Loan growth remains strong, past-due loan ratios are low, while new banks may be looking to open in the Andean nation to take advantage of an economy that is still posting positive growth.

"The banking sector has overcome the crisis quite successfully," said Gustavo Urrutia, an analyst with brokerage Centura SAB.

Urrutia said he was surprised at the resilience of the loans market, which he estimated, despite slower growth, should rise by 8% this year. Growth rates in 2008 were 30%. For 2010 he forecast growth of about 15%.

International Monetary Fund Deputy Managing Director, Murilo Portugal, told government news agency Andina this week that Peru's strong regulatory structure has helped keep the financial system in good shape.

"We have seen evidence of this in the placement of 60-year bonds by Banco de Credito at a low interest rate, which is very impressive," he said, adding that other banks could eventually follow suit.

Banco de Credito del Peru (CREDITC1.VL), which has about a 40% market share in Peru, issued $250 million in 60-year bonds, although demand was much higher. The bank followed this up this week by issuing $107 million in five-year bonds in Chile, the first corporate issue by a Peruvian borrower in the Chilean market.

Analysts say the banking sector's main weakness is concentration--both within the sector, and geographically in Lima, Peru's capital.

Four banks currently control 80% of Peru's bank market, with Banco de Credito first, followed by BBVA Banco Continental (CONTINC1.VL), Canada's Scotiabank SAA(SCOTIAC1.VL) and Peru's Banco Internacional del Peru, or Interbank (INTERBC1.VL).

Eleven other banks have outlets in Peru, including HSBC Holdings Plc (HBC) and Deutsche Bank (DB). Further international interest in the sector is palpable however.

Since opening in 2006 HSBC now has 19 branches. HSBC Peru's general manager Luiz Felipe Mauger recently told newspaper Gestion that, "We are going to continue growing at full speed."

Last month, two Chinese banks, the Industrial and Commercial Bank of China, or ICBC - the world's biggest - and the China Development Bank, or CDB, sent visiting delegations. Both expressed interest in the Peruvian financial market.

Although increased competition might mean lower profits down the line, there is plenty of room for growth, particularly in lower income groups and in the provinces.

An estimated 60% of Peruvians have no bank account.

"After the social instability of the 1960s, the 1970s and the 1980s, when banks were closing, many people still prefer to keep their money in the mattress," said Luis Zapata, an analyst with brokerage Intercapital.

Some banks are already tackling the issue, by developing "agents" in small shops, allowing customers to make withdrawals and deposits via the shopkeeper using a card swipe machine and a pin number. Banks are also offering new products such as zero-cost savings accounts.

-By Sophie Kevany, Dow Jones Newswires; 51-198-903-8043; peru@dowjones.com

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