CREDICORP LTD | CIK:0001001290 |

Filed: 4/26/2018

Entity registrant name: CREDICORP LTD (CIK: 0001001290)

Generator: DataTracks

SEC filing page: http://www.sec.gov/Archives/edgar/data/1001290/000114420418022710/0001144204-18-022710-index.htm

XBRL Instance: http://www.sec.gov/Archives/edgar/data/1001290/000114420418022710/bap-20171231.xml

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ifrs-full:DisclosureOfIntangibleAssetsExplanatory

INTANGIBLE ASSETS AND GOODWILL, NET

Intangible assets -

The movement of intangible assets with limited useful life for the years ended December 31, 2017, 2016 and 2015 is as follows:

Description	Client relationships (i)		Rights of use		Brand name (ii)		Fund manager contract (iii)		Core deposits intangible		Software and developments		Intangible in progress		Other		2017		2016		2015
	S/(000)		S/(000)		S/(000)		S/(000)		S/(000)		S/(000)		S/(000)		S/(000)		S/(000)		S/(000)		S/(000)

Cost -
Balances at January 1		406,186		55,900		261,715		100,608		21,100		1,614,338		302,747		26,841		2,789,435		2,512,114		2,329,549
Additions		–		–		–		–		–		88,466		182,984		272		271,722		277,346		276,564
Transfers		–		–		–		–		–		180,129		(180,129)		–		–		–		(3,299)
Disposals and others		1,019		–		384		877		–		26,319		609		–		29,208		(25)		(90,700)
Balances at December 31		407,205		55,900		262,099		101,485		21,100		1,909,252		306,211		27,113		3,090,365		2,789,435		2,512,114

Accumulated amortization -
Balance at January 1		190,354		55,900		86,391		5,843		9,681		1,089,884		–		26,841		1,464,894		1,242,843		1,043,886
Amortization of the year		30,310		–		14,792		2,049		3,516		190,413		–		–		241,080		224,216		218,874
Disposals and others		10,888		–		10,470		(5,153)		(10)		25,306		–		–		41,501		(2,165)		(19,917)
Balance at December 31		231,552		55,900		111,653		2,739		13,187		1,305,603		–		26,841		1,747,475		1,464,894		1,242,843

Net carrying amount		175,653		–		150,446		98,746		7,913		603,649		306,211		272		1,342,890		1,324,541		1,269,271

During the year 2017 additions are mainly related to the implementation and development of various IT projects such as Nuevo HomeBanking Alta, opening of savings accounts in Kiosco, Yape, User IT, Retail Credits, Effectiveness in approval and Portal Via BCP (implementation of a technological platform, which is used for the administration of the insurance segment of the group, and to develop applications related to customer service channels, and implementation of treasury solutions during the year 2016).

(i)

Client relationships -

This item consists of the following:

	2017		2016
	S/(000)		S/(000)

Prima AFP - AFP Unión Vida		107,018		119,367
Mibanco		39,093		51,121
Inversiones IMT		26,206		26,438
Mibanco - Edyficar Perú		3,336		5,155
Credicorp Capital Colombia - Correval		–		13,751
Net carrying amount		175,653		215,832

(ii)

Brand name -

This item consists of the following:

	2017		2016
	S/(000)		S/(000)

Mibanco		145,095		151,923
Inversiones IMT		5,351		9,941
Credicorp Capital Colombia - Correval		–		13,460
Net carrying amount		150,446		175,324

(iii)

Fund manager contract -

This item consists of the following:

	2017		2016
	S/(000)		S/(000)

Credicorp Capital Colombia - Correval		52,635		49,287
Inversiones IMT		46,111		45,478
Net carrying amount		98,746		94,765

Management has assessed at each reporting date that there was no indication that client relationships, rights of use, brand name, fund management contract and software and developments may be impaired.

b)	Goodwill -

Goodwill acquired through business combinations has been allocated to each subsidiary or groups of them, which are also identified as a CGU for the purposes of impairment testing, as follows:

	2017		2016
	S/(000)		S/(000)

Mibanco - Edyficar Perú		273,694		273,694
Prima AFP – AFP Unión Vida		124,641		124,641
Credicorp Capital Colombia		77,746		80,022
Banco de Crédito del Perú		52,359		52,359
Inversiones IMT		41,290		39,284
Pacífico Seguros		36,354		36,354
Atlantic Security Holding Corporation		29,795		29,795
Crediseguro Seguros Personales		96		-
Net carrying amount		635,975		636,149

The recoverable amount of all of the CGUs has been determined based on the calculations of the fair value less selling costs, which is the present value of the discounted cash flows determined principally with assumptions of projection of revenue and expenses (based on efficiency ratios).

Balances of goodwill from Inversiones IMT and Credicorp Capital Colombia are impacted by the volatility of the exchange rate of the local currency of the countries in which they operate against the exchange rate of Grupo Credicorp’s functional currency.

The following table summarizes the key assumptions used for the calculation of fair value less selling costs in 2017 and 2016:

	At December 31, 2017
Description	Terminal value growth rate		Discount rate
	%		%

Mibanco - Edyficar Perú		3.00	12.43
Prima AFP – AFP Unión Vida		1.00	9.41
Credicorp Capital Colombia		3.80	12.63
Banco de Crédito del Perú		5.00	11.46
Inversiones IMT		5.25	11.72
Pacífico Seguros (*)		5.00	11.24 and 12.38
Atlantic Security Holding Corporation		2.00	10.31

(*)

As of December 31, 2017, corresponds to the discount rates used by the Group to determine the recoverable value for the non-life and life insurance business lines cash flows that comprised this CGU as a result of the merger, See Note 2(a).

	At December 31, 2016
Description	Terminal value growth rate		Discount rate
	%		%

Mibanco - Edyficar Perú		3.00		12.48
Prima AFP - AFP Unión Vida		1.20		8.73
Credicorp Capital Colombia		3.80		13.44
Banco de Crédito del Perú		5.00		12.48
Inversiones IMT		5.25		12.41
Pacífico Seguros		5.00		11.66
Atlantic Security Holding Corporation		2.00		11.17

Five or ten years of cash flows, depending on the business maturity, were included in the discounted cash flow model. The growth rate estimates are based on past performance and management’s expectations of market development. A long-term growth rate to perpetuity has been determined taking into account forecasts included in industry reports.

Discount rates represent the current market assessment of the risks specific to each CGU. The discount rate is derived from the capital asset pricing model (CAPM). The cost of equity is derived from the expected return on investment by the Group’s investors, specific risk incorporated by applying individual comparable beta factors adjusted by the debt structure of each CGU and country and market risk specific premiums to each CGU. The beta factors are evaluated annually based on publicly available market data.

During the year 2015, the Group recorded a gross impairment loss amounting to S/82.4 million (S/0.1 million during the year 2016), as a result of the assessment of the recoverable amount of the CGU “Inversiones IMT”, amounting to S/234.3 million, decreasing in relation to prior years due to the lower revenues generated compared to those originally budgeted by Management and for the changes expected in the payment of taxes attributable to the parent company resulting from the tax law reform presented in Chile.

The key assumptions described above may change if the conditions of the economy and market change. At December 31, 2017, the Group estimates that reasonably possible changes in these assumptions would not cause the recoverable amount of all CGUs to decline below their carrying amount.