consolidated balance
                sheet date.





(b)
            Borrowed
                funds -


The
      balance of the borrowed funds corresponds to the following
      operations:





**2007**
            
            **2006**US$(000)
            
            US$(000)CCR
                Inc. MT-100, Payment rights master Trust -2005
                Series A and B (i)
            
            
            280,000
            
            
            280,0002006
                Series A (ii)
            
            
            90,404
            
            
            90,6122007
                Serie A (iii)
            
            
            350,000
            
            
            -2007
                Serie B (iii)
            
            
            150,000
            
            
            -**Total**
            
            
            870,404
            
            
            370,612





(i)
            Amount
                represents the loan transaction made by BCP in November 2005 for
                US$230.0
                million, related to Series 2005-A Floating Rate Certificates due
                2012, and
                US$50.0 million related to Series 2005-B Floating Rate Certificates
                due
                2009. The certificates bear a variable interest rate of one month
                Libor
                plus 0.21 percent for the 2005-A Series and one month Libor plus
                0.60
                percent for the Series 2005-B. As of December 31, 2007 and December
                31,
                2006, the balance of this obligation amounts to US$280.0 million.
                A
                portion of the loan (70 percent), subject to variable interest rate
                risk,
                has been hedged through an interest rate swap hedge operation for
                a
                notional amount of US$196.0 million, note
                21(d).





(ii)
            Amount
                represents the loan transaction made by the BCP in March 2006 for
                US$100.0
                million, related to Series 2006-A Floating Rate Certificates due
                2016. The
                certificates bear a variable interest rate of one month Libor plus
                0.24
                percent. As of December 31, 2007, the balance of this obligation
                amounts
                to US$90.4 million (US$90.6 million as of December
                31,2006).




F-61




(continued)




For
      the
      US$100.0 million of the Series 2006-A and the US$230.0 and US$50.0 million
      of
      the Series 2005-A and 2005-B, BCP has signed an insurance policy with AMBAC
      Assurance Corporation, which guarantees the timely payment of scheduled
      principal and certain accrued interest to pay the monthly payments with
      maturities in 2016, 2012 and 2009, respectively.





(iii)
            Amount
                represents the loan transaction made by the BCP in July 2007 for
                US$350.0
                million and US$150 million, related to Series 2007-A Floating Rate
                Certificates due 2017 and Series 2007-B Floating Rate Certificates
                due
                2014. The certificates bear a variable interest rate of one month
                Libor
                plus 0.28 percent and 0.25 percents for series 2007-A and 2007-B,
                respectively. These loans, subject to variable interest rate risk,
                have
                been hedged through three interest rate swap hedge operations for
                a
                notional amount of US$500.0 million, note
                21(d).





For
      the
      US$350.0 million of the Series 2007 - A floating Rates Certificates and the
      US$150.0 million of the Series 2007 - B Floating Rates Certificates, BCP has
      signed an insurance policy with AMBAC Assurance Corporation, which guarantees
      the timely payment of scheduled principal and certain accrued interest to pay
      the monthly payments with maturities through November 2017 and November 2014
      respectively.





All
      these
      loans are secured by the collection of BCP’s future inflows from electronic
      messages sent through the Society for Worldwide Interbank Financial
      Telecommunications network and utilized within the network to instruct
      correspondent bank to make a payment of a certain amount to a beneficiary that
      is not a financial institution. In these transactions, Wilmington Trust Company
      acted as Trustee under the trust agreement and Bank of New York as Indenture
      Trustee and administrator of the contracts.





The
      loans
      obtained by the Group include covenants which in Management’s opinion, the Group
      is in compliance at the consolidated balance sheet date.


F-62




(continued)




(c)
            As
                of December 31, 2007 and 2006, maturities of due to bank and
                correspondents and borrowed funds are shown below, based in the remaining
                period to the repayment date:





**Due
                to bank and correspondents******
            
            **2007**
            
            **2006**US$(000)
            
            US$(000)Up
                to 3 months
            
            
            670,153
            
            
            279,802From
                3 months to 1 year
            
            
            307,170
            
            
            126,447From
                1 to 3 years
            
            
            338,802
            
            
            23,457From
                3 to 5 years
            
            
            105,694
            
            
            22,001More
                than 5 years
            
            
            22,195
            
            
            114,215**Total**
            
            
            1,444,014
            
            
            565,922





**Borrowed
                funds**
            
            **2007**
            
            **2006**US$(000)
            
            US$(000)Up
                to 1 year
            
            
            8,165
            
            
            -From
                1 to 3 years
            
            
            148,921
            
            
            61,217From
                3 to 5 years
            
            
            303,476
            
            
            166,817More
                than 5 years
            
            
            409,842
            
            
            142,578**Total**
            
            
            870,404
            
            
            370,612





(d)
            As
                of December 31, 2007, the Group has credit lines granted by several
                local
                and foreign financial institutions amounted to US$1,390.5 million
                (US$1,162.5 million as of December 31, 2006) that are available for
                future
                operating activities or to settle capital
                commitments.


F-63




(continued)




**16.**
            **Technical,
                insurance claims reserves and reserves for unearned
                premiums**


(a)
            This
                item is made up as follows:





**2007****Technical reserves**
            
            **Reserves for direct claims**
            
            **Claims assumed**
            
            **Total**US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)Life insurance
            
            
            500,768
            
            
            50,046
            
            
            -
            
            
            550,814Property
                and casualty insurance
            
            
            109,695
            
            
            92,887
            
            
            21,257
            
            
            223,839Health
                insurance
            
            
            15,766
            
            
            25,059
            
            
            49
            
            
            40,874**Total**
            
            
            626,229
            
            
            167,992
            
            
            21,306
            
            
            815,527





**2006****Technical reserves**
            
            **Reserves for direct claims**
            
            **Claims assumed**
            
            **Total**US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)Life
                insurance
            
            
            442,172
            
            
            41,932
            
            
            794
            
            
            484,898Property
                and casualty insurance
            
            
            67,640
            
            
            39,429
            
            
            2,164
            
            
            109,233Health
                insurance
            
            
            15,029
            
            
            19,053
            
            
            8
            
            
            34,090**Total**
            
            
            524,841
            
            
            100,414
            
            
            2,966
            
            
            628,221





The
      reserves for claims represent the reported claims and the reserve for the
      incurred and non-reported claims by the policyholders chargeable to the Group
      and its Subsidiaries. The reported claims are adjusted on the basis of the
      technical reports received from the adjusters. The claims to be paid by the
      reinsurers and coinsurers are shown as ceded claims.





The
      reserves for direct claims include reserves for incurred and non-reported claims
      for the three types of risks that the Group manages; such amounts at December
      31, 2007 were US$36.6 million (US$27.6 million as of December 31, 2006), of
      which US$14,9 million correspond to life risks, US$3.1 million to property
      and
      casualty and US$18.6 million to health risks (US$11.7, US$3.7 and US$12.2
      million, respectively, as of December 31, 2006). The IBNR reserves have been
      determined on the basis of the Bornhuetter - Ferguson methodology - BF, which
      is
      applied to compare statistical occurrences of claims, excluding payments made
      to
      the policyholders.


F-64




(continued)




During
      2007 and previous years, the differences between the estimations for the
      incurred and non-reported claims and the settled and pending liquidation claims
      have not been significant. In the case of property and casualty and health
      risks, retrospective analysis indicate that the amounts provisioned are greater
      than the settled claims and those pending liquidation by a percentage that
      does
      not exceed 10 percent of the provisioned amounts.





The
      movement for the years ended December 31, 2007 and 2006 of technical and
      insurance claims reserves is as follows:





(b)
            Reserves
                for insurance claims (direct and
                assumed):





**2007****Life insurance**
            
            **Property and**
              **casualty insurance**
            
            **Health insurance**
            
            **Total**US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)**Initial balance**
            
            
            42,726
            
            
            41,593
            
            
            19,061
            
            
            103,380Claims
            
            
            63,744
            
            
            152,351
            
            
            108,767
            
            
            324,862Payments
            
            
            (57,626
            )
            
            (79,817
            )
            
            (103,061
            )
            
            (240,504
            )Translation
                result
            
            
            1,202
            
            
            17
            
            
            341
            
            
            1,560**Final
                balance**
            
            
            50,046
            
            
            114,144
            
            
            25,108
            
            
            189,298





**2006****Life insurance**
            
            **Property and**
              **casualty insurance**
            
            **Health insurance**
            
            **Total**US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)**Initial
                balance**
            
            
            36,839
            
            
            30,690
            
            
            15,139
            
            
            82,668Claims
            
            
            52,713
            
            
            60,285
            
            
            89,797
            
            
            202,795Payments
            
            
            (49,369
            )
            
            (49,386
            )
            
            (86,119
            )
            
            (184,874
            )Translation
                result
            
            
            2,543
            
            
            4
            
            
            244
            
            
            2,791**Final
                balance**
            
            
            42,726
            
            
            41,593
            
            
            19,061
            
            
            103,380


F-65




(continued)




(c)
            Technical
                Reserves:





**2007****Life insurance**
            
            **Property and**
              **casualty insurance**
            
            **Health insurance**
            
            **Total**US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)**Initial
                balance**
            
            
            442,172
            
            
            67,640
            
            
            15,029
            
            
            524,841Accretion
                expenses and other
            
            
            16,499
            
            
            -
            
            
            -
            
            
            16,499Unearned
                premium reserves and annual variation, net
            
            
            220
            
            
            42,055
            
            
            737
            
            
            43,012Insurance
                subscriptions
            
            
            78,342
            
            
            -
            
            
            -
            
            
            78,342Payments
            
            
            (26,868
            )
            
            -
            
            
            -
            
            
            (26,868
            )Translation
                result
            
            
            (9,597
            )
            
            -
            
            
            -
            
            
            (9,597
            )**Final
                balance**
            
            
            500,768
            
            
            109,695
            
            
            15,766
            
            
            626,229





**2006****Life insurance**
            
            **Property and**
              **casualty insurance**
            
            **Health insurance**
            
            **Total**US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)**Initial
                balance**
            
            
            383,158
            
            
            63,976
            
            
            16,292
            
            
            463,426Accretion
                expenses and other
            
            
            12,683
            
            
            -
            
            
            -
            
            
            12,683Unearned
                premium reserves and annual variation, net
            
            
            -
            
            
            3,664
            
            
            (1,263
            )
            
            2,401Insurance
                subscriptions
            
            
            60,227
            
            
            -
            
            
            -
            
            
            60,227Payments
            
            
            (23,356
            )
            
            -
            
            
            -
            
            
            (23,356
            )Translation
                result
            
            
            9,460
            
            
            -
            
            
            -
            
            
            9,460**Final
                balance**
            
            
            442,172
            
            
            67,640
            
            
            15,029
            
            
            524,841





As
      of
      December 31, 2007 and 2006, no additional reserves were needed as a result
      of
      the liability adequacy test. The main assumptions used in estimation of
      annuities, disability and survivor reserves as of December 31, 2007 and 2006,
      were the following:




F-66
 
  (continued)


**Modality**
            **Mortality Table**
            **Technical rates**Life immediate annuity
            RV2004 and B - 85
            4.80% - 5.22% in US$
              4.01% in
                S/Dead
                an Disability Pension System insurance
            RV
                85 MI - 85H and 85M
            Provisional
                regime 3.00%
              Definitive
                regime 2.96% in S/
              Definitive
                regime 4.78% in US$Individual
                Life
            SOC
                80 adjustable
            4.00%
                - 5.00%





The
      mortality tables are those recommended by the regulators in Peru.





The
      sensitivity of the estimates used by the Group to measure its insurance risks
      is
      represented primarily by the life insurance risks, the main variables at the
      consolidated balance sheet date being the interest rates and the mortality
      tables. The Group has evaluated, the changes of the reserves related to life
      insurance (Life immediate annuities) of +/- 100 bps of the interest rates and
      of
      +/- 5 bps of the mortality factors, being the results as follows:





**Variation of the reserve****Variables**
            
            **Amount of the reserve**
            
            **Amount**
            
            **Percentage**US$(000)
            
            US$(000)
            
            %**Portfolio
                in US$ - Basis amount**
            
            
            279,027Changes
                in interest rates: + 100 bps
            
            
            254,058
            
            
            (24,969
            )
            
            (8.95
            )Changes
                in interest rates: - 100 bps
            
            
            308,651
            
            
            29,624
            
            
            10.62Changes
                in Mortality tables to 105%
            
            
            275,951
            
            
            (3,076
            )
            
            (1.10
            )Changes
                in Mortality tables to 95%
            
            
            282,269
            
            
            3,242
            
            
            1.16




**Variation
                of the reserve****Variables**
            
            **Amount of the reserve**
            
            **Amount**
            
            **Percentage**US$ (000)
            
            US$ (000)
            
            %**Portfolio
                in S/ - Basis amount**
            
            
            15,015Changes
                in interest rates: + 100 bps
            
            
            13,353
            
            
            (1,662
            )
            
            (11.07
            )Changes
                in interest rates: - 100 bps
            
            
            16,692
            
            
            1,677
            
            
            11.17Changes
                in Mortality tables to 105%
            
            
            14,926
            
            
            (89
            )
            
            (0.59
            )Changes
                in Mortality tables to 95%
            
            
            15,110
            
            
            95
            
            
            0.63


F-67




(continued)




**17.**
            **Bonds
                and subordinate notes
                issued**


(a)
            This
                item is made up as follows:





**Weighted**
              **average annual interest rate****2007**
            
            **2006**
            
            **Maturity**
            
            **2007**
            
            **2006**%
            
            %
            
            
            
            US$(000)
            
            US$(000)**Bonds -**Corporate
                bonds (i)
            
            
            6.59
            
            
            6.23
            
            Between
                February 2008 and December 2014
            
            
            127,331
            
            
            90,173Leasing
                bonds (ii), (iii)
            
            
            6.10
            
            
            5.53
            
            Between
              January 2008 and November 2010
            
            
            167,255
            
            
            177,952Mortgage
                bonds (iii)
            
            
            7.70
            
            
            7.70
            
            Between
              May 2011 and April 2012
            
            
            20,744
            
            
            23,610Subordinated
                bonds
            
            
            6.72
            
            
            6.89
            
            Between
              January 2008 and May 2027
            
            
            104,841
            
            
            96,758420,171
            
            
            388,493**Subordinated
                notes -**Subordinated
                negotiable certificates notes (iv)
            
            
            
            
            
            
            
            
            
            
            
            113,503
            
            
            120,000Subordinated
                notes (iv)
            
            
            
            
            
            
            
            
            
            
            
            161,308
            
            
            -694,982
            
            
            508,493**Interest
                payable**
            
            
            
            
            
            
            
            
            
            
            
            7,316
            
            
            4,079**Total**
            
            
            
            
            
            
            
            
            
            
            
            702,298
            
            
            512,572


F-68




Notes
        to
        the consolidated financial statements (continued)




(i)
            During
                2007, the Group issued corporate bonds for US$50.1 million (US$47.2
                million corporate bonds issued during 2006) and redeemed bonds for
                US$18.8
                million (US$43.4 million during 2006). The details of the new issuance
                are
                the following:





**Issuance 2007**
            **Amount**
            **Currency**
            **Maturity**
            **Rate**US$(000)
            
            
            (%)**Second
                Program of Corporate Bonds BCP**First
                issuance - Series A (*)
            50,067
            Peruvian
            19/12/2014
            6.84




**Issuance 2006**
            **Amount**
            **Currency**
            **Maturity**
            **Rate**US$(000)
            
            
            (%)**First
                Program of Corporate Bonds BCP**Sixth
                issuance - Series B
            6,258
            Peruvian
            08/08/2008
            6.37Sixth
                issuance - Series A
            6,258
            Peruvian
            27/02/2008
            5.81Eight
                issuance - Series B
            10,951
            Peruvian
            06/09/2010
            6.31Eight
                issuance - Series C
            7,822
            Peruvian
            21/09/2010
            6.25Eight
                issuance - Series D
            5,006
            Peruvian
            11/10/2010
            6.12Ninth
                issuance - Series B
            7,822
            Peruvian
            03/03/2011
            6.93Tenth
                issuance - Series B
            3,129
            Peruvian
            24/03/2013
            8.00**Total**
            47,246





(*)
            Based
                on this issuance, it has been obtained a “Cross currency swap” operation
                from JP Morgan Chase & Co.; with the objective to convert the risk
                profile of the bonds from Peruvian currency to US Dollars. Likewise,
                the
                fixed annual nominal interest rate of 6.84 percent has been changed
                to a
                variable rate of Libor plus 84 basic points, note
                21(d).





(ii)
            During
                the course of 2007, Banco de Crédito del Perú S.A., a subsidiary of
                Credicorp, issued lease bonds amounting to US$39.6 million with maturities
                between June 2009 and January 2010. Also, in 2007, bonds were redeemed
                by
                Credicorp for US$55.0 million (US$41.6 million in
                2006).





(iii)
            Leasing
                and mortgages bonds are collateralized by the fixed assets financed
                by the
                Group with these resources.





(iv)
            In
                October 2007 and November 2006, BCP through its Panama branch, issued
                Subordinated notes and Subordinated negotiable certificates notes
                amounted
                to S/483.3 millions (equivalent to US$161.3 million) and US$120.0
                million
                on the international market with maturities on the years 2022 and
                2021,
                respectively. These debts accrued a fixed annual interest rate of
                7.17 and
                6.95 percent, respectively, for the first 10 years, with payment
                each six
                months. After the first 10 years, the interest rate is changed to
                a
                variable interest rate, established by the market interest rate,
                of the
                sovereign bonds issued by the Peruvian Government which maturity
                is in
                year 2037, plus 150 basis points and Libor plus 2.79 percent,
                respectively, with half-year and quarterly payments. At the end of
                the
                first 10 years, the Bank can redeem 100 percent of the debt, without
                penalties. This subordinated debt has certain financial and operating
                covenants which in Management’s opinion, the Group is in compliance at the
                consolidated balance sheet date.




F-69


Notes
        to
        the consolidated financial statements (continued)




(b)
            The
                bonds and subordinate bonds issued as of December 31, 2007 and 2006,
                classified by maturity are shown
                below:




**2007**
            
            **2006**US$(000)
            
            US$(000)Up
                to 3 months
            
            
            61,188
            
            
            19,316From
                3 months to 1 year
            
            
            85,968
            
            
            56,701From
                1 to 3 years
            
            
            154,953
            
            
            177,873From
                3 to 5 years
            
            
            68,007
            
            
            110,224Over
                5 years
            
            
            324,866
            
            
            144,379**Total**
            
            
            694,982
            
            
            508,493





**18.**
            **Equity**


(a)
            Share
                capital -


As of
        December 31, 2007, 2006 and 2005, 94,382,317 shares of capital stock were
        issued
        at US$5 per share.





(b)
            Treasury
                stock -


Treasury
      stock comprises of the par value of Credicorp’s shares owned by the Group’s
      companies, which amounts 14,620,842 shares as of December 31, 2007 and 2006.
      The
      difference of US$113.4 million, between the acquisition cost of US$186.5 million
      and their par value (US$73.1 million), is recorded as a reduction of the
“Capital surplus”.





(c)
            Reserves
                -


In
      accordance with the local laws that regulate financial and insurance activities
      of the Group’s subsidiaries in Peru, a reserve of up to at least 35 percent of
      their paid-in capital is required to be established through annual transfers
      of
      at least 10 percent of net income. As of December 31, 2007 and 2006, these
      reserves were approximately US$222.7 and US$214.8 million,
      respectively.





F-70


Notes
        to
        the consolidated financial statements (continued)


The
      Shareholders meeting on February 28, 2007 agreed to transfer from “Retained
      earnings” to “Other reserves” an amount of US$107.3 million.





The
      Shareholders Meeting dated on October 26, 2006 agreed to transfer from “Retained
      earnings” to “Other reserves” an amount of US$210.4 million.





Other
      reserves contain the unrealized net gains from available-for-sale investments
      and of the derivatives instruments used as cash flows hedge; this item is broken
      down as follows:





**Unrealized net gains (losses) of:****Available-for-sale investments**
            
            **Derivatives used**
              **as cash flow**
              **hedge**
            
            **Total**US$(000)
            
            US$(000)
            
            US$(000)**Balances
                as of January 1****st****,
                2005**
            
            
            76,131
            
            
            -
            
            
            76,131Unrealized
                net gain from available-for-sale investments Note 6(c)
            
            
            7,121
            
            
            -
            
            
            7,121Transfer
                of net realized gain from investments available-for-sale to the income
                statement, net of realized loss, note 6(c)
            
            
            (1,572
            )
            
            -
            
            
            (1,572
            )Net
                gain on cash flow hedge
            
            
            -
            
            
            1,622
            
            
            1,622**Balances
                as of December 31, 2005**
            
            
            81,680
            
            
            1,622
            
            
            83,302Unrealized
                net gain from available-for-sale investments note 6(c)
            
            
            69,411
            
            
            -
            
            
            69,411Transfer
                of net realized gain from investments available-for-sale to the income
                statement, net of realized loss, note 6(c)
            
            
            (6,620
            )
            
            -
            
            
            (6,620
            )Net
                gain on cash flow hedge, note 13(b) (ii)
            
            
            -
            
            
            1,316
            
            
            1,316**Balances
                as of December 31, 2006**
            
            
            144,471
            
            
            2,938
            
            
            147,409Net
                unrealized gain from available-for-sale investments note 6(c)
            
            
            85,129
            
            
            -
            
            
            85,129Transfer
                of net realized gain from investments available-for-sale to the income
                statement, net of realized loss and impairment, note 6(c)
            
            
            (17,634
            )
            
            -
            
            
            (17,634
            )Transfer
                of impairment on investment available-for-sale to income statement,
                note
                6(c)
            
            
            5,017
            
            
            -
            
            
            5,017Net
                loss on cash flow hedge, note 13(b) (ii)
            
            
            -
            
            
            (40,371
            )
            
            (40,371
            )**Balances
                as of December 31, 2007**
            
            
            216,983
            
            
            (37,433
            )
            
            179,550





F-71


Notes
        to
        the consolidated financial statements (continued)


(d)
            Dividends
                distribution -


During
      2007, 2006 and 2005, Credicorp paid cash dividends, net of the effect of
      treasury shares, amount to approximately US$103.7, US$87.7 and US$63.8 million,
      respectively.





The
      Shareholders Meeting dated on March 28, 2008 agreed to declare a cash dividend
      of US$1.50 per Common Share for a total amount of approximately US$141.6
      million, corresponding to the results of 2007, which was paid in cash on May
      7,
      2008.





In
      accordance with current Peruvian legislation, there is no restriction for
      overseas remittance of dividends or the repatriation of foreign investment.
      The
      dividends paid by the Peruvian subsidiaries to Credicorp are subject to a
      withholding tax of 4.1 percent.





(e)
            Equity
                for legal purposes (Regulatory capital)
                -


As
      of
      December 31, 2007 and 2006, the regulatory capital for the subsidiaries engaged
      in financial and insurance activities amounted to approximately US$1,420.2
      and
      US$1,008.0 million, respectively. This regulatory capital has been determined
      in
      accordance with the Superintendencia de Banca, Seguros y AFP (SBS) of Perú
regulations in force as of such dates. According to the Superintendencia de
      Banca, Seguros y AFP (SBS) regulations, the Group’s regulatory capital exceeds
      in approximately US$350.4 million the minimum regulatory capital required as
      of
      December 31, 2007 (approximately US$157.0 million as of December 31,
      2006).





**19.**
            **Taxes**


(a)
            Credicorp
                is not subject to any type of income taxes or taxes on capital gains,
                equity or property. The Peruvian subsidiaries are subject to corporate
                taxation on income under the Peruvian Tax system. The statutory income
                tax
                rate payable in Peru is 30 percent of taxable profits in 2007, 2006
                and
                2005.





ASHC
      and
      its Subsidiaries are not subject to taxes in the Cayman Islands or Panama.
      For
      the three years ended December 31, 2007, 2006 and 2005, no taxable profits
      were
      generated from its operations in the United States of America.





F-72


Notes
        to
        the consolidated financial statements (continued)


A
      reconciliation of the differences between the statutory income tax rate and
      the
      effective tax rate for the Group is shown as follows:





**2007**
            
            **2006**
            
            **2005****%**
            
            **%**
            
            **%**Peruvian
                statutory tax rate
            
            
            30.00
            
            
            30.00
            
            
            30.00**Increase
                (decrease) in the statutory tax rate due to:**(i)Increase
                (decrease) arising from net income of subsidiaries not domiciled
                in
                Peru
            
            
            0.46
            
            
            4.08
            
            
            1.05(ii)Non-taxable
                costs (income), net
            
            
            (5.76
            )
            
            (4.86
            )
            
            (6.23
            )(iii)   
                 Translation
                results not considered for tax purposes
            
            
            (3.15
            )
            
            (3.96
            )
            
            2.58**Effective
                income tax rate**
            
            
            21.55
            
            
            25.26
            
            
            27.40





(b)
            The
                deferred income tax has been calculated on all temporary differences
                applied at an income tax rate of 30 percent. The income tax expense
                analysis as of December 31, 2007, 2006 and 2005 is as
                follows:





**2007**
            
            **2006**
            
            **2005**US$(000)
            
            US$(000)
            
            US$(000)**Current
                -**In
                Peru
            
            
            114,496
            
            
            85,413
            
            
            80,630In
                other countries
            
            
            2,712
            
            
            2,960
            
            
            4,418117,208
            
            
            88,373
            
            
            85,048**Deferred
                -**In
                Peru
            
            
            (14,921
            )
            
            (4,786
            )
            
            (11,502
            )**Total**
            
            
            102,287
            
            
            83,587
            
            
            73,546





F-73


Notes
        to
        the consolidated financial statements (continued)


(c)
            The
                following table shows a summary of the Group’s deferred income
                taxes:





**2007**
            
            **2006**US$(000)
            
            US$(000)**Assets**Stock
                appreciation rights provision
            
            
            24,001
            
            
            11,047Allowance
                for loan losses, net
            
            
            21,985
            
            
            13,642Reserve
                for sundry risks, net
            
            
            4,550
            
            
            3,412Tax
                loss carry-forward
            
            
            4,451
            
            
            3,244Non-accrued
                interest
            
            
            3,243
            
            
            1,830Other
            
            
            8,626
            
            
            4,841**Deferred
                income tax asset**
            
            
            66,856
            
            
            38,016**Liabilities**Unrealized
                net gains on investments
            
            
            (38,424
            )
            
            (28,330
            )Intangibles
                assets, net
            
            
            (25,205
            )
            
            (26,168
            )Valuation
                of Indexed certificates Citigroup
            
            
            (18,131
            )
            
            (751
            )Leasing
                operations, net
            
            
            (1,250
            )
            
            (2,758
            )Fixed
                assets, net
            
            
            135
            
            
            (2,304
            )Other
            
            
            (6,950
            )
            
            (5,499
            )**Deferred
                income tax liability**
            
            
            (89,825
            )
            
            (65,810
            )**Net
                deferred income tax liability**
            
            
            (22,969
            )
            
            (27,794
            )





A
      portion
      of the Group’s deferred tax asset arises from part of the provisions for sundry
      risks and for loan losses, which are not deductible for income tax purposes
      until they comply with all the requirements established by the tax authorities.
      Therefore, the Group has recorded an accumulated deferred tax asset to reflect
      the future tax benefit of the deduction of these provisions.





Credicorp
      and its subsidiaries have recorded deferred income taxes directly in other
      reserves in the statement of changes in equity of US$10.1, US$9.2, US$1.5
      million, for 2007, 2006 and 2005, respectively. Such amounts comprise the income
      tax effects of unrealized gains and losses on securities available for sale.
      Likewise, in 2006, the Group has recognized the deferred tax liability arising
      from the acquisition of AFP Union Vida (Note 2(a)) by approximately US$25.6
      million.





F-74


Notes
        to
        the consolidated financial statements (continued)


(d)
            The
                Peruvian tax authorities have the right to review and, if necessary,
                amend
                the annual tax returns of the Peruvian subsidiaries up to four year
                after
                its presentation. The major subsidiaries subject to these reviews
                are BCP
                and PPS. In BCP, the fiscal years 2001, 2002, 2003, 2004 and 2005,
                have
                been reviewed by the tax authorities. As a result of such revisions,
                no
                significant additional taxes have arisen in excess of the previously
                accounted for in the Group consolidated financial statements.





The
      years
      2006 and 2007 for BCP and 2004 to 2007 for PPS, are pending of review. Any
      additional tax arising as a result of the tax authority examination will be
      charged to income in the year when such tax is determined. At present, it is
      not
      possible to estimate the adjustments that the tax authorities may determine;
      however, in Management’s opinion, it is not expected that any additional
      assessments will be determined in amounts considered significant to the
      consolidated financial statements as of December 31, 2007 and 2006.





**20.**
            **Stock
                appreciation rights**


As
      indicated in note 3(w), Credicorp has granted stock appreciation rights (SARs)
      to certain key executives and employees who have at least one year’s service in
      Credicorp or any of its subsidiaries. The SARs expire after eight years and
      25
      percent of them may be exercised during each of the first four years of the
      plan.





At
      the
      end of the fourth year and until the expiration date of such SARs, all the
      unexercised SARs may be exercised at any time. As of December 31, 2007 and
      2006,
      410,700 and 948,925 SARs had been exercised under this plan for an approximate
      amount of US$18.8 and US$29.3 million, respectively, plus the income tax on
      behalf of the executives and employees that is assumed by the Group at 30
      percent of the amount paid.





F-75


Notes
        to
        the consolidated financial statements (continued)


The
      number of SARs issued and not exercised as of December 31, 2007 and 2006 and
      the
      prices of such rights as of said dates are as follows:





**Year of**
              **Issuance**
            
            **Number**
              **of outstanding SARs**
              **issued as of**
              **December 31, 2007**
            
            **Number of Vested SARs**
              **as of December 31**
            
            **Exercise price****2007**
            
            **2006**
            
            **2007**
            
            **2006**US$
            
            US$2000
            
            
            49,750
            
            
            49,750
            
            
            68,750
            
            
            8.50
            
            
            8.802001
            
            
            73,000
            
            
            73,000
            
            
            81,500
            
            
            5.30
            
            
            5.602002
            
            
            92,500
            
            
            92,500
            
            
            117,500
            
            
            6.98
            
            
            7.282003
            
            
            151,900
            
            
            151,900
            
            
            220,000
            
            
            8.17
            
            
            8.472004
            
            
            237,700
            
            
            237,700
            
            
            317,984
            
            
            10.99
            
            
            11.292005
            
            
            384,500
            
            
            349,813
            
            
            281,038
            
            
            16.00
            
            
            16.302006
            
            
            497,050
            
            
            310,800
            
            
            215,156
            
            
            25.32
            
            
            25.622007
            
            
            648,250
            
            
            271,656
            
            
            -
            
            
            48.50
            
            
            -2,134,650
            
            
            1,537,119
            
            
            1,301,928





Credicorp’s
      Management has estimated the fair value of the SARs as of December 31, 2007
      and
      2006, using the binomial option pricing model, with assumptions obtained from
      the relevant available market information. The key assumptions used are as
      follows:





**Key
                assumptions**
            
            **2007**
            
            **2006**Expected
                volatility
            
            
            32.70
            %
            
            31.31
            %Risk
                free interest rate
            
            
            3.51
            %
            
            4.71
            %Expected
                lifetime
            
            
            4.92
                years
            
            
            5.05
                yearsQuoted
                price of Credicorp shares at year-end
            
            US$
            76.30
            
            US$
            40.94





F-76


Notes
        to
        the consolidated financial statements (continued)


The
      movement of the SARs for the years ended December 31, 2007 and 2006 are as
      follows:





**2007**
            
            **2006****Outstanding
                SARs**
            
            **Vested**
              **SARs**
            
            **Outstanding
                SARs**
            
            **Vested**
              **SARs****Number**
            
            **Number**
            
            **Amount**
            
            **Number**
            
            **Number**
            
            **Amount**US$(000)
            
            
            
            
            
            US$(000)**Balance
                as of January 1****st**
            
            
            1,858,350
            
            
            1,301,928
            
            
            38,761
            
            
            2,201,275
            
            
            1,658,932
            
            
            22,813Granted
                and vested
            
            
            689,500
            
            
            647,610
            
            
            22,248
            
            
            621,000
            
            
            600,046
            
            
            12,838Exercised
            
            
            (410,700
            )
            
            (410,700
            )
            
            (18,801
            )
            
            (948,925
            )
            
            (948,925
            )
            
            (29,292
            )Decrease
            
            
            (2,500
            )
            
            (1,719
            )
            
            (88
            )
            
            (15,000
            )
            
            (8,125
            )
            
            (232
            )Increase
                in the
              option
                fair value
            
            
            -
            
            
            -
            
            
            47,482
            
            
            -
            
            
            -
            
            
            32,634**Balance
                as of December 31**
            
            
            2,134,650
            
            
            1,537,119
            
            
            89,602
            
            
            1,858,350
            
            
            1,301,928
            
            
            38,761





In
      accordance with the signed contracts, Credicorp assumes the payment of the
      income tax of this benefit on behalf of its executives and employees, which
      corresponds to 30 percent of the benefit. Credicorp estimates the amount over
      the basis of the liability recorded for the vested benefits and records it
      in
      the same caption of this plan.





The
      liabilities recorded for this plan are included in “Payroll taxes, salaries and
      other personnel expenses”, in the caption “Other liabilities” of the
      consolidated balance sheets (note 13 (a)) and the expenses in the caption
“Personal expenses” on the consolidated income statements. In 2007, 2006 and
      2005, the SARs prices were modified and informed to the executives of the
      Group.





During
      2007 and 2006, the Group signed contracts with Citigroup by which has acquired
      certificates linked to the yield of Credicorp’s shares, to obtain an economic
      hedge of the SARs granted to its executives and employees, note 8.





F-77


Notes
        to
        the consolidated financial statements (continued)


**21.**
            **Off-balance
                sheet accounts**


(a)
            This
                item is made up as follows:





**2007**
            
            **2006**US$(000)
            
            US$(000)**Contingent
                credits -**Guarantees
                and stand by letters (c)
            
            
            1,133,476
            
            
            1,204,500Import
                and export letters of credit (c)
            
            
            431,049
            
            
            250,8761,564,525
            
            
            1,455,376Responsabilities
                under credit lines agreements (e)
            
            
            1,082,115
            
            
            814,746Forward
                foreign exchange contracts - sell (d)
            
            
            939,531
            
            
            561,111Forward
                foreign exchange contracts - buy (d)
            
            
            (1,270,648
            )
            
            (592,081
            )Swap
                contracts (d)Interest
                rate swaps
            
            
            1,277,841
            
            
            494,158Currency
                swaps
            
            
            118,552
            
            
            48,883Cross
                currency swap
            
            
            50,420
            
            
            -**Total**
            
            
            3,762,336
            
            
            2,782,193





(b)
            In
                the normal course of its business, the Group’s banking subsidiaries are
                party to transactions with off-balance sheet risk. These transactions
                expose the Group’s banking subsidiaries to credit risk in addition to the
                amounts recognized in the consolidated balance sheets.





Credit
      risk for off-balance sheet financial instruments is defined as the possibility
      of sustaining a loss because any other party to a financial instrument fails
      to
      perform in accordance with the terms of the contract.





The
      exposures to losses under commitments to guarantees, stand by letters, extend
      credit, provide export and import letters of credit and guarantees are
      represented by the contractual amount specified in these instruments. The Group
      applies the same credit policies in making commitments and conditional
      obligations as it does for on-balance sheet instruments (note 7(a)) including
      the requirement to obtain collateral to support off-balance sheet financial
      instruments when it is deemed necessary. Collateral held varies, but may include
      deposits held in financial institutions, securities or other
      assets.





Because
      the fact that many of the contingent transactions are expected to expire without
      any performance being required, the total committed amounts do not necessarily
      represent future cash requirements.





(c)
            Export
                and import letters of credit and guarantees and stand by letters
                are
                conditional commitments issued by the Group to guarantee the performance
                of a customer to a third party. Export and import letters of credit
                are
                mainly issued as credit enhancements for overseas commercial transactions.
                Risks associated with these credits are reduced by the participation
                of
                third parties.




F-78


Notes
      to
      the consolidated financial statements (continued)




(d)
            As
                of December 31, 2007 and December 31, 2006, Credicorp has foreign
                currency
                forwards derivatives (as of December 31, 2006 the Group had a minor
                position on options for exchange rates amounted to US$8.7 million).
                Foreign currency forwards are commitments to buy or sell currency
                at a
                future date at a contracted price. Risk arises from the possibility
                that
                the counter-party to the transaction does not perform as agreed and
                the
                change in the prices of the underlying currencies. As of December
                31, 2007
                and 2006, forward foreign currency purchase and sale agreements referred
                to above include nominal amounts of approximately US$2,210.2 million
                and
                US$1,153.2 million, respectively, which have in general maturities
                of less
                than a year. These agreements are executed to satisfy client requirements
                and are recognized in the consolidated financial statements at their
                fair
                market value. As of December 31, 2007, the forward contracts net
                position
                is an overbuy of U.S. Dollars of approximately US$331.1 million (overbuy
                of approximately US$31.0 million as of December 31,
                2006).





Interest
      rate and currency swaps are derivatives contracts, where counter parties
      exchange variable interest rates for fixed interest rates or different
      currencies, respectively, in the terms and conditions established at the
      contract inception. The risk arises each time the projected level of the
      variable rate during the term of the contract is higher than the swap rate,
      as
      well as from non-compliance with contractual terms by one of the parties. As
      of
      December 31, 2007, the notional amount of open interest rate and currency swap
      contracts was approximately US$1,446.8 million (approximately US$543.0 million
      as of December 31, 2006). These contracts are recorded at fair value, recording
      both realized and unrealized gains and losses in the consolidated income
      statements.





As
      of
      December 31, 2006, the Group has signed one interest rate swap contract for
      a
      notional amount of US$196.0 million designated as a cash flow hedge, because
      it
      reduces the exposure to the variable interest rate risk of a portion of the
      loan
      transaction entered into by the Group on November 2005, Note 15(b). In
      accordance with the hedge operation, the Group pays a fixed rate of 4.57 percent
      and receives a variable rate equal to the monthly Libor interest rate over
      the
      notional amount and the settlements are made on a monthly basis; the instrument
      matures November 2012. The loan and the interest rate swap have the same
      critical terms.




F-79


Notes
        to
        the consolidated financial statements (continued)




As
      of
      December 31, 2007, the Group has other three interest rate swaps, which in
      the
      aggregate amounting to a nominal US$500.0 million (US$250.0, US$100.0 and
      US$150.0 million), designated as a cash flow hedge as a way to reduce the
      Group’s interest rate risk exposure arising from the transaction entered into by
      the Group in June 2007, note 15(b). Based on the hedge terms and conditions,
      the
      Group pays a fixed rate of 5.4775, 5.59 and 5.495 percent, respectively, and
      exchanges it by a floating interest rate equivalent to a monthly Libor on the
      nominal amount. Payments are made monthly. The maturity date of the interest
      rate swap amounting to US$150 million is July 2014 and the maturity of those
      amounting to US$250 and US$100 million is July 2017. The loan and the interest
      rate swaps agreements have the same critical terms.





As
      of
      December 31, 2007, the Group has signed one cross currency swap contract for
      a
      notional amount of US$50.4 million designated as a fair value hedge, because
      it
      reduces the exposure to the change in the far value of the corporate bonds
      issue
      in Peruvian currency, note 17(a)(i). In accordance with the hedge transaction,
      the bonds were converted from Peruvian currency to US Dollars. Likewise, the
      fixed annual nominal interest rate of 6.84 percent has been changed to a
      variable rate of Libor plus 84 basic points. The bonds and the cross currency
      swap have the same critical terms.





The
      fair
      value of the asset and liability forward contracts and swaps as of December
      31,
      2007 amounted approximately US$45.8 and US$69.7 million, respectively
      (approximately US$19.1 and US$7.8 million as of December 31, 2006) and are
      included under the caption “Other assets and other liabilities” of the
      consolidated balance sheets, respectively, note 13(b). As of December 31, 2007
      and 2006, the fair value of the cash flow hedges amounts to a loss of US$37.4
      and a gain of US$2.9 million, respectively, and is recorded in
      equity.





(e)
            The
                responsibilities under credit lines agreements do not correspond
                to
                commitment of obtain credit; and include credit lines and other consumer
                loans that are cancelable upon notification to the consumer.




F-80




Notes
        to
        the consolidated financial statements (continued)


**22.**
            **Interest
                and dividend income and interest
                expenses**


The
      items
      are made up as follow:





**2007**
            
            **2006**
            
            **2005**US$(000)
            
            US$(000)
            
            US$(000)**Interest
                and dividend income**Interest
                loans
            
            
            701,471
            
            
            537,671
            
            
            447,392Interest
                on deposits in banks
            
            
            105,817
            
            
            93,886
            
            
            37,127Interest
                from trading securities
            
            
            3,289
            
            
            2,913
            
            
            2,497Interest
                from investments available-for-sale
            
            
            228,473
            
            
            132,792
            
            
            114,745Dividends
                from trading securities
            
            
            213
            
            
            1,007
            
            
            2Dividends
                from investments available-for-sale
            
            
            8,870
            
            
            8,133
            
            
            3,551Other
                interest income
            
            
            17,841
            
            
            5,600
            
            
            7,118**Total**
            
            
            1,065,974
            
            
            782,002
            
            
            612,432**Interest
                expenses**Interest
                on deposits and obligations
            
            
            (295,750
            )
            
            (189,552
            )
            
            (119,138
            )Interest
                on bonds and subordinated notes issued
            
            
            (33,592
            )
            
            (25,282
            )
            
            (24,332
            )Interest
                on due to banks and correspondents and borrowed funds
            
            
            (83,070
            )
            
            (56,634
            )
            
            (20,288
            )Other
                interest expenses
            
            
            (19,588
            )
            
            (12,010
            )
            
            (9,401
            )**Total**
            
            
            (432,000
            )
            
            (283,478
            )
            
            (173,159
            )





During
      2007, 2006 and 2005 the interest income accrued on impaired financial instrument
      recognized in the consolidated income statement amounted to US$3.5, US$4.1
      and
      US$4.3 million, respectively.




F-81




Notes
        to
        the consolidated financial statements (continued)


**23.**
            **Banking
                services commissions**


Banking
      services commissions for the three years ended December 31, 2007, 2006 and
      2005
      are as follow:





**2007**
            
            **2006**
            
            **2005**US$(000)
            
            US$(000)
            
            US$(000)Maintenance
                of accounts, transfers and credit and debit card services
            
            
            145,926
            
            
            122,534
            
            
            111,074Funds
                management
            
            
            83,726
            
            
            38,728
            
            
            14,469Stock
                exchange, securities and custody
            
            
            11,112
            
            
            7,793
            
            
            5,943Contingent
                credits
            
            
            23,819
            
            
            22,344
            
            
            19,433Collections
            
            
            29,308
            
            
            24,514
            
            
            18,893Other
            
            
            30,870
            
            
            27,865
            
            
            36,351**Total**
            
            
            324,761
            
            
            243,778
            
            
            206,163




F-82




Notes
        to
        the consolidated financial statements (continued)


**24.**
            **Net
                premiums earned**


Premiums
      earned net of insurance contract ceded to reinsurer for the three years ended
      December 31, 2007, 2006 and 2005 are as follows:





**Gross**
              **Premiums (*)**
            
            **Ceded toreinsurers and
                coinsurers, net**
            
            **Assumed**
              **from othercompanies, net**
            
            **Net premiumsearned**
            
            **Percentage**
              **of amountassumed on net
                premiums**US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            %**As
                of December 31, 2007**Life
                insurance
            
            
            89,598
            
            
            (2,658
            )
            
            1,408
            
            
            88,348
            
            
            1.59Accident
                and health insurance
            
            
            129,306
            
            
            (2,488
            )
            
            116
            
            
            126,934
            
            
            0.09Property
                and casualty insurance
            
            
            146,331
            
            
            (71,759
            )
            
            7,418
            
            
            81,990
            
            
            9.05**Total
                premiums**
            
            
            365,235
            
            
            (76,905
            )
            
            8,942
            
            
            297,272
            
            
            3.01**As
                of December 31, 2006**Life
                insurance
            
            
            66,477
            
            
            (2,923
            )
            
            1,228
            
            
            64,782
            
            
            1.90Accident
                and health insurance
            
            
            111,295
            
            
            (2,377
            )
            
            1,526
            
            
            110,444
            
            
            1.38Property
                and casualty insurance
            
            
            138,964
            
            
            (64,767
            )
            
            1,838
            
            
            76,035
            
            
            2.42**Total
                premiums**
            
            
            316,736
            
            
            (70,067
            )
            
            4,592
            
            
            251,261
            
            
            1.83**As
                of December 31, 2005**Life
                insurance
            
            
            46,239
            
            
            (2,537
            )
            
            965
            
            
            44,667
            
            
            2.16Accident
                and health insurance
            
            
            111,785
            
            
            (2,745
            )
            
            1,531
            
            
            110,571
            
            
            1.38Property
                and casualty insurance
            
            
            126,377
            
            
            (61,133
            )
            
            (1,527
            )
            
            63,717
            
            
            (2.40
            )**Total
                premiums**
            
            
            284,401
            
            
            (66,415
            )
            
            969
            
            
            218,955
            
            
            0.44





(*)  Includes
      the annual variation of the technical and unearned premiums
      reserves.




F-83


Notes
        to
        the consolidated financial statements (continued)


25.
            Net
                claims incurred for property and casualty, life and health insurance
                contracts


The
      expenses for claims at December 31, 2007, 2006 and 2005 include the following
      items:





**2007****Life insurance**
            
            **Property andcasualty insurance**
            
            **Health**
              **insurance**
            
            **Total**US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)Gross
                insurance claims
            
            
            63,744
            
            
            152,351
            
            
            108,767
            
            
            324,862Ceded
                claims
            
            
            (52
            )
            
            (84,662
            )
            
            (1,548
            )
            
            (86,262
            )**Net
                insurance claims**
            
            
            63,692
            
            
            67,689
            
            
            107,219
            
            
            238,600





**2006****Life insurance**
            
            **Property andcasualty insurance**
            
            **Health insurance**
            
            **Total**US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)Gross
                insurance claims
            
            
            52,713
            
            
            60,285
            
            
            89,797
            
            
            202,795Ceded
                claims
            
            
            (823
            )
            
            (13,698
            )
            
            (1,752
            )
            
            (16,273
            )**Net
                insurance claims**
            
            
            51,890
            
            
            46,587
            
            
            88,045
            
            
            186,522





**2005****Life****insurance**
            
            **Property andcasualty insurance**
            
            **Health insurance**
            
            **Total**US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)Gross
                insurance claims
            
            
            41,650
            
            
            56,539
            
            
            93,115
            
            
            191,304Ceded
                claims
            
            
            (870
            )
            
            (13,970
            )
            
            (964
            )
            
            (15,804
            )**Net
                insurance claims**
            
            
            40,780
            
            
            42,569
            
            
            92,151
            
            
            175,500





F-84


Notes
        to
        the consolidated financial statements (continued)


**26.**
            **Other
                income and expenses**


The
      items
      are made up as follow:





**2007**
            
            **2006**
            
            **2005**US$(000)
            
            US$(000)
            
            US$(000)**Other
                income**Income
                from the sale of assets seized
            
            
            10,689
            
            
            9,244
            
            
            6,202Real
                estate rental income
            
            
            3,519
            
            
            3,031
            
            
            1,941Recoveries
                of other accounts receivable and other assets
            
            
            3,113
            
            
            1,763
            
            
            4,512Other
            
            
            7,613
            
            
            8,638
            
            
            8,916**Total
                other income**
            
            
            24,934
            
            
            22,676
            
            
            21,571**Other
                expenses**Commissions
                in insurance activities
            
            
            29,135
            
            
            25,555
            
            
            19,289Sundry
                technical insurance expenses
            
            
            21,929
            
            
            10,910
            
            
            8,183Provision
                for sundry risks, note 13(e)
            
            
            8,096
            
            
            6,461
            
            
            5,567Provisions
                for other account receivables
            
            
            2,836
            
            
            3,163
            
            
            7,112Loss
                from fake bills
            
            
            -
            
            
            -
            
            
            1,960Other
            
            
            10,003
            
            
            6,629
            
            
            4,634**Total
                other expenses**
            
            
            71,999
            
            
            52,718
            
            
            46,745




F-85


Notes
        to
        the consolidated financial statements (continued)


**27.**
            **Earnings
                per share**


The
      net
      earnings per ordinary share have been determined over the net income
      attributable to equity holders of Credicorp as follows:





**2007**
            
            **2006**
            
            **2005****Number
                of shares in issue:**Ordinary
                shares, note 18(a)
            
            
            94,382,317
            
            
            94,382,317
            
            
            94,382,317Less
                - treasury shares, note 18(b)
            
            
            (14,620,842
            )
            
            (14,620,842
            )
            
            (14,620,842
            )**Weighted
                outstanding average number of ordinary shares**
            
            
            79,761,475
            
            
            79,761,475
            
            
            79,761,475Net
                income attributable to equity holders of Credicorp (in thousands
                of U.S.
                dollars)
            
            
            350,735
            
            
            230,013
            
            
            181,885Basic
                and diluted earnings per share for net income attributable to equity
                holders of Credicorp (in U.S. Dollars)
            
            
            4.40
            
            
            2.88
            
            
            2.28





**28.**
            **Business
                segments**


The
      Group
      is organized on two main lines of business:





(i)
            Banking
                business - incorporating corporate and private banking services,
                corporate, consumer, micro-business and mortgage loans, credit and
                debit
                cards, savings, deposits, overdrafts, foreign currency and derivative
                products, structure financing, corporate leasing, custody, among
                others.





(ii)
            Insurance
                business - incorporating the issuance of policies of insurance to
                cover
                claims, such as fires, vehicles, transport, personal accidents and
                life
                insurance, among others.





In
      addition the Group, since 2005, maintains activities related to pension fund
      management, note 2(a). Other operations of the Group comprise brokerage, fund
      management and trusteeship.





Transactions
      between the business segments are realized on normal commercial terms and
      conditions.





F-86


Notes
        to
        the consolidated financial statements (continued)
  The
        following table presents the Group’s financial information by industry (primary
        segment) and geographical area (secondary segment) as of December 31, 2007,
        2006
        and 2005:





(i)
            Business
                segments by industry (amount expressed in million of U.S. Dollars):





**External
                income**
            
            **Income from
                other segments**
            
            **Eliminations**
            
            **Total**
              **income (*)**
            
            **Operating
                income (**)**
            
            **Total**
              **assets**
            
            **Fixed**
              **Assets, net**
            
            **Depreciation
                and amortization**
            
            **Other
                provisions (***)****2007**Banking
            
            
            1,402
            
            
            65
            
            
            (65
            )
            
            1,402
            
            
            614
            
            
            16,245
            
            
            218
            
            
            39
            
            
            35Insurance
            
            
            377
            
            
            13
            
            
            (13
            )
            
            377
            
            
            110
            
            
            1,138
            
            
            46
            
            
            4
            
            
            -Pension
                funds
            
            
            55
            
            
            (4
            )
            
            4
            
            
            55
            
            
            (1
            )
            
            244
            
            
            11
            
            
            8
            
            
            -Brokerage
                and other
            
            
            47
            
            
            7
            
            
            (7
            )
            
            47
            
            
            (30
            )
            
            79
            
            
            -
            
            
            -
            
            
            (4
            )**Total
                consolidated**
            
            
            1,881
            
            
            81
            
            
            (81
            )
            
            1,881
            
            
            693
            
            
            17,706
            
            
            275
            
            
            51
            
            
            31**2006**Banking
            
            
            975
            
            
            24
            
            
            (24
            )
            
            975
            
            
            447
            
            
            11,090
            
            
            197
            
            
            36
            
            
            2Insurance
            
            
            316
            
            
            2
            
            
            (2
            )
            
            316
            
            
            115
            
            
            989
            
            
            47
            
            
            4
            
            
            -Pension
                funds
            
            
            23
            
            
            -
            
            
            -
            
            
            23
            
            
            -
            
            
            227
            
            
            11
            
            
            10
            
            
            -Brokerage
                and other
            
            
            58
            
            
            1
            
            
            (1
            )
            
            58
            
            
            1
            
            
            576
            
            
            -
            
            
            -
            
            
            -**Total
                consolidated**
            
            
            1,372
            
            
            27
            
            
            (27
            )
            
            1,372
            
            
            563
            
            
            12,882
            
            
            255
            
            
            50
            
            
            2**2005**Banking
            
            
            712
            
            
            11
            
            
            (11
            )
            
            712
            
            
            400
            
            
            9,893
            
            
            199
            
            
            35
            
            
            11Insurance
            
            
            219
            
            
            14
            
            
            (14
            )
            
            219
            
            
            80
            
            
            786
            
            
            46
            
            
            3
            
            
            -Pension
                funds
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            18
            
            
            2
            
            
            1
            
            
            -Brokerage
                and other
            
            
            166
            
            
            3
            
            
            (3
            )
            
            166
            
            
            3
            
            
            339
            
            
            1
            
            
            -
            
            
            -**Total
                consolidated**
            
            
            1,097
            
            
            28
            
            
            (28
            )
            
            1,097
            
            
            483
            
            
            11,036
            
            
            248
            
            
            39
            
            
            11




F-87


Notes
        to
        the consolidated financial statements (continued)


(ii)
            Segment
                information by geographical area (amounts expressed in million of
                U.S.
                Dollars):





**2007**
            
            **2006**
            
            **2005****Total**
              **income (*)**
            
            **Operatingincome (**)**
            
            **Total**
              **assets**
            
            **Total**
              **income (*)**
            
            **Operating
                income (**)**
            
            **Total**
              **assets**
            
            **Total**
              **income (*)**
            
            **Operating
                income (**)**
            
            **Total**
              **assets**Peru
            
            
            1,573
            
            
            625
            
            
            12,693
            
            
            1,152
            
            
            518
            
            
            9,655
            
            
            947
            
            
            438
            
            
            8,336Panama
            
            
            102
            
            
            10
            
            
            2,506
            
            
            55
            
            
            7
            
            
            839
            
            
            28
            
            
            3
            
            
            593Cayman
                Islands
            
            
            100
            
            
            19
            
            
            1,423
            
            
            81
            
            
            14
            
            
            1,364
            
            
            55
            
            
            13
            
            
            1,238Bolivia
            
            
            78
            
            
            38
            
            
            815
            
            
            62
            
            
            28
            
            
            654
            
            
            50
            
            
            23
            
            
            493Colombia
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -United
                States of America
            
            
            28
            
            
            1
            
            
            269
            
            
            22
            
            
            (4
            )
            
            370
            
            
            17
            
            
            6
            
            
            376**Total
                consolidated**
            
            
            1,881
            
            
            693
            
            
            17,706
            
            
            1,372
            
            
            563
            
            
            12,882
            
            
            1,097
            
            
            483
            
            
            11,036





(*)
            Include
                total interest and dividend income, other income and net premiums
                earned
                from insurance activities.


(**)
            Operating
                income includes the net interest income from banking activities and
                the
                amount of the net premiums earned, less insurance
                claims.


(***)
            Correspond
                to reserves for assets seized and the allowance for loan
                losses.





F-88


Notes
        to
        the consolidated financial statements (continued)


**29.**
            **Transactions
                with related parties**


(a)
            The
                consolidated financial statements of the Group as of December 31,
                2007 and
                2006 include the transactions with related parties of the companies
                mentioned in note 3(b). For its 2007 and 2006 consolidated financial
                statements, the Group defines related parties as related companies,
                the
                Board of Directors, the Group’s key executives (defined as the management
                of Credicorp’s Holding) and enterprises which are controlled by these
                individuals through their majority shareholding or their role as
                chairman
                or CEO in those companies.





(b)
            The
                following table shows the main transactions with related companies
                as of
                December 31, 2007 and 2006.





**Related companies****2007**
            
            **2006**US$(000)
            
            US$(000)Direct
                loans
            
            
            94,102
            
            
            70,636Investments
                available-for-sale
            
            
            90,396
            
            
            62,125Deposits
            
            
            31,689
            
            
            25,074Contingent
                credits
            
            
            14,026
            
            
            13,925Interest
                income related to loans
            
            
            2,288
            
            
            2,097Interest
                expense related to deposits
            
            
            2,009
            
            
            1,505Investments
                available-for-sale cost
            
            
            1,673
            
            
            -Derivatives
                at fair value
            
            
            386
            
            
            179Other
                income
            
            
            1,192
            
            
            953





(c)
            The
                loans, contingent operations and derivative contracts with related
                parties
                are made in accordance with the normal market conditions available
                to
                other customers. Outstanding loans balances at the year-end are granted
                by
                collaterals given by the related part. The loans to related companies
                as
                of December 31, 2007 had a maturity between January 2008 and September
                2017 and an accrued annual interest average of 6.79 percent (as of
                December 31, 2006 had a maturity between January 2007 and August
                2012 and
                an accrued annual interest average of 7.71 percent). As of December
                31,
                2007, the provision for doubtful debts due to related parties amounts
                to
                US$0.2 million (US$0.1 million as of December 31, 2006). This amount
                is
                established based on an assessment performed on a continuous basis
                in the
                financial position of the related party and the market where it
                operates.





(d)
            As
                of December 31, 2007 and 2006, directors, officers and employees
                of the
                Group have been involved, directly and indirectly, in credit transactions
                with certain subsidiaries of the Group, as permitted by Peruvian
                Law
                No26702, which regulates and limits certain transactions with employees,
                directors and officers of a bank or an insurance company in Peru.
                As of
                December 31, 2007 and 2006, direct loans to employees, directors
                and key
                management amounts to US$82.5 and US$59.5 million, respectively and
                are
                paid monthly during their loan enforce and earn interest at similar
                market
                rates for these loans.





The
      Group
      does not maintain loans to the directors and key personnel which are guaranteed
      with shares of Credicorp or other companies of the Group.





F-89


Notes
        to
        the consolidated financial statements (continued)


(e)
            The
                Group key executives compensation as of December 31, 2007 and 2006,
                comprises the following captions:





**2007**
            
            **2006**US$(000)
            
            US$(000)Stock
                appreciation rights, note 20
            
            
            27,113
            
            
            23,206Salaries
            
            
            5,535
            
            
            4,824Directors
                compensations
            
            
            1,162
            
            
            1,173Other
            
            
            12,947
            
            
            6,962**Total**
            
            
            46,757
            
            
            36,165





The
      Group
      key executives compensation comprises all the payments received by them,
      including the taxes assumed by the Group.





F-90


Notes
        to
        the consolidated financial statements (continued)




**30.**
            **Financial
                instruments classification**


The
      following are the carrying amounts of the financial assets and liabilities
      captions in the consolidated balance sheets, by categories as defined under
      IAS
      39:





**As of December 31, 2007**
            
            **As of December 31, 2006****Financial assets/liabilitiesdesignated at fair value**
            
            
            
            
            
            
            
            
            
            **Financial assets/liabilitiesdesignated at fair value****Held fortrading**
            
            **At inception**
            
            **Loans and
                receivables**
            
            **Available forsale securities**
            
            **Liabilities at
                amortizedcost**
            
            **Total**
            
            **Held fortrading**
            
            **At inception**
            
            **Loans and
                receivables**
            
            **Available forsale securities**
            
            **Liabilities atamortizedcost**
            
            **Total**US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)**Assets**Cash
                and due from banks
            
            
            -
            
            
            -
            
            
            3,073,865
            
            
            -
            
            
            -
            
            
            3,073,865
            
            
            -
            
            
            -
            
            
            2,733,530
            
            
            -
            
            
            -
            
            
            2,733,530Trading
                securities
            
            
            50,995
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            50,995
            
            
            45,136
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            45,136Investments
                available-for-sale
            
            
            -
            
            
            -
            
            
            -
            
            
            5,228,641
            
            
            -
            
            
            5,228,641
            
            
            -
            
            
            -
            
            
            -
            
            
            3,450,711
            
            
            -
            
            
            3,450,711Loans,
                net
            
            
            -
            
            
            -
            
            
            8,039,500
            
            
            -
            
            
            -
            
            
            8,039,500
            
            
            -
            
            
            -
            
            
            5,736,823
            
            
            -
            
            
            -
            
            
            5,736,823Financial
                assets designated at fair value through profit and loss
            
            
            -
            
            
            213,153
            
            
            -
            
            
            -
            
            
            -
            
            
            213,153
            
            
            -
            
            
            53,116
            
            
            -
            
            
            -
            
            
            -
            
            
            53,116Premiums
                and other policies receivable
            
            
            -
            
            
            -
            
            
            85,495
            
            
            -
            
            
            -
            
            
            85,495
            
            
            -
            
            
            -
            
            
            61,279
            
            
            -
            
            
            -
            
            
            61,279Accounts
                receivable from re-insurers and co-insurers
            
            
            -
            
            
            -
            
            
            116,141
            
            
            -
            
            
            -
            
            
            116,141
            
            
            -
            
            
            -
            
            
            35,181
            
            
            -
            
            
            -
            
            
            35,181Due
                from customers on acceptances
            
            
            
            
            
            -
            
            
            35,901
            
            
            -
            
            
            -
            
            
            35,901
            
            
            -
            
            
            -
            
            
            45,129
            
            
            -
            
            
            -
            
            
            45,129Other
                assets, note 13
            
            
            45,843
            
            
            -
            
            
            151,825
            
            
            -
            
            
            -
            
            
            197,668
            
            
            19,134
            
            
            -
            
            
            98,630
            
            
            -
            
            
            -
            
            
            117,76496,838
            
            
            213,153
            
            
            11,502,727
            
            
            5,228,641
            
            
            -
            
            
            17,041,359
            
            
            64,270
            
            
            53,116
            
            
            8,710,572
            
            
            3,450,711
            
            
            -
            
            
            12,278,669


F-91


Notes
        to
        the consolidated financial statements (continued)


**As of December 31, 2007**
              
              **As of December 31, 2006****Financial assets/liabilitiesdesignated at fair value**
              
              
              
              
              
              
              
              
              
              **Financial assets/liabilitiesdesignated at fair value****Held fortrading**
              
              **At inception**
              
              **Loans and
                  receivables**
              
              **Available forsale securities**
              
              **Liabilities at
                  amortized**
                **cost**
              
              **Total**
              
              **Held fortrading**
              
              **At inception**
              
              **Loans and
                  receivables**
              
              **Available forsale securities**
              
              **Liabilities at
                  amortized cost**
              
              **Total**US$(000)
              
              US$(000)
              
              US$(000)
              
              US$(000)
              
              US$(000)
              
              US$(000)
              
              US$(000)
              
              US$(000)
              
              US$(000)
              
              US$(000)
              
              US$(000)
              
              US$(000)**Liabilities**
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              -Deposits
                  and obligation
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              11,350,714
              
              
              11,350,714
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              8,838,991
              
              
              8,838,991Financial
                  liabilities designated at fair value through profit and
                  loss
              
              
              -
              
              
              50,561
              
              
              -
              
              
              -
              
              
              -
              
              
              50,561
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -Due
                  to banks and correspondents
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              1,453,261
              
              
              1,453,261
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              570,989
              
              
              570,989Due
                  from customers on acceptances
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              35,901
              
              
              35,901
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              45,129
              
              
              45,129Accounts
                  payable to re-insurers and co-insurers
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              21,914
              
              
              21,914
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              25,134
              
              
              25,134Borrowed
                  funds
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              870,404
              
              
              870,404
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              370,612
              
              
              370,612Bonds
                  and subordinated notes issued
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              702,298
              
              
              702,298
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              512,572
              
              
              512,572Other
                  liabilities, note 13
              
              
              69,662
              
              
              -
              
              
              -
              
              
              -
              
              
              389,314
              
              
              458,976
              
              
              7,774
              
              
              -
              
              
              -
              
              
              -
              
              
              257,742
              
              
              265,51669,662
              
              
              50,561
              
              
              -
              
              
              -
              
              
              14,823,806
              
              
              14,944,029
              
              
              7,774
              
              
              -
              
              
              -
              
              
              -
              
              
              10,621,169
              
              
              10,628,943





F-92


Notes
          to
          the consolidated financial statements (continued)


**31.**
            **Financial
                risk management**


By
      their
      nature, the Group’s activities involved principally the use of financial
      instruments, including derivatives. The Group accepts deposits from customers
      at
      both fixed and floating rates, for various periods, and seeks to earn
      above-average interest margins by investing these funds in high-quality assets.
      The Group seeks to increase these margins by consolidating short-term funds
      and
      lending for longer periods at higher rates, while maintaining sufficient
      liquidity to meet all claims that might fall due.





The
      Group
      also seeks to raise its interest margins by obtaining above-average market
      margins, net of allowances, through lending to commercial and retail borrowers
      with a range of credit standing. Such exposures involve not just on-balance
      sheet loans and advances; the Group also enters into guarantees and other
      commitments such as letters of credit and performance.





The
      Group
      also trades in financial instruments where it takes positions in traded and
      over-the-counter instruments, including derivatives, to take advantage of
      short-term market movements in equities, bonds, currency and interest
      rates.





In
      this
      sense, risk is inherent in the Group’s activities but it is managed through a
      process of ongoing identification, measurement and monitoring, subject to risk
      limits and other controls. This process of risk management is critical to the
      Group’s continuing profitability and each individual within the Group is
      accountable for the risk exposures relating to his or her responsibilities.
      The
      Group is exposed to credit risk, liquidity risk and market risk, the latter
      being subdivided into trading and non-trading risks. It is also subject to
      operating risks.





The
      independent risk control process does not include business risks such as changes
      in the environment, technology and industry. They are monitored through the
      Group’s strategic planning process.





(a)
            Risk
                management structure-


The
      Board
      of Directors of the Group and of each subsidiary is ultimately responsible
      for
      identifying and controlling risks; however, there are separate independent
      bodies in the major subsidiaries (BCP, PPS and ASH) responsible for managing
      and
      monitoring risks, as further explained to follow:





(i)
            Board
                of Directors


The
      Board
      of Directors of each major subsidiary is responsible for the overall risk
      management approach and responsible for the approval of the policies and
      strategies currently in place. The Board provides written principles for overall
      risk management, as well as written policies covering specific areas, such
      as
      foreign exchange risk, interest rate risk, credit risk, use of derivative
      financial instruments and non-derivative financial instruments.




F-93




Notes
        to
        the consolidated financial statements (continued)


(ii)
            Risk
                Management Committee


The
      Risk
      Management Committee of each major subsidiary is responsible for the strategy
      to
      be used in mitigating risks as well as setting forth the overall principles,
      policies and limits for the different type of risk that face the Group. It
      is
      responsible for monitoring fundamental risk issues and manages and monitors
      the
      relevant risk decisions.





(iii)
            Risk
                Management Department


The
      Risk
      Management Department of each major subsidiary is responsible for developing,
      implementing and improving, on a continuous basis, the Group’s risk management
      infrastructure by adopting and incorporating global best practices and following
      established policies.





(iv)
            Internal
                Audit


Risk
      management processes throughout the Group are monitored by the internal audit
      function, which examines both the adequacy of the procedures and the compliance
      of them. Internal Audit discusses the results of all assessments with
      Management, and reports its findings and recommendations to the Credicorp’s
      Audit Committee and the Board of Directors.





(v)
            Treasury
                and Foreign Exchange Departments


Treasury
      Department is responsible for managing the Group’s assets and liabilities and
      the overall financial structure. It is also primarily responsible for the
      management of funding and liquidity risks of the Group as
      well
      as the investment, forward and spot portfolios, assuming the related liquidity,
      interest rate and exchange rate risks, under the policies and limits currently
      effective and established by the Group.





(b)
            Risk
                measurement and reporting systems-


The
      Group's risks are measured using a method which reflects both the expected
      loss
      likely to arise in normal circumstances and unexpected losses, which are an
      estimate of the ultimate actual loss based on statistical models. The models
      make use of probabilities derived from historical experience, adjusted to
      reflect the economic environment. The Group also runs worse case scenarios
      that
      would arise in the event that extreme events which are unlikely to occur do,
      in
      fact, occur.





Monitoring
      and controlling risks is primarily performed based on limits established by
      the
      Group. These limits reflect the business strategy and market environment of
      the
      Group as well as the level of risk that the Group is willing to accept. In
      addition, the Group monitors and measures the overall risk bearing capacity
      in
      relation to the aggregate risk exposure across all risk types and
      activities.





Information
      compiled from all the Group’s subsidiaries is examined and processed in order to
      analyze, control and identify early risks. This information is presented and
      explained to the Board of Directors, the Risk Management Committee, and all
      relevant members of the Group. The report includes aggregate credit exposure,
      credit metric forecasts, hold limit exceptions, VaR (Value at Risk), liquidity
      ratios and risk profile changes. Senior management assesses the appropriateness
      of the allowance for credit losses on a quarterly basis.


F-94




Notes
        to
        the consolidated financial statements (continued)


(c)
            Risk
                mitigation-


As
      part
      of its overall risk management, the Group uses derivatives and other instruments
      to manage exposures resulting from change in interest rates, foreign currencies,
      equity risk and credit risk.





The
      risk
      profile is assessed before entering into hedge transactions, which are
      authorized by the appropriate level of seniority within the Group. The
      effectiveness of hedges is assessed by the Risk Management Department (based
      on
      economic considerations rather than the IFRS hedge accounting regulations).
      The
      effectiveness of all the hedge relationships is monitored by the unit monthly.
      In situations of ineffectiveness, the Group will enter into a new hedge
      relationship to mitigate risk on a continuous basis.





The
      Group
      actively uses collateral to reduce its credit risks.





(d)
            Excessive
                risk concentration-


Concentrations
      arise when a number of counterparties are engaged in similar business
      activities, or activities in the same geographic region, or have similar
      economic, political or other conditions. Concentrations indicate the relative
      sensitivity of the Group’s performance to developments affecting a particular
      industry or geographical location.





In
      order
      to avoid excessive concentrations of risk, the Group’s policies and procedures
      include specific guidelines to focus on maintaining a diversified portfolio.
      Identified concentrations of credit risks are controlled and managed
      accordingly.





**31.1**
            **Credit
                risk -**


(a)
            The
                Group takes on exposure to credit risk, which is the risk that a
                counterparty will cause a financial loss for the Group by failing
                to
                discharge an obligation. Credit risk is the most important risk for
                the
                Group’s business; management therefore carefully manages its exposure to
                credit risk. Credit exposures arise principally in lending activities
                that
                lead to loans, and investment activities that bring debt securities
                and
                other bills into the Group’s asset portfolio. There is also credit risk in
                off-balance sheet financial instruments, such as contingent credits,
                which
                expose the Group to similar risks to loans and these are mitigated
                by the
                same control processes and policies. Likewise, credit risk arising
                from
                derivative financial instruments is, at any time, limited to those
                with
                positive fair values, as recorded in the consolidated balance
                sheet.




F-95




Notes
        to
        the consolidated financial statements (continued)




Impairment
      provisions are provided for losses that have been incurred at the consolidated
      balance sheet date. Significant changes in the economy or in the particular
      situation of an industry segment that represents a concentration in the Group’s
      portfolio could result in losses that are different from those provided for
      at
      the balance consolidated sheet date.





The
      Group
      structures the levels of credit risk it undertakes by placing limits on the
      amount of risk accepted in relation to one borrower or groups of borrowers,
      and
      to geographical and industry segments. Such risks are monitored on a revolving
      basis and subject to a frequent review. Limits in the level of credit risk
      by
      product, industry sector and by country are approved by the Board of
      Directors.





Exposure
      to credit risk is managed through regular analysis of the ability of borrowers
      and potential borrowers to meet interest and capital repayment obligations
      and
      by changing these lending limits where appropriate. Some other specific control
      and mitigation measures are outlined below:





(i)
            Collateral


The
      Group
      employs a range of policies and practices to mitigate credit risk. The most
      traditional of these is the taking of security for funds advances, which is
      common practice. The Group implements 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; liens over financial instruments such as debt securities and
      equities.





Longer-term
      finance and lending to corporate entities are generally secured; revolving
      individual credit facilities are generally unsecured. In addition, in order
      to
      minimize the credit loss the Group will seek additional collateral from the
      counterparty as soon as impairment indicators are noticed for the relevant
      individual loans and advances.





Collateral
      held as security for financial assets other than loans is determined by the
      nature of the instrument. Debt securities, treasury and other eligible bills
      are
      generally unsecured, with the exception of asset-backed securities and similar
      instruments, which are secured by portfolios of financial
      instruments.





Management
      monitors the market value of collateral, requests additional collateral in
      accordance with the underlying agreement, and monitors the market value of
      collateral obtained during its review of the adequacy of the allowance for
      impairment losses. It is the Group’s policy to dispose of repossessed properties
      in an orderly fashion. The proceeds are used to reduce or repay the outstanding
      claim. In general, the Group does not occupy repossessed properties for business
      use.


F-96




Notes
        to
        the consolidated financial statements (continued)


(ii)
            Derivatives


The
      Group
      maintains strict control limits on net open derivative positions (i.e., the
      difference between purchase and sale contracts), by both amount and term. At
      any
      one time, the amount subject to credit risk is limited to the current fair
      value
      of instruments that are favorable to the Group (ie, assets where their fair
      value is positive), which in relation to derivatives is only a small fraction
      of
      the contract, or notional values used to express the volume of instruments
      outstanding. This credit risk exposure is managed as part of the overall lending
      limits with customers, together with potential exposures from market movements.
      Collateral or other security is not usually obtained for credit risk exposures
      on these instruments.





Settlement
      risk arises in any situation where a payment in cash, securities or equities
      is
      made in the expectation of a corresponding receipt in cash, securities or
      equities. Daily settlement limits are established for each counterparty to
      cover
      the aggregate of all settlement risk arising from the Group’s market
      transactions on any single day.





(iii)
            Credit-related
                commitments


The
      primary purpose of these instruments is to ensure that funds are available
      to a
      customer as required. Guarantees and standby letters of credit carry the same
      credit risk as loans. Documentary and commercial letters of credit - which
      are
      written undertakings by the Group on behalf of a customer authorizing a third
      party to draw drafts on the Group up to a stipulated amount under specific
      terms
      and conditions - are collateralized by the underlying shipments of goods to
      which they relate and therefore carry less risk than a direct loan. The Group
      is
      under no commitments to extend credit.





In
      order
      to manage the credit risk, as part of the Risk Management Department of the
      Group, see note 31(a), exist a Risk Management Service which its major functions
      are implementing methodologies and statistical models for the measurement of
      credit risk exposures, developing and applying methodologies for the calculation
      of the risk-rated, both at the corporate and business unit levels, performing
      analysis of credit concentrations and verifying that the credit exposures are
      within the established limits. Also, suggesting the global risk exposures by
      economic sector, time term, among others.





Also,
      a
      Risk Assessment Committee has been established comprising 3 directors, the
      Chief
      Executive Officer, the Chief Financial Officer, the Deputy Chief Executive
      Officer and the Risk Management Department Manager. Each of the financial
      indicators prepared by the Risk Management Service are analyzed by this
      committee on a quarterly basis to subsequently evaluate the policies, procedures
      and limits currently effective at the Group to make sure an efficient and
      effective risk management is always in place.


F-97




Notes
        to
        the consolidated financial statements (continued)




At
      the
      same time, the Group has a Credit Division, which establishes the overall credit
      policies for each and all the businesses in which the Group decides to take
      part. These policies are set forth based on the guidelines established by the
      Board of Directors and keeping in mind the statutory financial laws and
      regulations. The main activities of this function are to establish the client
      credit standards and guidelines (evaluation, authorization and control), to
      follow the guidelines established by the Board of Directors and General
      Management as well as those established by governmental regulatory bodies,
      to
      review and authorize credit applications, up to the limit within the scope
      of
      its responsibilities and to submit to upper hierarchies those credit
      applications exceeding the established limits, to monitor credit-granting
      activities within the different autonomous bodies, among others.





(b)
            The
                table below shows the maximum exposure to credit risk for the components
                of the consolidated balance sheet, including derivatives at fair
                value as
                of December 31, 2007 and 2006. The maximum exposure is shown gross,
                before
                the effect of mitigation through any
                collateral:





**2007**
            
            **2006**US$(000)
            
            US$(000)**Assets**Cash
                and due from banks
            
            
            3,073,865
            
            
            2,733,530Trading
                securities
            
            
            50,995
            
            
            45,136Investments
                available-for-sale
            
            
            5,228,641
            
            
            3,450,711Loans,
                net
            
            
            8,039,500
            
            
            5,736,823Financial
                assets designated at fair value through profit and loss
            
            
            213,153
            
            
            53,116Premiums
                and other policies receivable
            
            
            85,495
            
            
            61,279Accounts
                receivable from re-insurersand
                co-insurers
            
            
            116,141
            
            
            35,181Due
                from customers on acceptances
            
            
            35,901
            
            
            45,129Other
                assets, note 13
            
            
            197,668
            
            
            117,76417,041,359
            
            
            12,278,669**Off-balance
                instruments**Contingent
                credits
            
            
            1,564,525
            
            
            1,455,376**Total**
            
            
            18,605,884
            
            
            13,734,045




F-98




Notes
        to
        the consolidated financial statements (continued)




The
      above
      table represents a worse case scenario of credit risk exposure to the Group
      at
      December 31, 2007 and 2006, without taking account of any collateral held or
      other credit enhancements attached. For on-balance-sheet assets, the exposures
      set out above are based on net carrying amounts as reported in the consolidated
      balance sheets. As shown above, as of December 31, 2007, 52 percent of the
      total
      maximum exposure is derived from loans (52 percent as of December 31, 2006);
      28
      percent represents investments in trading securities and available for sale
      (25
      percent as of December 31, 2006) and 17 percent represents cash and due from
      banks (20 percent as of December 31, 2006). Management is confident in its
      ability to continue to control and sustain minimal exposure of credit risk
      to
      the Group resulting from both its loan portfolio and investments based on the
      following:





-
            97
                percent of the loans portfolio is categorized in the top two grades
                of the
                internal rating system as of December 31, 2007 (96 percent as of
                December
                31, 2006);





-
            94
                percent of the loan portfolio is considered to be neither past due
                nor
                impaired as of December 31, 2007 (93 percent as of December 31,
                2006);





-
            75
                percent of the investments have at least investment grade credit
                rating
                (BBB- or higher) or are debt securities issued by Banco Central de
                Reserva
                del Peru - BCRP (not rated) as of December 31, 2007 (74 percent as
                of
                December 31, 2006); and





-
            18
                percent and 59 percent of the cash and due from banks represent amounts
                deposited in the vaults of the Group and in the Peruvian Central
                Bank
                (included overnight operations), respectively, as of December 31,
                2007 (17
                percent and 52 percent, respectively, as of December 31,
                2006).





(c)
            Credit
                risk management for loans -


Credicorp
      classifies all its loans into one of five risk categories, depending upon the
      degree of risk of non-payment of each loan. The grades used by Credicorp are:
      (i) normal, (ii) potential problems, (iii) substandard, (iv) doubtful and (v)
      loss.





The
      five
      loan risk grades have the following characteristics:





Normal
      (Class A): Debtors of commercial loans or credits that fall into this category
      have complied on a timely basis with their obligations and at the time of
      evaluation of the credit do not present any reason for doubt with respect to
      repayment of interest and principal on the agreed upon dates, and the Group
      must
      have no reason to believe that the status will change before the next
      evaluation. To place a loan or credit in Class A, a clear understanding of
      the
      use to be made of the funds and the origin of the cash flows to be used by
      the
      debtor to repay the loan or credit is required. Consumer loans warrant Class
      A
      classification if payments are current or up to eight days past-due. Residential
      mortgage loans warrant Class A classification if payments are current or up
      to
      thirty days past-due.


Potential
      problems (Class B): Debtors of commercial loans or credits included in this
      category are those that at the time of the evaluation of the credit demonstrate
      certain deficiencies, which, if not corrected in a timely manner, imply risks
      with respect to the recovery of the loan. Certain common characteristics of
      loans or credits in the category include: delays in loan payments which are
      promptly covered, a general lack of information required to analyze the credit,
      out-of-date financial information, temporary economic or financial imbalances
      on
      the part of the debtor which could affect its ability to repay the loan, market
      conditions that could affect the economic sector in which the debtor is active,
      material overdue debts or pending judicial collection actions initiated by
      other
      financial institutions, noncompliance with originally contracted conditions,
      conflicts of interest within the debtor company, labor problems; unfavorable
      credit history, noncompliance with internal policies of the debtor company,
      excessive reliance on one source of raw materials or one buyer of the debtor’s
      products, and low inventory turnover ratios or large inventories that are
      subject to competitive challenges or technological obsolescence. Consumer loans
      are categorized as Class B if payments are between 9 and 30 days late.
      Residential mortgage loans become Class B when payments are between 31 and
      90
      days late.


F-99




Notes
        to
        the consolidated financial statements (continued)
  Substandard
        (Class C): Debtors of commercial loans or credits whose loans or credits
        are
        placed in this category demonstrate serious financial weakness, often with
        operating profits or available income insufficient to cover financial
        obligations on agreed upon terms, with no reasonable short-term prospects
        for a
        strengthening of the debtor’s financial capacity. Loans or credits demonstrating
        the same deficiencies that warrant classification as category B credits warrant
        classification as Class C credits if those deficiencies are such that if
        they
        are not corrected in the near term, they could impede the recovery of principal
        and interest on the loan on the originally agreed terms. In addition, commercial
        loans are classified in this category when payments are between 61 and 120
        days
        late. If payments on a consumer loan are between 31 and 60 days late, such
        loans
        are classified as Class C. Residential mortgage loans are classified as Class
        C
        when payments are between 91 and 120 days late.





Doubtful
      (Class D): Debtors of commercial loans or credits included in this
      classification present characteristics of actual credit risk that make doubtful
      the recovery of the loan. Although the loan recovery is doubtful, if there
      is a
      reasonable possibility that in the near future the creditworthiness of the
      debtor might improve, a Class D categorization is appropriate. These credits
      are
      distinguished from Class E credits by the requirement that the debtor remain
      in
      operation, generate cash flow, and make payments on the loan, albeit at a rate
      less than that specified in its contractual obligations. In addition, commercial
      loans are classified in this category when payments are between 121 and 365
      days
      late. Consumer loans are categorized as Class D if payments are between 61
      and
      120 days late. Residential mortgage loans are Class D when payments are between
      121 and 365 days late.





Loss
      credits (Class E): Commercial loans or credits which are considered
      unrecoverable or which for any other reason should not appear on Group’s books
      as an asset based on the originally contracted terms fall into this category.
      In
      addition, commercial loans are classified in this category when payments are
      more than 365 days late. Consumer loans are categorized as Class E if payments
      are more than 120 days late. Residential mortgage loans are moved into Class
      E
      when payments are more than 365 days late.





The
      Group
      reviews its loan portfolio on a continuing basis in order to assess the
      completion and accuracy of its grades.





All
      loans
      considered impaired (the ones classified as substandard, doubtful and loss)
      are
      analyzed by the Groups’ management. The Group addresses impairment assessment in
      two areas: individually assessed allowances and collectively assessed
      allowances, as follows:


F-100




Notes
        to
        the consolidated financial statements (continued)


-
            Individually
                assessed allowance -


The
      Group
      determines the allowances appropriate for each individually significant loan
      or
      advance on an individual basis. Items considered when determining allowance
      amounts include the sustainability of the counterparty’s business plan, its
      ability to improve performance once a financial difficulty has arisen, projected
      receipts and the expected dividend payout should bankruptcy ensue, the
      availability of other financial support and the realizable value of collateral,
      and the timing of the expected cash flows. The impairment losses are evaluated
      at each reporting date, unless unforeseen circumstances require more careful
      attention.





The
      methodology and assumptions used for estimating future cash flows are reviewed
      regularly by the Group in order to reduce any differences between loss estimates
      and actual loss experience.





-
            Collectively
                assessed allowance -


Allowances
      are assessed collectively for losses on loans and advances that are not
      individually significant (including consumer and residential mortgages) and
      for
      individually significant loans and advances where there is not yet objective
      evidence of individual impairment (included in categories A and B). Allowances
      are evaluated on each reporting date with each portfolio receiving a separate
      review.





The
      collective assessment takes account of impairment that is likely to be present
      in the portfolio even though there is not yet objective evidence of the
      impairment in an individual assessment. Impairment losses are estimated by
      taking into consideration of the following information: historical losses on
      the
      portfolio, current economic conditions, the approximate delay between the time
      a
      loss is likely to have been incurred and the time it will be identified as
      requiring an individually assessed impairment allowance, and expected receipts
      and recoveries once impaired. Local management is responsible for deciding
      the
      length of this period which can extend for as long as one year. The impairment
      allowance is then reviewed by credit management to ensure alignment with the
      Group’s overall policy.





Financial
      guarantees and letter of credit are assessed and provision made in similar
      manners as for loans.





In
      the
      case of borrowers in countries where there is an increased risk of difficulties
      in servicing external debt, an assessment of the political and economic
      situation is made, and an additional country risk provisions
      provided.





When
      a
      loan is uncollectible, it is written off against the related provision for
      loan
      impairment. Such loans are written off after all the necessary procedures have
      been completed and the amount of the loss has been determined. Subsequent
      recoveries of amounts previously written off decrease the amount of the
      provision for loan impairment in the consolidated income
      statements.





The
      following is a summary of the direct loans classified in three major groups:
      i)
      Loans neither past due nor impaired, comprising those direct loans having
      presently no delinquency characteristics and related to clients ranked as normal
      and potential problems; ii) Past due but not impaired loans comprising past
      due
      loans of clients classified as normal or with potential problems and iii)
      Impaired loans, or those past due loans of **** clients
      classified as substandard, doubtful and loss; presented net of the provision
      for
      loan losses for each of the loan grades:


F-101




Notes
        to
        the consolidated financial statements (continued)


**As of December 31, 2007****Commercial**
              **loans**
            
            **Residential**
              **mortgage**
              **loans**
            
            **Consumer**
              **loans**
            
            **Total**
            
            **%**US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)Neither
                past due nor impaired -Normal
            
            
            5,517,220
            
            
            1,138,912
            
            
            779,866
            
            
            7,435,998
            
            
            91Potential
                problem
            
            
            347,186
            
            
            13,781
            
            
            7,463
            
            
            368,430
            
            
            5Past
                due but not impaired -Normal
            
            
            204,766
            
            
            70,738
            
            
            52,379
            
            
            327,883
            
            
            4Potential
                problem
            
            
            5,410
            
            
            318
            
            
            134
            
            
            5,862
            
            
            -Impaired
                -Substandard
            
            
            49,535
            
            
            10,097
            
            
            11,733
            
            
            71,365
            
            
            1Doubtful
            
            
            61,578
            
            
            12,552
            
            
            14,586
            
            
            88,716
            
            
            1Loss
            
            
            36,483
            
            
            7,437
            
            
            8,643
            
            
            52,563
            
            
            1Gross
            
            
            6,222,178
            
            
            1,253,835
            
            
            874,804
            
            
            8,350,817
            
            
            103**Less:
                Allowance for loan losses**
            
            
            166,203
            
            
            14,454
            
            
            30,662
            
            
            211,319
            
            
            3**Total,
                net**
            
            
            6,055,975
            
            
            1,239,381
            
            
            844,142
            
            
            8,139,498
            
            
            100








**As of December 31, 2006****Commercial**
              **loans**
            
            **Residential**
              **mortgage**
              **loans**
            
            **Consumer**
              **loans**
            
            **Total**
            
            **%**US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)Neither
                past due nor impaired -Normal
            
            
            3,810,556
            
            
            914,604
            
            
            491,125
            
            
            5,216,285
            
            
            **90**Potential
                problem
            
            
            337,775
            
            
            11,766
            
            
            3,386
            
            
            352,927
            
            
            **6****Past
                due but not impaired -**Normal
            
            
            114,981
            
            
            20,480
            
            
            8,779
            
            
            144,240
            
            
            **3**Potential
                problem
            
            
            2,005
            
            
            5,414
            
            
            819
            
            
            8,238
            
            
            **-****Impaired
                -**Substandard
            
            
            52,684
            
            
            7,622
            
            
            5,270
            
            
            65,576
            
            
            1Doubtful
            
            
            98,110
            
            
            14,193
            
            
            9,814
            
            
            122,117
            
            
            2Loss
            
            
            49,726
            
            
            7,194
            
            
            4,974
            
            
            61,894
            
            
            1Gross
            
            
            **4,465,837**
            
            
            **981,273**
            
            
            **524,167**
            
            
            **5,971,277**
            
            
            **103****Less:
                Allowance for loan losses**
            
            
            **163,066**
            
            
            **9,253**
            
            
            **17,959**
            
            
            **190,278**
            
            
            **3****Total,
                net**
            
            
            4,302,771
            
            
            972,020
            
            
            506,208
            
            
            5,780,999
            
            
            100




F-102




Notes
      to
      the consolidated financial statements (continued)





Loans
      that are neither past-due nor impaired whose terms have been renegotiated are
      as
      follows:





**As of December 31, 2007****Commercial**
              **loans**
            
            **Residential**
              **mortgage**
              **loans**
            
            **Consumer**
              **loans**
            
            **Total**
            
            **%**US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)**Loans
                refinanced or restructured:**Normal
            
            
            6,584
            
            
            331
            
            
            75
            
            
            6,990
            
            
            35Potential
                problems
            
            
            12,661
            
            
            32
            
            
            10
            
            
            12,703
            
            
            65**Total**
            
            
            19,245
            
            
            363
            
            
            85
            
            
            19,693
            
            
            100




**As of December 31, 2006****Commercial**
              **loans**
            
            **Residential**
              **mortgage**
              **loans**
            
            **Consumer**
              **loans**
            
            **Total**
            
            **%**US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)**Loans
                refinanced or restructured**Normal
            
            
            10,751
            
            
            638
            
            
            19
            
            
            11,408
            
            
            54Potential
                problems
            
            
            9,426
            
            
            153
            
            
            33
            
            
            9,612
            
            
            46**Total**
            
            
            20,177
            
            
            791
            
            
            52
            
            
            21,020
            
            
            100




F-103




Notes
        to
        the consolidated financial statements (continued)




An
      aging
      analysis of loans past due but not impaired by class, is as
      follows:





**As of December 31, 2007****Commercial**
              **loans**
            
            **Residential**
              **mortgage**
              **loans**
            
            **Consumer**
              **loans**
            
            **Total**US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)Past
                due up to 30 days
            
            
            204,766
            
            
            70,738
            
            
            52,379
            
            
            327,883Past
                due 31 - 60 days
            
            
            5,398
            
            
            243
            
            
            131
            
            
            5,772Past
                due 61 - 90 days
            
            
            3
            
            
            14
            
            
            2
            
            
            19Past
                due over 91 days
            
            
            9
            
            
            61
            
            
            1
            
            
            71**Total**
            
            
            210,176
            
            
            71,056
            
            
            52,513
            
            
            333,745





**As of December 31, 2006****Commercial**
              **loans**
            
            **Residential**
              **mortgage**
              **loans**
            
            **Consumer**
              **loans**
            
            **Total**Past
                due up to 30 days
            
            
            114,981
            
            
            20,480
            
            
            8,779
            
            
            144,240Past
                due 31 - 60 days
            
            
            1,755
            
            
            5,306
            
            
            771
            
            
            7,832Past
                due 61 - 90 days
            
            
            191
            
            
            55
            
            
            14
            
            
            260Past
                due over 91 days
            
            
            59
            
            
            53
            
            
            34
            
            
            146**Total**
            
            
            116,986
            
            
            25,894
            
            
            9,598
            
            
            152,478




F-104




Notes
      to
      the consolidated financial statements (continued)




The
      break
      down of the gross amount of impaired loans by class, along with the fair value
      of related collateral and the amounts of their allowance for loan losses, are
      as
      follows:





**As of December 31, 2007****Commercial**
              **loans**
            
            **Residential**
              **mortgage**
              **loans**
            
            **Consumer**
              **loans**
            
            **Total**US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)**Impaired
                loans**
            
            
            147,596
            
            
            30,086
            
            
            34,962
            
            
            212,644**Fair
                value of collateral**
            
            
            59,957
            
            
            19,863
            
            
            3,914
            
            
            83,734**Allowance
                for loan losses**
            
            
            72,793
            
            
            6,238
            
            
            20,173
            
            
            99,204,





**As of December 31, 2006****Commercial**
              **loans**
            
            **Residential**
              **mortgage**
              **loans**
            
            **Consumer**
              **loans**
            
            **Total**US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)**Impaired
                loans**
            
            
            200,520
            
            
            29,009
            
            
            20,058
            
            
            249,587**Fair
                value of collateral**
            
            
            85,550
            
            
            21,654
            
            
            2,447
            
            
            109,651**Allowance
                for loan losses**
            
            
            104,533
            
            
            4,240
            
            
            10,825
            
            
            119,598





**(d)**
            **Credit
                risk management on investments in trading securities and
                available-for-sale -**


The
      Group
      evaluates the credit risk identified of each of the financial instruments in
      these categories, stating the risk rating granted to them by a risk rating
      agency. For investments traded in Peru, the risk ratings use are those provided
      by Apoyo & Asociados Internacionales S.A.C. (a Peruvian rating agency
      authorized by the Peruvian government regulator and associated to Fitch Rating)
      and for investments traded abroad, the risk-ratings used are those provided
      by
      Standard & Poors. In the event any subsidiary use a risk-rating prepared by
      any other risk rating agency, such risk-ratings are standardized with those
      provided by the afore-mentioned institutions for consolidation
      purposes.





The
      following table shows the analysis of the risk-rating of held-for-trading and
      available-for-sale investments, provided by the institutions referred to above.
      These financial instruments are mostly concentrated on the first risk ratings
      or
      are debt securities issued by Banco Central de Reserva del Peru - BCRP (not
      rated), as a way to reduce their impact on the consolidated financial statements
      of any eventual substantial loss that may arise from the impairment of the
      credit and general position of issuers. The exposure composition is as
      follows:


F-105




Notes
        to
        the consolidated financial statements (continued)


**As of December 31, 2007****Held-for-trading**
            
            **Available-for-sale**
            
            **Total**US$(000)
            
            %
            
            US$(000)
            
            %
            
            US$(000)
            
            %**Instruments
                rated in Peru**AAA
            
            
            271
            
            
            0.5
            
            
            285,661
            
            
            5.5
            
            
            285,932
            
            
            5.4AA-
                to AA +
            
            
            1,301
            
            
            2.6
            
            
            35,943
            
            
            0.7
            
            
            37,244
            
            
            0.7A-
                to A+
            
            
            149
            
            
            0.3
            
            
            13,306
            
            
            0.3
            
            
            13,455
            
            
            0.3BBB-
                a BBB+
            
            
            -
            
            
            -
            
            
            2,018
            
            
            -
            
            
            2,018
            
            
            -BB-
                to BB+
            
            
            -
            
            
            -
            
            
            2,214
            
            
            -
            
            
            2,214
            
            
            -Lower
                than B-
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -Unrated
                (*)
            
            
            25,078
            
            
            49.2
            
            
            2,854,295
            
            
            54.6
            
            
            2,879,373
            
            
            54.626,799
            
            
            52.6
            
            
            3,193,437
            
            
            61.1
            
            
            3,220,236
            
            
            61.0**Instruments
                rated abroad**AAA
            
            
            -
            
            
            -
            
            
            242,428
            
            
            4.6
            
            
            242,428
            
            
            4.6AA-
                to AA +
            
            
            -
            
            
            -
            
            
            132,907
            
            
            2.5
            
            
            132,907
            
            
            2.5A-
                to A+
            
            
            -
            
            
            -
            
            
            234,455
            
            
            4.6
            
            
            234,455
            
            
            4.5BBB-
                a BBB+
            
            
            19,336
            
            
            37.8
            
            
            584,549
            
            
            11.2
            
            
            603,885
            
            
            11.4BB-
                to BB+
            
            
            2,119
            
            
            4.2
            
            
            539,816
            
            
            10.3
            
            
            541,935
            
            
            10.3Lower
                than B-
            
            
            -
            
            
            -
            
            
            22,740
            
            
            0.4
            
            
            22,740
            
            
            0.4Unrated
                (*)
            
            
            2,741
            
            
            5.4
            
            
            278,309
            
            
            5.3
            
            
            281,050
            
            
            5.324,196
            
            
            47.4
            
            
            2,035,204
            
            
            38.9
            
            
            2,059,400
            
            
            39.0**Total**
            
            
            50,995
            
            
            100.0
            
            
            5,228,641
            
            
            100.0
            
            
            5,279,636
            
            
            100.0




F-106




Notes
        to
        the consolidated financial statements (continued)


**As of December 31, 2006****Held-for-trading**
            
            **Available-for-sale**
            
            **Total**US$(000)
            
            %
            
            US$(000)
            
            %
            
            US$(000)
            
            %**Instruments
                rated in Peru**AAA
            
            
            2
            
            
            -
            
            
            213,142
            
            
            6.2
            
            
            213,144
            
            
            6.1AA
                -to AA +
            
            
            8,755
            
            
            19.4
            
            
            48,406
            
            
            1.4
            
            
            57,161
            
            
            1.6A
                to A+
            
            
            777
            
            
            1.7
            
            
            9,207
            
            
            0.3
            
            
            9,984
            
            
            0.3BBB-
                to BBB
            
            
            -
            
            
            -
            
            
            1,719
            
            
            -
            
            
            1,719
            
            
            -BB-
                to BB+
            
            
            -
            
            
            -
            
            
            2,679
            
            
            0.1
            
            
            2,679
            
            
            0.1Lower
                than B-
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -Unrated
                (*)
            
            
            35,602
            
            
            78.9
            
            
            1,521,008
            
            
            44.1
            
            
            1,556,610
            
            
            44.645,136
            
            
            100.0
            
            
            1,796,161
            
            
            52.1
            
            
            1,841,297
            
            
            52.7**Instruments
                rated abroad**AAA
            
            
            -
            
            
            -
            
            
            243,098
            
            
            7.0
            
            
            243,098
            
            
            7.0AA-
                to AA +
            
            
            -
            
            
            -
            
            
            90,274
            
            
            2.6
            
            
            90,274
            
            
            2.6A
                to A+
            
            
            -
            
            
            -
            
            
            268,555
            
            
            7.8
            
            
            268,555
            
            
            7.7BBB-
                to BBB+
            
            
            -
            
            
            -
            
            
            412,055
            
            
            11.9
            
            
            412,055
            
            
            11.8BB-
                a BB+
            
            
            -
            
            
            -
            
            
            420,948
            
            
            12.2
            
            
            420,948
            
            
            12.0Lower
                than BB-
            
            
            -
            
            
            -
            
            
            16,672
            
            
            0.5
            
            
            16,672
            
            
            0.4Unrated
                (*)
            
            
            -
            
            
            -
            
            
            202,948
            
            
            5.9
            
            
            202,948
            
            
            5.8-
            
            
            -
            
            
            1,654,550
            
            
            47.9
            
            
            1,654,550
            
            
            47.3**Total**
            
            
            45,136
            
            
            100.0
            
            
            3,450,711
            
            
            100.0
            
            
            3,495,847
            
            
            100.0





(*)
            As
                of December 31, 2007, include principally US$2,407.0 million, US$346.1
                million and US$193.4 million of debt securities issued by Banco Central
                de
                Reserva del Perú - BCRP (which is a Peruvian Government entity not rated),
                listed and non-listed equity securities and mutual funds, respectively
                (US$1,277.6 million, US$250.9 million and US$96.5 million as of December
                31, 2006, respectively).


F-107




Notes
        to
        the consolidated financial statements (continued)


The
      following table presents the summary of the various techniques used by the
      Group
      to measure the Investments available-for-sale recognized at fair value in
      percentage:





**2007**
            
            **2006****%**
            
            **%**Quoted
                Market Price
            
            
            39.4
            
            
            47.0Valuation
                Techniques - market observable inputs
            
            
            58.6
            
            
            51.4Valuation
                Techniques - non-market observable inputs
            
            
            2.0
            
            
            1.6**Total**
            
            
            100.0
            
            
            100.0


F-108




Notes
        to
        the consolidated financial statements (continued)


(e)
            Concentration
                of financial instruments exposed to credit
                risk:


As
      of
      December 31, 2007 and 2006, the financial instruments with exposure to the
      credit risk were distributed by the following economic sectors:





**2007**
            
            **2006****Designated at fair value through**
              **profit and loss**
            
            
            
            
            
            
            
            **Designated at fair value through**
              **profit and loss****Held for**
              **trading**
            
            **At inception**
            
            **Loans and**
              **receivables**
            
            **Available for**
              **sale securities**
            
            **Total**
            
            **Held for**
              **trading**
            
            **At inception**
            
            **Loans and**
              **receivables**
            
            **Available for**
              **sale securities**
            
            **Total**US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)Financial
                services
            
            
            49,901
            
            
            213,153
            
            
            3,303,821
            
            
            3,569,312
            
            
            7,136,187
            
            
            1,742
            
            
            53,116
            
            
            2,909,132
            
            
            1,166,944
            
            
            4,130,934Manufacturing
            
            
            2,710
            
            
            -
            
            
            2,134,497
            
            
            199,874
            
            
            2,337,081
            
            
            -
            
            
            -
            
            
            1,585,646
            
            
            -
            
            
            1,585,646Mortgage
                loans
            
            
            -
            
            
            -
            
            
            1,079,955
            
            
            -
            
            
            1,079,955
            
            
            -
            
            
            -
            
            
            849,037
            
            
            -
            
            
            849,037Commerce
            
            
            520
            
            
            -
            
            
            861,701
            
            
            62,011
            
            
            924,232
            
            
            227
            
            
            -
            
            
            667,895
            
            
            33,973
            
            
            702,095Public
                Administration and defense
            
            
            22,161
            
            
            -
            
            
            73,533
            
            
            746,634
            
            
            842,328
            
            
            19,134
            
            
            -
            
            
            -
            
            
            1,454,193
            
            
            1,473,327Consumer
                loans
            
            
            -
            
            
            -
            
            
            833,505
            
            
            -
            
            
            833,505
            
            
            -
            
            
            -
            
            
            517,911
            
            
            -
            
            
            517,911Mining
            
            
            11,737
            
            
            -
            
            
            448,570
            
            
            138,578
            
            
            598,885
            
            
            12,189
            
            
            -
            
            
            293,416
            
            
            28,470
            
            
            334,075Electricity,
                gas and water
            
            
            9,802
            
            
            -
            
            
            330,480
            
            
            207,014
            
            
            547,296
            
            
            6,801
            
            
            -
            
            
            250,819
            
            
            116,965
            
            
            374,585Leaseholds
                and real estate activities
            
            
            -
            
            
            -
            
            
            373,659
            
            
            159,063
            
            
            532,722
            
            
            -
            
            
            -
            
            
            227,347
            
            
            22,213
            
            
            249,560Communications,
                storage and transportation
            
            
            -
            
            
            -
            
            
            387,911
            
            
            97,945
            
            
            485,856
            
            
            247
            
            
            -
            
            
            249,597
            
            
            98,685
            
            
            348,529Micro-business
                loans
            
            
            -
            
            
            -
            
            
            474,968
            
            
            -
            
            
            474,968
            
            
            -
            
            
            -
            
            
            15,099
            
            
            -
            
            
            15,099Community
                Services
            
            
            -
            
            
            -
            
            
            239,947
            
            
            -
            
            
            239,947
            
            
            -
            
            
            -
            
            
            167,711
            
            
            -
            
            
            167,711Construction
            
            
            -
            
            
            -
            
            
            197,257
            
            
            3,914
            
            
            201,171
            
            
            -
            
            
            -
            
            
            76,352
            
            
            17,038
            
            
            93,390Agriculture
            
            
            -
            
            
            -
            
            
            172,817
            
            
            5,550
            
            
            178,367
            
            
            -
            
            
            -
            
            
            144,130
            
            
            -
            
            
            144,130Fishing
            
            
            -
            
            
            -
            
            
            131,483
            
            
            -
            
            
            131,483
            
            
            -
            
            
            -
            
            
            148,919
            
            
            -
            
            
            148,919Insurance
                activities
            
            
            -
            
            
            -
            
            
            122,667
            
            
            -
            
            
            122,667
            
            
            -
            
            
            -
            
            
            53,647
            
            
            42,853
            
            
            96,500Education,
                health and other services
            
            
            -
            
            
            -
            
            
            102,456
            
            
            4,514
            
            
            106,970
            
            
            2,517
            
            
            -
            
            
            -
            
            
            1,510
            
            
            4,027Other
            
            
            7
            
            
            -
            
            
            233,500
            
            
            34,232
            
            
            267,739
            
            
            21,413
            
            
            -
            
            
            553,914
            
            
            467,867
            
            
            1,043,194**Total**
            
            
            96,838
            
            
            213,153
            
            
            11,502,727
            
            
            5,228,641
            
            
            17,041,359
            
            
            64,270
            
            
            53,116
            
            
            8,710,572
            
            
            3,450,711
            
            
            12,278,669




F-109




Notes
        to
        the consolidated financial statements (continued)


As
      of
      December 31, 2007 and 2006, the financial instruments with exposure to credit
      risk were distributed by the following geographical areas:





**2007****Designated at fair value through**
              **profit and loss****Held for**
              **trading**
            
            **At inception**
            
            **Loans and**
              **receivables**
            
            **Available for**
              **sale securities**
            
            **Total**US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)Peru
            
            
            70,189
            
            
            -
            
            
            10,048,500
            
            
            3,693,246
            
            
            13,811,935United
                States of America
            
            
            49
            
            
            213,153
            
            
            591,202
            
            
            889,421
            
            
            1,693,825Panama
            
            
            -
            
            
            -
            
            
            10,831
            
            
            4,661
            
            
            15,492Germany
            
            
            -
            
            
            -
            
            
            6,868
            
            
            3,756
            
            
            10,624Canada
            
            
            151
            
            
            -
            
            
            24,358
            
            
            8,788
            
            
            33,297Bolivia
            
            
            3,683
            
            
            -
            
            
            578,436
            
            
            192,896
            
            
            775,015Spain
            
            
            36
            
            
            -
            
            
            13,456
            
            
            1,541
            
            
            15,033Venezuela
            
            
            -
            
            
            -
            
            
            1,189
            
            
            34,273
            
            
            35,462Gran
                Cayman
            
            
            -
            
            
            -
            
            
            -
            
            
            21,017
            
            
            21,017Chile
            
            
            -
            
            
            -
            
            
            5,178
            
            
            124,557
            
            
            129,735Netherlands
            
            
            -
            
            
            -
            
            
            34,246
            
            
            18,726
            
            
            52,972United
                Kingdom
            
            
            13,654
            
            
            -
            
            
            38,571
            
            
            31,041
            
            
            83,266Colombia
            
            
            -
            
            
            -
            
            
            59,471
            
            
            89,363
            
            
            148,834Brasil
            
            
            -
            
            
            -
            
            
            2,204
            
            
            36,130
            
            
            38,334Mexico
            
            
            -
            
            
            -
            
            
            4,930
            
            
            34,976
            
            
            39,906Ecuador
            
            
            -
            
            
            -
            
            
            19,518
            
            
            -
            
            
            19,518Republic
                of Salvador
            
            
            -
            
            
            -
            
            
            602
            
            
            11,168
            
            
            11,770Other
            
            
            9,076
            
            
            -
            
            
            63,167
            
            
            33,081
            
            
            105,324**Total**
            
            
            96,838
            
            
            213,153
            
            
            11,502,727
            
            
            5,228,641
            
            
            17,041,359




F-110




Notes
        to
        the consolidated financial statements (continued)


**2006****Designated at fair value through**
              **profit and loss****Held for**
              **trading**
            
            **At inception**
            
            **Loans and**
              **receivables**
            
            **Available for**
              **sale securities**
            
            **Total**US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)Peru
            
            
            31,714
            
            
            -
            
            
            7,331,086
            
            
            1,993,424
            
            
            9,356,224United
                States of America
            
            
            21,447
            
            
            53,116
            
            
            617,338
            
            
            823,900
            
            
            1,515,801Panama
            
            
            -
            
            
            -
            
            
            32,961
            
            
            7,291
            
            
            40,252Germany
            
            
            -
            
            
            -
            
            
            2,466
            
            
            -
            
            
            2,466Canada
            
            
            -
            
            
            -
            
            
            5,764
            
            
            -
            
            
            5,764Bolivia
            
            
            3,432
            
            
            -
            
            
            491,735
            
            
            152,083
            
            
            647,250Spain
            
            
            -
            
            
            -
            
            
            13,269
            
            
            27
            
            
            13,296Venezuela
            
            
            -
            
            
            -
            
            
            45,161
            
            
            56,983
            
            
            102,144Gran
                Cayman
            
            
            -
            
            
            -
            
            
            14,602
            
            
            -
            
            
            14,602Chile
            
            
            -
            
            
            -
            
            
            8,515
            
            
            109,136
            
            
            117,651Honduras
            
            
            -
            
            
            -
            
            
            7,284
            
            
            -
            
            
            7,284Netherlands
            
            
            -
            
            
            -
            
            
            -
            
            
            8,283
            
            
            8,283United
                Kingdom
            
            
            1
            
            
            -
            
            
            6,188
            
            
            34,195
            
            
            40,384Colombia
            
            
            -
            
            
            -
            
            
            35,495
            
            
            73,662
            
            
            109,157Brasil
            
            
            -
            
            
            -
            
            
            3,411
            
            
            -
            
            
            3,411Mexico
            
            
            -
            
            
            -
            
            
            616
            
            
            45,613
            
            
            46,229Ecuador
            
            
            -
            
            
            -
            
            
            14,960
            
            
            -
            
            
            14,960Republic
                of Salvador
            
            
            -
            
            
            -
            
            
            13,690
            
            
            14,134
            
            
            27,824Other
            
            
            7,676
            
            
            -
            
            
            66,031
            
            
            131,980
            
            
            205,687**Total**
            
            
            64,270
            
            
            53,116
            
            
            8,710,572
            
            
            3,450,711
            
            
            12,278,669





**31.2**
                      **Market
                          risk
                          -**


The
      Group
      takes on exposure to market risks, which is the risk that the fair value or
      future cash flows of a financial instrument will fluctuate because of changes
      in
      market prices. Market risks arise from open positions in interest rates,
      currency, commodities and equity products; all of which are exposed to general
      and specific market movements and changes in the level of volatility of prices
      such as interest rates, credit spreads, foreign exchange rates and equity
      prices. Due to the nature of the Group’s current activities, commodity price
      risk is not applicable.


F-111




Notes
        to
        the consolidated financial statements (continued)


The
      Group
      separates exposures to market risk into two groups: (i) those that arise from
      value fluctuation of trading portfolios due to movements of market rates or
      prices (Trading Book) and (ii) those that arise from changes in the structural
      positions of non-trading portfolios due to movements of the interest rates,
      prices and foreign exchange ratios (ALM Book).





Trading
      portfolios include those liquid positions arising from market-making
      transactions where the Group acts as principal with clients or with the market.
      Non-trading portfolios consist of relatively illiquid positions, mainly banking
      assets and liabilities (deposits and loans) and non-trading investments
      (available-for-sale). Trading activities are primarily conducted by BCP, the
      Group’s major subsidiary.





The
      risks
      that trading portfolios face are managed through VaR historical simulation
      techniques; while non-trading portfolios are managed using Asset Liability
      Management (ALM).




(a)
                Trading
                    Book-


The
      trading book is made up of liquid investment instruments. The trading book
      is
      characterized for having liquid positions in equities, bonds, foreign
      currencies, and derivatives. Some limits have been set in order to control
      and
      monitor the risks undertaken. These risks arise from the size of the positions
      and/or from the volatility of the risk factors embedded in each financial
      instrument. Regular reports are prepared for the Risk Management Committees
      and
      top management. The major measurement technique used to measure and control
      market risk is Value at Risk (VaR).





The
      Group
      applies VaR to its trading portfolios to estimate the market risk of positions
      held and the maximum losses that are expected, based upon a number of
      assumptions for various changes in market conditions. The Risk Management
      Committee set limits on the level of risk that may be accepted and review of
      daily.





VAR
      is a
      statistically-based estimate of the potential loss on the current portfolio
      from
      adverse market movements. It expresses the “maximum” amount the Group might
      lose, but only to a certain level of confidence (99 percent). There is therefore
      a specified statistical probability (1 percent) that actual loss could be
      greater than the VAR estimate. The VaR model assumes a certain “holding period”
until positions can be closed (1 day - 10 days). The time horizon used to
      calculate VaR is one day; however, the one-day VAR is amplified to a 10-day
      time
      frame and calculated multiplying the one-day VaR times the square root of 10
      -
      results are presented in the tables below. The assessment of past movements
      has
      been based on historical one-year data. The Group applies these historical
      changes in rates directly to its current positions (a method known as historical
      simulation).





The
      use
      of this approach does not prevent losses outside of these limits in the event
      of
      more significant market movements.


F-112




Notes
        to
        the consolidated financial statements (continued)




As
      of
      December 31, 2007 and 2006, the Group’s VaR by type of asset is as
      follows **:**




**2007**
            
            **2006**US$(000)
            
            US$(000)Equity
                securities
            
            
            5,211
            
            
            5,196Fixed
                Income
            
            
            567
            
            
            2Derivatives
            
            
            626
            
            
            1,012Consolidated
                VaR by type of asset
            
            
            5,261
            
            
            5,659





As
      of
      December 31, 2007 and 2006, the Group’s VaR by risk type is as
      follows **:**





**2007**
            
            **2006**US$(000)
            
            US$(000)Foreign
                exchange risk
            
            
            133
            
            
            1,928Interest
                rate risk
            
            
            514
            
            
            78Equity
                risk
            
            
            4,879
            
            
            4,765Consolidated
                VaR by risk type
            
            
            5,261
            
            
            5,659





(b)
            ALM
                Book -


The
      management of the risks associated with long-term and structural positions
      is
      called Asset and Liability Management (ALM). Non-trading portfolios which
      comprise the ALM Book are exposed to different sensitivities that can bring
      about a deterioration in the value of the assets compared to its liabilities
      and
      hence to a reduction of its net worth.





(i)
            Interest
                risk -


Interest
      rate risk arises from the possibility that changes in interest rates will affect
      future cash flows or the fair values of financial instruments. Cash flow
      interest rate risk is the risk that the future cash flows of a financial
      instrument will fluctuate because of changes in market interest rates. Fair
      value interest rate risk is the risk that the value of a financial instrument
      will fluctuate because of changes in market interest rates. The Group takes
      on
      exposure to the effects of fluctuations in the prevailing levels of market
      interest rates on both its fair value and cash flow risks. Interest margins
      may
      increase as a result of such changes but may also decrease in the event that
      unexpected movements arise. The Board sets limits on the level of mismatch
      of
      interest rate re-pricing that may be undertaken, which is monitored daily by
      Treasury Department.





**Re-pricing
      gap -**


Gap
      analysis comprises aggregating re-pricing timeframes into buckets and checking
      if each bucket nets to zero. Different bucketing schemes might be used. An
      interest rate gap is simply a positive or negative net re-pricing timeframe
      for
      one of the buckets.


F-113




Notes
        to
        the consolidated financial statements (continued)




The
      table
      below summarizes the Group’s exposure to interest rate risks. It includes the
      Group’s financial instruments at carrying amounts, categorized by the earlier of
      contractual re-pricing or maturity dates:




**As of December 31, 2007****Up to 1 month**
            
            **1 to 3 months**
            
            **3 to 12 months**
            
            **1 to 5 years**
            
            **More than 5**
              **years**
            
            **Non-interest**
              **bearing**
            
            **Total**US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)**Assets**Cash
                and due from banks
            
            
            2,331,637
            
            
            31,074
            
            
            48,172
            
            
            42,045
            
            
            19
            
            
            620,918
            
            
            3,073,865Investments
            
            
            567,613
            
            
            680,272
            
            
            1,974,368
            
            
            837,269
            
            
            842,317
            
            
            377,797
            
            
            5,279,636Loans
            
            
            2,078,657
            
            
            2,294,056
            
            
            1,499,311
            
            
            2,051,629
            
            
            115,847
            
            
            -
            
            
            8,039,500Assets
                designated at fair value through profit and loss
            
            
            -
            
            
            -
            
            
            50,561
            
            
            -
            
            
            -
            
            
            162,592
            
            
            213,153Premiums
                and other policies receivables
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            85,495
            
            
            85,495Accounts
                receivable from re-insurers and co-insurers
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            116,141
            
            
            116,141Other
                assets
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            898,108
            
            
            898,108**Total
                assets**
            
            
            4,977,907
            
            
            3,005,402
            
            
            3,572,412
            
            
            2,930,943
            
            
            958,183
            
            
            2,261,051
            
            
            17,705,898**Liabilities**Deposits
                and obligations
            
            
            3,358,599
            
            
            3,089,841
            
            
            1,709,965
            
            
            263,913
            
            
            2,088
            
            
            2,926,308
            
            
            11,350,714Financial
                liabilities designated at fair value through profit and loss
            
            
            -
            
            
            -
            
            
            50,561
            
            
            -
            
            
            -
            
            
            -
            
            
            50,561Due
                to banks and correspondents
            
            
            484,560
            
            
            437,345
            
            
            303,506
            
            
            198,357
            
            
            21,296
            
            
            8,197
            
            
            1,453,261Accounts
                payable to re-insurers and co-insurers
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            21,914
            
            
            21,914Technical,
                insurance claims reserves and reserves for unearned
                premiums
            
            
            1,626
            
            
            4,878
            
            
            14,634
            
            
            95,017
            
            
            305,039
            
            
            394,333
            
            
            815,527Borrowed
                funds
            
            
            -
            
            
            870,404
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            870,404Bonds
                and subordinated notes issued
            
            
            101,521
            
            
            34,520
            
            
            54,546
            
            
            176,924
            
            
            328,147
            
            
            6,640
            
            
            702,298Other
                liabilities
            
            
            -
            
            
            -
            
            
            8,275
            
            
            -
            
            
            -
            
            
            617,671
            
            
            625,946Equity
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            1,815,273
            
            
            1,815,273**Total
                liabilities and equity**
            
            
            3,946,306
            
            
            4,436,988
            
            
            2,141,487
            
            
            734,211
            
            
            656,570
            
            
            5,790,336
            
            
            17,705,898**Off-Balance
                sheet items**Derivatives
                assets
            
            
            1,746,686
            
            
            724,850
            
            
            719,635
            
            
            349,552
            
            
            116,269
            
            
            -
            
            
            3,656,992Derivatives
                liabilities
            
            
            967,415
            
            
            617,771
            
            
            801,599
            
            
            806,626
            
            
            463,581
            
            
            -
            
            
            3,656,992779,271
            
            
            107,079
            
            
            (81,964
            )
            
            (457,074
            )
            
            (347,312
            )
            
            -
            
            
            -**Marginal
                gap**
            
            
            1,810,872
            
            
            (1,324,507
            )
            
            1,348,961
            
            
            1,739,658
            
            
            (45,699
            )
            
            (3,529,285
            )
            
            -**Accumulated
                gap**
            
            
            1,810,872
            
            
            486,365
            
            
            1,835,326
            
            
            3,574,984
            
            
            3,529,285
            
            
            -
            
            
            -


F-114




Notes
        to
        the consolidated financial statements (continued)




**As of December 31, 2006****Up to 1 month**
            
            **1 to 3 months**
            
            **3 to 12 months**
            
            **1 to 5 years**
            
            **More than 5**
              **years**
            
            **Non-interest**
              **bearing**
            
            **Total**US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)**Assets**Cash
                and due from banks
            
            
            1,068,748
            
            
            8,775
            
            
            1,181,148
            
            
            -
            
            
            -
            
            
            474,859
            
            
            2,733,530Investments
            
            
            402,925
            
            
            532,586
            
            
            1,055,645
            
            
            626,422
            
            
            749,667
            
            
            128,602
            
            
            3,495,847Loans
            
            
            1,624,343
            
            
            1,325,556
            
            
            1,431,177
            
            
            1,023,526
            
            
            296,140
            
            
            36,081
            
            
            5,736,823Assets
                designated at fair value through profit and loss
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            53,116
            
            
            53,116Premiums
                and other policies receivables
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            61,279
            
            
            61,279Accounts
                receivable from re-insurers and co-insurers
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            35,181
            
            
            35,181Other
                assets
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            765,753
            
            
            765,753**Total
                assets**
            
            
            3,096,016
            
            
            1,866,917
            
            
            3,667,970
            
            
            1,649,948
            
            
            1,045,807
            
            
            1,554,871
            
            
            12,881,529Deposits
                and obligations
            
            
            2,429,405
            
            
            2,204,614
            
            
            1,763,756
            
            
            275,260
            
            
            176,392
            
            
            1,989,564
            
            
            8,838,991Due
                to banks and correspondents
            
            
            292,805
            
            
            45,799
            
            
            47,275
            
            
            84,922
            
            
            98,335
            
            
            1,853
            
            
            570,989Accounts
                payable to re-insurers and co-insurers
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            25,134
            
            
            25,134Technical,
                insurance claims reserves and reserves for unearned
                premiums
            
            
            2,149
            
            
            4,298
            
            
            19,341
            
            
            78,611
            
            
            274,741
            
            
            249,081
            
            
            628,221Borrowed
                funds
            
            
            -
            
            
            370,612
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            370,612Bonds
                and subordinated notes issued
            
            
            43,044
            
            
            -
            
            
            83,957
            
            
            363,201
            
            
            22,370
            
            
            -
            
            
            512,572Other
                liabilities
            
            
            
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            401,242
            
            
            401,242Equity
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            1,533,768
            
            
            1,533,768**Total
                liabilities and equity**
            
            
            2,767,403
            
            
            2,625,323
            
            
            1,914,329
            
            
            801,994
            
            
            571,838
            
            
            4,200,642
            
            
            12,881,529**Off-Balance
                sheet items**Derivatives
                assets
            
            
            981,884
            
            
            308,913
            
            
            332,171
            
            
            59,708
            
            
            13,557
            
            
            -
            
            
            1,696,233Derivatives
                liabilities
            
            
            720,056
            
            
            176,447
            
            
            335,506
            
            
            379,779
            
            
            84,445
            
            
            -
            
            
            1,696,233261,828
            
            
            132,466
            
            
            (3,335
            )
            
            (320,071
            )
            
            (70,888
            )
            
            -
            
            
            -**Marginal
                gap**
            
            
            590,441
            
            
            (625,940
            )
            
            1,750,306
            
            
            527,883
            
            
            403,081
            
            
            (2,645,771
            )
            
            -**Accumulated
                gap**
            
            
            590,441
            
            
            (35,499
            )
            
            1,714,807
            
            
            2,242,690
            
            
            2,645,771
            
            
            -
            
            
            -




F-115




Notes
        to
        the consolidated financial statements (continued)


**Sensitivity
      to changes in interest rates -**


The
      following table presents the sensitivity to a reasonable possible change in
      interest rates, with all other variables held constant, of the Group’s
      consolidated income statement and consolidated statements of change in equity;
      before income tax.





The
      sensitivity of the consolidated income statement is the effect of the assumed
      changes in interest rates on the net interest income for one year before income
      tax, based on the floating rate non-trading financial assets and financial
      liabilities held at December 31, 2007 and 2006, including the effect of
      derivatives instruments. The sensitivity of equity is calculated by revaluing
      fixed rate available-for-sale financial assets, including the effect of any
      associated hedges, and swaps designated as cash flow hedges, as of December
      31,
      2007 and 2006 for the effects of the assumed changes in interest
      rates:





**As of December 31, 2007****Currency**
            
            **Changes in basis**
              **points**
            
            **Sensitivity of net**
              **income**
            
            **Sensitivity of Equity**US$(000)
            
            US$(000)U.S. Dollar
            
            
            +/-
            
            
            50
            
            
            +/-
            
            
            7,652
            
            
            -/+
            
            
            20,205U.S.
                Dollar
            
            
            +/-
            
            
            75
            
            
            +/-
            
            
            11,479
            
            
            -/+
            
            
            30,307U.S.
                Dollar
            
            
            +/-
            
            
            100
            
            
            +/-
            
            
            15,305
            
            
            -/+
            
            
            40,408U.S.
                Dollar
            
            
            +/-
            
            
            150
            
            
            +/-
            
            
            22,957
            
            
            -/+
            
            
            60,613Peruvian
                Currency
            
            
            +/-
            
            
            50
            
            
            -/+
            
            
            2,966
            
            
            -/+
            
            
            20,705Peruvian
                Currency
            
            
            +/-
            
            
            75
            
            
            -/+
            
            
            4,448
            
            
            -/+
            
            
            31,056Peruvian
                Currency
            
            
            +/-
            
            
            100
            
            
            -/+
            
            
            5,932
            
            
            -/+
            
            
            41,409Peruvian
                Currency
            
            
            +/-
            
            
            150
            
            
            -/+
            
            
            8,897
            
            
            -/+
            
            
            62,114





**As of December 31, 2006****Currency**
            
            **Changes in basis**
              **points**
            
            **Sensitivity of net**
              **income**
            
            **Sensitivity of Equity**US$(000)
            
            US$(000)U.S.
                Dollar
            
            
            +/-
            
            
            50
            
            
            +/-
            
            
            5,598
            
            
            -/+
            
            
            31,278U.S.
                Dollar
            
            
            +/-
            
            
            75
            
            
            +/-
            
            
            8,398
            
            
            -/+
            
            
            46,918U.S.
                Dollar
            
            
            +/-
            
            
            100
            
            
            +/-
            
            
            11,198
            
            
            -/+
            
            
            62,557U.S.
                Dollar
            
            
            +/-
            
            
            150
            
            
            +/-
            
            
            16,795
            
            
            -/+
            
            
            93,835Peruvian
                Currency
            
            
            +/-
            
            
            50
            
            
            -/+
            
            
            494
            
            
            -/+
            
            
            12,461Peruvian
                Currency
            
            
            +/-
            
            
            75
            
            
            -/+
            
            
            741
            
            
            -/+
            
            
            18,691Peruvian
                Currency
            
            
            +/-
            
            
            100
            
            
            -/+
            
            
            987
            
            
            -/+
            
            
            24,921Peruvian
                Currency
            
            
            +/-
            
            
            150
            
            
            -/+
            
            
            1,481
            
            
            -/+
            
            
            37,862




F-116




Notes
        to
        the consolidated financial statements (continued)


The
      interest rate sensitivities set out in the table above are illustrative only
      and
      are based on simplified scenarios. The figures represent the effect of the
      pro-forma movements in the net interest income based on the projected yield
      curve scenarios and the Group’s current interest rate risk profile. This effect,
      however, does not incorporate actions that would be taken by management to
      mitigate the impact of this interest rate risk. In addition, the Group seeks
      proactively to change the interest rate risk profile to minimize losses and
      optimize net revenues. The projections above also assume that interest rate
      of
      all maturities move by the same amount and, therefore, do not reflect the
      potential impact on net interest income of some rates changing while others
      remain unchanged. The projections make other simplifying assumptions too,
      including that all positions run to maturity.





Available-for-sale
      equity securities and mutual funds are not considered as part of the investment
      securities for sensitivity calculation purposes; however, a 10 percent and
      15
      percent changes in market prices is conducted to these price-sensitivity
      securities and the expected unrealized gain or loss (equity), before income
      tax,
      is presented below:





**Market price sensitivity**
            
            **Changes in**
              **market prices**
            
            **As of December 31,**
              **2007**
            
            **As of December 31,**
              **2006**%
            
            US$(000)
            
            US$(000)Equity
                securities
            
            
            **+/-**
            
            
            **10**
            
            
            **+/-**
            
            
            **32,088**
            
            
            **+/-**
            
            
            **21,557**Equity
                securities
            
            
            **+/-**
            
            
            **15**
            
            
            **+/-**
            
            
            **48,132**
            
            
            **+/-**
            
            
            **32,335**Mutual
                funds
            
            
            **+/-**
            
            
            **10**
            
            
            **+/-**
            
            
            **20,008**
            
            
            **+/-**
            
            
            **9,624**Mutual
                funds
            
            
            **+/-**
            
            
            **15**
            
            
            **+/-**
            
            
            **30,013**
            
            
            **+/-**
            
            
            **14,436**




F-117




Notes
        to
        the consolidated financial statements (continued)




**(ii)**
            **Foreign
                exchange risk -**


The
      Group
      takes is expose to foreign currency exchange rates on its financial position
      and
      cash flows. The Management sets limits on the level of exposure by currency
      and
      in total for both overnight and intra-day positions, which are monitored daily.
      Most assets and liabilities are denominated in U.S. Dollars.





Foreign
      currency transactions are made at the free market exchange rates of the
      countries where Credicorp’s Subsidiaries are established. As of December 31,
      2007 and 2006, the Group’s assets and liabilities by currencies were as
      follows:




**2007**
            
            **2006****U.S. Dollars**
            
            **Peruvian**
              **currency**
            
            **Other**
              **currencies**
            
            **Total**
            
            **U.S. Dollars**
            
            **Peruvian**
              **currency**
            
            **Other**
              **currencies**
            
            **Total**US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)**Monetary
                assets -**Cash
                and due from banks
            
            
            2,644,858
            
            
            311,828
            
            
            117,179
            
            
            3,073,865
            
            
            2,250,111
            
            
            396,238
            
            
            87,181
            
            
            2,733,530Trading
                securities
            
            
            38,647
            
            
            11,463
            
            
            885
            
            
            50,995
            
            
            14,144
            
            
            30,800
            
            
            192
            
            
            45,136Available-for-sale
                investments
            
            
            1,934,672
            
            
            3,129,351
            
            
            164,618
            
            
            5,228,641
            
            
            1,493,043
            
            
            1,904,535
            
            
            53,133
            
            
            3,450,711Loans,
                net
            
            
            5,555,864
            
            
            2,450,297
            
            
            33,339
            
            
            8,039,500
            
            
            4,181,558
            
            
            1,492,681
            
            
            62,584
            
            
            5,736,823Financial
                assets designated to fair value through profit and loss
            
            
            213,153
            
            
            -
            
            
            -
            
            
            213,153
            
            
            53,116
            
            
            -
            
            
            -
            
            
            53,116Other
                assets
            
            
            261,102
            
            
            299,695
            
            
            9,745
            
            
            570,542
            
            
            216,388
            
            
            129,268
            
            
            6,242
            
            
            351,89810,648,296
            
            
            6,202,634
            
            
            325,766
            
            
            17,176,696
            
            
            8,208,360
            
            
            3,953,522
            
            
            209,332
            
            
            12,371,214**Monetary
                liabilities -**Deposits
                and obligations
            
            
            (7,173,362
            )
            
            (3,892,138
            )
            
            (285,214
            )
            
            (11,350,714
            )
            
            (6,098,199
            )
            
            (2,588,864
            )
            
            (151,928
            )
            
            (8,838,991
            )Due
                to bank and correspondents and borrowed funds
            
            
            (2,071,882
            )
            
            (248,362
            )
            
            (3,421
            )
            
            (2,323,665
            )
            
            (883,979
            )
            
            (53,193
            )
            
            (4,429
            )
            
            (941,601
            )Financial
                liabilities designated at fair value through profits and
                loss
            
            
            (50,561
            )
            
            -
            
            
            -
            
            
            (50,561
            )
            
            -
            
            
            -
            
            
            -
            
            
            -Bonds
                and subordinated notes issued
            
            
            (329,567
            )
            
            (372,731
            )
            
            -
            
            
            (702,298
            )
            
            (334,608
            )
            
            (177,964
            )
            
            -
            
            
            (512,572
            )Other
                liabilities
            
            
            (1,040,179
            )
            
            (434,353
            )
            
            11,144
            
            
            (1,463,388
            )
            
            (662,946
            )
            
            (378,473
            )
            
            (13,178
            )
            
            (1,054,597
            )(10,665,551
            )
            
            (4,947,584
            )
            
            (277,491
            )
            
            (15,890,626
            )
            
            (7,979,732
            )
            
            (3,198,494
            )
            
            (169,535
            )
            
            (11,347,761
            )(17,255
            )
            
            1,255,050
            
            
            48,275
            
            
            1,286,070
            
            
            228,628
            
            
            755,028
            
            
            39,797
            
            
            1,023,453Forwards
                position, net
            
            
            331,117
            
            
            (273,971
            )
            
            (57,146
            )
            
            -
            
            
            30,970
            
            
            (22,368
            )
            
            (8,602
            )
            
            -**Net
                monetary position**
            
            
            313,862
            
            
            981,079
            
            
            (8,871
            )
            
            1,286,070
            
            
            259,598
            
            
            732,660
            
            
            31,195
            
            
            1,023,453




F-118




Notes
        to
        the consolidated financial statements (continued)




The
      Group
      manages foreign exchange risk by monitoring and controlling non - U.S. Dollar
      position values due to changes in exchange rates. The Group measures its
      performance in U.S. Dollar, so if the net foreign exchange position is positive,
      any depreciation of the U.S. Dollar would affect Group’s consolidated balance
      sheet positively. The current position in a foreign currency comprises exchange
      rate-linked assets and liabilities in that currency. An institution’s open
      position in individual currencies comprises assets, liabilities and off-balance
      sheet items denominated in the respective foreign currency for which the
      institution itself bears the risk; any appreciation/depreciation of the foreign
      exchange would affect the consolidated income statement.





The
      Group’s net foreign exchange balance is the sum of its positive open non-U.S.
      Dollar positions (net long position) less the sum of its negative open non-U.S.
      Dollar positions (net short position); and any devaluation/revaluation of the
      foreign exchange position would affect the consolidated income statement. A
      currency mismatch would leave Group’s consolidated balance sheet vulnerable to a
      fluctuation of the foreign currency (exchange rate shock).





The
      table
      below shows the sensitivity analysis of the Peruvian Currency, the currency
      to
      which the Group had significant exposure as of December 31, 2007 and 2006 on
      its
      non-trading monetary assets and liabilities and its forecast cash flows. The
      analysis calculates the effect of a reasonably possible movement of the currency
      rate against the U.S. Dollar, with all other variables held constant on the
      consolidated income statement, before income tax. A negative amount in the
      table
      reflects a potential net reduction in consolidated income statement, while
      a
      positive amount reflects a net potential increase:





**Sensitivity Analysis**
            
            **Change in**
              **currency rates**
            
            **2007**
            
            **2006**%
            
            US$(000)
            
            US$(000)**Devaluation
                -**Peruvian
                Currency
            
            
            5
            
            
            (51,636
            )
            
            (38,561
            )Peruvian
                Currency
            
            
            10
            
            
            (109,009
            )
            
            (81,407
            )**Revaluation
                -**Peruvian
                Currency
            
            
            5
            
            
            46,718
            
            
            34,889Peruvian
                Currency
            
            
            10
            
            
            89,189
            
            
            66,605




F-119


Notes
      to
      the consolidated financial statements (continued)





**31.3**
            **Liquidity
                risk -**


Liquidity
      risk is the risk that the Group is unable to meet its payment obligations
      associated with its financial liabilities when they fall due and to replace
      funds when they are withdrawn. The consequence may be the failure to meet
      obligations to repay depositors, fulfill commitments to lend or meet other
      operating cash needs.





The
      Group
      is exposed to daily calls on its available cash resources from overnight
      deposits, current accounts, maturing deposits, loans draw-downs, guarantees
      and
      other calls. The Group does not maintain cash resources to meet all of these
      needs, as experience shows that a minimum level of reinvestment of maturing
      funds can be predicted with a high level of certainty. The Management of the
      Group’s subsidiaries sets limits on the minimum proportion of funds available to
      meet such calls and on the minimum level of inter-bank and other borrowing
      facilities that should be in place to cover withdrawals at unexpected levels
      of
      demands. Sources of liquidity are regularly reviewed by a separate team in
      Group
      Treasury Department to maintain a wide diversification by currency, geography,
      provider, product and term.





The
      matching and controlled mismatching of the maturities and interest rates of
      assets and liabilities is fundamental to the management of the Group. It is
      unusual for banks to be completely matched, as transacted business is often
      based on uncertain terms and of different types. An unmatched position
      potentially enhances profitability, but also increases the risk of
      losses.





The
      maturities of assets and liabilities and the ability to replace, at an
      acceptable cost, interest-bearing liabilities as they mature are important
      factors in assessing the liquidity of the Group and its exposure to changes
      in
      interest rates and exchange rates.





Liquidity
      requirements to support calls under guarantees and standby letters of credit
      are
      considerably less than the amount of the commitment, because the Group does
      not
      generally expect the third party to draw funds under the agreement. The total
      outstanding contractual amount of commitments to extend credit does not
      necessarily represent future cash requirements, as many of these commitments
      will expire or terminate without being funded.





A
      maturity mismatch, long-term illiquid assets against short-term liabilities,
      exposes a consolidated balance sheet to risks related both to rollover and
      to
      interest rates. If liquid assets do not cover maturing debts, a balance sheet
      is
      vulnerable to a rollover risk. Furthermore, a sharp increase in interest rates
      can dramatically increase the cost of rolling over short-term liabilities,
      leading to a rapid increase in debt service. The contractual-maturity gap report
      is useful in showing liquidity characteristics.





F-120




Notes
      to
      the consolidated financial statements (continued)





The
      table
      below presents the cash flows payable by the Group by remaining contractual
      maturities at the consolidated balance sheets dates. The amounts disclosed
      in
      the table are the contractual undiscounted cash flows:


**As of December 31, 2007**
                
                **As of December 31, 2006****Up to a month**
                
                **From 1 to 3 months**
                
                **From 3 to 12
                    months**
                
                **From 1 to 5 years**
                
                **Over 5**
                  **years**
                
                **Total**
                
                **Up to a**
                  **month**
                
                **From 1 to 3 months**
                
                **From 3 to 12
                    months**
                
                **From 1 to 5 years**
                
                **Over 5
                    years**
                
                **Total**US$(000)
                
                US$(000)
                
                US$(000)
                
                US$(000)
                
                US$(000)
                
                US$(000)
                
                US$(000)
                
                US$(000)
                
                US$(000)
                
                US$(000)
                
                US$(000)
                
                US$(000)Deposits
                    and obligations
                
                
                3,509,461
                
                
                1,785,348
                
                
                3,914,794
                
                
                2,602,403
                
                
                298,750
                
                
                12,110,756
                
                
                2,301,949
                
                
                1,331,413
                
                
                3,076,991
                
                
                2,081,960
                
                
                279,408
                
                
                9,071,721Financials
                    liabilities designated at fair value through profit and
                    loss
                
                
                266
                
                
                534
                
                
                2,448
                
                
                65,063
                
                
                -
                
                
                68,311
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -Due
                    to bank and correspondents and Borrowed funds
                
                
                274,279
                
                
                524,809
                
                
                486,328
                
                
                1,053,649
                
                
                529,040
                
                
                2,868,105
                
                
                406,477
                
                
                143,327
                
                
                254,160
                
                
                369,532
                
                
                502,056
                
                
                1,675,552Accounts
                    payable to re-insurer and co-insurers
                
                
                3,507
                
                
                10,840
                
                
                7,412
                
                
                155
                
                
                -
                
                
                21,914
                
                
                9,395
                
                
                6,022
                
                
                8,927
                
                
                790
                
                
                -
                
                
                25,134Technical,
                    insurance claims reserves and reserves for unearned
                    premiums
                
                
                77,047
                
                
                100,991
                
                
                184,769
                
                
                165,095
                
                
                558,301
                
                
                1,086,203
                
                
                168,181
                
                
                13,169
                
                
                60,065
                
                
                128,492
                
                
                510,284
                
                
                880,191Bonds
                    and subordinates notes issued
                
                
                48,867
                
                
                43,071
                
                
                104,174
                
                
                315,911
                
                
                426,688
                
                
                938,711
                
                
                42,751
                
                
                10,354
                
                
                110,275
                
                
                478,798
                
                
                47,861
                
                
                690,039Other
                    liabilities
                
                
                30,464
                
                
                23,993
                
                
                367,922
                
                
                83,492
                
                
                -
                
                
                505,871
                
                
                213,325
                
                
                9,489
                
                
                57,205
                
                
                19,253
                
                
                -
                
                
                299,272**Total
                    liabilities**
                
                
                3,943,891
                
                
                2,489,586
                
                
                5,067,847
                
                
                4,285,768
                
                
                1,812,779
                
                
                17,599,871
                
                
                3,142,078
                
                
                1,513,774
                
                
                3,567,623
                
                
                3,078,825
                
                
                1,339,609
                
                
                12,641,909


F-121


Notes
      to
      the consolidated financial statements (continued)





The
      table
      below shows the contractual maturity of the Group’s contingent credits at the
      consolidated balance sheets dates:





**As of December 31, 2007**
            
            **As of December 31, 2006****Up to a**
              **month**
            
            **From 1 to 3
                months**
            
            **From 3 to 12
                months**
            
            **From 1 to 5
                years**
            
            **Over 5**
              **years**
            
            **Total**
            
            **Up to a
                month**
            
            **From 1 to
                3 months**
            
            **From 1 to 12
                months**
            
            **From 1 to 5
                years**
            
            **Over 5
                years**
            
            **Total**US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)
            
            US$(000)**Contingent
                credits**
            
            
            318,692
            
            
            253,054
            
            
            571,702
            
            
            402,443
            
            
            18,634
            
            
            1,564,525
            
            
            200,256
            
            
            268,490
            
            
            467,405
            
            
            468,836
            
            
            50,389
            
            
            1,455,376





The
      Bank
      expects that not all of the contingent liabilities or commitments will be drawn
      before expiry of the commitments.





F-122




Notes
      to
      the consolidated financial statements (continued)





**31.4**
            **Operational
                risk -**


Operational
      risk is the risk of loss arising from systems failure, human error, fraud or
      external events. When controls fail to perform, operational risks can cause
      damage to reputation, have legal or regulatory implications, or lead to
      financial loss. The Group cannot expect to eliminate all operational risks,
      but
      through a control framework and by monitoring and responding to potential risks,
      the Group is able to manage the risks. Controls include effective segregation
      of
      duties, access, authorization and reconciliation procedures, staff education
      and
      assessment processes, including the use of Internal Audit.





**31.5**
            **Risk
                of the insurance activity
                -**


The
      risk
      under any insurance contract is the possibility that the insured event occurs
      and the uncertainty of the amount of the resulting claim. By the very nature
      of
      an insurance contract, this risk is random and therefore
      unpredictable.





For
      a
      portfolio of insurance contracts where the theory of probability is applied
      to
      pricing and provisioning, the principal risk that the Group faces is that the
      actual claims and benefit payments exceed the carrying amount of the insurance
      liabilities. This could occur because the frequency or severity of claims and
      benefits are greater than estimated. Insurance events are random and the actual
      number and amount of claims and benefits will vary from year to year from the
      level established using statistical techniques.





Experience
      shows that the larger the portfolio of similar insurance contracts, the smaller
      the relative variability about the expected outcome will be. In addition, a
      more
      diversified portfolio is less likely to be affected by a change in any subset
      of
      the portfolio. The Group has developed its insurance underwriting strategy
      to
      diversify the type of insurance risks accepted within each of theses categories
      to achieve a sufficiently large population of risks to reduce the variability
      of
      the expected outcome, as well as the use of reinsurance
      arrangements.





Factors
      that aggravate insurance risk include lack of risk diversification in terms
      of
      type and amount of risk, geographical location and type of industry
      covered.





The
      Group
      is liable for all insured events that occurred during the term of the contract,
      even if the loss is discovered after the end of the contract term. As a result,
      liability claims are settled over a long period of time and a larger element
      of
      the claims provision relates to incurred but non-reported claims (IBNR). There
      are several variables that affect the amount and timing of cash flows from
      these
      contracts. These mainly relate to the inherent risk of the business activities
      carried out by individual contract holders and the risk management procedures
      they adopted.


F-123


Notes
      to
      the consolidated financial statements (continued)





The
      estimated cost of claims includes direct expenses to be incurred in settling
      claims, net of the expected subrogation value and other recoveries. The Group
      takes all reasonable steps to ensure that it has appropriate information
      regarding its claims exposures. The liability for these contracts includes
      a
      provision for reported claims not yet paid and a provision for unexpired risks
      at the consolidated balance sheet date.





The
      subsidiaries of the Group that operate in the insurance segment have automatic
      reinsurance coverage contracts that protect them against frequency and severity
      losses. The reinsurance includes coverage for excess claims and catastrophes.
      The objective of the reinsurance is that the total net insurance loss does
      not
      affect the net worth and liquidity of the Group in any given year.





In
      addition to the total Group’s reinsurance program, it is possible to buy
      additional reinsurance protection under the automatic or facultative contract
      modality and for any situation the risk evaluation process considers it
      necessary.





In
      reference to reinsurance risks, the policy of the Group is to only enter into
      contracts with companies that are qualified as investment grade by qualified
      international risk rating agencies.





The
      Group’s placement of reinsurance is diversified such that it is neither
      dependent on a single reinsurer nor are the operations of the Group
      substantially dependent upon any single reinsurance contract. There is no single
      counterparty of the total reinsurance accounts receivable and payable at the
      consolidated balance sheet date.





However,
      given the uncertainty in establishing claims provisions, it is likely that
      the
      final outcome will prove to be different from the original liability
      established. This could occur as the frequency or severity, or both, of the
      claims and benefits are greater than the calculated. In the particular case
      of
      the survival business life (life annuities), the risk assumed by the Group
      consists in that the real life expectancy of the insured population is greater
      than the estimated at the time of issuing the policy, which would mean there
      would be a deficit in the reserves to carry out the pension payments.





The
      factors considered in the evaluation of insurance risks are the frequency and
      severity of the claims, the sources of uncertainty in the calculation of
      payments for future claims and the mortality tables for life insurance.





**Non-life
      insurance contracts (general insurance and healthcare)**


The
      Group
      principally issues the following types of general insurance contracts: motor,
      household and commercial. Healthcare contracts provide medical expense cover
      to
      policyholders. Risk under non-life insurance policies usually cover 12 month
      duration.





For
      general insurance contracts the most significant risks arise from climate
      changes, natural disasters and other type of damages. For healthcare contracts
      the most significant risk arise from lifestyle changes, epidemics and medical
      science and technology improvements.


F-124


Notes
      to
      the consolidated financial statements (continued)





These
      risks do not vary significantly in relation to the location of the risk insured
      by the Group, type of risk insured an by industry.





The
      above
      risk exposure is mitigated by diversification across a large portfolio of
      insurance contracts. The variability of risk is improved by careful selection
      and implementation of underwriting strategies, which are designed to ensure
      that
      risks are diversified in terms of type of risk and level of insured benefits.
      This is largely achieved through diversification across industry sectors and
      geography. Further, strict claim review policies to assess all new and ongoing
      claims, regular detailed review of claims handling procedures and frequent
      investigation of possible fraudulent claims are all policies and procedures
      put
      in place to reduce the risk exposure of the Group. The Group further enforces
      a
      policy of actively managing and prompt pursuing of claims, in order to reduce
      its exposure to unpredictable future developments that can negatively impact
      the
      Group.





The
      Group
      has also limited its exposure by imposing maximum claim amounts on certain
      contracts as well as the use of reinsurance arrangements in order to limit
      exposure to catastrophic events.





**Life
      insurance contracts**


Life
      insurance contracts offered by the Group include mainly immediate annuities,
      group life and universal life.





The
      main
      risks that the Group is exposed to are as follows:





-
            Mortality
                / Longevity risk - risk of loss arising due to policyholder death
                experience being different than
                expected.


-
            Morbidity
                risk - risk of loss arising due to policyholder health experience
                being
                different than expected.


-
            Investment
                return risk - risk of loss arising from actual returns being different
                than expected.


-
            Expense
                risk - risk of loss arising from expense experience being different
                than
                expected.


-
            Policyholder
                decision risk - risk of loss arising due to policyholder experiences
                (lapses and surrenders) being different than expected.





These
      risks do not vary significantly in relation to the location of the risk insured
      by the Group, type of risk insured or by industry.


F-125


Notes
      to
      the consolidated financial statements (continued)





The
      Group’s underwriting strategy is designed to ensure that risks are well
      diversified in terms of type of risk and level of insured benefits. Underwriting
      limits are in place to enforce appropriate risk selection criteria. The Group
      further enforces a policy of actively managing and prompt pursuing of claims,
      in
      order to reduce its exposure to unpredictable future developments that can
      negatively impact the Group.





The
      treatment of benefits as well as the sufficiency of the reserves is a principal
      concern of the insurance management. The technical reserves are estimated by
      actuaries of the insurance segment and are reviewed by independent experts.
      The
      insurance segment continuously monitors the claim trends, which allows estimates
      to be carried out for incurred and non-reported claims (IBNR) based on recent
      information. These estimations are also reviewed by independent experts. The
      management has made a sensitivity analysis of the estimates of the technical
      reserves, note 16(c).





The
      insurance products do not contain particularly relevant terms or clauses that
      could have a significant impact or represent important uncertainties to the
      cash
      flows of the insurance segment.




F-126


Notes
      to
      the consolidated financial statements (continued)





In
      the
      following paragraphs the Group has segregated some risk information related
      to
      its insurance business, which has been already included in the Group’s
      consolidated risk information; in order to provide more specific insight about
      this particular business.





(a)
            Interest
                risk of the insurance activity -


The
      following tables show the re-pricing gap of the insurance activity based on
      the
      financial statements in accordance with IFRS and after the eliminations for
      consolidation:




**As of December 31, 2007****Up to 1**
                    **month**
                  
                  **1 to 3**
                    **months**
                  
                  **3 to 12**
                    **months**
                  
                  **1 to 5****years**
                  
                  **More than 5**
                    **years**
                  
                  **Non-interest
                      bearing**
                  
                  **Total**US$(000)
                  
                  US$(000)
                  
                  US$(000)
                  
                  US$(000)
                  
                  US$(000)
                  
                  US$(000)
                  
                  US$(000)**Assets**Cash
                      and due from banks
                  
                  
                  16,520
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  4,354
                  
                  
                  20,874Investments
                  
                  
                  4,295
                  
                  
                  10,847
                  
                  
                  11,630
                  
                  
                  96,207
                  
                  
                  513,714
                  
                  
                  159,755
                  
                  
                  796,448Premiums
                      and other policies receivables
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  85,495
                  
                  
                  85,495Accounts
                      receivable from re-insurers and co-insurers
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  116,141
                  
                  
                  116,141Other
                      assets
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  119,503
                  
                  
                  119,503**Total
                      assets**
                  
                  
                  20,815
                  
                  
                  10,847
                  
                  
                  11,630
                  
                  
                  96,207
                  
                  
                  513,714
                  
                  
                  485,248
                  
                  
                  1,138,461**Liabilities**Due
                      to banks and correspondents
                  
                  
                  2,964
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  9
                  
                  
                  2,973Accounts
                      payable to re-insurers and co-insurers
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  21,914
                  
                  
                  21,914Technical,
                      insurance claims reserves and reserves for unearned
                      premiums
                  
                  
                  1,626
                  
                  
                  4,878
                  
                  
                  14,634
                  
                  
                  95,017
                  
                  
                  305,039
                  
                  
                  394,333
                  
                  
                  815,527Other
                      liabilities
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  32,869
                  
                  
                  32,869Equity
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  265,178
                  
                  
                  265,178**Total
                      liabilities and equity**
                  
                  
                  4,590
                  
                  
                  4,878
                  
                  
                  14,634
                  
                  
                  95,017
                  
                  
                  305,039
                  
                  
                  714,303
                  
                  
                  1,138,461**Marginal
                      gap**
                  
                  
                  16,225
                  
                  
                  5,969
                  
                  
                  (3,004
                  )
                  
                  1,190
                  
                  
                  208,675
                  
                  
                  (229,055
                  )
                  
                  -**Accumulated
                      gap**
                  
                  
                  16,225
                  
                  
                  22,194
                  
                  
                  19,190
                  
                  
                  20,380
                  
                  
                  229,055
                  
                  
                  -
                  
                  
                  -




F-127


Notes
      to
      the consolidated financial statements (continued)


**As of December 31, 2006****Up to 1
                    month**
                
                **1 to 3**
                  **months**
                
                **3 to 12
                    months**
                
                **1 to 5 years**
                
                **More than 5
                    years**
                
                **Non-interest
                    bearing**
                
                **Total**US$(000)
                
                US$(000)
                
                US$(000)
                
                US$(000)
                
                US$(000)
                
                US$(000)
                
                US$(000)**Assets**Cash
                    and due from banks
                
                
                18,464
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                59,548
                
                
                78,012Investments
                
                
                3,439
                
                
                15,856
                
                
                44,392
                
                
                102,051
                
                
                411,725
                
                
                143,823
                
                
                721,286Premiums
                    and other policies receivables
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                61,279
                
                
                61,279Accounts
                    receivable from re-insurers and co-insurers
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                35,181
                
                
                35,181Other
                    assets
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                93,629
                
                
                93,629**Total
                    assets**
                
                
                21,903
                
                
                15,856
                
                
                44,392
                
                
                102,051
                
                
                411,725
                
                
                393,460
                
                
                989,387**Liabilities**Accounts
                    payable to re-insurers and co-insurers
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                25,134
                
                
                25,134Technical,
                    insurance claims reserves and reserves for unearned
                    premiums
                
                
                2,149
                
                
                4,298
                
                
                19,341
                
                
                78,611
                
                
                274,741
                
                
                249,081
                
                
                628,221Other
                    liabilities
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                46,104
                
                
                46,104Equity
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                289,928
                
                
                289,928**Total
                    liabilities and equity**
                
                
                2,149
                
                
                4,298
                
                
                19,341
                
                
                78,611
                
                
                274,741
                
                
                610,247
                
                
                989,387**Marginal
                    gap**
                
                
                19,754
                
                
                11,558
                
                
                25,051
                
                
                23,440
                
                
                136,984
                
                
                (216,787
                )
                
                -**Accumulated
                    gap**
                
                
                19,754
                
                
                31,312
                
                
                56,363
                
                
                79,803
                
                
                216,787
                
                
                -
                
                
                -




F-128




Notes
      to
      the consolidated financial statements (continued)





The
      following tables demonstrate the sensitivity to a reasonably possible change
      in
      interest rates, with all other variables held constant, in consolidated income
      statement and equity of the insurance activity, before income tax:





**As
                of December 31, 2007****Currency**
            
            **Changes in basis**
              **points**
            
            **Sensitivity of net**
              **income**
            
            **Sensitivity of Equity**US$(000)
            
            US$(000)U.S.
                Dollar
            
            
            +/-
            
            
            50
            
            
            -/+
            
            
            129
            
            
            -/+
            
            
            9,883U.S.
                Dollar
            
            
            +/-
            
            
            75
            
            
            -/+
            
            
            194
            
            
            -/+
            
            
            14,824U.S.
                Dollar
            
            
            +/-
            
            
            100
            
            
            -/+
            
            
            259
            
            
            -/+
            
            
            19,766U.S.
                Dollar
            
            
            +/-
            
            
            150
            
            
            -/+
            
            
            388
            
            
            -/+
            
            
            29,649Peruvian
                Currency
            
            
            +/-
            
            
            50
            
            
            +/-
            
            
            50
            
            
            -/+
            
            
            1,533Peruvian
                Currency
            
            
            +/-
            
            
            75
            
            
            +/-
            
            
            75
            
            
            -/+
            
            
            2,300Peruvian
                Currency
            
            
            +/-
            
            
            100
            
            
            +/-
            
            
            101
            
            
            -/+
            
            
            3,066Peruvian
                Currency
            
            
            +/-
            
            
            150
            
            
            +/-
            
            
            151
            
            
            -/+
            
            
            4,599





**As
                of December 31, 2006****Currency**
            
            **Changes
                in basis**
              **points**
            
            **Sensitivity
                of net**
              **income**
            
            **Sensitivity
                of Equity**US$(000)
            
            US$(000)U.S.
                Dollar
            
            
            +/-
            
            
            50
            
            
            -/+
            
            
            694
            
            
            -/+
            
            
            9,863U.S.
                Dollar
            
            
            +/-
            
            
            75
            
            
            -/+
            
            
            1,040
            
            
            -/+
            
            
            14,794U.S.
                Dollar
            
            
            +/-
            
            
            100
            
            
            -/+
            
            
            1,387
            
            
            -/+
            
            
            19,726U.S.
                Dollar
            
            
            +/-
            
            
            150
            
            
            -/+
            
            
            2,081
            
            
            -/+
            
            
            29,589Peruvian
                Currency
            
            
            +/-
            
            
            50
            
            
            -/+
            
            
            26
            
            
            -/+
            
            
            1,367Peruvian
                Currency
            
            
            +/-
            
            
            75
            
            
            -/+
            
            
            38
            
            
            -/+
            
            
            2,051Peruvian
                Currency
            
            
            +/-
            
            
            100
            
            
            -/+
            
            
            51
            
            
            -/+
            
            
            2,735Peruvian
                Currency
            
            
            +/-
            
            
            150
            
            
            -/+
            
            
            77
            
            
            -/+
            
            
            4,102





The
      interest rate sensitivities set out in the table above are illustrative only
      and
      employ simplified scenarios. It should be note that the effects may not be
      linear and therefore the results cannot be extrapolated. The sensitivities
      do
      not incorporate actions that could be taken by management to mitigate the effect
      of the interest rate movements, nor do the take account of any resultant changes
      in policyholder behaviors.




F-129


Notes
      to
      the consolidated financial statements (continued)





(b)
            Foreign
                exchange risk of the insurance activity
                -


As
      of
      December 31, 2007 and 2006, the insurance activity assets and liabilities by
      currencies after the eliminations for consolidation were as
      follows:





**2007****U.S.
                Dollars**
            
            **Peruvian
                Currency**
            
            **Total**US$(000)
            
            US$(000)
            
            US$(000)Monetary
                assets
            
            
            800,899
            
            
            259,279
            
            
            1,060,178Monetary
                liabilities
            
            
            (636,170
            )
            
            (211,013
            )
            
            (847,183
            )**Net
                monetary position**
            
            
            164,729
            
            
            48,266
            
            
            212,995**2006****U.S.
                Dollars**
            
            
            **Peruvian
                Currency**
            
            
            **Total**US$(000)
            
            
            US$(000)
            
            
            US$(000)Monetary
                assets
            
            
            592,875
            
            
            324,363
            
            
            917,237Monetary
                liabilities
            
            
            (483,995
            )
            
            (199,777
            )
            
            (683,772
            )**Net
                monetary position**
            
            
            108,880
            
            
            124,585
            
            
            233,465





The
      table
      below shows the sensitivity analysis of the Peruvian Currency as of 31 December
      2007 and 2006 on the insurance activity non-trading monetary assets and
      liabilities and its forecast cash flows. The analysis calculates the effect
      of a
      reasonably possible movement of the currency rate against the U.S. Dollar on
      the
      consolidated income statement, with all other variables held constant, before
      income tax. A negative amount in the table reflects a potential net reduction
      in
      consolidated income statement, while a positive amount reflects a net potential
      increase.





**Sensitivity
                Analysis**
            
            **Change in**
              **currency rates**
            
            **2007**
            
            **2006**%
            
            US$(000)
            
            US$(000)Devaluation
                -Peruvian
                Currency
            
            
            5
            
            
            (2,540
            )
            
            (6,557
            )Peruvian
                Currency
            
            
            10
            
            
            (5,363
            )
            
            (13,843
            )Revaluation
                -Peruvian
                Currency
            
            
            5
            
            
            2,298
            
            
            5,933Peruvian
                Currency
            
            
            10
            
            
            4,388
            
            
            11,326




F-130


Notes
      to
      the consolidated financial statements (continued)





(c)
            Liquidity
                risk of the insurance activity -




The
      insurance companies of the Group are exposed to requirements of cash available,
      mainly for contracts of insurance claims of short term. The liquidity risk
      is
      the risk that the cash may not be available to pay obligations at their maturity
      at a reasonable cost. The Group holds the available funds for covering its
      liabilities according to their maturity and unexpected claims.





The
      insurance companies of the Group control the liquidity risk through the exposure
      of the maturity of their liabilities. Therefore, the investment plan has been
      structured according the maturities in order to manage the risk of fund
      requirements to cover insurance claims and others, in addition to the Group
      support.





F-131




Notes
      to
      the consolidated financial statements (continued)





The
      table
      below presents the cash flows payable by the Group under non-derivative
      financial liabilities by remaining contractual maturities at the consolidated
      balance sheets dates. The amounts disclosed in the table are the contractual
      undiscounted cash flows and include the interest raisen:


**As
                  of December 31, 2007**
              
              **As
                  of December 31, 2006****_____________________________________________________________________________________**
              
              **_____________________________________________________________________________________****Up
                  to a month**
              
              **From
                  1 to 3 months**
              
              **From
                  3 to 12 months**
              
              **From
                  1 to 5 years**
              
              **Over
                  5 years**
              
              **Total**
              
              **Up
                  to a month**
              
              **From
                  1 to 3 months**
              
              **From
                  3 to 12 months**
              
              **From
                  1 to 5 years**
              
              **Over
                  5 years**
              
              **Total**US$(000)
              
              US$(000)
              
              US$(000)
              
              US$(000)
              
              US$(000)
              
              US$(000)
              
              US$(000)
              
              US$(000)
              
              US$(000)
              
              US$(000)
              
              US$(000)
              
              US$(000)Due
                  to bank and correspondents and Borrowed funds
              
              
              2,973
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              2,973
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -Accounts
                  payable to re-insurer and co-insurers
              
              
              3,507
              
              
              10,840
              
              
              7,412
              
              
              155
              
              
              -
              
              
              21,914
              
              
              9,395
              
              
              6,022
              
              
              8,927
              
              
              790
              
              
              -
              
              
              25,134Technical,
                  insurance claims reserves and reserves for unearned
                  premiums
              
              
              77,047
              
              
              100,991
              
              
              184,769
              
              
              165,095
              
              
              558,301
              
              
              1,086,203
              
              
              168,181
              
              
              13,169
              
              
              60,065
              
              
              128,492
              
              
              510,284
              
              
              880,191Other
                  liabilities
              
              
              9,974
              
              
              7,594
              
              
              847
              
              
              280
              
              
              -
              
              
              18,695
              
              
              31,772
              
              
              440
              
              
              546
              
              
              -
              
              
              -
              
              
              32,758**Total
                  liabilities**
              
              
              93,501
              
              
              119,425
              
              
              193,028
              
              
              165,530
              
              
              558,301
              
              
              1,129,785
              
              
              209,348
              
              
              19,631
              
              
              69,538
              
              
              129,282
              
              
              510,284
              
              
              938,083




F-132




Notes
      to
      the consolidated financial statements (continued)





(d)
            Credit
                risk of the insurance activity -


Credit
      risk is the risk that one party to a financial instrument will cause a financial
      loss to the other party by failing to discharge an obligation.





The
      following policies and procedures are in place to mitigate the Group’s exposure
      to credit risk:





-
            The
                Group sets the maximum amounts and limits that may be advanced to
                corporate counterparties by reference to their long- term credit
                ratings.





-
            The
                credit risk in respect of customer balances, incurred on non-payment
                of
                premiums or contributions will only persist during the grace period
                specified in the policy document or trust deed until expiry, when
                the
                policy is either paid up or terminated. Commission paid to intermediaries
                is netted off against amounts receivable from them to reduce the
                risk of
                doubtful debts.





-
            Reinsurance
                is placed with counterparties that have a good credit rating and
                concentration of risk is avoided by following policy guidelines in
                respect
                of counterparties’ limits that are set each year by the board of directors
                and are subject to regular reviews. At each reporting date, management
                performs an assessment of creditworthiness of reinsurers and updates
                the
                reinsurance purchase strategy, ascertaining suitable allowance for
                impairment.





-
            A
                Group policy setting out the assessment and determination of what
                constitutes credit risk for the Group. Compliance with the policy
                is
                monitored and exposures and breaches are reported to the Group risk
                committee. The policy is regularly reviewed for pertinence and for
                changes
                in the risk environment.





**31.6**
            **Capital
                management**


The
      Group
      maintains an actively managed capital base to cover risks inherent in its
      business. The adequacy of the Group’s capital is monitored using, among other
      measures, the rules and ratios established by the Superintendencia de Banca,
      Seguros y AFP (SBS), the supervising authority of its major subsidiaries and
      for
      consolidation purposes.





The
      Group’s objectives when managing capital, which is a broader concept than the
“Equity” on the face of the consolidated balance sheets, are: (i) to comply with
      the capital requirements set by the regulators of the banking markets where
      the
      entities within the Group operate; (ii) to safeguard the Group’s ability to
      continue as a going concern so that it can continue to provide returns for
      shareholders and benefits for other stakeholders; and (iii) to maintain a strong
      capital base to support the development of its business.




F-133


Notes
      to
      the consolidated financial statements (continued)





Capital
      adequacy and the use of regulatory capital are monitored daily by the Group’s
      management, employing techniques based on the guidelines developed by the Basel
      Committee, as implemented by the SBS for supervisory purposes. The required
      information is filed with the SBS on a quarterly basis. The SBS requires each
      bank or banking group to: (a) hold the minimum level of the regulatory capital,
      and (b) maintain a ratio of total regulatory capital to the risk-weighted asset
      at maximum level of 11. In addition, those individual banking subsidiaries
      or
      similar financial institutions not incorporated in Peru are directly regulated
      and supervised by their local banking supervisor, which may differ from country
      to country.





The
      risk-weighted assets are measured by means of a hierarchy of five risk weights
      classified according to the nature and reflecting an estimate of credit, market
      and other risks associated with each asset and counterparty, taking into account
      any eligible collateral or guarantees. A similar treatment is adopted for
      off-balance sheet exposure, with some adjustments to reflect the more contingent
      nature of the potential losses.





As
      of
      December 31, 2007 and 2006, the regulatory capital for the subsidiaries engaged
      in financial and insurance activities amounted to approximately US$1,420.2
      and
      US$1,008.0 million, respectively. This regulatory capital has been determined
      in
      accordance with the Superintendencia de Banca, Seguros y AFP (SBS) regulations
      in force as of such dates. According to the Superintendencia de Banca, Seguros
      y
      AFP (SBS) and the Administradoras Privadas de Fondos de Pensiones (AFP)
      regulations, the Group’s regulatory capital exceeds in approximately US$350.4
      million the minimum regulatory capital required as of December 31, 2007
      (approximately US$157.0 million as of December 31, 2006).





**31.7**
            **Fair
                value**


Fair
      value is defined as the amount for which an asset could be exchanged or a
      liability settled, between knowledgeable, willing parties in an arm’s length
      transaction, assuming an on-going enterprise.





When
      a
      financial instrument is traded in an active and liquid market, its quoted market
      price in an actual transaction provides the best evidence of its fair value.
      When a quoted market price is not available, or may not be indicative of the
      fair value of the instrument, to determine such fair value, the current market
      value of another instrument that is substantially similar, discounted cash
      flow
      analysis or other estimation techniques may be used, all of which are
      significantly affected by assumptions used. Although Management uses its best
      judgment in estimating the fair value of these financial instruments, there
      are
      inherent weaknesses in any estimation technique. As a result, the fair value
      may
      not be indicative of the net realizable or liquidation value.




F-134


Notes
      to
      the consolidated financial statements (continued)





The
      methodologies and assumptions used to determine fair values depend on the terms
      and risk characteristics of the various financial instruments and include the
      following:





(a)
            Assets
                for which fair value approximates carrying value - For financial
                assets
                and financial liabilities that are liquid or having a short term
                maturity
                (less than three months) it is assumed that the carrying amounts
                approximate to their fair value. This assumption is also applied
                to demand
                deposits, savings accounts without a specific maturity and variable
                rate
                financial instruments.





(b)
            Fixed
                rate financial instruments - The fair value of fixed rate financial
                assets
                and liabilities carried at amortized cost are estimated by comparing
                market interest rates when they were first recognized with current
                market
                rates offered for similar financial instruments. The estimated fair
                value
                of fixed interest bearing deposits is based on discounted cash flows
                using
                prevailing money-market interest rates for debts with similar credit
                risk
                and maturity. For quoted debt issued the fair values are calculated
                based
                on quoted market prices. For those notes issued where quoted market
                prices
                are not available, a discounted cash flow model is used based on
                a current
                interest rate yield curve appropriate for the remaining term to
                maturity.





(c)
            Financial
                instrument recorded at fair value - The fair value for financial
                instruments traded in active markets at the consolidated balance
                sheets
                dates is based on their quoted market price or dealer price quotations
                (bid price for long positions and ask price for short positions),
                without
                any deduction for transaction costs. For all other financial instruments
                not listed in an active market, the fair value is determined by using
                appropriate valuation techniques. Valuation techniques include net
                present
                value techniques and comparison to similar instruments for which
                market
                observable prices exist.




F-135


Notes
      to
      the consolidated financial statements (continued)





Based
      in
      the aforementioned, set out below is a comparison of the carrying amounts and
      fair values of the Group’s financial instruments that are carried in the
      consolidated balance sheets. The table does not include the fair values of
      non-financial assets and non-financial liabilities:


**2007**
                  
                  **2006****Book**
                    **value**
                  
                  **Fair**
                    **value**
                  
                  **Book**
                    **value**
                  
                  **Fair**
                    **value**US$(000)
                  
                  US$(000)
                  
                  US$(000)
                  
                  US$(000)18.
                  
                  19.
                  
                  20.
                  
                  21.**Assets**Cash
                      and due from banks
                  
                  
                  3,073,865
                  
                  
                  3,073,865
                  
                  
                  2,733,530
                  
                  
                  2,733,530Trading
                      securities
                  
                  
                  50,995
                  
                  
                  50,995
                  
                  
                  45,136
                  
                  
                  45,136Investments
                      available-for-sale
                  
                  
                  5,228,641
                  
                  
                  5,228,641
                  
                  
                  3,450,711
                  
                  
                  3,450,711Loans,
                      net
                  
                  
                  8,039,500
                  
                  
                  8,056,106
                  
                  
                  5,736,823
                  
                  
                  5,731,285Financial
                      assets designated at fair value through profit and loss
                  
                  
                  213,153
                  
                  
                  213,153
                  
                  
                  53,116
                  
                  
                  53,116Premiums
                      and other policies receivable
                  
                  
                  85,495
                  
                  
                  85,495
                  
                  
                  61,279
                  
                  
                  61,279Accounts
                      receivable from re-insurersAccounts
                      receivable from re-insurers and co-insurers
                  
                  
                  116,141
                  
                  
                  116,141
                  
                  
                  35,181
                  
                  
                  35,181Due
                      from customers on acceptances
                  
                  
                  35,901
                  
                  
                  35,901
                  
                  
                  45,129
                  
                  
                  45,129Other
                      assets
                  
                  
                  197,668
                  
                  
                  197,668
                  
                  
                  117,764
                  
                  
                  117,764**Liabilities**Deposits
                      and obligation
                  
                  
                  11,350,714
                  
                  
                  11,350,714
                  
                  
                  8,838,991
                  
                  
                  8,838,991Due
                      to banks and correspondents
                  
                  
                  1,453,261
                  
                  
                  1,453,185
                  
                  
                  570,989
                  
                  
                  571,248Banker’s
                      acceptances outstanding
                  
                  
                  35,901
                  
                  
                  35,901
                  
                  
                  45,129
                  
                  
                  45,129Accounts
                      payable to re-insurers and co-insurers
                  
                  
                  21,914
                  
                  
                  21,914
                  
                  
                  25,134
                  
                  
                  25,134Financial
                      liabilities designated at fair value through profit and
                      loss
                  
                  
                  50,561
                  
                  
                  50,561
                  
                  
                  -
                  
                  
                  -Borrowed
                      funds
                  
                  
                  870,404
                  
                  
                  870,404
                  
                  
                  370,612
                  
                  
                  370,612Bonds
                      and subordinated notes issued
                  
                  
                  702,298
                  
                  
                  716,609
                  
                  
                  512,572
                  
                  
                  517,539Other
                      liabilities
                  
                  
                  458,976
                  
                  
                  458,976
                  
                  
                  265,516
                  
                  
                  265,516




F-136


Notes
      to
      the consolidated financial statements (continued)





**31.8**
            **Fiduciary
                activities and management of investment and pension funds
                -**


The
      Group
      provides custody, trustee, investment management and advisory services to third
      parties. The Group makes allocations and purchase and sale decisions in relation
      to a wide range of financial instruments. Those assets that are held in a
      fiduciary capacity are not included in these consolidated financial statements.
      These services give rise to the risk that the Group will be accused of poor
      administration or under-performance.





As
      of
      December 31, 2007 and 2006, the assigned value of the financial assets under
      administration (in U.S. Dollars million) is as follows:





**2007**
            
            **2006**Investments
                funds
            
            
            1,768.8
            
            
            1,124.2Pension
                Funds
            
            
            5,939.0
            
            
            4,163.4Equity
                managed
            
            
            2,740.7
            
            
            1,688.7**Total**
            
            
            10,448.5
            
            
            6,976.3




F-137


Notes
      to
      the consolidated financial statements (continued)





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F-138


Notes
      to
      the consolidated financial statements (continued)




**EXHIBIT
      INDEX**




1.1
            Bye-laws
                of Credicorp Ltd., incorporated herein by reference to Exhibit 1.1
                to
                Credicorp’s Annual Report on Form 20-F dated June 30,
                20051.2
            Memorandum
                of Association of Credicorp Ltd., incorporated herein by reference
                to
                Exhibit 1.2 to Credicorp’s Annual Report on Form 20-F dated June 27,
                20038
            List
                of Subsidiaries, incorporated herein by reference to Exhibit 8 to
                Credicorp’s Annual Report on Form 20-F dated June 27,
                200312.1
            Certification
                by the Chief Executive Officer Pursuant to Section 302 of the U.S.
                Sarbanes-Oxley Act of 200212.2
            Certification
                by the Chief Financial and Accounting Officer Pursuant to Section
                302 of
                the U.S. Sarbanes-Oxley Act of 200213.1
            Certification
                by the Chief Executive Officer Pursuant to Section 906 of the U.S.
                Sarbanes-Oxley Act of 200213.2
            Certification
                by the Chief Financial and Accounting Officer Pursuant to Section
                906 of
                the U.S. Sarbanes-Oxley Act of 2002




F-139