Peru Banks to Tighten Corporate Credit as El Niño Threatens Economy

Why Peru's Banks Are Restricting Credit Before El Niño

Peru's banks are bracing for a severe climate shock by pulling back on corporate lending. A survey by the Central Reserve Bank of Peru (BCRP), carried out between 1 and 17 July among executives in the risk, commercial and finance divisions of the country's lenders, shows that institutions expect to tighten the conditions attached to business credit over the next three months — for corporations, large and mid-sized companies, small firms and microenterprises alike. It is the first time this year that lending expectations have moved into pessimistic territory, according to the survey.

The trigger is the looming El Niño. Peru's official multi-agency panel Enfen, in its 17 July update, projects that the so-called El Niño Costero — the local coastal warming that affects Peru and Ecuador — will persist through the second half of 2026 at strong-to-extraordinary intensity. Combined with a global El Niño centred in the Central Pacific, the phenomenon threatens the second anchovy season and key crops such as rice, potato, avocado, blueberry, asparagus and grape.

The scale of the expected damage explains the shift. The BCRP itself projects El Niño will subtract 0.7 percentage points from GDP in 2026 and 0.9 points in 2027. Investment firm Credicorp Capital estimates that agriculture and fishing output alone will fall by about 4% this year — more than in 2023 — and lenders say they are already making decisions on more pessimistic scenarios than the central bank's baseline.

Bank executives expect restrictive credit conditions to hold until the end of the year, and possibly into the first quarter of 2027. A more precise assessment is due in September and October, when Enfen issues a fuller update on whether the coastal El Niño will extend into next summer. Fishing is already bearing the brunt: according to Víctor Blas, strategy and finance division manager at Financiera Confianza, the supply of financing to the fishing sector is 'totally restricted', even for large industrial borrowers.

Inside the Squeeze: Sectors, Scenarios and the Case for Saver Protection

The turn in bank behaviour is a textbook case of pre-emptive risk management — and its effects will travel well beyond the sectors directly hit by the weather.

How Post-Election Optimism Gave Way to Caution

Just weeks ago, the mood in Peru's financial system was buoyant. With an anti-market government ruled out after the election results, demand had responded well to the Mother's Day and Fiestas Patrias shopping campaigns, particularly in commerce and services, one bank manager told Gestion. That optimism has been reversed as local and international forecasters such as the US NOAA raised the probability of severe disruption. The same manager now describes the banking sector's position as conservative — and the BCRP survey shows the shift is systemic rather than isolated.

Where the Tightening Bites First

The restrictions will not be evenly spread. Micro and small businesses face the toughest conditions, but lenders will also tighten terms for medium, large and corporate borrowers. Geography and sector matter more than size, however. Enrique Castellanos, an economics professor at Universidad del Pacífico, points to fishing and agriculture in the north as the most exposed, with knock-on effects spreading through the economy: if agro-industry incomes fall, purchasing power drops, commerce and services in regions such as Piura lose revenue, and banks become reluctant to lend to those businesses too. Blas adds that credit admission policies are becoming more demanding by region and sector, with lenders scrutinising debt-to-income ratios more aggressively. 'The strongest borrowers are the ones that get financed,' another bank executive said — a clear signal that weaker firms will be rationed out.

Why Savers Are Part of the Calculation

There is a deliberate logic behind the caution, and it benefits households indirectly. Banks finance their lending largely with depositors' money, and executives say they have a fiduciary duty to protect it. By tightening admission policies before the storm hits, lenders aim to avoid a severe deterioration of their credit portfolios — which, in the extreme, could threaten solvency. This is the argument, echoed by economists and bankers in the article, for why the squeeze is 'good for savers': depositor funds are safeguarded at the cost of restricting credit to businesses. It is a rational trade-off, but the burden of adjustment falls on companies that depend on working capital through the second half of the year.

The 2023 Precedent and the Risk Window

Credicorp Capital's analysis stresses what happened last time Peru faced a major coastal El Niño. In the fourth quarter of 2023, more than 100,000 formal private-sector jobs disappeared in agriculture, while dengue cases peaked at 17,300 nationally — against an average of about 1,000 in years without El Niño. The firm also warns that housing and infrastructure on the north coast are highly exposed to losses from intense rains. On current Enfen figures, the probability that the coastal El Niño extends to summer 2027 stands at 71% — which helps explain why banks say they are planning for the pessimistic case rather than the central scenario.

How Peruvian Businesses Should Prepare for Tighter Credit

For Peruvian businesses and the analysts covering them, the near-term environment is now clear: credit gets harder, faster, in the sectors El Niño will touch first.

• Fishing-sector companies should plan on scarce financing through 2026: Blas (Financiera Confianza) reports credit supply to the sector is already 'totally restricted', including for large industrial borrowers.
• Agro and food producers on the north coast (rice, potato, avocado, blueberry, asparagus, grape) should expect stricter debt-to-income screening and smaller approved amounts, per the BCRP survey — so line up working capital before conditions harden further.
• Commerce and services firms with exposure to northern Peru should model softer demand: Castellanos expects reduced purchasing power to spread from agro and fishing into retail income, including in Piura.
• Set planning horizons to at least Q1 2027: surveyed lenders expect restrictive conditions through end-2026 and possibly beyond, with the September–October Enfen update (current extension probability: 71%) the key checkpoint.
• For stronger borrowers, the squeeze is an opportunity: with lenders rationing credit to the weakest, firms with solid repayment capacity and collateral should still find terms open — document cash flows and collateral early.