Feb 8 (Reuters) - Credicorp, one of Peru's largest financial holding companies, posted a 16.7% drop in its fourth-quarter net profit to 841.8 million soles ($219 million) on Thursday, citing macro economic challenges and effects from the El Nino weather phenomenon.

The company's return on equity (ROE) in the fourth quarter landed at 10.6%, down from 14.4% in the year-ago period.

Net interest income, the difference between what banks earn on loans and dole out to pay down liabilities, increased 6.6%.

Its cost of risk, an indicator of expected losses, meanwhile rose 127 basis points to 3.2% while non-performing loans rose slightly 15.6% in the period.

"We anticipate improved macroeconomic conditions in 2024," Chief Executive Gianfranco Ferrari said in a statement, pointing to "the waning influence of the El Nino phenomenon, an upgraded GDP outlook, reduced local reference rate and controlled inflation."

The release came shortly after Peru's central bank cut its benchmark interest rate by 25 basis points to 6.25% on Thursday, as inflation continued to ease.

Late last year, Credicorp had outlined plans for a management shakeup, including a new chief financial officer set to take up the role next July.

($1 = 3.8500 soles) (Reporting by Valentine Hilaire; Editing by Sarah Morland)