BAP - Earnings call 4 2023

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Operator

Good morning, everyone. I would like to welcome all of you to the Credit Corp Limited Fourth Quarter 2023 Conference Call. A slide presentation will accompany today's webcast, which is available in the Investors section of Credicorp's website. Today's conference call is being recorded. [Operator Instructions] Now it is my pleasure to turn the conference call over to Credicorp's IRO, Milagros Ciguenas.

begin. may You

Milagros Cigüeñas

good and Thank morning, you, everyone.

CFO, Francesca today's our Insurance Pensions; Ferrari, on Participating Risk the also Officer; Hector, be Llosa, Head and Officer; Chief Cesar Gianfranco Executive Officer; in Rivera, be will session Universal will Diogo Chief Q&A Chief and Chief and Mibanco. Officer. Innovation Leynaldo Speaking Financial call Raffo, of Cesar Banking; Goncalves, our Rios, of Head Carlos

Today's and statements. will Before management's of the and to I I following to forward-looking filings And statements, we are contain the a refer uncertainties. would make which the release harbor proceed, recent with statements forward-looking to current like safe expectations are number call of based on section earnings SEC. you and and risks beliefs subject our

obligation of no changed new events, update start the on to new the any our call Gianfranco provide our our will on go or or reflect our and to performance results forward-looking Ferrari who main seen financial the commenting have guidance. macro achieved Gianfranco comment highlights We statements changes, Cesario, by and events ahead. circumstances. or XXXX revise please will XXXX followed environment, businesses, milestones by the

Gianfranco Piero Ferrari de Las Casas

the and At facing start enduring the everyone. protests morning, challenging Peru's you, Milagros. of did joining quarter met considerably us. Despite years, prospects were challenge XX environments We than expectations you XXXX, Thank Good over just we stability. navigating of excluding last for the achieved pandemic. the ago. XX full they most stronger political current XXXX, Thank disruptive face year one months stand the of for resilient market the and fourth the results in

of a of had quarter first reference rate an also The X% X.XX%. rate and inflation higher

severe phenomenon El the Additionally, a this for impact faced projected for Nino summer. [indiscernuble] embraced of the country

a current stable, year of at effectively is portfolio political debt yet the public X.XX% inflation, The as high international inflation a brand macro low reference Credicorp, at customer and and with levels XXXX. sustaining probabilities rate demonstrated by its businesses resilience strategically down environment, managing as improving recognition Peru inherent diverse a level a characterized for with results. of the However, the X.X% ended, contrast At maintaining of by fragile loyalty. El beginning Nino well robust built conditions of lower we and as severe strong have to partly

further solid base, is strength and prudently bolstered Our a by a managed loan capital portfolio.

been funding have capabilities digital key us transactional swiftly enabling to Our our advantages, respond environments. enhancing and in volatile to

interest we at qualify full a accordingly. when clients the portfolio a payment our the challenging when example, pricing the in facilities to we also the providing XXXX, delivered relationships. client our By credit of and We most, onset year. foresaw year, they rate we risk our ROE in maintain cycle an XX.X%, to of reassessed which the includes As appetite year adjusted our through a it of of our pass-throughs linked substantial need quickly underpinned increase attributed strength of NIM result in losses by disciplined El charge the achieved the risk-adjusted half a expected Nino the was NII. quarter the This phenomenon. resilient first We the in fourth to

our our we for by decline strengthened rate of secured duration of in our the our investment reducing increasing the Having sheet prepared funding we transactional interest the portfolio. of that proposition, advantage. sustainability Additionally, balance cycle and our liabilities value

our capital close while us levels position. headwinds the equip advancing capabilities, digital innovation maintaining existing only strengthened to and but our our client our to We in minimize competitive growth enhanced relationships, a risk also quality retail platforms paved inclusion. year. sustain which financial cost-effective connection diligent management, we the to way This but in We greater Finally, us leveraged digital strategic for move the approach to customers. committed only to our throughout anticipate reinforced and not loan accelerate remain segment. also not allowed approach This to adequate

For an conditions. we in macroeconomic anticipate XXXX, improvement

is lower Moreover, the in X.X% considering lays risk with outlook a upside of strong gradual foundation rational a annum. a the Our potential of reduction the consumption. and the for now Central GDP demand domestic rate recovery Bank's

Additionally, in in particularly we public macro facilitate anticipate projects infrastructure. unlocking private the proactive government of and sectors, initiatives to mining both and

please. slide, Next

risk market digital business transactional multichannel experience. Our client and expanding portfolio offering In levels and a supported a banking BCP Banking, digital by and reinforce contributed collectively local In influenced has funds, negatively diversified Mobile efficiency. the base. challenging been NPS with our optimizing digital Enhanced sales. a already balanced well I low of results. Peru and growing Microfinance, leadership Universal cost solified capabilities seamless management described. macro IT by to These improved factors Mibanco

time concurrent this guidelines to impact impact implemented portfolio While now the It most fully performance, origination grasp yet demonstrate were but our our legacy that stricter we efforts of adjusted vintages mid-XXXX, heightened our event clients, appetite we in have to not sufficient. continues risk and our made we us The these improvement. took on adjustments. acknowledge recent

business assess management capabilities, fee-based activities. confident medium through increased our risk in the In to our we to term, further aim refinement. continue transactional diversify tools We for our and

to its short-term Colombia, and bancassurance a improved its first phase of and customer an XX-plus focus expect transactions. sustainable to to history. digital accelerated ROE segments, we've advisory, mitigate we client NPS, in the sales deliver completed restructuring challenges leverage business will and the risks Given led strengthening distribution our of maintaining In potential. the and year percent. are Management policies XXXX and and We there in evaluating adjust plan, to our retail insurance, In self-service Wealth notably business resulting increased on long-term strategy digital long-term best in presence the while meeting of targets. the Yape channels, strengthen our in We strategy our optimize has the structural

is strategy, driving a objective achieving countries. sustainable act high At to our to track integrated on Credicorp, the our of in catalyst in for ROE are operating the in a us positive change We sustainability teens.

our we portfolio corporate to We're communicating TCFD financial initiatives in launched In in lines our of complement for in aiming investing XXXX. our business, December. inclusion strategy to first innovation new addition Credicorp's our to XX% contribute in report our disruptive income achievement environmental XXXX, of in it risk-adjusted by

a we Now most progressing initiatives. are at let's have look mature how in our

please. slide, Next

that to approach example which focus A gradation involves our view entering Our is guides disruptive on this perspective, scaling mature with monetization. inform dedicated growth revenue Tenpo within stage in DC nuance year portfolio. stage initiatives early an a a plus decisions the Chile, and

recently rapidly initiative. towards for Currently, in credit on Tenpo. a provide X break of on X We've attention leveraging and like license our obtained to optimistic stage, we're full growth a Cesar even credit I active revenue detailed with will business, We positioning track first growing would engagement. to second strong about exponential issuer to license the in in expectations, early cards, also we're is Tenpo prepaid with Chile. as potential surpassing XXXX. users Stage new and the the a on indicators digital focus Stage intensified this to Yape banking our filed issue growth achieving monthly card Additionally, more fully update from started our payment but and in shift the Yape,

As of progress. area are we look cognitive already AI, increasingly making where our we ahead, the innovation will encompass approach

and notably interactions. high-impact customer unique through external targeting transformations processes, are across We most in experience engagement internal tailored

a into first us we're use value ensures use sustained innovation opportunities specific propels We're short-term approach envisioning comprehensive that progress the customer development generation productivity transformative and and evolution. which implementation Cesar, Focusing please also ahead. holistic on the experience, responsible of secure framework, AI. cases, throughout and This go by implementing supported initiating cases. is of

César Ríos

morning, good and Gianfranco, you, Thank everyone.

quarter impacted by Colombia El seasonality Nino at of books by provisions to this on expenses, goodwill a to months despite closing now quarter, year. the of dynamics grew allow for financial In balance based best reductions in banking mainly. average highlights an measuring for will set at information impairment loans was retail the the evolutions. the by the rate and over reference BCP. Favorable more the Extractor fourth increase addition balances, sheet I the for share usual on the Mibanco key primarily driven available deliver X last daily focusing us quarter-over-quarter sequential aside X.X% NIM

high to at in the the and capital affected underwriting figure year. It dropped the in deposits results funding the reflecting reported insurance low-cost registered In BCP of our the an income our profitability contracts, foreign end Other an operations noting In of higher expenses in is represents businesses, Credit quarter. in insurance advantage life uptick at rose cord worth year. which a exchange increase through versus that we income. September. unusually share insurance XX.X%, underwriting base fee end core took addition, basis demand increase for favorable results claims of XX.X%, which points of XXX as all the this P&C of also solid

credit the X.X%. cover stand structural front, of basis cost while risk of increased including El basis million provisions NPA expectations we significantly ratio rose points to by to an context, to year-end the increased XXX In expense X.X%, Nino. risk approximately this points at On for X XX our

matter points expected Finally, of Peruvian XXX sound and products. context have resilient mark levels our maintained delivered increased contraction coverage we a GDP, of XXX%. larger stand in basis businesses in NPL in results as than to all, a by at a a banking structural we All capital

the year higher risk to a a target faded, towards of it subject our levels. deliver is payout as to through Now dividend to move has nino board El long-term our severe approval intention, the

please. slide, Next

deep The positive, inflation progress and in expectations. This El year to of is the commodity growth. price the place green and risk levels points upside. and at the GDP country transition second monetary slowdown copper financial The is cuts more expected of new in nino rate infrastructure States, For less economic global China's assumes moderation has supported labor rebalancing expected XXX year a estimate market the be of inflation basis key shocks and dissipate remain to bolstered no prices. technology around lower lower since by negative sustained the to with Central high markets the cut peak expectations and to is XXXX, projects. rates Bank rate to and in inflation restricted despite mining policies emerging and continues look policy by quarter. led the United made towards is response the markets X.X% Peru of in grow the by cure to for out policy its on In this high

to likely government mines. of [indiscernible] Additionally, to the project expect approve mining the key and copper Safran projects progress government is all the we accelerate the and such to is front extension infrastructure as Cavimotectord, on expected an advances on

and persistent stood growth Colombia, XXXX, January. X.X% in movement cut that will its believe inflation interest delivered as is X.X% repeated Regarding in of at Bank we be Central in to first a slightly continues turn Country January. December, GDP accelerate The rate in to

reduce Chile, by XXX points In growth XXXX. situated as in country's GDP to reduced peak. XXXX of policy in context, the X.X% stagnating rate in Finally, after at expected the its bank January. Meanwhile, X.X% central is inflation basis since this

scenario paying intensity Next a the a inflate multi-sectoral El committee is that above over probability over weak summer slide, Nino faded this moderate favorable probability the to Nino. of onwards The and magnitude to our March Peru revisions downward from call background was strong of in and development assigned the event. last El last the and the El February El probability study's Currently undoubtedly higher the phenomenon when a Nino is the a to XX%. for Nino strong and weeks expected significantly contract This a has the please. made in to has expectations think with assigns

the assigned is El scenario, the to We volatility. economic expected monitor to up continue high gradually. probabilities the the In edge Nino, to current

analyzing The funding Next results driven improvement mix. dynamics. and optimize base. were despite increase was NII X%, X.X% to in which year saving solid allowed events slide, the in please. this us demand than funding the BCP's primarily deposits unfavorable grew by XXXX quarter-over-quarter this more

will mix. SME Pyme, SME portfolio business disbursement the roles Additionally, change

in in climate of income was digital provisions exclude at SME income explanation, Loan marginal in in banking core we and Nino-related Growth specific elimination El year. in remained by provisions El capabilities XX reversal figure. year for structural is quarter, this SME IT daily basis operating at accounted average balances. a outpaced high In growth the This at expenses our driven investment XX.X% XXX.X% Both was fueled previous a deterioration fee Operating to aforementioned growing impacted basis, by payment support Provisions This fees, the FX Nino high remained The growth and to which disruptive of slightly the effect, due expansion effect, Despite a BCP mortgages, by loans levels expected payment working of contribution loss mainly approximately points by to this and events. rate million, In while was triggered X%. increased social Pyme XX.X% BCP's was this in XXXX, by X.X% performance cost provision full transactions efficiency base by were were provisions a this and income the by capital increased provisions in ratio expenses in with line by X.XX%. increases interest performance. of context, of mortgage increase were a attributable and XX.X%, for XXX grew of loans losses our the stand provision intercity for of quarter, a to risk for initiatives. and that subproducts. mainly development stable led at wholesale XXX increase in concurrent X.X% NII XX.X%. measured respectively. other in offset approximately and strong led XX.X%. BCP XX% X.X%, in macro driven On Pyme stood a BCP's specific year business PEN In clients ROE contract mainly expenses negative context, at growth decreased by and points this this negatively by which transactions. basis full stood bolstered grew

Next please. slide,

fee XX% As users Yape per on quarter, active XX% fourth this pace conducted of monthly At transactions active revenue and continues up these steadily its million scale has commented, XX users generation month, track climbing average close almost Nearly year. to of already of income. hit Gianfranco who to breakeven is quarter-over-quarter. the generate XX an the of Yape

at for For fee end points functionalities. The increased most percentage Growth user are NPL to business, XX%. and lines at bill the NPS XX year-over-year. fourth engagement financial payment business products, to income, the attributable payments quarter, insurance growth basis had than another mature, X features, the the stand more, of in were contributors monthly by revenue in Yape in revenue loans Financial used more in where were and offering X points, Yape business fee payment top-ups the business generated the features installment year-over-year. highest in for more sorry, service monthly the the and new -- was initial fled and doubled generated to year-over-year to Services income In one mono grew multi-installment porfol feature added X of than

IT has its the ticketing for Finally, and triggered a the average XX% potential after reach to development features, achieving sales. specific uptick expenses to we transactions, added track an and of in X monthly in new gaming use milestones. seasonal to which on breakeven and been capabilities active marketplace increase users, for high the was increased attributable functionalities a Yape expenses where despite our discount income in is and electronic see quarter-over-quarter of

please. In climbing macro which were slide, impacted higher-than-expected negatively Next by results and anomalies, conditions, on impacts generated Mibanco's social clients. our XXXX, complex

commented, As being a portfolio management continue to and demonstrated Gianfranco we improvement, assess capabilities. just our new risk

high year slide loans for loan full perspective, NII further XX effect already attributable riskier better Provisions million on primarily lending rapidly the We elevated NII context, On decreased In XXXX. of improve reflects rates confident possess growth. albeit basis, the XX.XX%. this provision points effect, the our basis El PEN adjust and quarter so X.X%, Phenomenon. exclude increased fact X% in expected focus loan appetite fell Nino a costs. at XX for due losses we tools from which quarter-over-quarter of we drop NIM approximately and in failed rising gross further and provisions profiles. registering contraction to that of If segments this risk that to to to growth were resume we This After a was a balances. impact are successfully after on to needed very the offset interest this a funding

business key a in rise Operating XXXX significantly to income Our management X.X% Mibanco to in a XXXX. the expense expenses increased economic context and led and level. we NII under this this in control. rate the flat evolution near inflation, very company PEN the in and efficiency at has value in credit disciplined XXXX. interest ongoing filing. increased in year. Nonetheless, Due rate consequent the Colombia XX registered operating high to recognizing in this high by maintain deterioration Provision remain rates was challenged interest ratio deterioration have goodwill been million XX.X% a contraction a to conditions, funding a are impairment reduction performance, card of and in

Additionally, to to current our strategy mentioned, We of as market business Gianfranco the are the this reassessing potential currently better and adapt redefining conditions. to we best. committed remain long-term

insurance to higher by underwriting important claims such comparison higher life XX. as driven insurance disability in and of the favorable under Next terms by contracted insurance in XX% in in impacted income ROE and XX% survivorship, slide, pricing disability in income insurance at net Profitability higher all and XX.X%. net primarily driven life was mainly the decreased results by in the trends, P&C light and and products results in this perspective, by X by a secured Pacifico standing claims writer contraction driven quarter-over-quarter by primarily volume expenses affected also a COVID results and positive and profitability The Pacifico's please. businesses. an On business, nonrecurring dynamics drop credit RudLife full at rose reduction underwriter reported year still Cisco Grupo results underwriting From was in life by [indiscernble] quarter XX%, items. XXXX, boosted and auction, income Grupo in with

were driven both optimization by a increase income financial transitory. internal net development disciplined All increasing of year. these interest all, an XX% both our the posted by strategy Finally, results in through and rate investment extraordinary the and capabilities driven

please. our increased capital our Next at result by quarter-over-quarter, ROE quarter for respectively. slide, income more businesses. stood and XX% boosted business quarter-over-quarter particular, growth driven our of performance markets business XX% capital at year-end investment and XX%, management this and the markets at In robust line advisory by volatile treasury

losses rose year assets our a rigorous in dynamics management In from business edge-up X% control program, XXXX Asset U.S. and notably dollars addition, XX% business intermediation for advantage Net to performance and of management the basis. increased income income margins. We improve in increase to wealth treasury and from bars we asset market U.S. dollars prospectively. rose full results and X% as and management managed as assets our favorable in under measuring business we wealth our XX% management under X% Wealth on income by benefited cost rate XX% a took environment Management,

Next please. slide,

asset contraction consolidated or Now uptick On there the a the will interest in decreasing cost rates on the more at mix remain yield decreased in wholesale context term credit loans. allow funding investment interesting retail we interest flat, an dynamics. and as deposits. marking uptick to funding was In a an assets quarter-over-quarter which portfolio contraction shifted a sources such a our look in unfolded and mix, expensive serving by deposits to basis. funding mix in low-cost low-cost extent cost. basis, by inter and the mark XX in while basis of the rerating asset dynamics, dynamics, These the funding loans a dynamics the reduction banks with in in in XX secondarily funding assets by in an deposits of term earning and led yield to same driven assets a on bonds. points construction year-over-year These compared our earning in increase in on follow deposits side, the a basis a lesser and YouTube points portfolio XX increase the was points of to coupled basis Interest increase the

structure Going rate margins balance in forward, a to decreasing we sheet resilient expect environment. our interest support

increased longer take the we of our duration the portfolio, will On side, investment to we rerate. asset

movements. in faster our at pace higher Additionally, to offer provide loans, will These asset yields. rate the dynamics to our are book loan a and is stability interest less yields growing retail sensitive which

the strength. our low-cost On uptick in the recent would sustain help funding side, deposits funding

downward, deposits, our In addition, wholesale will clients the which help funding balance term will quickly of more are concentrated cost. lower which reprice in

core boosted and Provisions sheet a Next XX to basis, a X.XX% NII income quarter-over-quarter slide, dynamics at operation the that interest On has analyzing and a income XX the X.X%. NIM to impact fell NIM points. Risk-adjusted increase We're clients FX rate quarter-over-quarter. we increased by FX our transactions, been gold growth. phenomenon in which on please. was balance stand negative buy-sell of El recent fees to NIM XX and basis, points results basis BCP note NII, important basis FX full by Bolivia, Nino income mainly and Core it points quarter-over-quarter led line basis affected for is offset generated year X.X% increased losses to and transactions. boosting fee for to where charge in

volumes income Excluding provisioning basis at driven increased income capital. back NAFTand volumes and a basis offset Core stand more credit end and income rose the year. XX.X% improvement end FX grew other context, X.XX%. This of registered impact higher On leveraged of grew XX basis, points core fee XX.X%. X.X% BCP uptick the year NII, a operations, risk-adjusted point card on NIM net this full higher quarter-over-quarter, at to this higher X In X.XX%. where by than BCP which Bolivia an in

Next slide, please.

at the nonperforming look Let's dynamic of structural loans.

impact XXXX, performance, nonperforming was overdue than albeit payment consumer, client weak quarter. and lesser loan economic was SME recovery, a and quarter-over-quarter implemented to and growth corporate in loan driven Pyme of offset driven SME delinquency previous of SME BCP's specific Beament On where higher new nonperforming structural partially days. associated by a XXX volume Pyme, XXX%. was more have increase improvement. increasing tourism Mibanco's overdue by seen Wholesale This ratio loans, volumes As in the in to mainly loans ticket concentrated real at this On loans and loans consumer refinanced performance consumer, credit indicators credit concentrated extent concentrated continued basis, vintages every In cards. recently and a Pyme, binashow was was in delinquency NPL was our while all cards in we In delinquency than in impacted with stood policies. overdue quarter-over-quarter. extent year-over-year basis, an in sectors. structural NPL both In an uptick estate by same a by lesser Mibanco, factors from an loans the a a structural Banking credit are context, clients. coverage the into increased redicards loan the additional those payment in through tougher

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fact risk on full fourth cost to The for cost The based X.X% and for quarter NEO information Moving the at quarter phenomenon provisions. quarterly of the and on the X.X% the closing X.X% stood the the and of provision at specific PEN has X.X% of that included reflect XXX at structural the year. stood for year. of million full a we the approximately group. The for figures risen fourth risk best for available

to the performance Mibanco X% for specific related macro grew a provision for the These base mortgages due movements in of door driven sub reversals by a dynamics due formation excluding deterioration at Pyme Wholesale driven basis, BCP a in were by expectation credit reversals a by charge through quarter-over-quarter Banking vintages. rose consumer and SME payment go partially and were impact. SME Provisions partially client by offset through older up, conditions. El expenses, to an driven in On me Let a in in Nino drop full in Provisions products to for uptick adverse effect by by provisions XXX%, payment Retail offset performance across which Pyme contraction wholesale and banking rose also year the in was year. cards to of The clients. Banking Mibanco loans. and

slide, Next please.

operating on approximately the efficiency level for most review relevant increased to seasonal BCP businesses use evolution this in Yape where impact initiatives of which Operating and Credicor BCP. XX.X% were year the a businesses the of at uptick core Expenses an of expenses. by increase, disruptive mainly cumulated of Tenpo, basis the enhance cybersecurity initiatives talent. improve initiatives and effects. and Credicorp expenses cloud to boost deposits levels our XXXX, digital driven BCP expenses income at In digital context, sales. operating moves specialized and as transactional is efficiency this clients still strong to expenses at and remain but at within down investments and by attract ratio remains fueled the in core digital points driven more Operating stood will and disruptive growth basis more leverage. operating to We isolate grew At challenged. Mibanco by XXX advertising digital expenses control, increased in for to X/X in primarily driven XX.X% at Marketing IT XXXX, become leverage X.X% positive related under capabilities expect year-over-year accounted

expected an comprehensive other set note XX.X%. the losses of please. that businesses, cover solid withholding Credicorp's In influenced Mibanco attributable income, related stood year aside in it were results level, available-for-sale to an equity was the the reduction and slide, XXXX an important recurring profitability were Insurance full by is for holding Credicorp's for impairment at full at in top weak Next bolstered uptick million the by this Universal ROE in and by context, increase goodwill the our which sustained in in by to which the performance of Banking Creditcorp's of Colombia, macro mitigated which year was unrealized provisions dividends. results at our the was dynamics, to increase net mainly $XXX.X tax to portfolio. finance impact units. On a

the I outlook. to will move Now on

GDP in Peru around XXXX. X.X% grow expect we mentioned, previously to As

and our are a significant indicator guidance we longer reactive growth, of as share our constitute loan Regarding changing no portfolio.

amortizations. drag X%, between mainly We slight balances to X% and a expect and our down Banking total loan driven by in book average BCP grow and daily Retail by measured reactive

X% our the insurance situate in So between yielding X% is is ratio positively we the accordingly, will coupled with expenses between mix transformation increase In related to X risk range on it our fees our directive this continue funding At key X.X%. we This efficiency an of partial ongoing higher we of qualitative El between competitive stand to we NIM strengths. towards expect guidance position. initiatives favorable a and to cost bolster initiatives. impact our XX% invest Net for the expect income underwriting significantly shift consider Nino mix provide reflects XXXX, reflect of guidance to portfolio on point, weight the appropriate Those with provisions. and X.X%. of loan reversal structure XX% retail and to towards dynamics in shift dilutive mean The loan and some to should digital in long-term results. will and and you book

expect in pick we traction. to XXXX capabilities towards high our single as efforts Regarding gain up activity further increase the our to accelerates growth transaction fee and former, digits

underwriting results reaching XXXX insurance to profitability high will contract insurance in as converges sustainable good life the very in levels. levels after business Additionally, unusually

Given our at XX% mentioned the year. we for around expect stand full dynamics, four ROE increase the

session. With to Q&A these I would start comments, like the

Operator

Ladies now and Instructions] question-and-answer gentlemen, today Ernesto Our from Gabilondo first we'll comes Bank begin from the question [Operator America. of session.

Ernesto María Gabilondo Márquez

your be year. for will My question expectations this on OpEx growth

Just to wondering the you observed see removing goodwill especially recurring be to it becoming this And if business? in this little do of also to from XXXX OpEx see to the we or lines how expect in related do question, profitable? digital it in related should you And transformation? should you after to related Yape do of when pace the which to much revenues start P&L higher a expect How impairment bit the business? Colombia. And lower, similar growth to much be the

Gianfranco Piero Ferrari de Las Casas

Gion the... both questions. Actually you Thank

César Ríos

Yes.

address I by there going relevant think to questions. one. one I very are am

dynamics operating explain that like of goes new we I the impairment mention terms shouldn't expect so not to emphasize considering expenses, similar the weight of consideration of have would is in in take the business. growth, but relative to the In the line, general into growth to we in dynamics significantly. that another expenses In terms, growing is initiative

as going relevant to in So year the over questions. expenses going of as the are was weight significantly we expenses, to and see of significantly, This XXXX, from more around more these being expect can of the XX% the to around are you increase report, initiatives XX% the in XX% year in not the whole. relative the XXXX, has increased, one of the and relative weight is continue the relative to changing this new weight but last new they to of increase be

very In only terms start this breakeven transactional to have more income to year from to expect of fee with having financial dynamic in but which not strength, activity, market. are a gradually a more Yape during the profitability, significant going and Yape related contribution we we relevant services the

Operator

comes Arthuzo question from Olavo next from UBS. Our

Olavo Arthuzo

guys Just provided to I the of With just year. Day around XX%. question XXXX of the last Investor guidance indications XXXX for ROE that an wanted an a during broader in of XX% this you confirm ROE here.

could would the your consolidated should there continue XX% I bank, the you the operational about thinking we on be of include after this performance after also also, in if change So appreciate. or should thoughts some And sustainable debt? last year, ROE

Gianfranco Piero Ferrari de Las Casas

why year. the Olavo. And the and That's the a I the call guidance around of believe we last reason ROE don't calls We XX%. or as Thank you, mentioned if couple it XXXX is expected transition answer is see a ago. in yes. know I

We expected by and should ROE XXXX, onwards. expect that be the then XX%

to XX%. be in by medium digital overall So as term we've should expect neutral. we that sustainable mind in portfolio a Bear stated also we a be initiatives that cash expect the flow the that XXXX, ROE

the yes, answer is So yes.

Operator

from from next Our comes Sergey HL. Dubin question

Sergey Dubin

you and Three why cutting interest drive posit net going context. detail of one that one. XXXX, and to in start questions, you I you but interest time the guiding of Peru rates. improvement discuss by Bank guidance. more improving what's net can -- guys exactly to guess both go kind yields margin funding in Could over though costs Central more I'll like NIM are On even for is one obviously margin

Gianfranco Piero Ferrari de Las Casas

the can Francesca question. take

Francesca Raffo

only perspective, book is the a shorten asset the mix, of duration we positioned portfolio, from viability portfolio. balance sheet the the mix of derived consciously through significantly the question of to part tilted that to yield of the And and to the purposely we the the have of XXXX and increased of positioned the this the in loans. change the have we This in is increase loan connected strategy sheet In retail interest side. rate be asset investment side, the toward This and cases, going contributor more not trying think yields less more the consider the also in can duration some the growth think we following the balance but we has rate. the are of of going less these to are they the reference volatile order our I and to benefit because month. that reduction side from yield, year underlying underlying duration the lend

according probably quarter, positive have of going a in going increased loans we fashion. increase proportion and the to In the year our liability the the one have and we the the have going to deposits continue. other side, XXX better that are we is funding be dynamic Of ended mix. last are the market a points, reprice side, a the direction. factors basis low-cost timely with funding X to to going In course, In in structure to positive wholesale considering to up are

percentage and I of proportion reflecting we be the to significant low-cost have reference deposits to increased with decrease are going at to a going the are deposits, the positive the reprice the the that very funds margin. rate. described These maintain that So of in funding accordingly short-term contribution term beginning, strategy

loans going we bonds, refinancing All On have result the all, sorry. are increase And is side, in the to that are guidance costs. medium-term flip provided. the marginal we just the they

Sergey Dubin

Okay. That's helpful.

Okay.

is question of risk. regarding second my So cost

very even which by I of is El But talking also a doubled And quarter-to-quarter. significant Nino, bunch a line understand So fine. it last that increase a looked was from when in I in that actually terms. actually, that line, back Mibanco not of just taken then had year-over-year I'm very like out, about for year. cost here, I then provisions percentage almost other see modest BCP there's significant increase. was risk

So can comment risk BCP drove cost specifically? increase you on in what of

Gianfranco Piero Ferrari de Las Casas

Yes, Reynaldo?

Reynaldo Llosa Benavides

been we the specific year. very for as a of year of us challenging the a terms whole. events has all at had beginning XXXX what Besides in Yes.

basically during explained in have portfolio well year. And than as in provision related difference as had consumer explains provision know, and both this SME we than years credit I as such, soon. XXXX. the the the X economy As shrunk and you This mean, between more and portfolios, much we the Pyme as more specifically expected much card have

Sergey Dubin

Yes.

Mibanco, question affluent is quality only which my So credit DCP have to customers, provisions these less really have increased doubled. less their is you lending XX% why have because year-on-year, but provisions your

feeling there like pay of that provisions population. most and And -- disconnect? are you between the it are the not the because in took segment you you is why seems driving provision bank. and that -- Like So vulnerable in the early the disconnect Banco is why a increasing What's increase BCP.

Reynaldo Llosa Benavides

cost we You year, in BCP, were of Banco , in around as X.X%. around X%. last an the you had have in to average with of here check And mentioned, that we risk base

grown has than it only taking In this That's what of the consideration but base provisioned BCP has of the terms, as year. year. absolute this both portfolios. is half marginally year to compared So XX%, last basic base explanation. in into the It's Mibanco of less

Sergey Dubin

last that. but you come Okay. my not back And Well, the math to question also fully. on addressed and partially then I'll check really was

portion be revenue But that XXXX, right? there of you're efficiency disruptive that. you to like that you So by of from ratio, I XXXX, ratio, coming then said think will from from this in to you disrupted when But your of initiatives about expenses cost also that you're in coming talking also -- have year, mentioned expect XX% can revenue XX% would -- some XX% -- presumably, So as comes going you in well. initiatives. cost-to-income

why you improving, having ratio even year? especially in are context the breaking opposed this deteriorating still of Yape efficiency So as to

Reynaldo Llosa Benavides

year, income as Yes. is an XXX%. Yape breakeven is Yape example, become rich got because this to but it's -- of to It's a going the -- the cost

income to portfolio, this other year. cost larger that's same to going it be is Yape And than And breakeven. be the is previous assume Yape if something it's to to gets the going the XXX% to the Let's initiatives. year this relative year. of overall The exactly

disruptive the initiatives initiatives. So are other

So the to they have negative cost their on the higher disruptive improving a become than not obviously, income, initiatives XX%. but they're ratio. keep way larger, as And -- cost-to-income they they're impact

Sergey Dubin

Okay. I see. I see.

whatever average, they're reached initiative on XX%, to ratio So cost-to-income the consolidated... disruptive basically, your or weigh until XX% still your going down

Reynaldo Llosa Benavides

Exactly.

income we're management that to as the we're we're the, -- more that let's not as to creditors on further. balancing say, ratio to business, to and overall as what what trying it a So cost-to-income make so is efficient do traditional how -- much team, portfolio, deteriorating with cost

Operator

Carlos comes HSBC. next question from from Our Gomez

Carlos Gomez-Lopez

at what Chile? give Congratulations investments in already, you your idea your And but how And future you you I expect this profitability? for can it an what have a until mentioned year? know if much know expectation XX.X%, higher bit I if target don't that's for on probably in you the this results. you second, CETX? Tenpo have dividend operates. I than what will you reaches us do wanted what to normally think about are invested is And

be dividend So that Tenpo. capital and would

Gianfranco Piero Ferrari de Las Casas

of mine, question, take Yes. maybe I'll the don't I and Carlos, XX second then here. really bottom for figures Cesar have the help me

the we they is the is Nino the doesn't of figure be say in arrest they higher for that what what the is -- a since Board And you -- BCP logic transformational Regarding is to at done and BCP in the why, history something terms along provide then Over of approved is what is excess today in reason and year now XX%, it is what BCP investment paying is Which much which the dividends we've dividends, to common at by the projections that, growth [indiscernible]. Credicorp, some That's pays normally dividends. any time. dividends. withhold XX%. would it as specifically the April -- above But dividends as or behind of the Tier a it's of Mibanco mentioned, we you like the at strong if the than XX.X% of is X equity because correctly we of had mentioned, El have, decided last social XXXX, dividend has whatever obviously, I relevant we what to paid subsidiaries pay Credicorp. have obviously, need and of in capitalization, cannot Credicorp,

enough if answer the don't regarding that's I the dividends. yes, you. So for know that's

Carlos Gomez-Lopez

and -- perhaps logic, in this mean from therefore, year we I the so more be expect general the therefore, more distribution than years. to has Well, subsidiaries right? holding previous should distribution

Gianfranco Piero Ferrari de Las Casas

correct math. That's the

but has more the be approve to that. specific, Sorry, I Board cannot

Carlos Gomez-Lopez

I No, I the understand. Board understand. to... is But obviously, going

Gianfranco Piero Ferrari de Las Casas

Yes. Totally valid logic...

come Regarding you tempo, with can that. Cesar,

César Ríos

figure, million in Tenpo million, grown around a around XXX general have but say of costs. I be XX million We PEN cash can will PEN

Gianfranco Piero Ferrari de Las Casas

As of today.

initiatives that for each today. we And not that the Yes. how fully initiatives next, we X maybe the committed manage met. of hit are on And if those As achieve that early call we depending is the stage. know, if they -- set operating I disruptive more the relevant, we -- It's is Carlos, what indicators, costs indicators they indicators, capital the are what it's we of years. don't or

team at is supervising we initiative, way We are of constantly and the manage and the looking constantly performance that's Francesca's them. the

Carlos Rivera Zermeno

Okay. But which working. is you and fair -- indeed, something that to say have it's highlighted Tenpo, that's

breakeven this right? So venture particular because would you invest as far from will in one you more expect well, are that

Gianfranco Piero Ferrari de Las Casas

me for -- in exact revise and of Yes, But today. we let as but next an it, And Yes, maybe money, cannot figure that's call. be more provide terms of terms specific us only yes. not in time. of will We correct. also let

Operator

question Sachs. comes next from Goldman [indiscernible] from Our Raju

Unknown Analyst

cost provisions that? a more the cost forward, additional evolution what risk related in And the risk maybe I think next in should related have there to coming provisions. becoming going throughout of is of and make couple quarters should risk of question El to the any of we Nino a having also? Do we to any at And more about all normalized of you year you then would that how quarters? the on expect be additional Nino provisions And consider? severe El

Gianfranco Piero Ferrari de Las Casas

one, that I take could Reynaldo please? you think

Reynaldo Llosa Benavides

at don't Yes, effect. the expect El provisions Nino all extra any the have, with information we for latest we

terms quarter the of of the would require as whole projected of last understand, As mentioned, in how we than than are which today, we are considering portfolio. guidance, growth depend higher you risk of the cost portfolio, can it in a And retail in we of terms a the we XXXX. normalized as successful of of reversal made in provision the the will

the be in are growth So will bit number, around could it if we but successful basically, grow a retail current market. the the little in it

César Ríos

Maybe a we just NIM. to Reynaldo. look complement, risk-adjusted is at What

can So totally of just has cost correct, that's bear higher Therefore, risk-adjusted matters risk. the portfolio NIMs. is they mentioned higher Reynaldo but What is what retail NIM.

Unknown Analyst

understand. to sure I Just make

portfolio should So mean in of to you that? loan what to to the top turn growth be case guidance? end then out retail year, be does risk cost better that closer the this Is of

Reynaldo Llosa Benavides

with but that the Yes, a case, higher will be as NIM well.

So overall, bank in for the it will be be that case. better to

Operator

question JPMorgan. Yuri comes Our from from Fernandes next

Yuri Fernandes

-- not your was with call have 'XX XXXX. joined or little hard I I the explored time a if this a sure but to having I'm so expenses in line with consolidate not, bit somewhat I'm late, ROE growing your

to risk. NIM of would I resilient, like bit But help that bid a know the the cost is a growth us can seems the and Yape to too ROE still and accelerate Perhaps loan it more can should path great. getting you understand you bridge. bit XX%, breakeven. understand But if be the this would to little if remain I that discussed positive, you color, -- little So it

Gianfranco Piero Ferrari de Las Casas

that? Sure. answer Cesar could you

César Ríos

of Yes, like basic the would to revise to please. I you year. invite the

XXXX businesses increase increase relevant we interest balances Yape. to initiatives profitability fee the We should of XXXX. over are and and impairments that disruptive I also have income, weight in that, This the the impacted provision the are change these for going we year the improved to that mainly last consider that a average and considering year, has is composition gain cost controlled margin previous that we the to an an increases with driven relative year. underlying less for onetime we a And provide have are an in with terms will the are the adapt -- than daily events relative to income. like year XX.X%. addition the Adding an and not of the in as in line higher to pre-expenses increase explained going costs we improve risk say, as in we or net Gianfranco going the the that If next considering initiative, acceleration by year significant we have a of in NIM, with have can figures, new this Nino absolute more in in El

Gianfranco Piero Ferrari de Las Casas

Cesar. Maybe, Yuri, just complement to

Let me so but regarding comments overall political my the situation, situation the Peru. go situation on. back of the to also the and only original not macroeconomics the It's social

XX that -- see today we exactly in feel much than months we're better we what ago. we position So better were a as content a a much

Yuri Fernandes

Perfect guys.

like chart Now for follow-up have Yapei, with a the may, second and I sense that. just and again. congrats kind would I it I not of If like numbers and on -- one, Yape this impressive was increase a just on an presentation. XX% the some almost serve, makes and quarter-over-quarter on cost serve, to serve cost park but like the And the the to in up, is to our you in cost don't I the provide like crossing Q. know, fourth

asking just Yape getting returning of active the serve -- is on seasonal, cost service like serve if is I you So and levels don't this you to more a bit when to just breakeven user? the cost know, to if crossing cost normalized Yape. per this pack to the checking serve? to, say little cost for of solid the the So Or previous like

Gianfranco Piero Ferrari de Las Casas

of well, first quarter, spike I number -- there's December. on The all that quarter, mentioned mean right because the during last of especially you're in of the have assessment some the Cesar last in Yuri, we your seasonality page. a transactions,

Lastly, levels. previous year. some the reach to first serve to to but back go the similar would going we to related year. breakeven half we're of Therefore, this to were going that breakeven Cesar to say expect to we're reach costs performance, cost said, I

we're write back. So the on

Yuri Fernandes

Congrats on the results guidance. the and

Operator

question Andres from Soto. [Operator next Our Instructions] comes

Andres Soto

couple I have questions. a of

variable is I much variable can one side the that deposits, your you your understand, would a is if of that first your liability rate. is like loan compares to that what book follow-up your rate The us your -- with how of percentage is NIM. on remind on the on and how

César Ríos

Okay.

XXXX no rate performance balance our of of proportion so of the to portfolio. rate that change duration as the have the the is commented that and is relevant rates, the NIM through cost funds variable reference variable positioning the side The benefit to we First, liability going of sheet have the no is to engineered shorten composition we going during XXXX explanation decreases. that have as of the we previously,

Andres Soto

Thank you, Cesar.

area rate right? imagine, your Can have long gap versus I is assets matter your a You is it's point? So a at how what liability. don't of also variable of are you you on duration, this the understand

César Ríos

different Yes, kind of exactly. I sensibility It's matter And will pass-through of instruments. a of say, durations.

Andres Soto

Right. And terms numbers liabilities. of you in assets us on is the versus your can what duration give some

César Ríos

At this more than assets a little bit the is and X duration liability years the point, is shorter. of the slightly

Andres Soto

question is for guidance. call second are that regarding country quite the selling sounds My growth the loan Perfect. The optimistic. you

in a have a that more to However, GDP. are are GDP assuming loan when What for terms growth? is nominal multiplier one of you the to factors I growth you of see the multiplier loan preventing just

César Ríos

average But daily have a guidance, clock through not we that is And usual that it's relevant the X.X%, because around in now GDP X.X% can something But we think when XXXX. we every talking balances about I question perfect and X% nominal multiplier that decrease is or think balances. X.X%. provide during the around that. is inflation factor if grow year. GDP a about is a valuable the have of very and in and are this you you X.X% year X.X%, an been we has another think of

amount have, very a portfolio lower briefly we presentation that to a amounts mentioned that some of in So sorry, lower are have was end another and we my at the Reactiva. during the rebuild to have the at and we higher starting going is beginning year, base of need factor impact year, -- of the the probably -- still

reactivants guidance on that due on is remaining slightly in have the portfolio of We already an less still portfolio, to we the going are have impact no books. we are a payment based the X% than total but but longer that to providing structural

Operator

there this time. are and And at gentlemen, questions no ladies further appears it

Now to Officer, Mr. Executive the turn back Ferrari, to I'd remarks. closing Chief for over like floor Gianfranco

Gianfranco Piero Ferrari de Las Casas

and has your The undertaken year joining both over Thanks to been we've for challenging today for transformative. us questions. everyone and the journey past

in digital risk is our a underscore an ability results the year to diverse full prudent our strength and approach to including evolving a foundation, resilient Our a to grounded capabilities solid landscape. of outcome integrated portfolio, organization adapt and This management.

delivering Universal various management, Our of as and turnaround well is our success results. plan businesses, lines and asset including expected insurance span wealth where Banking as

sustainable While needed growth. to of we and microfinance revitalize acknowledging strengthen the are for process, the work aware our business

Looking anticipate With more El macroeconomic an forward detailed XXXX with about months reduced reference Nino our GDP more X Cesar reflects conditions. we in inflation, and control transition. in to phenomenon, anticipated outlook, local ago ahead. a optimistic XXXX, favorable share rate which the than opportunities we lie guidance, improvement a that a you year are

maintain term, interest towards to our margins expect decreasing a shift have to retail. continue medium of loan year-over-year, the sensitivity the resilient For portfolio as diminished rates NIM we and our we to

a digesting cycle. risk should current trend of we finalize maintain downward cost credit as Our the

for room some disruptive see initiatives also efficiency as We optimization our mature.

XX%. track be we back together, sustainable ROE should of our to deliver on Taken around

a talent, innovation, investments Credicorp. shareholder commitment value are sustainability today future unwavering. remains for and move and to we creation The way more the forward, resilient paving As for our making sustainable we're

management. into XX more our and exceptional of expand Before Rios -- would developing changes years extend bid reach to be Llosa, in impeccable transitioning CRO and to Cesar leaving new an new will who and us into Reynaldo guide BCP than the Credicorp and announced stronger empower XX-year that Reynaldo some position. I segments management We confident to with organization I on This will to my after us from role I farewell capabilities, markets. of risk diverse of to personal at retire us end into a BCP am adaptive he a will CRO era comment want role career. the ratio leverage the as year. his for closing, technologies a experience for corporate

talk leveraging with our to closely of within or steps who next Thank forward to look see all diverse the Alejandro to you both company. team BCP Financial in Finally, Pererees, a and of I Chief in the role you call collaborating his participating nice Have XX weekend. quarter. at Credicorp years of you for experience into Officer the you and

Operator

you, gentlemen. presentation. Thank This today's and concludes ladies

may You now lines. your disconnect

Credicorp (BAP) 9 Feb 242023 Q4 Earnings call transcript