If Grupo PacíficoPacifico fails to assess accurately the risks that it assumes or does not accurately estimate its retention, it may fail to establish adequate premium rates. Failure to establish adequate premium rates could reduce income and have a materiallymaterial adverse effect on its operating results or financial condition. Moreover, there is inherent uncertainty in the process of establishing life insurance reserves and property and casualty (P&C) loss reserves. Reserves are estimates based on actuarial and statistical projections at a given point in time of what Grupo PacíficoPacifico ultimately expects to pay out on claims and the costrelated costs of adjusting those claims, based on the facts and circumstances then known. Factors affecting these projections include, among others, in the case of life insurance reserves: changes in mortality/longevity rates, interest rates, persistency rates and regulation; and in the case of P&C loss reserves: changes in medical costs, repair costs and regulation. Any negative effect on Grupo PacíficoPacifico could have a material adverse effect on our results of operations and financial condition.

Pension fund

Even though private pension fund managers have always been closely regulated by the SBS, in 2012, the Peruvian Government adopted the Law to Reform the Private Pension System (SPP by its Spanish initials). The reform aimed to achieve increased competition and efficiency and to reduce administration costs in the SPP. The law sets forth a new process by which individuals, which are referred to as “affiliates”, may become beneficiaries affiliated with the SPP. The Law to Reform the SPP will be implemented in phases. See “Item 4. Information on the Company – 4.B. Business Overview – (12) Supervision and Regulation – 12.7 Prima AFP”.

The relevant changes that are contemplated in this law are:

In December 2012, the first tender process was held to determine who would manage the accounts of new affiliates for a two year period. A new participant in the SPP won, and started operations on June 1, 2013. In December 2014, the second tender process was held. Given the requirements to participate in the process, Prima AFP decided not to bid, and instead decided to focus on maintaining customer service levels and the value proposition that the company offers its affiliates. The next tender process is expected to be held in December 2016 but it depends on the SBS definition.

In December 2015 Congress passed a draft law that modifies some aspects of the current Pension Fund system’s framework. This law was observed by the President in January 2016. On April 14, 2016 the Congress approved the law and it was promulgated on April 21, 2016. Among the most material changes, the law allows affiliates to withdraw up to 95.5% of its pension funds when reaching the age of 65 (retirement age), to use up to 25% of its fund as a guarantee for the initial payment on the purchase of a first home and allows the early retirement of 50% of the fund for affiliates that have a terminal illness. Also, it extends the Special Regime of Early Retirement (REJA) until December 31st 2018, for affiliates who are unemployed for at least 12 months and apply for men and women, with at least 55 years old and 50 years old, respectively.

(6)    A deterioration in the quality of our loan portfolio may adversely affect our results of operations

Given that a significant percentage of our income is related to lending activities, a significant deterioration of loan quality would have a material adverse effect on our business, financial condition and results of operations. We are subject to concentration default risks in our loan portfolio. Problems with one or more of our largest borrowers may adversely affect our financial condition and results of operations. While loan portfolio risk associated with lending to certain economic sectors or clients in certain market segments can be mitigated through adequate diversification, our pursuit of opportunities, in which we can charge higher interest rates, and thereby increase revenue, may reduce diversification of our loan portfolio and expose us to greater credit risk.

In addition, loan concentration in commercial sectors is particularly salient in Peru and significant deterioration in such sectors may have a material adverse effect on our business, financial condition and results of operations. Our current strategy includes increasing our exposure to market segments with heightened credit risk, including middle-market and consumer segments, such as unsecured small companies and consumer loans and consumer mortgages, which have higher risk profiles as compared to loans to large corporate customers. Given the changing composition of our loan portfolio and possible adverse changes in the environment in which we operate, our future results may differ significantly from our past results.

(7)    Our banking and capital market operations in neighboring countries expose us to risk related to political and economic conditions

BCP Bolivia, Credicorp Capital Colombia and IM Trust expose us to risk related to Bolivian, Colombian and Chilean political and economic conditions, respectively. Most economies in Latin America and the Caribbean experienced low economic growth in 2015, due to: (i) weak global demand, (ii) a fall in export prices, and (iii) sluggish investment. Significant changes to Bolivian, Colombian and Chilean political and economic conditions could have an adverse effect on our business, financial condition and results of operations.

Bolivia

Most of the operations and customers of BCP Bolivia, BCP’s commercial bank in Bolivia, are located in that country. Accordingly, our results of operations and financial condition depend on Bolivia’s economic activity and political environment.

In October 2014, Evo Morales was reelected as president of Bolivia for a period of five years. During this third term, the government is expected to continue the economic policies and reforms of the first two presidential terms of Mr. Morales, which concentrated on redistribution programs through different bonus schemes, on deepening the industrialization of strategic economic sectors and on closing Bolivia’s infrastructure gap. Given the government’s high dependence on income from exports of natural gas to Brazil and Argentina, declines in the price of the gas exported (which is linked to the price of oil) could strain government finances and reduce its ability to continue the high levels of public spending of the last several years.

In February 2016 the government calls a referendum to ask if the people would agree with the nomination of President Evo Morales for a third term. The answer was that 51,27% of the population disagreed with the query; therefore the Movimiento al Socialismo, (which is the Mr. Morales political party) will seek a new presidential candidate for the next election.

During 2015, Bolivia’s macroeconomic indicators continued the positive trend observed over the last several years. However, the fall in the prices of Bolivia´s main exports caused some of these indicators to deteriorate in 2015 versus 2014. In 2015: (i) GDP grew 4.8%, still one of the highest growth rates in South America but below the 5.5% recorded in 2014; (ii) inflation remained stable at 2.9%, below the Central Bank´s target of 5.5% and the 2014 inflation rate of 5.2%; and (iii) after continuous growth over the last several years, international reserves declined 13.7% in 2015 mainly due to lower exports. As of December 2015, international reserves represented 39% of GDP. Further declines in the prices of commodities, primarily oil and minerals, could put additional pressure on Bolivia´s fiscal balance, international reserves and GDP growth. Additionally, the financial services law (Ley de Servicios Financieros N° 393), which was enacted in 2013, established lending quotas and caps on interest rates that could negatively impact interest margins on banks and reduce their ability to generate enough capital to maintain the growth rates in their lending portfolios experienced during the last several years.

Colombia

The adjustment of the Colombian economy to lower oil prices has continued to be orderly so far. The GDP expanded 3.1% in 2015 mainly as a result of a still strong labor market and a solid public spending due to regional elections (October 2015), available royalties, and housing programs. All this allowed consumption to continue showing a relatively healthy growth last year. Likewise, the strong execution of civil works by the government contributed to maintain investment in positive ground. Accordingly, while the Colombian economy decelerated against 2014 (4.4%), it posted the second highest growth rate among main Latam countries and so, outperformed the region in 2015 (-0.3%). Importantly, the Colombian Peso depreciated by 25.2% last year following the sharp fall in crude prices and its impact on the trade balance and fiscal accounts. Finally, it is worth to mention that the statutory income tax rate for corporates went from 34% to 39% in 2015 as a result of the 2014 tax reform (40% in 2016). Likewise, a maximum rate of corporate wealth tax (i.e. the rate charged to firms with equity over COP 5 bn) was set at 1.15% in 2015. A new tax reform is expected this year.

Chile

Influenced by both external and domestic factors, the Chilean economy has posted a strong slowdown during the last two years, growing 2.1% in 2015, similar to 2014 (1.9%). This cycle began with a sharp decline in investment while private consumption has also been negatively affected more recently by the worse economic outlook. The main surprise in 2015 was the fall observed in exports despite the sharp Chilean pesos depreciation. A slow reallocation process of productive resources, the low growth of trading partners, and the sharp depreciation of their currencies, are the main factors behind this unexpected decline in real exports. On the supply side, the services sector boosted activity in 2015, clearly influenced by higher fiscal spending. Importantly, the statutory income tax rate for corporates went from 21% to 22.5% in 2015 as a result of the 2014 tax reform (24% in 2016).

(8)    Our trading activities expose us to volatility in market prices, declines in market liquidity or fluctuations in foreign currency exchange rates, which may result in losses that could have a material adverse effect on our business, financial condition and results of operations

The securities and derivative financial instruments in our trading portfolio may cause us to record gains or losses, when sold or marked to market, and may fluctuate considerably from period to period due to numerous factors that are beyond our control, including foreign currency exchange rates, interest rate levels, the credit risk of our counterparties and general market volatility. These losses from trading activities could have a material adverse effect on our business, financial condition and results of operations. In this sense, risk is inherent in the Group’s trading 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.

(9)    Natural disasters in Peru could disrupt our businesses and affect our results of operations and financial conditionscondition

We are exposed to natural disasters in Peru, such as earthquakes, floods and mudslides. Earthquakes in Peru are common occurrences as the country is located in a seismic zone: the interface between the Nazca and South American tectonic plates. Peru has been adversely affected by earthquakes in the past, including an 8.0a 7.9 magnitude earthquake that struck the central coast of Peru in 2007. The country is also vulnerable to El Nino Phenomenon, which provokes floods and mudslides in the north and central Andean regions. The 1997-1998 El Nino, due to its very strong intensity, destroyed crops and infrastructure equivalent to 2.2% of GDP. During 2015, the National Oceanic and Atmospheric Administration (NOAA) alerted a very strong El Nino would be registered in the Central Pacific. Yet, event developed with a moderate intensity in Peru and had a limited impact in infrastructure and economic activity.

A natural disaster of this nature or any other type of disaster could impair.impair our operational capacity. Our operational capacity, our business continuity plans which are designed to sustain Credicorp’s critical operations, include emergency response, disaster recovery, operations continuity, crisis management, data protection and recovery, and critical systems redundancy. Although we test our business continuity plans annually, these plans may prove to be ineffective which could have a material adverse effect on our ability to carry out our businesses, especially if an incidence or disaster affects computer-based data systems or destroysdamages customer or other data. In addition, if a significant number of our employees were affected by the natural disaster, our ability to conduct business could be impaired.

Our subsidiary Grupo PacíficoPacifico is further exposed to risks associated with natural disasters in Peru as an insurance business. To protect Grupo Pacífico’sPacifico’s solvency and liquidity, our insurance business historically has obtained reinsurance for a substantial portion of its earthquake-related risks through automatic quota share and excess loss treaties; however, there can be no assurance that a major catastrophe would not have a material adverse impact on our results of operations or financial condition or that our reinsurance policies will be an effective hedge against our exposure to risks resulting from natural disasters.

Regulatory changes to the private pension fund and banking system in Peru could impact our earnings and adversely affect our operating performance. Our estimated current maximum catastrophic exposure, net of reinsurance, excluding reinstallments is S/7.0 million.

Prima AFP manages our Pension Fund Administration business. In Peru, private pension fund managers are closely regulated by the SBS. In 2012, the Peruvian Government adopted the Law to Reform the Private Pension System, which modifies the commissions that fund managers, may collect from pension fund participants. Prior to the adoption of the Law to Reform the Private Pension System, Peruvian pension fund participants, known as “affiliates”, were charged commissions based on their salaries. Under the Law to Reform the Private Pension System, pension fund managers, known as AFPs, will apply a mixed fee to manage funds. This new fee structure will be calculated based on monthly remuneration of the affiliate plus a fee on the fund that is set up with new contributions. By May 31, 2013, affiliates that are already in the private pension fund system must choose between (i) continuing to be subject to the fee structure based on remuneration that was in place prior to the adoption of the Law to Reform the Private Pension System; and (ii) changing to the new fee structure (mixed commission). All new affiliates will be subject to the mixed fee structure. The mixed fee structure will be in place for a 10-year transitional period after which an AFP´s fees will be based sole on its funds under management. These changes in the fee structure of Peru’s pension funds are designed, to align the interest of AFPs and their clients.

Other regulatory changes from the Law to Reform the Private Pension System include: (i) the establishment of an auction process to determine which AFP will manage the accounts of new affiliates; (ii) the packaging of insurance for survivors, disability and burial costs; (iii) the creation of a capital protection fund designed to establish a stable source of funds for seniors; and (iv) other measures designed to expand coverage. It also contemplates changes related to employers, outside service contracts and the operating processes. These regulatory changes may reduce the fees that we collect and adversely affect our results of operations. The Law to Reform the Private Pension System will be implemented in phases. Changes in 2013 will be focused on modifying processes and systems. See “Item 4. Information on the Company—(B) Business Overview—(11) Supervision and Regulation—(vii) Prima AFP.”

In the case of the banking system, the last main changes in regulation were the elimination of fees related to our Retail Banking Business and higher standards in transparency regarding information offered to clients about interest rates and features of financial products. Although the impact on our banking business’ fee income was not material, pressure from Congress may continue and the regulator could persist on increasing the regulation of fees.

Recent legislation regarding the financial services industry may subject us to significant and extensive regulation, which may have an impact on our operations.

Government measures to regulate the financial industry, including the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act) and the Foreign Account Tax Compliance Act (FATCA) of the United States are likely to increase our regulatory compliance burden and related costs. These and other regulatory developments are likely to impact Credicorp, and may require us to change certain aspects of our business practices and impose additional costs on us, ultimately having an impact on our operations. With respect to FATCA and Dodd Frank, Credicorp has hired outside consultants to help determine the impact that the implementation of these two laws will have on our institution. Based on our analysis to date, we do not expect the implementation of FATCA to have a material impact on our business given our limited number of U.S. accountholders. Also, we do not expect that the implementation of the Dodd-Frank Act, including the Volcker Rule and regulations related to swap transactions, will materially impact our business or cause us to incur material costs. However, until final implementations of the regulations under these new laws are issued, we cannot assure you of the extent of the impact these new laws will have on Credicorp.

(10)    We operate in a competitive banking environment that may limit our potential to grow, particularly in the medium term as more foreign banks establish or expand operations in Peru.Peru

BCP has experienced increased competition, including increased pressure on margins. This is primarily a result of the presence of the following:

Larger Peruvian companies have gained access to new sources of capital through the 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 dedicate greater resources to, and be more successful in, the development of technologically advanced products and services that may compete directly with BCP’s products and services. Such competition would adversely affect the acceptance of BCP’s products and/or lead to adverse changes in the spending and saving habits of BCP’s customer base. If competing 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. 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. 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 or other similar factors.

As a result of Peru’s strong Peru’s economic growth, which has outpaced growth by nearby countries, several banks have sought and obtained authorization to open representative offices in Peru. Itaú Unibanco, Banco Latinoamericano de Comercio Exterior (Bladex), Morgan Stanley Bank and Bank of Tokyo and the Industrial and Commercial Bank of ChinaMitsubishi UFJ (BTMU) are among those banks receiving authorization. With the increased competition, more individuals will have access to credit, and the percentage of the population using bakingbanking services will likely climb. This will eventually put downward pressure on interest rates. Any negative impact on BCP as a result of increased competition could have a materiallymaterial adverse effect on our results of operations and financial condition.

(11)    Economic and market conditions in other countries may affect the Peruvian economy and the market price of Peruvian securities.

Economic conditions in other countries may impactand developments in international financial markets can affect Peru’s GDPeconomic growth. Peru’sThe country’s exports are highly concentrated in the oil and mining industry. This industry, represents almost 25%with taxes levied on the sector representing approximately 2% of Peru’sthe Peruvian government’s total income tax revenues, andrevenues. In addition, gold and copper alone constitute around 45%exports represent 43% of Peru’s total exports.all shipments. Therefore, an economic downturnPeruvian trade responds significantly to fluctuations in Peru’s major importers of mining goods may adversely affect Peru’s economic growth.metal prices, especially gold and copper. Gold and copper prices fell 36.6% and 41.7%, respectively between December 2012 and December 2015, turning a US$6.3 billion trade surplus in 2012 into a US$3.2 billion trade deficit in 2015.

Nearly one quarter of

In addition to changes in prices, Peru is also vulnerable to fluctuations in foreign demand, especially from the expected growth in Peru’s economy over the next year depends on economic conditions in China, which generates considerable demand for basic metals mined in Peru. AnUnited States and China. A more pronounced economic slowdown in China over the next severalfew years poses a risk to Peruvian growth as it may adversely affect thehurt exports and foreign direct investment. Lower growth ofin Latin America can also hurt the Peruvian economy and our business, especially in the cases of Chile, Colombia and Panama, where we have operations, as well as Brazil and Mexico, which have a resultbroad impact throughout the region because of lower exports, lower levelstheir size.

Finally, financial conditions in global markets also affect the economy, affecting interest rates for local corporate bonds and influencing the exchange rate. Monetary tightening in developed economies, particularly on the part of foreign investment and lower tax revenues. The aforementionedthe Federal Reserve System in the United States, could affect economic activity in Peru to the growthdegree that it strengthens the dollar and increases interest rates, thereby reducing access to funding for some local businesses. Also, since the Peruvian economy has still some level of our businessdollarization (30.5% of loans and 45.2% of deposits as these reflectof December 2015), potential balance-sheet effects should also be contemplated since a higher exchange rate could increase debt burdens for individuals and businesses that have taken loans in dollars but have earned their income in local currency.

However, the BCRP has taken steps to foster de-dollarization and thus reduce this vulnerability by:

In November 2015 the Central Bank expanded its credit de-dollarization program, adjusting the present limits used to calculate the rate of the additional reserve requirements based on the Peruvian economy.

Fluctuationreduction of a bank’s foreign currency exposures, effective as of December 2016. The current minimum reduction is 20% of the banks’ total exposure as of September 2013, while in the case of car and volatilitymortgage loans, the minimum reduction required by December 2016 is 30% of capital marketsthe February 2013 exposures. Thereafter, the reduction for car loans and interest rates may decrease our net income.mortgage loans will increase by 10 percentage points at the end of each year.

We may suffer losses related to the investments by BCP, ASHC, Grupo Pacífico 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 capital markets may result in a decline in the value of our positions and lead us to register net losses. In addition, a downturn in capital markets could also lead to volatile prices and negative net revenues from trading positions, even in the absence of a general economic 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 our financial condition by causing a decrease in net interest income.

(12)    A failure in, or breach of, our operational or security systems could temporarily interrupt our businesses, increasing our costs and causing losses.

We have defined and implemented governance with specific roles for risk and control assessment, monitoring and awareness programs, security initiatives, business objectives, corporate alignment and regulatory compliance with banking, credit card, insurance and pension fund industry requirements in Peru, Bolivia, Chile, Colombia, Panama, the Cayman Islands and the United States of America.

Although we have a strong IT infrastructure and high-skilled professionals managing IT operations, weour risk exposure could be significant. We are still vulnerable to failure of our operational systems. This could temporarily interrupt our business, increasing our costs and causing losses. Temporary interruptions or failures in hardware and software that support our business and customer’scustomers’ transactions could result mainly in regulatory fines, penalties, and reputational loss.

Credicorp has not experienced any material losses related to cyber-attacks or operational stability. Credicorp is continuously working and investing resources in maintaining and updating control processes in order to prepare and adapt to new technologies. However our use of the internet and telecommunications technologies to conduct financial transactions, as well as the increased sophistication and activities of organized criminals, hackers and other external parties can impact the confidentiality, integrity and availability of critical information.

(13)    Acquisitions and strategic partnerships may not perform as expected, which could have an adverse effect on our business, financial condition and results of operation.

Acquisitions and strategic partnerships, asincluding those made in our investment banking and insurance businesses may not perform as expected since our assessment could be based on assumptions with respect to operations, profitability and other matters that may subsequently prove to be incorrect. Future acquisitions, investments and alliances may not produce the anticipated synergies or perform in accordance with our expectations, which could have an adverse effect on our business, financial condition and results of operation.

(14) Reinsurance is an important tool in risk management of any primary insurance company and as such, it allows achieving a level of risk diversification that in turns helps to reduce losses. But, we face the possibility that the reinsurance company will be unable to honor its contractual obligations.

Credicorp assumes reinsurance risk in the normal course of business for our insurance contracts when applicable. Premiums and claims on assumed reinsurance are recognized as revenue or 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.

ITEM 4.  INFORMATION ON THE COMPANY

4. A         History and development of the company

We are a limited liability company that was incorporatedformed with the legal name Credicorp Ltd. in Bermuda on October 20, 1995 to act as a holding company, coordinate the policy and administration of our subsidiaries, and engage in investing activities. Our principal activity is to coordinate and manage the business plans of our subsidiaries in an effort to implement an universal banking services and develop our insurance business, focusing mainly on Peru, Bolivia, Colombia and BoliviaChile along with limited investments in other countries of thein that region. Our registered address is Clarendon House, 2 Church Street, Bermuda. The management and administrative office (i.e., principal place of business) in Peru of our subsidiary, Banco de CréditoCredito del Perú,Peru, is located at Calle Centenario 156, La Molina, Lima 12, Peru, and the phone number is 51-1-313-2000.

As of December 31, 2012,2015, our total assets were US$40.8S/155.5 billion and our net equity was US$4.4S/16.7 billion. Our net income attributable to our equity holders in 2010, 20112013, 2014 and 20122015 was US$571.3S/1,538.3 million, US$709.3S/2,387.9 million, and US$788.8S/3,092.3 million, respectively. See “Item 3. Key Information—(A)Information — 3.A Selected Financial Data” and “Item 5. Operating and Financial Review and Prospects.”Prospects”.

We were formed in 1995 for the purpose of acquiring, through an exchange offer, the common shares of BCP, ASHC and Grupo Pacífico.Pacifico. We currently hold, directly and indirectly, 97.7% of BCP, 97.8%98.5% of Grupo PacíficoPacifico and 100% of ASHC. See “Item 4. Information on the Company—(C)Company — 4.C Organizational Structure.”Structure”.

In February 2005, we were authorized by Peruvian regulatory authorities to establish Prima AFP, of which Grupo CréditoCredito is the main shareholder. Prima AFP started operations in August 2005.

In August 2006, Prima AFP acquired UniónUnion Vida AFP, which iswas a pension fund operating in the Peruvian market. Prima AFP’s acquisition of UniónUnion Vida AFP, which was formerly held by Grupo Santander PerúPeru S.A., was a strategic move toward consolidation as part of its efforts to gain a leading position in the pension fund market. As of the date of the acquisition, Prima AFP was the second largest pension fund company in terms of market share terms (defined as the amount of affiliates and assets under corporate management), with the second highest returns and the lowest commission for affiliates (who invest a portion of their salary each month). Today, Prima AFP is the largest pension fund manager in Peru. The merger between Prima AFP and UniónUnion Vida AFP was consummatedclosed in December 2006.

In October 2009, BCP acquired from the Cooperative for Assistance and Relief Everywhere Inc. (CARE) – Perú, all the shares that this entity owned of Empresa Financiera Edyficar S.A. (Edyficar), representing 77.12% of Edyficar’s capital stock. In accordance with Peruvian legal requirements in effect at the time, BCP made a public offering to Edyficar’s minoritynon-controlling shareholders to acquire the remaining 22.67%22.88% of the company’s stock. The total purchase price for the acquisition was US$96.1 million (equivalent to S/274 million), including related direct acquisition costs. As of December 31, 2012 BCP owned 99.79% of Edyficar.

In October 2010, the Credicorp group acquired American Life Insurance Company (ALICO)’s 20.1% and 38% stakes in PacíficoPacifico Seguros and PacíficoPacifico Vida, respectively. PacíficoPacifico Vida’s shares were acquired through Credicorp Ltd. and its subsidiary, Grupo Crédito,Credito, acquired Pacífico Seguros´sPacifico Seguros’s shares. Consequently, at the conclusion of this transaction, Credicorp and its subsidiary Grupo CréditoCredito held 97.68% of PacíficoPacifico Seguros, and jointly controlled 100% of PacíficoPacifico Vida. The total investment amounted to approximately US$174 million, making it the largest transaction ever completed in the Peruvian insurance market. We expect the acquisition to permit the Credicorp group to realize synergies in its decision making process and through the integration of all its insurance business lines. The closer proximity between companies will also allow Grupo PacíficoPacifico to improve its value proposition to customers, who seek integral insurance solutions. On April 28, 2011, Credicorp transferred its 24% stake in PacíficoPacifico Vida to PacíficoPacifico Seguros. As a result of that transfer, PacíficoPacifico Seguros now directly owns 86% of the shares of PacíficoPacifico Vida, and Credicorp directly owns the remaining 14%. This transfer did not affect Credicorp’s consolidated financial statements.

In November 2010, Credicorp’s Board of Directors approved the transfer of 84.9% of BCP’s total shares to Grupo CréditoCredito S.A. (its(Credicorp’s Peruvian wholly owned subsidiary) through a capital contribution, in order to facilitate Credicorp’s future investments in Peru without modifying the controlling structure of BCP. Under the new structure, Credicorp directly holds 12.7% of BCP’s total shares and, in conjunction with its subsidiary Grupo Crédito, continues to control the same 97.7% of such shares without modifying the internal governance structure. Before this change in ownership structure, dividends to Credicorp from its Peruvian subsidiaries, such as BCP, were remitted abroad and had to be remitted back to Peru when capital for new investments in the country were required. With the new structure, Grupo Crédito,Credito, which acts as the local holding company for some of Credicorp’s investments in Peru (Prima AFP, Grupo PacíficoPacifico and others), will manage Credicorp’s future Peruvian investments, and directly transfer the dividends to Credicorp when it is required to do so under Credicorp’s dividend policy. This modified organizational structure willdid not affect the way Credicorp and BCP manage their day-to-day operations, and Credicorp’s dividend policy has not changed as a result of this transaction.

In the second half of 2011, Pacíficoour subsidiary Pacifico Salud invested approximately US$ 82.7S/225.1 million to create the largestits own private medical services network in Peru by acquiring majority shares to directly manage: (i) the El Golf, San Borja and Oncocare clinics in Lima, (ii) the Galeno clinic in Arequipa, (iii) Laboratorios ML, a clinical laboratory, and (iv) Doctor+, which is a house call/ambulance service. In 2012, PacíficoPacifico Salud invested US$ 38.6S/102.7 million to increase its integrated insurance and health providing services by acquiring: (i) Clínica BelénClinica Belen S.A., (ii) Centro OdontológicoOdontologico Americano, (iii) Prosemedic S.A., (iv) Clínica SánchezClinica Sanchez Ferrer S.A. and Inversiones Marsfe S.R.L., and (v) Bio Pap Service S.A.C. We believe that these acquisitions enable PacíficoPacifico Salud to directly benefit from this sector’s growth and to strategically defend against potential changes in the healthcare service supply chain, where vertical integration in the insurance business is becoming more frequent.

During 2012, Credicorp, as part of theour strategic plan, initiated the creation of a regional investment bank.banking platform. On April 27, 2012, Credicorp, through its subsidiary BCP, acquired a 51 percent51% stake in Credicorp Capital Colombia (formerly Correval S.A. Sociedad Comisionista de Bolsa,Bolsa), a brokerage entity established in Bogota, Colombia, for approximately US$72.3 million. This entity will bemillion (approximately S/246.6 million). In June 2013, BCP transferred its shares to Credicorp Investments Ltd..Capital Ltd., without affecting Credicorp’s consolidated financial statements and without recording any gain or loss. On July 31, 2012, Credicorp, through its subsidiary BCP, acquired 60.6 percent60.6% of IM Trust S.A. (IM Trust, Corredores de Bolsa (IM Trust)Bolsa), an investment banking entity established in Santiago, Chile, for approximately US$131.5 million (approximately S/447.1 million), of which US$110.9 million werewas paid in cash consideration at the acquisitionsacquisition date and US$20.6 million will bewas paid in cash in AugustJuly 2013. In November 2012, IM Trust wasBCP transferred its shares to Credicorp InvestmentsCapital Ltd., without affecting Credicorp’s consolidated financial statements and without recording any impact on Credicorp’s financial statements.gain or loss. For theour investment banking operations in Peru, we created BCPCredicorp Capital Peru S.A.A. (BCP(formerly BCP Capital), a company incorporated in Peru that was established in April 2012 through the split of an equity block of BCP. This split resulted in a reduction of BCP’s assets, liabilities and net equity in an amount of US$71.2S/184.7 million, US$18.0S/46.7 million and US$53.2S/138.0 million, respectively. Assets transferred included Credibolsa S.A.B., Creditítulos S.T., Credifondos S.A.F.M.Credicorp Capital Bolsa, Credicorp Capital Titulizadora, Credicorp Capital Fondos and BCP’s investment banking activities. The equity block split had no effect inon Credicorp’s consolidated financial statements; no gains or losses arose from it.

Finally,In 2012, we established Credicorp InvestmentsCapital Ltd. (Credicorp Investments) in Bermuda to hold the Group’s investment banking activities in Chile, Colombia and Peru and asPeru. As of December 31, 2012, the consolidated financial statements2015, Credicorp Capital held directly and indirectly 60.6% of this subsidiary only include IM Trust operations from Novemberand 51.0% of Credicorp Capital Colombia.

At Credicorp Capital’s shareholder meeting held on September 11, 2013, the Company agreed to increase Credicorp Capital Ltd.’s share capital in the Company by US$3.9 million (approximately S/13.3 million) in exchange for 100% of the share capital of Credicorp Capital Securities Inc., which Credicorp Ltd. controls. Credicorp Capital Securities Inc. is incorporated in the United States of America and provides securities brokerage services, mainly to retail customers in Latin America.

On September 25, 2014, Credicorp announced that its subsidiary El Pacifico Peruano Suiza Compañia de Seguros y Reaseguros (“Pacifico”) had reached an initial agreement with Banmedica (Santiago Stock Exchange listed company with a market capitalization of US$ 1,317 million as of September 25^th, 2014), to establish the preliminary terms and conditions to develop businesses in the healthcare industry in Peru and further providing medical services, health insurance and health plans. This transaction reflects Credicorp’s strategy to capitalize on Pacifico’s in-depth knowledge of Peruvian market and Banmedica’s extensive know-how and successful experience in the health care business. On December 2012. We will also transfer Correval (at book value)30, 2014, Pacifico signed the final agreement with Banmedica S.A. to enter into the healthcare market in Peru. Based on this agreement, Credicorp Investments as soon as we obtain the approval from Colombian supervisors.lost control of its subsidiary Pacifico Entidad Prestadora de Salud (Pacifico EPS), which became an associate. This agreement came into effect on January 1, 2015. The agreement has two major parts:

GeneralThis transaction resulted in profits of S/99 million, which is recognized in “Net gain on sale of securities” in the consolidated statements of income (See Note 2b and 13 to the Consolidated Financial Statements).

At Grupo Credito’s shareholder meeting held on February 11, 2015, shareholders approved the terms of split of equity block of Grupo Credito in favour of Credicorp Capital Holding Perú S.A., a company incorporated on September 3, 2014 and a subsidiary of Credicorp Capital Ltd., with the aim of implementing a reorganization of Credicorp’s investments. The equity block was composed of the investment that Grupo Credito held in Credicorp Capital Peru, whose net equity was approximately S/511.3 million as of May 31, 2015. As a result, Grupo Credito reduced its share capital by approximately S/491.7 million. Credicorp Capital Holding Peru also increased its share capital by about S/491.7 million and issued 491,686,830 new shares with a nominal value of S/1.00 each in favour of Credicorp Ltd (shareholder of Grupo Credito). In October 2015, Credicorp´s Board of Directors approved the transfer of the shares to Credicorp Capital Limited, finishing the reorganization process to regroup, under Credicorp Capital Limited, all the investments in subsidiaries related to capital markets.

On March 20, 2014, Credicorp, through its subsidiary Empresa Financiera Edyficar S.A., acquired a 60.68% stake in Mibanco, Banco de la Microempresa S.A. (Mibanco), a local bank that specialized in the micro and small entities sector, for approximately S/504.8 million or US$179.5 million, in cash. On April 8, 2014, Grupo Credito S.A. and Empresa Financiera Edyficar S.A., subsidiaries of Credicorp Ltd., acquired from the International Finance Corporation (IFC) an additional 6.5% stake in Mibanco (5% through Grupo Credito S.A. and 1.5% through Empresa Financiera Edyficar S.A.) for approximately S/54.1 million. In addition, Credicorp’s subsidiaries made a Public Tender Offer (Oferta Pública de Adquisición or OPA by its Spanish initials) to non-controlling shareholders of Mibanco pursuant to the Capital Markets Law. Credicorp acquired in July 2014 an additional 18.56% of Mibanco’s capital stock forapproximately S/153.6 million; and in September 2014, acquired an additional 1.19% for approximately S/10 million. As of December 31, 2014, Credicorp held 86.93% of Mibanco’s capital stock and paid an aggregate of approximately S/722.5 million. A merger transaction between Edyficar and Mibanco, which involved a spin-off of the majority of the assets and liabilities of Edyficar, was made effective on March 2, 2015. No gains or losses were recognized in the income statement. As of the merger day, Credicorp held 95.36% of the new Mibanco's capital stock. Also the new entity held S/5,595 million in assets and S/3,514 million in total loans.

4. B     Business Overview

(1)    Credicorp operating segments

We are the largest financial services holding company in Peru. For management purposes, the GroupCredicorp is organized into four operating segments based on our products and services. According to IFRS, an operating segment is a component of an entity that engages in business activities from which it may earn revenues and incur expenses;expenses, whose operating results are regularly reviewed by the entity’s chief who makes decisions about resources allocated for the segment and assesses its performance;performance, and for which discrete financial information is available. We conduct our financial services business through our operating segments as follows: banking, insurance, pension funds and investment banking.

Banking: principally handling loans, credit facilities, deposits and current accounts. Banking also includes handling deposits, consumer loans and credit cards products for individual customers.

Insurance: including commercial property, transportation and marine hull, automobile, life, health and pension fund underwriting insurance. Private hospital services are also included under this operating segment.

Pension funds: providing private pension fund management services to customers.

Investment Banking: including corporate finance (structured lending, capital markets and M&A), sales & trading (equity, fixed income, and derivatives), and asset management (investment funds, mutual funds, advisory and mandates).

The following table provides certain financial information about our principal business segments as of and for the year ended December 31, 2012 (See Note 27 to the Consolidated Financial Statements):

* Operating income includes the net interest income from banking activities and the amount of the net premiums earned, less insurance claims.

We conduct our wholesale banking, treasury and retail banking and wealth management activities primarily through BCP, the largest (in terms of total assets, loans, deposits, net equity and net income) full-service Peruvian commercial bank, and our ASB private banking and asset management firm. We conduct our pension fund business through Prima AFP (the largest pension fund in terms of funds under management) and our insurance activities through Grupo Pacífico, which is the second largest Peruvian insurance company in terms of premiums, fees and net income. We conduct our investment banking business primarily through BCP Capital S.A.A. in Peru, Correval S.A. in Colombia, and IM Trust S.A. in Chile, each of which is a leading company in its respective market. It should be noted that the term “Peruvian commercial bank,” “Peruvian insurance company” and other similar terms used in this Annual Report do not include the assets, results or operations of any foreign parent company or foreign subsidiary of such Peruvian company.

Primarily as a result of the strong microeconomic environment in Peru in 2012, we recorded net income after minority interest of US$ 788.8 million in 2012, US$709.3 million in 2011 and US$571.3 million in 2010. The 2012 result reflected an increase of 11.2% in our net income, primary as a consequence of the strong performance of all our subsidiaries.

Our total assets amounted to US$28.4 billion in 2010, US$30.7 billion in 2011 and US$40.8 billion in 2012. The 32.8% increase in total assets in 2012 was primarily a result of the continued growth of our loan portfolio, which grew by 23.1% in 2012 (compared to a growth of 21.3% in 2011 and 24.2% in 2010), in line with the expansion of the Peruvian economy, which had GDP growth rate of 6.3% in 2012. Our past-due loan ratio (which includes loans under legal collection) was 1.70% at the end of 2012 (compared to a ratio of 1.46% at the end of 2011 and 1.44% at the end of 2010). We had a coverage ratio (i.e., reserves for loans as a percentage of past-due loans) of 187.7% (compared to a ratio of 200.6% at the end of 2011 and 198% at the end of 2010), and our return on average net equity (ROAE) reached 20.2% in 2012 (compared to 22.2% in 2011 and 21.3% in 2010).

Banking segment

BCP

BCP’s year-end 2012 net income totaled US$660.8 million, which resulted in a contribution to Credicorp of US$645.8 million. This earnings contribution was 13.8% higher than the 2011 contribution (US$564.1 million) and higher than the 2010 contribution of US$464.4 million. This was mainly a product of our improved net interest income which was in turn attributable to a 22.5% increase in gross loans. As a result, BCP registered a ROAE of 25.6% in 2012.

Performance in 2012 was primarily a result of:

Performance in these areas enabled BCP to offset the company’s 75.7% increase in provisions for loan losses and 21.6% increase in operating expenses. The increase in provisions did not indicate a deterioration of portfolio quality and instead reflected the relative growth of retail banking as a percentage of our total loan portfolio. Retail banking segments have historically had higher levels of past-due loans and higher margins than other banking segments.

BCP’s higher operating expenses were a result of BCP’s higher salary expenses and employee benefits and higher administrative and general expenses. These higher operating expenses were exacerbated by the 5.4% appreciation of the Nuevo Sol against the U.S. Dollar over the course of 2012, as a significant portion of BCP’s operating expenses are denominated in local currency.

BCP’s total assets reached US$34.2 billion at the end of 2012 a 32.6% increase from the US$26.8 billion of total assets that BCP had as of December 31, 2011. As of December 31, 2010 BCP’s total assets were US$25.3 billion. The increase in total assets in 2012 was a result of the 22.2% expansion of BCP’s loans net of provisions, which totaled US$20.1 billion at the end of 2012.

The loan portfolio constituted 58.5% of BCP’s total assets at the end of 2012 (61.2% in 2011 and 55% in 2010). BCP’s total past-due loans reached US$370.4 million from US$258.3 million registered in 2011 (a 43.4% increase from the previous year) and US$209.1 million in 2010 while refinanced and restructured loans increased by 48.1%, from US$96 million in 2011 to US$142.2 million at the end of 2012 (US$76.7 million in 2010). The composition of BCP’s loan portfolio in 2012 changed significantly. As of December 2012, the average daily balances in our retail banking business accounted for 51.2% (compared to 46.9% in December 2011 and 42% at the end of 2010) and wholesale banking business accounted for 48.8% of BCP’s total portfolio (compared to 53.1% in December 2011 and 58% at the end of 2010). This outcome is a result of BCP’s strategic focus on increased market penetration in middle and lower segments, which are generally characterized by higher margins.

The average daily balances of BCP’s wholesale banking loans grew by 12.1% in 2012 (8.1% in 2011) as a result of the financing provided for large investments, inventories and working capital to keep pace with Peru’s dynamic economy. As a result, BCP continued to lead the Peruvian financial system with a market share of 47.2% for the corporate segment (44.3% in 2011) and 33.2% for the middle market (34.3% in 2011).

BCP’s retail banking portfolio continued its upward trend and grew 32.8% in 2012 (average daily balance). In terms of growth and yields, BCP’s small and medium enterprise (SME) loans were its best performing product, growing by 35.4% (measured in average daily balances) to a total volume of US$4.1 billion, followed by credit cards which grew 27.7% to US$1 billion, in each case as of December 31, 2012. Consumer loans grew 35.4% to US$1.8 billion, while mortgages expanded 29.8%, totaling US$3.2 billion.

On the liabilities side, BCP’s deposits reached US$22.8 billion on December 31, 2012 from US$17.6 billion in 2011 (a 30% increase from the previous year) and US$ 16.8 billion in 2010. This increase in deposits not only continues to reinforce BCP’s funding structure, as deposits account for 72.3% of all funding sources, but also serves to maintain BCP’s status as an industry leader with a market share of 33.7%. BCP’s time deposits grew 58.7%. Demand deposits were BCP’s largest deposit type, totaling US$7.6 billion as of December 31, 2012. Savings deposits, BCP’s second-largest deposit type, reached US$6.1 billion. Time deposits totaled US$6.7 billion while Severance Indemnity Deposits (CTS by its Spanish initials) totaled US$2.2 billion.

BCP’s issuance of bonds gained greater relevance within the funding structure. In April 2012, BCP completed a subordinated bond issuance for US$350 million. This transaction was entered into to fully align BCP with new capital requirements established by local regulators. As of December 31, 2012, the aggregate outstanding principal amount of BCP’s bonds totaled US$3,605 million (15.5% higher than the level registered in 2011).

BCP maintains adequate provisioning and long-term risk management policies. Its coverage ratio decreased to 188.6% in 2012 from 200.8% in 2011, which in turn was higher than the coverage ratio of 198.5% in 2010. Total cumulative provisions reached US$705.5 million as of December 31, 2012, which is 34.6% higher than provisions in the previous year.

In 2012, BCP continued expanding its channel network as part of its customer service focus. By providing quality and widespread customer access to BCP’s financial services, BCP sought to increase its penetration of the Peruvian market. In 2012, the network expansion plan focused on cost-efficient channels, by opening ATMs and Agentes BCP locations, which grew by 24.2% and 22.2%, respectively. At the end of 2012, BCP had a total of 1,844 ATMs (1,485 in 2011 and 1,159 in 2010) and 5,713 Agentes BCP (4,674 in 2011 and 3,513 in 2010). Agentes BCP are BCP representatives located in retail establishments, such as grocery and drug stores. As a result of this strategy, BCP’s average number of transactions in 2012 increased 17.8% compared to 2011 and its transactional business was therefore able to generate higher income from fees and commissions.

Overall, BCP’s results met our expectations and remained profitable in line with the growth of Peruvian economy, which posted a 6.3% GDP growth in 2012 despite uncertainty about the global economy.

BCP Bolivia

BCP Bolivia’s year-end 2012 net income totaled US$20.6 million, a 7.7% decrease from its 2011 net income (US$22.3 million). The decrease from 2011 to 2012 was attributable to a 363.4% increase in income tax expense associated with new taxes enacted in 2012. In 2011, net income was US$ 22.3 million, a 41% increase from 2010 net income (US$15.8 million). The increase in 2011 was primarily due to growth in interest income driven by growth in BCP Bolivia’s loan portfolio, and a 38% increase in gains on foreign exchange transactions.

In 2012, 2011 and 2010 BCP Bolivia maintained its position as one of the leading banks in Bolivia. In 2012, BCP Bolivia reported a return on average assets of 1.6%, a past-due loan ratio of 1.2%, and a coverage ratio of 301.3%, compared to industry averages of 1.5%, 1.5% and 291.2% respectively. In 2011, the bank either outperformed or equaled industry average in the following ratios, return on average assets (1.7%), past-due loan ratio (1.2%) and coverage ratio (314%) compared to industry averages of 1.7%, 1.7% and 281.1%, respectively. In 2010, return on average assets (1.4%), past-due loan ratio (1.5%) and coverage ratio (272.6%) were also on par with or exceeded industry averages of 1.4%, 2.2% and 220.7%, respectively

BCP Bolivia’s loan portfolio grew from US$ 602 million in December 2010 to US$ 758 million in December 2011 and US$ 901 million in 2012. The increase in 2011 was driven primarily by a 33% increase in wholesale banking loans while the increase in 2012 was driven by a 25% increase in retail banking loans.

Although BCP Bolivia made a positive contribution to our results in each of the last three years, the bank´s earnings generation capacity is increasingly under pressure due to a more stringent regulatory environment and a significantly higher tax burden.

Edyficar

Edyficar focuses on SME lending and, together with BCP, it held a 23.3%, 21.4% and 19.6% market share in terms of loans at year-ended 2012, 2011 and 2010, respectively. Edyficar closest competitor has a market share of 14.3% at the end of 2012. The consolidation of Edyficar’s results into BCP’s financial statements resulted in a total contribution to BCP of US$36.5 million in 2012, compared to US$26.2 million in 2011 and US$22.1 million in 2010.

Edyficar registered total assets of US$1,064.4 million, US$591 million and US$465.9 million at year-end 2012, 2011 and 2010, respectively; which consisted of US$708.6 million, US$479.1 million, US$336.2 million from the company’s net loan portfolio, its main asset, at year-end 2012, 2011 and 2010, respectively. Total liabilities increased to US$966 million in 2012 (compared to US$515.2 million in 2011 and US$413.5 million in 2010), which included US$301.6 million from banks. Net shareholders’ equity reached US$98.4 million, US$75.8 million and US$52.4 million at year-end 2012, 2011 and 2010, respectively.

As of December 31, 2012, Edyficar had a client base of 443,406 clients, representing an increase of 24.6 % compared to the client base reported in 2011. In 2011, Edyficar had a client base of 356,000 clients which represented an increase of 24.5% compared to the 286,000 clients reported in 2010. The average amount of an Edyficar loan was S/. 4,411 (approximately US$1,730) in 2012, S/. 3,837 (approximately US$ 1,423) in 2011, and S/.3,502 (approximately US$1,247) in 2010. Edyficar registered a past-due loan ratio of 3.9% at the end of 2012, a reflection of its portfolio quality (compared to 4.0% obtained in 2011 and 2010). Edyficar reached a ROAE of 26.5%, 22.9% and 25.2% in 2012, 2011 and 2010, respectively (including goodwill of US$ 50.7 million for each of the last three years) and an efficiency ratio of 54.2%, 55% and 56.1% in 2012, 2011 and 2010, respectively.

The acquisition of Edyficar was part of BCP’s strategy to capture a significant portion of the growth of the Peruvian SME segment, which is expected to expand significantly over the next several years. BCP intends to support Edyficar’s growth and development by improving its funding cost and structure and providing necessary capital and technology.

Atlantic Security Bank (ASB)

Despite low economic performance in the global economy, in 2012 ASB achieved an increase in net profit due to strategic allocation in its investment portfolio and an increase the volume of interest earning assets. ASB’s net earnings for 2012 were US$48.4 million, an increase of 17.8% compared to the US$41.1 million reported in 2011 and US$48.9 million reported in 2010. Credicorp received a contribution of US$48.4 million from ASB in 2012.

Net interest and dividend income in 2012 totaled US$38.6 million, which represented an increase of 21.0% compared to the US$ 31.9 million reported in 2011, which in turn represented a 13.1% decline compared to the US$36.7 million reported in 2010. This increase was primarily due to the ASB’s investment strategies, and increasing volume of interest earning assets. ASB also benefited from lower funding cost, as a result of changing LIBOR in 2012. Short-term customer deposits, which have interest rates that reset frequently, permitted ASB to pay low rates on deposits accounts while earning higher interest income on assets engaged for middle and longer terms. ASB’s financial income, which includes income from fees, the sale of securities, and foreign exchange operations, was US$18.6 million in 2012.

ASB’s total assets were US$1,768.5 million as of December 31, 2012, an increase of 16.1% compared to 2011. ASB’s total assets were US$1,523.5 million in 2011 and US$1,337.8 million in 2010. The increase in total assets from 2011 to 2012 was mainly a result of significant growth in the funds that ASB managed on behalf of its clients, which in turn is related to the positive performance of the Peruvian economy.

At the end of 2012, ASB’s assets under management totaled US$3,961 million, compared to US$3,194 million in 2011 and US$3,178 million in 2010. This growth was primarily a result of increases in the global positions of ASB’s customers and the market value of ASB’s portfolio.

Insurance segment

Grupo Pacífico

In 2012, Grupo Pacífico, which encompasses Pacífico Seguros, Pacífico Vida and Pacífico Salud , reported net income, after deducting minority interests, of US$58.9 million (compared to US$57.1 million of net income in 2011 and US$ 55.4 million in 2010). The contribution we received from Grupo Pacífico increased, from a gain of US$ 47.4 million in 2010 to US$ 65.6 million in 2011 and US$ 66.0 million in 2012. This contribution includes net income, after minority interest, as well as the participation of Grupo Crédito (a subsidiary of Credicorp) in the minority interest.

This increase in net income was primarily a consequence of Grupo Pacífico’s total premiums, which increased 17% in 2012 (from US$ 872.4 million to US$ 1,019.9 million) and 16% in 2011 (from US$ 751.9 million to US$ 872.4 million). A 23% increase in net earned premiums (NEP) and a 17.2% increase in financial income also contributed to the increase in net income.

We believe that there is substantial growth potential in Peru’s insurance market, given the industry’s weak market penetration. Efficiency and risk management will continue to be key indicators in measuring Grupo Pacífico’s performance.

We believe that there is substantial growth potential in Peru’s insurance market, given the industry’s weak market penetration. Efficiency and risk management will continue to be key indicators in measuring Grupo Pacífico’s performance, as we believe that capitalizing on synergies between the insurance business and the distribution channels will lead Grupo Pacífico to greater penetration in the insurance market. Developing alternative sales channels, efficiently utilizing BCP’s network, maintaining relationships and market share through traditional brokerage channels, and expanding services in underserved regions of Peru are essential components of Grupo Pacífico’s growth strategy for 2013.

Additionally, during 2012, Pacifico Salud continued its initiative (which launched in 2011) to create the largest private medical services network in Peru by investing an additional US$ 38.6 million to acquire entities that specialized in providing health and wellness programs, primary and specialized ambulatory services, and comprehensive acute care services, Entities acquired by Pacífico Salud as a part of this initiative include: (i) Clínica Belén S.A., (ii) Centro Odontológico Americano, (iii) Prosemedic S.A., (iv) Clínica Sánchez Ferrer S.A. and Inversiones Marsfe S.R.L., and (v) Bio Pap Service S.A.C. We believe that these acquisitions enable Pacífico Salud to directly benefit from this sector’s growth and to strategically defend against potential changes in the healthcare service supply chain, where vertical integration in the insurance business is becoming more frequent.

Pension fund segment

Prima AFP

During 2012, the growth of the Peruvian economy resulted in positive results for the Private Pension System (SPP by its Spanish initials), which experienced growth in new affiliates, contributors and collections during the year.

These economic conditions led to an increase in the value of funds under management by the SPP during 2012, which reached US$ 38.0 billion as of December 31, 2012 and represented a 25.1% year-over-year increase compared to December 31, 2011 (US$30.4 billion). As of December 31, 2010, SPP had US$31.1 billion in funds under management.

Prima AFP was able to strengthen its position in the market by adjusting its processes and organization to provide high-quality services and timely and transparent information to its clients. As a result, the contribution we received from Prima AFP in 2012 was US$ 35.0 million as compared to US$ 32.4 million in 2011. In 2010, Prima AFP’s contribution was US$25.5 million.

Funds under management at Prima AFP increased from US$ 9.5 billion in 2011 to US$ 12.0 billion as of December 2012. In 2010, this indicator reached US$ 9.8 billion. By year-end 2012, Prima AFP’s market share of total funds under management was 31.5%, representing a year-over-year increase. Prima AFP is the largest pension fund management company in Peru by funds under management.

Prima AFP’s revenues from commissions in 2012 totaled US$ 117.2 million, a 12.2% increase from 2011 when revenues from commissions totaled US$104.4 million. In 2010, revenues from commissions reached US$ 85.2 million. This improvement was a result of a stable and high-quality portfolio of contributing members.

To improve its operating results, Prima AFP will continue to focus on increasing efficiency and reducing costs. Emphasis will also be placed on improving Prima AFP’s long-term stability through improved risk management, which is one of the company’s highest priorities.

In 2012, a series of reforms to the SPP were implemented. These reforms are discussed in “Item 4. Information on the Company — (B) Business Overview— (11) Supervision and Regulation— (vii) Prima AFP.”

Investment banking segment

A strategic focus for Credicorp involves the regionalization of Latin American markets. This has been reflected in the creation of the MILA (by its Spanish initials), a Latin American integrated market -among Chile, Colombia and Peru. The MILA opens up opportunities to further integrate asset management, brokerage and corporate finance operations which can offer benefits for companies that have a significant presence in these markets. Since the formation of the MILA, Credicorp’s investment banking business is carried out through BCP Capital, Correval and IM Trust, which hold considerable market shares in the Peruvian, Colombian and Chilean markets, respectively. These three companies perform operations in three business lines: Asset Management, Sales & Trading and Corporate Finance.

Asset Management

In terms of asset management, BCP Capital posted a total of US$ 4,593 million in assets under management in 2012, which represented a market share of 39% at the end of 2012. This figure includes US$2,749 million of assets managed by BCP Capital’s mutual funds, Correval posted a total of US$ 1,534 million in assets under management, including mutual funds and investment funds managed. Correval’s assets under management represented market share of 4.3% at the end of 2012. Finally, as of December 31, 2012 IM Trust had a total of US$ 2,126 million in assets under management, including US$ 460 million in mutual funds and investment funds managed.

Sales & Trading

In 2012, BCP Capital traded a total of US$ 2,073 million in equity securities and US$ 511 million in fixed income securities, which represented a market share of 16.8%, Correval traded a total of US$ 9,505 million in equity securities and US$ 139,748 million in fixed income securities, which represented market shares of 12.9% and 11.6% respectively. IM Trust traded a total of US$ 5,620 million in variable income instruments and US$ 31,599 million in fixed income instruments, which represented market shares of 7.13% and 11.3% respectively.

Corporate Finance

In 2012, BCP Capital’s corporate finance business structured mid-term transactions totaling US$ 1,660 million. The primary transactions were:

Consolidated Contributions

The following table sets forth the contribution to the consolidated net income attributable toOur banking business is principally focused on commercial and consumer loans, credit facilities, deposits, current accounts and credit cards. We conduct our equity holders by each of our principal subsidiaries:

(1)          Includes Banco de Crédito de Bolivia, which contributed US$20.6 million in 2012, US$22.3 million in 2011 and US$15.8 million in 2010; and Edyficar, which contributed US$36.5 million in 2012, US$26.2 million in 2011 and US$21.5 million in 2010. This amount also includesbanking business primarily through BCP Colombia, Inversiones BCP Ltda., Inmobiliaria BCP, and Credifondo, Credibolsa and Creditítulos, as of October 2012.

(2)          Includes Prima AFP (which recorded a net income of US$38.2 million in 2012, US$32.4 million in 2011 and US$25.5 million in 2010), BCP Capital (which includes Credifondo, Credibolsa, Creditítulos and BCP Financial Services, for November and December, 2012), Credicorp Securities, Credicorp Investments (which includes IM Trust), Credicorp Ltd. (which mainly includes expenses and the tax withheld in connection with the estimation of the dividends to be distributed to us by our Peruvian subsidiaries (BCP and Grupo Pacífico) and others.

Credicorp was established to create a financial group that would benefit from synergies among the group’s companies and would become a leader within each business market in which the companies operate. In moving steadily toward achieving these strategic goals, we have become a leading financial group. However, we do not operate in a static environment, and the last four years have demonstrated how quickly and dramatically the world can change. Peru’s economic growth slowed significantly in 2009 as a result of the international financial crisis. In response to this, we took steps toward improving our long-term sustainability and worked to position our companies for growth as the Peruvian market continues to evolve. In 2010, Peru’s economy returned to the dynamism it showed in the pre-crisis period, and we continued, and completed in many cases, the implementation of various initiatives that were designed to ensure the sustainability of Credicorp’s business segments.

The Peruvian market offers one of the strongest growth opportunities in South America. In the banking, insurance and pension fund industries, market penetration by service providers remains low. Accordingly, our business plans incorporate strategies that will enable us to reach underserved segments of the Peruvian population and achieve higher returns on our capital. As our businesses expand, it becomes increasingly important for us to maximize efficiencies and control risk. Our strength in these areas is the cornerstone of our strategy to achieve healthy, sustained and profitable growth.

The growth strategies we have adopted for each of our companies include a focus on retail markets. Our strategy provides a launching pad for two points of financial inclusion: our Agente BCP covers the liabilities’ side by promoting banking penetration and providing access to credit, which gives low income sectors the opportunity to improve standards of living and become part of the country’s economic model for growth. Using our collective resources, we are developing information systems that can collect commercial sales information and provide us with the data we need to process scoring models by segment. This will enhance our ability to assess and control risk, as well as cross-sell our products between our business segments. In addition, mobile banking, which is a combined effort of BCP, Movistar and Mastercard, is concentrating on reaching new clients by offering them a transactional platform that introduces them to the financial system through a technology that has become widely used: the mobile phone. There are considerable opportunities to expand these initiatives and their ability to reach underserved segments of the Peruvian population positions us for growth.

Another strategic focus for Credicorp involves the regionalization of Latin American market, which has picked recently increased in relevance due to problem in developed markets. This has been reflected in the creation of the MILA, which we believe provides strong possibilities for growth. The integration of equity trading in Chile, Colombia and Peru has createdStand-alone, the largest exchange in Latin America by number(in terms of issuerstotal assets, loans, deposits, net equity and the second-largest exchange in Latin America by market capitalization after the Brazilian BM&F Bovespa. Credicorp has seized this opportunity by acquiring Correvalnet income) full-service Peruvian commercial bank, and IM Trust, which together with BCP Capital reflect our commitment to concretize our regional presence in the investmentASB private banking and capital markets sectors. We also continue to make strides toward greater integration of our companies by more extensively sharing our talents and experience.

Bankingasset management firm.

The majority of our banking business is carried out through BCP Stand-alone which, is our largest subsidiary, BCP thattogether with Mibanco, held 30.4%33.1% of the Peruvian market share in loans and 33.2% market share in deposits, as of December 31, 2012.2015. A portion of our banking business is also carried out by ASB, which principally serves Peruvian private banking customers through offices in Panama. We conduct banking activities in Bolivia through BCP Bolivia, a full service commercial bank which maintained an 11.2%a 9% market share of current loans and a 11.1%8.9% market share of total deposits in Bolivia as of December 2012.2015. BCP Bolivia is thirdfourth with respect to loan market share and fifth with respect to deposit market share in the Bolivian banking system.

Our banking business, in terms of lending and investment, is organized into (i) wholesale banking activities, including our corporate and middle-market banking business segments, which are carried out by BCP’s Wholesale Banking Group and(WBG); (ii) retail banking activities, including our SME-Business, SME-Pyme, mortgage, consumer financing, credit card and wealth management segments, which are carried out by BCP’s Retail Banking & Wealth Management Group (RB&WM)

To increase our visibility; (iii) treasury activities, including money market trades, foreign exchange trading, derivatives and raise our market share in theproprietary trading; (iv) microlending, which is conducted through Mibanco; (v) wholesale and retail banking industry, BCP bought Edyficar,activities in Bolivia; and (vi) private banking, asset management and proprietary investment activities, which we perform through Atlantic Security Bank (ASB), which is a scaled, high-growth and highly profitable microfinance business. Edyficar has a solid risk management strategy and a proven track record in both loan portfolio growth and social impact. Edyficar provides financial services for low-income micro-entrepreneurs and unbanked communities.Cayman Islands licensed bank.

We apply uniform credit policies and approval and review procedures, which are based on conservative criteria adopted by BCP, to all of BCP’s subsidiaries. Our Chief Operating Officer (COO) is in charge of setting the general credit policies for our different business areas. These policies are set within the guidelines established by Peruvian financial sector laws and SBS regulations (See “(11)(see “Item 4. Information on the Company – 4.B Business Overview - (12) Supervision and Regulation—(ii)Regulation — 12.2 BCP”) and the guidelines set forth by our Board of Directors.

We also conduct our banking business through Atlantic Security Bank (ASB), which is a Cayman Islands licensed bank that engages in private banking, asset management and proprietary investment.

Our deposit-taking operations are principally managed by BCP’s RB&WM group and ASB’s private banking group. See “(12)“Item 4. Information on the Company – 4.B Business Overview - (13) Selected Statistical Information—(iv) Deposits.”Information — 13.4 Deposits”.

1.2    Insurance

We conduct our insurance operationsbusiness exclusively through Grupo PacíficoPacifico, which is the second largest Peruvian insurance company in terms of premiums, fees and its subsidiaries, which providenet income. Grupo Pacifico provides a broad range of insurance products. Grupo PacíficoPacifico focuses on three business areas,areas: property and casualty (P&C) insurance through PacíficoPacifico Seguros Generales, life and pension insurance through PacíficoPacifico Vida, and health care insurance through Pacífico Salud.Pacifico EPS, which also conducts private hospital operations. Grupo Pacífico,Pacifico, like other major Peruvian insurance companies, sells its products both directly and through independent brokers, agents, banking channels and agents. Directly written policies tendsponsors.

In 2015, Grupo Pacifico signed an agreement with Banmedica to be for large commercial clients,participate as well as for life andequal partners in the health insurance business. This association includes the private health insurance business lines.managed by Pacifico Seguros Generales, the corporate health insurance for employees sold by Pacifico EPS, and medical subsidiaries that provide medical services.

As a result, Grupo Pacifico transfered the majority control of Pacifico EPS to Banmedica. Therefore, Pacifico EPS and the medical subsidiaries no longer consolidate with Pacifico Seguros Generales and Pacifico Vida for accounting purposes, and are reported as an investment in associates.

1.3    Pension funds

Credicorp conducts all of its pension fund activities through its private pension fund administrator Prima AFP.

In 2014, new local and foreign investment regulations gave rise to increased flexibility in SPP’s registration process for new investment securities. Under the new regulations, AFPs can make non-complex investments through vehicles such as bonds, shares and mutual funds without authorization from the SBS. Additionally, AFPs can use financial derivatives without authorization from the SBS subject to certain restrictions, such as specific limits regarding each type of fund. These changes are expected to improve the management and risk-return profile of our portfolios while providing flexibility and additional opportunities to execute these kinds of transactions.

During 2012, Credicorpthrough2015, Credicorp through its subsidiary Prima AFP was able to strengthen its position in the market by adjusting its processes and organization to provide high-quality services, withservice and timely and transparent information to its clients.

In early 2012,clients.The year 2015 continued to be marked by a series of events linked to the pension fund market developed at a stable competitive level. Later inimplementation of reforms to the year the adoptionSPP. The reform of a new law, the Law Reform the Private Pension, dominated the market. The Law to Reform the Private Pension System establishes(SPP) in the areas of investments and risk continued, mainly related to changes to regulatory requirements concerning local and foreign investments in order to generate greater flexibility in both direct and indirect investments. In addition, SBS issued regulations for the new Fund Type Zero, which is mandatory for participants aged 65 and older who opt for a new process for integrating new affiliates into the SPP. statutory retirement pension. The Fund Type Zero may only invest in short-term instruments and debt securities, and took effect in April 2016.