Credicorp .(BAP) - 2024 Q3 - Quarterly Report

Operating and Financial Highlights Credicorp reported record S/1,524 million net income in 3Q24, maintaining ~17% ROE guidance and highlighting 13 million Yape MAU - Credicorp achieved a record 3Q24 net income of S/1,524 million, supported by margin strengthening, improved Cost of Risk (CoR), diversified non-interest revenue, and cost control, maintaining its 2024 ROE guidance of ~17%[4] 3Q24 Key Financial and Operational Highlights | Metric | 3Q24 Value (S/ million) | QoQ Change | YoY Change | Additional Detail | |:---|:---|:---|:---|:---| | Net Income (attributable to Credicorp) | 1,523.8 | +13.8% | +21.3% | Record high | | ROE | 18.5% | - | Up from 16.2% in 3Q23 | | Total Loans (ADB) | - | -1.2% | -1.2% | Decline due to corporate loan amortizations, stricter Mibanco origination, and BCP Retail Banking loan amortizations | | Total Deposits | - | +1.6% | +4.0% | Driven by low-cost deposits (69.7% of total) | | NPL Ratio | 5.9% | -12 bps | - | Fueled by improved risk management and debt relief | | Provisions | - | -20.6% | - | Reflects improved payment performance and risk management | | Cost of Risk (CoR) | 2.4% | -64 bps | -15 bps | | | Core Income | - | +0.8% | +9.8% | Excl. BCP Bolivia: +3.7% QoQ, driven by lower funding cost and higher fee income | | Insurance Underwriting Results | - | -7.5% | -11.8% | Less favorable Reinsurance Results in P&C | | Yape Monthly Active Users (MAU) | 13 million | - | - | Generating 44 transactions/month, monthly revenues S/4.9, costs S/4.3 | | Efficiency Ratio (9M24) | 44.6% | - | Improved 50 bps YoY | Operating expenses up 8.8% YTD, disruptive initiatives up 28.1% YoY | | BCP IFRS CET1 Ratio | 13.4% | +137 bps | - | Strong capital base | | Mibanco IFRS CET1 Ratio | 17.9% | +121 bps | - | Strong capital base | | Special Dividend Paid (Oct 18, 2024) | S/11 per share | - | - | Payout ratio 75.3% for the year | | Tenpo Bank Chile | - | - | - | Received provisional authorization certificate (Oct 25, 2024) | | Empresas Banmedica Acquisition | - | - | - | Agreement to acquire 50% stake in JV (Nov 1, 2024), expected to be accretive | Senior Management Quotes This section presents key statements and insights from Credicorp's senior management on performance and strategic direction Third Quarter 2024 Earnings Conference Call Credicorp Ltd. will host its 3Q24 Earnings Conference Call on November 8, 2024, at 9:30 am E.T., featuring senior management and accessible via webcast - Credicorp Ltd. will host its Third Quarter 2024 Earnings Conference Call on Friday, November 8th, 2024, at 9:30 am E.T. (9:30 am Lima, Perú)[11] - The call will be hosted by Gianfranco Ferrari (CEO), Alejandro Perez Reyes (CFO), Francesca Raffo (Chief Innovation Officer), Cesar Rios (Chief Risk Officer), Carlos Sotelo (Mibanco CFO), and the Investor Relations Team[11] - Participants can pre-register for a listen-only webcast or dial in using provided numbers, with the webcast archived for one year on the investor relations website[12][13] Summary of Financial Performance and Outlook Credicorp's 3Q24 performance featured record net income and strong ROE, driven by improved NII, NIM, and reduced provisions, alongside a strengthened capital base Loans in Average Daily Balances (ADB) Total loans (ADB) declined 1.2% QoQ and YoY in 3Q24 due to amortizations and stricter lending, partially offset by SME-Business and Mortgage growth - Total loans (ADB) declined 1.2% QoQ to S/140,574 million, primarily due to increased amortizations of long-term Corporate Banking loans, stricter lending guidelines at Mibanco, and higher loan amortizations in Consumer and Credit Cards[14] - YoY, total loans also fell 1.2%, driven by similar factors including Mibanco's stricter credit guidelines, increased amortizations in Middle Market Banking and SME-Pyme Government Program loans, and a decline in Consumer loans[15] - The decline was partially offset by growth in SME-Business and Mortgage loans QoQ, and Mortgage and BCP Bolivia loans YoY[14][15] Deposits Credicorp's deposit base expanded 1.6% QoQ and 4.0% YoY, driven by low-cost deposits, now 69.7% of total, benefiting from pension fund inflows - The deposit base expanded 1.6% QoQ and 4.0% YoY, mainly driven by sustained growth in Low-Cost Deposits (Demand and Savings balances)[16] - Low-cost deposits accounted for 69.7% of total deposits at quarter-end, benefiting from increased financial system liquidity due to pension fund withdrawals[16] BCP Liquidity Coverage Ratio (LCR) as of 3Q24 | Currency | Regulatory Standard | Internal Standard | |:---|:---|:---| | PEN (30 days) | 167.6% | 139.9% | | USD (30 days) | 187.1% | 141.1% | Net Interest Income (NII) and Margin (NIM) Net Interest Income (NII) increased 3.5% QoQ and 10.3% YoY, driven by lower interest expenses from low-cost deposits, improving NIM to 6.43% - NII rose 3.5% QoQ and 10.3% YoY, mainly driven by a decrease in Interest and Similar Expenses due to the increasing share of low-cost deposits in the funding mix[18][19] - NIM stood at 6.43% at quarter-end, up from 6.33% in 2Q24, and rose 32 bps YoY, reflecting a low-cost funding advantage and disciplined interest rate management[4][18][19] Portfolio Quality and Cost of Risk Credicorp's NPL balance decreased 4.8% QoQ, reducing the NPL ratio to 5.9%, with provisions down 20.6% QoQ, leading to a 2.4% Cost of Risk - The NPL balance dropped 4.8% QoQ and 3.5% YoY, primarily driven by BCP and Mibanco, due to debt repayment, tightened origination guidelines, and improved collections[22][23] - The NPL ratio decreased 12 bps QoQ and 11 bps YoY, closing at 5.9% at quarter-end[24] - Provisions declined 20.6% QoQ and 5.4% YoY, reflecting improved customer payment performance and risk management measures at BCP Retail Banking and Mibanco[25][26] - The Cost of Risk (CoR) closed at 2.4%, down 64 bps QoQ and 15 bps YoY, with the NPL Coverage Ratio at 98.7%[8][26] Other income Other Income was impacted by BCP Bolivia regulatory changes, but Other Core Income rose 3.8% QoQ and 18.7% YoY, driven by card usage, Yape, and Credicorp Capital fees - Other Income was impacted by regulatory changes in foreign transfers at BCP Bolivia[29] - Excluding BCP Bolivia, Other Core Income increased 3.8% QoQ, driven by increased use of debit and credit cards and higher Yape transaction volumes at BCP[29] - YoY, Other Core Income rose 18.7%, also supported by Credicorp Capital's increased Fee Income from Capital Markets and Wealth Management businesses[29] Insurance Underwriting Result The Insurance Underwriting Result decreased 7.5% QoQ and 11.8% YoY, driven by P&C reinsurance deterioration and increased Life Insurance service expenses - The Insurance Underwriting Result fell 7.5% QoQ and 11.8% YoY[30] - This decline was mainly driven by a deterioration in the Reinsurance Result in P&C and an uptick in Service Expenses for Life Insurance[30] - YTD, the Insurance Underwriting Result decreased 4.1%, primarily due to a deterioration in the Reinsurance Result, particularly in P&C[31] Efficiency Credicorp's Efficiency Ratio improved 50 bps YoY to 44.6% in 9M24, as Operating Income growth outpaced expense expansion, with disruptive initiatives growing 28.1% - The Efficiency Ratio improved 50 bps YoY to 44.6% in 9M24[8][32] - Operating expenses increased 8.8% YTD, with disruptive initiatives at Credicorp accounting for 12.0% of the total and growing 28.1% YoY[8][32] - Operating Income increased 9.4% YTD, contributing to the improved efficiency[32] Net Income attributable to Credicorp Net income attributable to Credicorp reached a record S/1,523.8 million in 3Q24, up 13.8% QoQ, resulting in 18.5% ROE Net Income and Equity Performance (3Q24) | Metric | 3Q24 Value (S/ million) | QoQ Change | YoY Change | |:---|:---|:---|:---| | Net Income attributable to Credicorp | 1,523.8 | +13.8% | +23.1% | | Net Shareholders' Equity | 33,463 | +3.2% | +7.0% | | ROE | 18.5% | - | - | Financial Overview Credicorp's 3Q24 overview shows robust net profit growth to S/1,523.8 million and 18.5% ROAE, driven by NII, NIM, strong capital, and improved efficiency Credicorp Ltd. Key Financials (3Q24 vs. 2Q24 & 3Q23) | Metric (S/ 000) | 3Q23 | 2Q24 | 3Q24 | QoQ Change | YoY Change | |:---|:---|:---|:---|:---|:---| | Net interest, similar income and expenses | 3,254,043 | 3,468,464 | 3,590,750 | 3.5% | 10.3% | | Provision for credit losses on loan portfolio, net of recoveries | (917,642) | (1,093,371) | (868,081) | -20.6% | -5.4% | | Net interest, similar income and expenses, after provision for credit losses on loan | 2,336,401 | 2,375,093 | 2,722,669 | 14.6% | 16.5% | | Other income | 1,402,603 | 1,661,479 | 1,621,282 | -2.4% | 15.6% | | Insurance underwriting result | 330,900 | 315,500 | 291,775 | -7.5% | -11.8% | | Total expenses | (2,350,469) | (2,465,354) | (2,524,166) | 2.4% | 7.4% | | Profit before income tax | 1,719,435 | 1,886,718 | 2,111,560 | 11.9% | 22.8% | | Net profit attributable to Credicorp | 1,238,173 | 1,339,096 | 1,523,788 | 13.8% | 23.1% | | Net income / share (S/) | 15.5 | 16.8 | 19.1 | 13.8% | 23.1% | | Dividends per Share (S/) | 25.0 | 35.0 | 11.0 | -68.6% | -56.0% | | Loans | 145,129,260 | 146,946,546 | 142,568,785 | -3.0% | -1.8% | | Deposits and obligations | 148,471,535 | 151,971,984 | 154,435,451 | 1.6% | 4.0% | | Net equity | 31,267,592 | 32,413,767 | 33,462,591 | 3.2% | 7.0% | Credicorp Ltd. Profitability and Quality Ratios (3Q24 vs. 2Q24 & 3Q23) | Metric | 3Q23 | 2Q24 | 3Q24 | QoQ Change | YoY Change | |:---|:---|:---|:---|:---|:---| | Net interest margin | 6.11% | 6.33% | 6.43% | 10 bps | 32 bps | | Risk-adjusted Net interest margin | 4.45% | 4.40% | 4.93% | 53 bps | 48 bps | | Funding cost | 3.15% | 2.86% | 2.68% | -18 bps | -47 bps | | ROAE | 16.2% | 16.2% | 18.5% | 234 bps | 235 bps | | ROAA | 2.1% | 2.2% | 2.4% | 26 bps | 35 bps | | NPL ratio | 6.0% | 6.0% | 5.9% | -12 bps | -11 bps | | Cost of risk | 2.5% | 3.0% | 2.4% | -64 bps | -15 bps | | Coverage ratio of NPLs | 93.0% | 95.0% | 98.7% | 364 bps | 565 bps | | Efficiency ratio | 46.3% | 44.9% | 45.2% | 29 bps | -112 bps | | BCP CET1 Ratio | 13.04% | 12.05% | 13.42% | 137 bps | 38 bps | | Mibanco CET1 Ratio | 17.56% | 16.73% | 17.94% | 121 bps | 38 bps | Credicorp's Strategy Update Credicorp's strategy focuses on technology and disruptive initiatives for client experience and market expansion, targeting 18% ROE and 10% risk-adjusted income from new models by 2026 Credicorp's Strategy Credicorp's strategy involves technology investment and disruptive initiatives to expand TAM and generate new income, targeting 18% ROE and 10% risk-adjusted income from new models by 2026 - Credicorp is investing in technology and disruptive initiatives to expand its TAM, generate new income sources, and efficiently capture market opportunities, aiming to decouple from macroeconomic environments[50] - The strategy focuses on providing the best client experience, enhancing digital and analytical capabilities, and becoming an omnichannel financial services company[51] - Credicorp aims to achieve a sustainable ROE of 18% and generate 10% of its risk-adjusted income through new business models by 2026[52] Main KPIs for Credicorp's Traditional Business Transformation (3Q24) | KPI | Subsidiary | 3Q23 | 2Q24 | 3Q24 | |:---|:---|:---|:---|:---| | Digital Clients | BCP | 62% | 72% | 74% | | Digital monetary transactions | BCP | 76% | 83% | 85% | | Transactional cost by unit | BCP | 0.07 | 0.04 | 0.04 | | Disbursements through leads | Mibanco | 74% | 68% | 66% | | Disbursements through alternative channels | Mibanco | 15% | 23% | 23% | | Mibanco Productivity (loans disbursed/relationship managers) | Mibanco | 22.1 | 21.9 | 23.6 | | Cashless transactions | BCP | 55% | 64% | 66% | | Mobile Banking rating iOS | BCP | 4.7 | 4.8 | 4.8 | | Mobile Banking rating Android | BCP | 4.6 | 4.6 | 4.7 | | Digital sales | BCP | 58% | 66% | 65% | Disruptive Initiatives: Yape Yape reached 13.0 million MAU in 3Q24, with 44 monthly transactions per user and S/4.9 monthly income, targeting 16.5 million users by 2026 - Yape reached 13.0 million monthly active users (MAU) in 3Q24, with average monthly transactions per MAU at 44[56] - Monthly income and cost per active yapero were S/4.9 and S/4.2, respectively, in 3Q24[56] - Yape's aspirations include reaching 16.5 million users and S/600 billion in transactions per year by 2026[56] Yape's Main KPIs (3Q24 vs. 2Q24 & 3Q23) | KPI | 3Q23 | 2Q24 | 3Q24 | QoQ Change | YoY Change | |:---|:---|:---|:---|:---|:---| | Monthly Active Users (MAU) (millions) | 9.8 | 12.3 | 13.0 | 5.9% | 32.5% | | Transactions (millions) | 794.6 | 1,400.7 | 1,664.2 | 18.8% | 109.4% | | Monthly Transactions / MAU | 29.1 | 40.0 | 44.1 | 10.3% | 51.9% | | Monthly Revenues / MAU | 2.9 | 4.1 | 4.9 | 18.4% | 69.8% | | Monthly Expenses / MAU | 3.8 | 4.0 | 4.2 | 6.0% | 11.7% | | Total Payment Volume (TPV) (S/ billion) | 37.3 | 62.1 | 76.8 | 23.7% | 105.9% | | Loans Disbursements (thousands) | 228.4 | 702.2 | 1,294.9 | 84.4% | 466.9% | | Gross Merchant Volume (GMV) (S/ million) | 30.3 | 69.6 | 112.9 | 62.3% | 272.3% | Yape's Main Financial KPIs (3Q24 vs. 2Q24 & 3Q23) | Financial KPI (S/ millions) | 3Q23 | 2Q24 | 3Q24 | QoQ Change | YoY Change | |:---|:---|:---|:---|:---|:---|\ | Net Interest Income | 46.1 | 60.3 | 75.0 | 24.3% | 62.5% | | Net Fee Income | 36.4 | 83.5 | 114.7 | 37.4% | 215.0% | | Total Income | 82.6 | 143.8 | 189.7 | 31.9% | 129.8% | | Total Expenses | (107.4) | (139.2) | (161.5) | 16.0% | 50.4% | - Payments business holds the largest share of Yape's total income (56% in 3Q24), boosted by Yape businesses, Bill payments, and QR code payments[61] - Financial business contributed 40% of total income, driven by Yape loans[61] - Marketplace income, led by Yape promos, represented 4% of total income[61] Integrating Sustainability in Our Businesses Credicorp integrates sustainability, focusing on environmental, financial inclusion, and education, with 5.3 million people included and US$1,101 million in sustainable loans in 3Q24 - Credicorp formally adhered to PCAF (Partnership for Carbon Accounting Financials) to standardize and disclose financed emissions measurements, with BCP Bolivia completing its first measurement and Pacífico Seguros beginning to measure its footprint[64] - BCP disbursed US$1,101 million in sustainable loans as of September 2024, including its first Sustainability Linked Loan (SLL) to Compañía de Minas Buenaventura[64] - BCP and Yape financially included 5.3 million people, with 331 thousand people obtaining their first loan through Yape (43% women)[63] - BCP helped over 257 thousand clients improve financial knowledge, and Mibanco Perú trained over 273 thousand clients through its Basic Digital Advisory Program[65] Progress on Sustainability Initiatives (3Q24) | Initiative | Company | 4Q22 | 4Q23 | 3Q24 | |:---|:---|:---|:---|:---| | Financially included through BCP and Yape (cumulative since 2020) | BCP | 2.5 million | 3.8 million | 5.3 million | | Stock of inclusive insurance policies | Pacífico Seguros | 2.6 million | 3.2 million | 3.3 million | | Trained through online courses via ABC at BCP (YTD) | BCP | 310.3 thousand | 614.1 thousand | 435.1 thousand | | Young people trained through ABC of Pension Culture (YTD) | Prima AFP | 61.0 thousand | 138.1 thousand | 390 thousand | | Clients trained in FE through Mibanco "Progress Academy" (YTD) | Mibanco Perú | 251.2 thousand | 413.3 thousand | 304.4 thousand | | Percentage of women banked on the asset side (loans) | Mibanco Perú | 56.0% | 55.9% | 62.4% | | SME-Pymes financially included through loans (YTD) | BCP | 49.7 thousand | 33.8 thousand | 31.2 thousand | 01 Loan Portfolio Credicorp's total loan portfolio (ADB) declined 1.2% QoQ and YoY due to repayments and stricter lending, partially offset by SME-Business and Mortgage growth 1.1. Loans Total loans (ADB) decreased 1.2% QoQ and YoY due to higher amortizations and stricter lending, partially offset by SME-Business and Mortgage loan growth - Total loans in average daily balances (ADB) fell 1.2% QoQ (-0.7% FX Neutral), primarily due to increased repayments of long-term loans in Corporate Banking, stricter lending guidelines at Mibanco, and higher loan amortizations in Consumer and Credit Cards[70][73] - YoY, total loans in ADB also fell 1.2% (-1.4% FX Neutral), driven by similar factors including tighter lending guidelines at Mibanco, increased repayments in Middle Market Banking, and amortizations of Government Program loans in SME-Pyme[71][73] - The decline was partially offset by growth in SME-Business and Mortgage loan balances QoQ, and Mortgage and BCP Bolivia loans YoY[70][73][79] Total Loans by Segment (Average Daily Balances, S/ millions) | Segment | Sep 23 | Jun 24 | Sep 24 | QoQ Change (%) | YoY Change (%) | % Part. in total loans (Sep 24) | |:---|:---|:---|:---|:---|:---|:---| | BCP Stand-alone | 115,851 | 116,450 | 115,569 | -0.8% | -0.2% | 82.2% | | Wholesale Banking | 52,796 | 53,157 | 52,257 | -1.7% | -1.0% | 37.2% | | Corporate | 31,134 | 31,879 | 31,108 | -2.4% | -0.1% | 22.1% | | Middle - Market | 21,662 | 21,278 | 21,148 | -0.6% | -2.4% | 15.0% | | Retail Banking | 63,055 | 63,293 | 63,312 | 0.0% | 0.4% | 45.0% | | SME - Business | 7,292 | 7,121 | 7,356 | 3.3% | 0.9% | 5.2% | | SME - Pyme | 16,549 | 16,295 | 16,184 | -0.7% | -2.2% | 11.5% | | Mortgage | 20,712 | 21,432 | 21,606 | 0.8% | 4.3% | 15.4% | | Consumer | 12,654 | 12,466 | 12,319 | -1.2% | -2.7% | 8.8% | | Credit Card | 5,848 | 5,978 | 5,847 | -2.2% | 0.0% | 4.2% | | Mibanco | 14,121 | 12,815 | 12,199 | -4.8% | -13.6% | 8.7% | | BAP's total loans | 142,219 | 142,261 | 140,574 | -1.2% | -1.2% | 100.0% | Evolution of Loan Dollarization The dollarization level of total loans increased 4 bps QoQ to 35.4% and 117 bps YoY, driven by reduced local currency loans and slight foreign currency growth - The dollarization level of total loans rose 4 bps QoQ to 35.4% at the end of September 2024, driven by a drop in LC loan balances, primarily from Mibanco and Wholesale Banking[77] - YoY, the dollarization level for the total portfolio rose 117 bps, due to a 2.9% decline in total LC loans and a 1.5% growth in total FC loans[78] Total Loans by Currency (Average Daily Balances, S/ millions) | Currency | Sep 23 | Jun 24 | Sep 24 | QoQ Change (%) | YoY Change (%) | % Part. by currency (Sep 24) | |:---|:---|:---|:---|:---|:---|:---| | Local Currency (LC) | 93,529 | 91,954 | 90,805 | -1.2% | -2.9% | 64.6% | | Foreign Currency (FC) (US$ millions) | 13,166 | 13,335 | 13,367 | 0.2% | 1.5% | 35.4% | 02 Deposits Credicorp's total deposits grew 1.6% QoQ and 4.0% YoY, fueled by low-cost deposits (now 69.7% of total), with the L/D ratio decreasing due to loan contraction Deposits Overview Total deposits expanded 1.6% QoQ and 4.0% YoY, driven by low-cost deposits (up 3.8% QoQ), fueled by pension fund withdrawals, partially offset by Time Deposit decreases - Total deposits expanded 1.6% QoQ (+3.2% FX neutral) and 4.0% YoY (+5.1% FX neutral), primarily driven by growth in low-cost deposits[84][86] - Low-cost deposits (Demand and Savings) increased 3.8% QoQ and 13.9% YoY, accounting for 69.7% of total deposits at quarter-end, reflecting a significant competitive advantage[85][86] - The growth in low-cost deposits was mainly due to inflows from pension fund withdrawals and transactional deposit captures, partially offset by a 2.3% QoQ and 13.6% YoY reduction in Time Deposits[84][86] Deposits by Type (S/ 000) | Deposit Type | Sep 23 | Jun 24 | Sep 24 | QoQ Change (%) | YoY Change (%) | |:---|:---|:---|:---|:---|:---| | Demand deposits | 45,120,127 | 50,657,031 | 53,149,144 | 4.9% | 17.8% | | Saving deposits | 49,395,543 | 53,015,745 | 54,474,960 | 2.8% | 10.3% | | Time deposits | 49,213,763 | 43,504,883 | 42,514,849 | -2.3% | -13.6% | | Severance indemnity deposits | 3,245,358 | 3,358,408 | 2,989,705 | -11.0% | -7.9% | | Low-cost deposits | 94,515,670 | 103,672,776 | 107,624,104 | 3.8% | 13.9% | | Total Deposits and obligations | 148,471,535 | 151,971,984 | 154,435,451 | 1.6% | 4.0% | Dollarization Level of Deposits The dollarization level of total deposits remained stable QoQ at 48.0% and decreased 86 bps YoY, influenced by increased local currency savings and demand deposits - The dollarization level of Total Deposits held steady QoQ at 48.0% at the end of September 2024, below the 2-year average of 49.6%[89] - This stability was driven by an increase in LC Savings and Demand Deposits from pension fund withdrawals, offset by a drop in LC Time Deposits due to easing interest rates[89] - YoY, the dollarization level fell 86 bps due to growth in LC Savings and Demand Deposits[90] Loan / Deposit Ratio (L/D ratio) Credicorp's L/D ratio stood at 92.3% in 3Q24, dropping significantly at BCP and Mibanco due to declining loans and growing low-cost deposits - The L/D ratio at Credicorp stood at 92.3% in 3Q24[97] - QoQ, the L/D ratio dropped 510 bps at BCP and 843 bps at Mibanco, driven by a drop in loan balances and growth in low-cost deposits in LC[95] - YoY, the L/D ratio dropped 763 bps at BCP and 2292 bps at Mibanco, reflecting similar drivers of loan balance reduction and deposit growth[96] Market Share of Deposits in the Peruvian Financial System BCP and Mibanco maintained total deposit market shares of 31.7% and 2.6% in August 2024, with Credicorp's low-cost deposit share at 41.0% - At the end of August 2024, BCP and Mibanco held total deposit market shares of 31.7% and 2.6% respectively, with BCP leading the market[101] - Credicorp's (BCP + Mibanco) share in the market for low-cost deposits stood at 41.0% at quarter-end, an increase of 12 bps YoY[103] - BCP's market share for Time Deposits fell 344 bps to 17.9% at the end of August 2024, as Time Deposits across the system rose but fell at BCP Stand-alone[102] 03 Interest-earning Assets (IEA) and Funding Credicorp's IEA increased 2.6% QoQ and 5.2% YoY, driven by cash and investments, while funding rose 0.7% QoQ and 3.2% YoY, mainly from low-cost deposits 3.1. IEA Interest-Earning Assets (IEA) increased 2.6% QoQ and 5.2% YoY, driven by cash and due from banks and strategic investments, partially offset by loan declines - IEA rose 2.6% QoQ, driven primarily by an increase in Cash and due from banks (36.3% QoQ), partially offset by a 3.0% drop in total loans[104][106] - YoY, IEA increased 5.2%, spurred by growth in Cash and due from banks (48.6% YoY) and an uptick in investments (4.3% YoY) as part of a strategy to extend the portfolio's duration via larger holdings of sovereign bonds[105][107] Interest Earning Assets (S/000) | Asset Type | Sep 23 | Jun 24 | Sep 24 | QoQ Change (%) | YoY Change (%) | |:---|:---|:---|:---|:---|:---| | Cash and due from banks | 24,907,836 | 27,157,901 | 37,007,966 | 36.3% | 48.6% | | Total investments | 51,116,913 | 52,426,146 | 53,328,873 | 1.7% | 4.3% | | Total loans | 145,129,260 | 146,946,546 | 142,568,785 | -3.0% | -1.8% | | Total interest earning assets | 222,667,631 | 228,308,084 | 234,324,929 | 2.6% | 5.2% | 3.2. Funding Total funding increased 0.7% QoQ and 3.2% YoY, driven by low-cost deposits from pension fund withdrawals and bond issuances - Funding rose 0.7% QoQ, driven by growth in the deposit balance (1.6% QoQ), mainly from AFP withdrawals into low-cost deposits, partially offset by a 5.6% drop in the Bond balance[104][108] - YoY, funding increased 3.2%, spurred mainly by deposit growth (4.0% YoY) and, to a lesser extent, by growth in 'Due to banks and correspondents' (21.1% YoY) and bond issuances (13.7% YoY) for long-term debt refinancing[105][109] Funding Sources (S/000) | Funding Source | Sep 23 | Jun 24 | Sep 24 | QoQ Change (%) | YoY Change (%) | |:---|:---|:---|:---|:---|:---| | Deposits and obligations | 148,471,535 | 151,971,984 | 154,435,451 | 1.6% | 4.0% | | Due to banks and correspondents | 10,493,411 | 12,620,346 | 12,704,234 | 0.7% | 21.1% | | BCRP instruments | 9,616,150 | 5,542,892 | 4,788,939 | -13.6% | -50.2% | | Bonds and notes issued | 14,914,632 | 17,953,508 | 16,952,011 | -5.6% | 13.7% | | Total funding | 185,617,598 | 190,235,527 | 191,474,800 | 0.7% | 3.2% | 04 Net Interest Income (NII) Credicorp's NII grew 3.5% QoQ and 10.3% YoY to S/3,590.75 million, driven by reduced interest expenses from low-cost deposits, improving NIM to 6.43% NII and NIM Overview NII increased 3.5% QoQ and 10.3% YoY due to lower interest expenses from low-cost deposits, with NIM rising 10 bps QoQ to 6.43%, and risk-adjusted NIM improving 53 bps - NII rose 3.5% QoQ and 10.3% YoY, driven primarily by a decrease in interest and similar expenses due to the growing share of low-cost deposits[110][111][113] - NIM rose 10 bps QoQ and 32 bps YoY to 6.43%, reflecting effective asset/liability management and a strategic funding advantage[112][117] - Risk-adjusted NIM rose 53 bps QoQ, supported by a reduction in provisions and improved client payment capacities[118] Net Interest Income and Margin (S/ 000) | Metric | 3Q23 | 2Q24 | 3Q24 | QoQ Change (%) | YoY Change (%) | |:---|:---|:---|:---|:---|:---| | Interest Income | 4,819,101 | 4,935,238 | 4,995,971 | 1.2% | 3.7% | | Interest Expense | (1,565,058) | (1,466,774) | (1,405,221) | -4.2% | -10.2% | | Net Interest Income | 3,254,043 | 3,468,464 | 3,590,750 | 3.5% | 10.3% | | Yield on IEAs | 8.73% | 8.69% | 8.64% | -5 bps | -9 bps | | Cost of Funds | 3.15% | 2.86% | 2.68% | -18 bps | -47 bps | | Net Interest Margin (NIM) | 6.11% | 6.33% | 6.43% | 10 bps | 32 bps | | Risk-Adjusted Net Interest Margin | 4.45% | 4.40% | 4.93% | 53 bps | 48 bps | QoQ Analysis QoQ, NII increased 3.5%, driven by LC NII growth from lower interest expenses due to low-cost deposits, and FC NII growth from increased interest income - QoQ, NII increased 3.5%, with LC NII rising 3.4% and FC NII rising 3.9%[121][122][125] - LC NII growth was driven by a drop in interest expenses due to increased low-cost deposits from pension fund withdrawals, lower expenses in the BCRP and banks line (due to rate cuts and reduced repos), and a reduction in bond expenses[122] - FC NII growth was mainly driven by a 3.0% increase in interest income from available funds, optimized via O/N deposits at BCRP, which offset a 2.1% rise in interest expenses from a subordinated bond issuance[125] YoY Analysis YoY, NII increased 10.3%, with LC NII rising from lower funding costs due to low-cost deposits, and FC NII growing from increased IEA and interest income - YoY, NII rose 10.3%, with LC NII increasing 10.3% and FC NII increasing 10.5%[126][128] - LC NII growth was fueled by a 27.1% drop in interest expenses, as low-cost deposits increased and local interest rates declined, leading to a funding cost reduction from 4.0% to 2.9%[126] - FC NII growth was driven by a 9.7% increase in average IEA and a 12.5% rise in interest income, primarily from available funds and loans in Corporate Banking and BCP Bolivia, despite a 14.8% increase in interest expenses due to debt issuances[128][129] YTD Analysis YTD, NII grew 9.3%, with LC NII rising from increased loan and investment income and lower expenses from low-cost deposits, while FC NII grew from loan and cash equivalent income - YTD, NII grew 9.3%, with LC NII rising 9.6% and FC NII increasing 8.1%[130][131][132] - LC NII growth was driven by a 3.8% rise in interest income from loans (SME-Pyme and credit cards) and investments, and lower expenses due to a larger proportion of low-cost deposits[131] - FC NII growth was attributable to a 13.8% rise in interest income from loans (Corporate Banking, BCP Bolivia) and cash equivalents, but interest expenses grew 21.0% due to increased volumes of more expensive funding sources like 'Due to banks' and 'Bonds and notes'[132] 05 Portfolio Quality and Provisions Credicorp's NPL portfolio contracted, with the NPL ratio falling to 5.9%, while provisions declined 20.6% QoQ, leading to a 2.4% CoR and 98.7% NPL Coverage Ratio 5.1 Portfolio Quality Credicorp's NPL portfolio decreased 4.8% QoQ and 3.5% YoY, with the NPL ratio falling to 5.9%, driven by debt repayments, stricter origination, and improved collections - The NPL portfolio contracted, driven mainly by BCP Stand-alone and Mibanco, reaching a turning point in impacted segments like Individuals and structural SME-Pyme at BCP, and Mibanco's loan portfolio[133] - QoQ, the NPL balance dropped 4.8%, led by BCP (debt repayments in Wholesale Banking and Individuals, lower overdue loans in SME-Pyme) and Mibanco (stricter origination, improved collections, debt facilities)[134][137] - YoY, the NPL balance fell 3.5%, driven by BCP (debt payment in Wholesale Banking, honoring of Reactiva guarantees in SME-Pyme), partially offset by Mibanco[138][139] Loan Portfolio Quality and Delinquency Ratios (S/000) | Metric | Sep 23 | Jun 24 | Sep 24 | QoQ Change (%) | YoY Change (%) | |:---|:---|:---|:---|:---|:---| | Total loans (Quarter-end balance) | 145,129,260 | 146,946,546 | 142,568,785 | -3.0% | -1.8% | | Write-offs | 1,018,084 | 994,556 | 923,946 | -7.1% | -9.2% | | Non-performing loans (NPLs) | 8,659,443 | 8,785,896 | 8,360,155 | -4.8% | -3.5% | | NPL ratio | 6.0% | 6.0% | 5.9% | -12 bps | -11 bps | 5.1 Provisions and Cost of Risk Provisions declined 20.6% QoQ and 5.4% YoY, driven by improved payment performance at BCP and Mibanco, leading to a 2.4% Cost of Risk - QoQ, provisions fell 20.6%, driven primarily by BCP Stand-alone (improved payment performance in Retail Banking, particularly Consumer, Credit Cards, and SME-Pyme) and Mibanco (improvements in debt collection management)[149] - YoY, provisions fell 5.4%, fueled by BCP Stand-alone (Consumer, SME-Pyme, Mortgage) and Mibanco, with the Cost of Risk (CoR) falling 15 bps YoY to 2.4%[150] - YTD, excluding the El Niño Phenomenon reversal in 1Q24, provisions rose 25.8%, mainly due to weakening payment capacity and deteriorating performance in SME-Pyme and Credit Cards[151] Loan Portfolio Provisions and Cost of Risk (S/ 000) | Metric | 3Q23 | 2Q24 | 3Q24 | QoQ Change (%) | YoY Change (%) | |:---|:---|:---|:---|:---|:---| | Gross provision for credit losses on loan portfolio | (1,008,750) | (1,193,548) | (981,870) | -17.7% | -2.7% | | Recoveries of written-off loans | 91,108 | 100,177 | 113,789 | 13.6% | 24.9% | | Provision for credit losses on loan portfolio, net of recoveries | (917,642) | (1,093,371) | (868,081) | -20.6% | -5.4% | | Cost of risk | 2.5% | 3.0% | 2.4% | -64 bps | -15 bps | Coverage Ratio of NPLs The total NPL Coverage Ratio reached 98.7% at 3Q24, increasing 364 bps QoQ and 565 bps YoY, driven by NPL reductions and increased allowance for loan losses - The total NPL Coverage Ratio reached 98.7% at the end of 3Q24, and 101.9% excluding Government Program portfolio NPLs[163] - QoQ, the total NPL Coverage Ratio at Credicorp rose 364 bps, driven by BCP Stand-alone (413 bps increase to 100.7% excluding GP loans) and Mibanco (386 bps increase to 101.6% excluding GP loans)[164][165] - YoY, the total NPL Coverage Ratio at Credicorp rose 565 bps, mainly driven by BCP Stand-alone (227 bps increase excluding GP loans, due to higher allowance for loan losses in SME-Pyme and Credit Cards)[166] NPL Coverage Ratio (S/ 000) | Metric | Sep 23 | Jun 24 | Sep 24 | QoQ Change | YoY Change | |:---|:---|:---|:---|:---|:---| | Allowance for loan losses | 8,056,216 | 8,350,024 | 8,250,023 | -1.2% | 2.4% | | Non-performing loans (NPLs) | 8,659,443 | 8,785,896 | 8,360,155 | -4.8% | -3.5% | | Coverage ratio of NPLs | 93.0% | 95.0% | 98.7% | 364 bps | 565 bps | 06 Other Income Credicorp's total Other Income contracted 2.4% QoQ due to BCP Bolivia regulatory changes, but Other Core Income rose 3.8% QoQ and 18.7% YoY, driven by card usage, Yape, and Credicorp Capital fees 6.1. Other Core Income Other Core Income contracted 6.2% QoQ due to BCP Bolivia regulatory changes, but excluding this, it rose 3.8% QoQ, driven by BCP Stand-alone's fee income from card usage and Yape - Total Other Core Income contracted 6.2% QoQ due to regulatory changes impacting BCP Bolivia's foreign transfers service business[171] - Excluding BCP Bolivia, Other Core Income rose 3.8% QoQ, driven by a 4.4% increase in Fee Income and 1.9% growth in Gains on FX transactions, both mainly from BCP Stand-alone[172][174] - YoY and YTD, Other Core Income grew 18.7% and 14.6% respectively, primarily due to increased Fee Income and Gains on FX Transactions at BCP Stand-alone (from retail/wholesale transactions and Yape)[174] Other Core Income (S/ 000) | Metric | 3Q23 | 2Q24 | 3Q24 | QoQ Change (%) | YoY Change (%) | |:---|:---|:---|:---|:---|:---| | Fee income | 975,955 | 1,148,830 | 1,108,314 | -3.5% | 13.6% | | Net gain on foreign exchange transactions | 208,620 | 217,896 | 172,998 | -20.6% | -17.1% | | Total other income Core | 1,184,575 | 1,366,726 | 1,281,312 | -6.2% | 8.2% | Fee Income at BCP Stand-alone (S/ 000,000) | Category | 3Q23 | 2Q24 | 3Q24 | QoQ Change (%) | YoY Change (%) | |:---|:---|:---|:---|:---|:---| | Payments and transactionals | 335.6 | 333.3 | 376.5 | 13.0% | 12.2% | | Yape | 39.1 | 70.2 | 96.4 | 37.3% | 146.2% | | Liability accounts | 178.2 | 189.9 | 198.0 | 4.3% | 11.1% | | Loan Disbursement | 89.5 | 101.0 | 96.1 | -4.9% | 7.4% | | Total | 758.5 | 812.5 | 880.0 | 8.3% | 16.0% | 6.2 Other Non-Core Income Other Non-Core Income dropped 13.6% QoQ (excluding BCP Bolivia) due to a base effect, but rose 13.4% YoY, driven by successful trading strategies and revaluation of seed capital - QoQ, Other Non-Core Income dropped 13.6% (excluding BCP Bolivia), primarily due to a base effect from a property sale and revaluation of the trading portfolio at Universal Banking[182] - YoY, Other Non-Core Income rose 13.4%, attributable to growth in Net gain on Securities from successful trading strategies in Capital Markets and revaluation of seed capital in Asset Management[183] - YTD, Other Non-Operating Income rose 8.3%, driven by Net Gain on Securities and an expansion in Net Gain on Derivatives Held for Trading in ASB and Credicorp Capital[184] Other Non-Core Income (S/ 000) | Metric | 3Q23 | 2Q24 | 3Q24 | QoQ Change (%) | YoY Change (%) | |:---|:---|:---|:---|:---|:---| | Net gain on securities | 53,591 | 92,711 | 120,033 | 29.5% | 124.0% | | Net gain from associates | 32,056 | 28,728 | 35,600 | 23.9% | 11.1% | | Net gain on derivatives held for trading | 38,545 | 41,748 | 93,801 | 124.7% | 143.4% | | Other non-financial income | 89,272 | 139,499 | 96,675 | -30.7% | 8.3% | | Total Other Non-Core Income | 218,028 | 294,753 | 339,970 | 15.3% | 55.9% | 07 Insurance Underwriting Result The Insurance Underwriting Result declined 7.5% QoQ and 11.8% YoY, primarily due to P&C reinsurance deterioration and increased Credit Life service expenses Insurance Underwriting Result Overview The Insurance Underwriting Result dropped 7.5% QoQ and 11.8% YoY, mainly due to P&C reinsurance deterioration and increased Credit Life service expenses - QoQ, the Insurance Underwriting Result dropped 7.5%, driven by deterioration in the Reinsurance Result (P&C) and growth in Insurance Service Expenses (Credit Life)[185] - YoY, the Insurance Underwriting Result declined 11.8%, due to deterioration in the Reinsurance Result (P&C) and an increase in Insurance Service Expenses (P&C and AMED)[185] - YTD, the Insurance Underwriting Result dropped 4.1%, mainly attributable to a deterioration in the Reinsurance Result (P&C) and a drop in Insurance Service Income, partially offset by a decrease in Insurance Service Expenses[185][186] Insurance Underwriting Results (S/ 000) | Metric | 3Q23 | 2Q24 | 3Q24 | QoQ Change (%) | YoY Change (%) | |:---|:---|:---|:---|:---|:---| | Total Income from Insurance Services | 923.7 | 909.1 | 940.9 | 3.5% | 1.9% | | Total Expenses for Insurance Services | (505.4) | (496.1) | (514.7) | 3.8% | 1.8% | | Total Reinsurance Results | (87.4) | (97.5) | (134.4) | 37.8% | 53.9% | | Total Insurance Underwriting Result | 330.9 | 315.5 | 291.8 | -7.5% | -11.8% | P & C The P&C Insurance Underwriting Result increased 10.4% QoQ due to higher service income and lower expenses, but dropped 13.7% YoY due to increased expenses and reinsurance issues - QoQ, the P&C Insurance Underwriting Result increased 10.4%, driven by a 6.3% rise in Insurance Service Income (Card Protection, Mortgage) and a 7.9% drop in Insurance Service Expenses (base effect in Aviation)[189][193] - The Reinsurance Result for P&C deteriorated QoQ due to a base effect from high claims recovered in 2Q24 in Aviation[193] - YoY, the P&C Insurance Underwriting Result dropped 13.7%, despite a 16.4% increase in Insurance Service Income[190][193] - This was due to an 8.6% rise in Insurance Service Expenses (Medical Assistance) and a deteriorated Reinsurance Result (growth in ceded premiums)[190][193] Life Insurance The Life Insurance Underwriting Result dropped 10.2% QoQ and 7.7% YoY, driven by decreased service income and increased service expenses - QoQ, the Life Insurance Underwriting Result dropped 10.2%, driven by a 0.7% drop in Insurance Service Income (Credit Life) and a 14.2% increase in Insurance Service Expenses (Credit Life claims), partially offset by an improved Reinsurance Result[192][194] - YoY, the Life Insurance Underwriting Result dropped 7.7%, primarily due to a 7.0% drop in Insurance Service Income (D&S), despite a 3.6% decline in Insurance Service Expenses and an improved Reinsurance Result[192][194] - YTD, the Life Insurance Underwriting Result dropped 5.3%, driven by a decrease in Insurance Service Income, particularly in the D&S line[192] 08 Operating Expenses Credicorp's operating expenses increased 8.2% YTD, driven by core businesses at BCP and 28.1% growth in disruptive initiatives like Yape Total Operating Expenses Total operating expenses increased 8.2% YTD, driven by higher Salaries and Employee Benefits from headcount and increased Administrative and General Expenses from digital transactions - Operating expenses rose 8.2% YTD, driven by an increase in Salaries and Employee Benefits (8.2% YTD) and Administrative and General Expenses (8.8% YTD)[195][198] - Growth in Salaries and Employee Benefits was due to increased headcount, hiring of specialized IT personnel, and higher provisions for variable compensation[198] - Administrative and General Expenses increased due to higher transactions through digital channels, leading to more cloud usage and other IT-related activities[198] Total Operating Expenses (S/ 000) | Expense Category | 3Q23 | 2Q24 | 3Q24 | QoQ Change (%) | YoY Change (%) | YTD Sep 23 | YTD Sep 24 | YTD Change (%) | |:---|:---|:---|:---|:---|:---|:---|:---|:---| | Salaries and employees benefits | 1,061,402 | 1,141,823 | 1,155,966 | 1.2% | 8.9% | 3,145,695 | 3,404,858 | 8.2% | | Administrative, general and tax expenses | 1,007,894 | 1,017,707 | 1,047,386 | 2.9% | 3.9% | 2,714,000 | 2,953,676 | 8.8% | | Depreciation and amortization | 159,761 | 172,204 | 179,495 | 4.2% | 12.4% | 481,389 | 526,845 | 9.4% | | Operating expenses (Total) | 2,243,691 | 2,340,934 | 2,389,261 | 2.1% | 6.5% | 6,385,072 | 6,909,840 | 8.2% | Operating Expenses for Core Businesses and Disruption The 8.2% YTD increase in operating expenses was driven by BCP core businesses (5.5% YTD growth) and disruptive initiatives (28.1% YTD growth), accounting for 12.0% of total expenses - The 8.2% YTD increase in operating expenses was attributable to the Core business at BCP (5.5% YTD growth) and disruptive initiatives (28.1% YTD growth), accounting for 37.9% and 34.6% of YTD growth respectively[200] - BCP's core business expense uptick was driven by growth in salaries and employee benefits (headcount, variable compensation) and technology expenses (server use from digital transaction growth, specialized IT personnel hiring)[201][202] - Disruptive expenses represented 12.0% of total expenses and rose 28.1% YTD, primarily for Yape, Culqui, and Tenpo, due to higher transactionality and new product development generating IT-related expenses[201] Operating Expenses for Core Businesses and Disruption (S/ 000) | Category | 3Q23 | 2Q24 | 3Q24 | QoQ Change (%) | YoY Change (%) | YTD Sep 23 | YTD Sep 24 | YTD Change (%) | |:---|:---|:---|:---|:---|:---|:---|:---|:---| | Core Business BCP | 1,232,663 | 1,302,494 | 1,316,399 | 1.1% | 6.8% | 3,622,682 | 3,821,327 | 5.5% | | Core Business Mibanco | 302,729 | 295,728 | 315,089 | 6.5% | 4.1% | 901,634 | 915,206 | 1.5% | | Disruption | 235,311 | 283,966 | 295,848 | 4.2% | 25.7% | 644,925 | 826,431 | 28.1% | | Total | 2,243,691 | 2,340,934 | 2,389,261 | 2.1% | 6.5% | 6,385,072 | 6,909,840 | 8.2% | 09 Operating Efficiency Credicorp's efficiency ratio improved 50 bps YTD to 44.6%, as operating income growth outpaced expense expansion, driven by higher NII and increased fee income - The efficiency ratio improved 50 bps YTD to 44.6%, as income growth outpaced expense expansion[203][205] - This improvement was driven by growth in core income, specifically higher net interest income and an uptick in fee income from increased use of digital channels and Yape[203][205] Efficiency Ratio by Subsidiary | Subsidiary | 3Q23 | 2Q24 | 3Q24 | QoQ Change | YoY Change | YTD Sep 23 | YTD Sep 24 | YTD Change | |:---|:---|:---|:---|:---|:---|:---|:---|:---| | BCP | 39.2% | 38.2% | 37.6% | -60 bps | -160 bps | 37.8% | 37.4% | -40 bps | | BCP Bolivia | 65.3% | 58.2% | 80.3% | 2210 bps | 1500 bps | 62.1% | 64.3% | 220 bps | | Mibanco Perú | 51.4% | 51.0% | 54.2% | 320 bps | 280 bps | 52.6% | 52.8% | 20 bps | | Credicorp (Consolidated) | 46.3% | 44.9% | 45.2% | 29 bps | -112 bps | 45.1% | 44.6% | -50 bps | 10 Regulatory Capital Credicorp's Regulatory Capital Ratio stood 1.43 times above minimum, with BCP Stand-alone's IFRS CET1 ratio at 13.42% and Mibanco's at 17.94%, both driven by retained earnings and RWA reduction 10.1 Regulatory Capital at Credicorp Credicorp's Regulatory Capital Ratio stood 1.43 times above minimum, increasing 10 bps QoQ due to higher Subordinated Debt and Retained Earnings, reflecting strong financial stability - Credicorp's Regulatory Capital Ratio stood 1.43 times above the minimum required at the end of 3Q24, increasing 10 bps QoQ[206][210] - This growth was driven by an increase in Subordinated Debt (related to a BCP issuance) and an increase in Retained Earnings, particularly at BCP[210] - Regulatory Tier 1 rose to 1.79 times (+9 bps) and Common Equity Tier 1 stood at 2.20 (+11 bps), both above minimum requirements[211] - The SBS modified the structure and composition of Total Regulatory Capital for financial conglomerates in 2024 to align with Basel III, incorporating Retained Earnings and Unrealized Gains/Losses, and including minimum CET1 and Tier 1 requirements[208][209] 10.2 Analysis of Capital at BCP Stand-alone BCP Stand-alone's IFRS CET1 Ratio increased 137 bps QoQ to 13.42%, driven by retained earnings and RWA reduction from loan contraction, with Global Capital Ratio at 18.96% - The IFRS CET1 Ratio at BCP Stand-alone rose 137 bps QoQ to 13.42% in 3Q24, above the internal appetite of 11%[206][218] - This increase was attributable to an uptick in Retained Earnings and a drop in the RWA level (fueled by loan contraction)[218] - The Global Capital Ratio stood at 18.96% (+272 bps QoQ), well above the regulatory minimum of 13.12%, driven by an increase in Subordinated Debt and Retained Earnings[219] - YoY, the IFRS CET1 ratio increased 38 bps, driven by growth in Retained Earnings, offset by an uptick in operational RWAs[206][218] 10.3 Analysis of Capital at Mibanco Mibanco's IFRS CET1 Ratio stood at 17.94% (up 122 bps QoQ), driven by RWA reduction from loan contraction and increased retained earnings, with Global Capital Ratio at 20.22% - The IFRS CET1 Ratio at Mibanco stood at 17.94% (+122 bps QoQ) at the end of 3Q24, above the internal appetite of 15%[206][223] - This increase was attributable to a reduction in the RWA level (driven by loan contraction due to stricter lending guidelines) and an increase in Retained Earnings[223] - The Global Capital Ratio at Mibanco stood at 20.22% (+127 bps QoQ), significantly above the regulatory minimum of 13.85%[224] - YoY, this ratio increased 38 bps due to a drop in the RWA level, offset by a decrease in the Retained Earnings balance[206][223] 11 Economic Outlook The Peruvian economy grew around 3.5% YoY in 3Q24, with inflation at 1.8%, BCRP reference rate at 5.25%, a 4.0% fiscal deficit, and a historical trade surplus Peru: Economic Forecast Peru's GDP is estimated to grow 3.0% in 2024, with inflation at 2.4%, BCRP reference rate at 5.00% by year-end, and a US$21,000 million trade surplus Peru: Economic Forecast (2019-2025) | Metric | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 (4) | 2025 (4) | |:---|:---|:---|:---|:---|:---|:---|:---| | Real GDP (% change) | 2.2 | (10.9) | 13.4 | 2.7 | (0.6) | 3.0 | 2.8 | | Inflation, end of period (%) | 1.9 | 2.0 | 6.4 | 8.5 | 3.2 | 2.4 | 2.5 | | Reference Rate, end of period | 2.25 | 0.25 | 2.50 | 7.50 | 6.75 | 5.00 | 4.25 | | Exchange rate, end of period (USDPEN) | 3.31 | 3.62 | 3.99 | 3.81 | 3.71 | 3.75 | 3.75 | | Fiscal balance (% GDP) | -1.6 | -8.9 | -2.5 | -1.7 | -2.8 | -3.5 | -2.4 | | Trade balance (US$ Millions) | 6,879 | 8,102 | 15,115 | 10,166 | 17,678 | 21,000 | 22,000 | - In 3Q24, the Peruvian economy is estimated to have grown around 3.5% YoY, with non-primary sectors expanding approximately 4.1% YoY, driven by services and non-primary manufacturing[225][231] - Annual inflation slowed to 1.8% YoY in 3Q24, remaining within the BCRP's target range of 1% to 3%[226][233][234] - The BCRP held its reference rate at 5.25% in October after cuts in August and September[233][234] Fiscal Balance and Current Account Balance The annualized fiscal deficit stood at 4.0% of GDP in September 2024, with a historical US$20.7 billion trade surplus driven by 8.4% YoY export growth - The annualized fiscal deficit as of September 2024 stood at 4.0% of GDP, marking the fifth consecutive month at this level[237] - The 12-month cumulative trade surplus as of August 2024 reached a new historical high of US$20.7 billion, with exports growing 8.4% YoY and imports remaining stable[240] - Terms of trade grew 11.8% YoY in August 2024, driven by higher prices for copper, gold, and silver, and lower import prices for industrial inputs and food items[241] - Moody's and Fitch affirmed Peru's foreign currency sovereign credit rating at Baa1 and BBB respectively, both upgrading the outlook to stable, citing sound policymaking and economic recovery[238][239] Exchange Rate The exchange rate closed 3Q24 at USDPEN 3.71, appreciating 3.3% QoQ due to global dollar weakening, with Net International Reserves reaching a historical high of US$83.8 billion - The exchange rate closed 3Q24 at USDPEN 3.71, appreciating 3.3% compared to 2Q24 and remaining stable compared to the end of 2023[226][243] - This appreciation was driven by the weakening of the global dollar, influenced by expectations surrounding the start of the Fed's rate-cutting cycle, which led to appreciation in most Latin American currencies[244] - Net International Reserves (NIR) closed 3Q24 at US$80.4 billion, reaching a historical high of US$83.8 billion in mid-September 2024[245] Safe Harbor for Forward-Looking Statements This section provides a safe harbor statement for forward-looking statements, cautioning readers about inherent risks and uncertainties, with no obligation to update - The material includes forward-looking statements based on management's current views, beliefs, expectations, and assumptions, which are not assurances of future performance[246] - Readers are cautioned that forward-looking statements involve known and unknown risks and uncertainties that could cause actual results to differ materially[248] - The company undertakes no obligation to publicly update or revise these statements to reflect events or circumstances after the date of the report[249] 12 Appendix The Appendix provides detailed supplementary information, including physical points of contact, loan portfolio quality, NII/NIM, regulatory capital, financial statements, and a glossary 12.1. Physical Point of Contact Credicorp's physical point of contact network saw minor changes in 3Q24, with a slight decrease in branches but an increase in ATMs and agents, totaling 41 QoQ and 103 YoY Physical Point of Contact (Units) | Category | Sep 23 | Jun 24 | Sep 24 | QoQ Change | YoY Change | |:---|:---|:---|:---|:---|:---| | Branches | 661 | 650 | 648 | -2 | -13 | | ATMs | 2,677 | 2,745 | 2,766 | 21 | 89 | | Agents | 11,830 | 11,835 | 11,857 | 22 | 27 | | Total | 15,168 | 15,230 | 15,271 | 41 | 103 | 12.2. Loan Portfolio Quality This section provides detailed portfolio quality ratios by segment, including NPL and coverage ratios, illustrating granular loan book performance 12.3. Net Interest Income (NII) Net Interest Income increased 3.5% QoQ and 10.3% YoY to S/3,590,750 thousand, driven by increased interest income and decreased interest expense Net Interest Income (S/ 000) | Metric | 3Q23 | 2Q24 | 3Q24 | QoQ Change (%) | YoY Change (%) | |:---|:---|:---|:---|:---|:---| | Interest income | 4,819,101 | 4,935,238 | 4,995,971 | 1.2% | 3.7% | | Interest on loans | 3,853,361 | 3,921,374 | 3,924,222 | 0.1% | 1.8% | | Interest on deposits with banks | 289,934 | 319,829 | 365,361 | 14.2% | 26.0% | | Interest on securities | 641,370 | 657,897 | 667,195 | 1.4% | 4.0% | | Interest expense | 1,565,058 | 1,466,774 | 1,405,221 | -4.2% | -10.2% | | Interest on deposits | 859,659 | 738,010 | 677,509 | -8.2% | -21.2% | | Interest on bonds and subordinated notes | 149,449 | 200,739 | 200,801 | 0.0% | 34.4% | | Net interest income | 3,254,043 | 3,468,464 | 3,590,750 | 3.5% | 10.3% | | Risk-adjusted Net interest income | 2,336,401 | 2,375,093 | 2,722,669 | 14.6% | 16.5% | 12.4. Net Interest Margin (NIM) and Risk Adjusted NIM Credicorp's consolidated NIM improved to 6.43% in 3Q24, with Risk-Adjusted NIM reaching 4.93%, and subsidiaries also showing improvements NIM Breakdown by Subsidiary | Subsidiary | 3Q23 | 2Q24 | 3Q24 | |:---|:---|:---|:---| | BCP Stand-alone | 5.77% | 6.08% | 6.17% | | Mibanco | 13.64% | 13.61% | 13.86% | | BCP Bolivia | 2.87% | 3.03% | 2.95% | | Credicorp (Consolidated) | 6.11% | 6.33% | 6.43% | Risk Adjusted NIM Breakdown by Subsidiary | Subsidiary | 3Q23 | 2Q24 | 3Q24 | |:---|:---|:---|:---| | BCP Stand-alone | 4.18% | 4.30% | 4.75% | | Mibanco | 8.73% | 7.67% | 9.12% | | BCP Bolivia | 2.47% | 2.25% | 2.59% | | Credicorp (Consolidated) | 4.45% | 4.40% | 4.93% | 12.5. Regulatory Capital This section details regulatory capital for Credicorp, BCP Stand-alone, and Mibanco, showing Credicorp's Total Regulatory Capital increased 8.1% QoQ to a 1.43 ratio, with strong CET1 ratios for subsidiaries Regulatory Capital at Credicorp Credicorp's Total Regulatory Capital increased 8.1% QoQ to S/39,078,056 thousand, with a Regulatory Capital Ratio of 1.43, and CET1 and Tier 1 ratios well above minimums Credicorp Regulatory Capital and Capital Adequacy Ratios (S/000) | Metric | Jun 24 | Sep 24 | QoQ Change (%) | |:---|:---|:---|:---| | Capital Stock | 1,318,993 | 1,318,993 | - | | Legal and Other Capital reserves | 28,008,038 | 27,187,346 | -2.9% | | Current and Accumulated Earnings | 3,914,339 | 5,432,237 | 38.8% | | Subordinated Debt | 5,896,957 | 7,939,610 | 34.6% | | Total Regulatory Capital (A) | 36,151,641 | 39,078,056 | 8.1% | | Total Regulatory Common Equity Tier 1 Capital (B) | 29,186,401 | 30,696,480 | 5.2% | | Total Regulatory Tier 1 Capital (C) | 29,186,145 | 30,696,480 | 5.2% | | Regulatory Capital Ratio (A) / (D) | 1.33 | 1.43 | 10 bps | | Regulatory Common Equity Tier 1 Capital Ratio (B) / (E) | 2.09 | 2.20 | 11 bps | | Regulatory Tier 1 Capital Ratio (C) / (F) | 1.71 | 1.79 | 9 bps | Regulatory and Capital Adequacy Ratios at BCP Stand-alone BCP Stand-alone's Total Regulatory Capital increased 14.3% QoQ to S/29,601,060 thousand, with CET1 ratio rising 135 bps QoQ to 13.25%, and Global Capital ratio to 18.96% BCP Stand-alone Regulatory Capital (S/ thousand) | Metric | Sep 23 | Jun 24 | Sep 24 | QoQ Change (%) | YoY Change (%) | |:---|:---|:---|:---|:---|:---| | Capital Stock | 12,973,175 | 12,973,175 | 12,973,175 | 0.0% | 0.0% | | Accumulated earnings | 4,474,351 | 3,920,795 | 5,426,132 | 38.4% | 21.3% | | Subordinated Debt | 5,120,550 | 5,171,850 | 7,232,550 | 39.8% | 41.2% | | Total Regulatory Capital | 26,397,466 | 25,893,766 | 29,601,060 | 14.3% | 12.1% | | Tier 1 Common Equity | 19,609,166 | 18,972,038 | 20,679,203 | 9.0% | 5.5% | BCP Stand-alone Capital Ratios under Local Regulation | Ratio | Sep 23 | Jun 24 | Sep 24 | QoQ Change | YoY Change | |:---|:---|:---|:---|:---|:---| | Common Equity Tier 1 ratio | 13.01% | 11.90% | 13.25% | 135 bps | 24 bps | | Regulatory Global Capital ratio | 17.51% | 16.24% | 18.96% | 272 bps | 145 bps | Regulatory Capital and Capital Adequacy Ratios at Mibanco Mibanco's Total Regulatory Capital increased 2.4% QoQ to S/2,648,281 thousand, with CET1 ratio rising 123 bps QoQ to 17.85%, and Global Capital Ratio to 20.22% Mibanco Regulatory Capital (S/ thousand) | Metric | Sep 23 | Jun 24 | Sep 24 | QoQ Change (%) | YoY Change (%) | |:---|:---|:---|:---|:---|:---| | Capital Stock | 1,840,606 | 1,840,606 | 1,840,606 | 0.0% | 0.0% | | Accumulated earnings | 669,894 | 356,449 | 424,627 | 19.1% | -36.6% | | Total Regulatory Capital | 2,861,101 | 2,585,586 | 2,648,281 | 2.4% | -7.4% | | Tier Common Equity | 2,524,943 | 2,268,460 | 2,338,088 | 3.1% | -7.4% | Mibanco Capital Ratios under Local Regulation | Ratio | Sep 23 | Jun 24 | Sep 24 | QoQ Change | YoY Change | |:---|:---|:---|:---|:---|:---| | Common Equity Tier 1 Ratio | 17.43% | 16.62% | 17.85% | 123 bps | 42 bps | | Regulatory Global Capital Ratio | 19.75% | 18.95% | 20.22% | 127 bps | 47 bps | Common Equity Tier 1 IFRS BCP Stand-alone's IFRS CET1 ratio increased 137 bps QoQ to 13.42%, driven by retained earnings and reduced RWAs, while Mibanco's rose 122 bps QoQ to 17.94% due to RWA reduction BCP Stand-alone Common Equity Tier 1 IFRS (S/ thousand) | Metric | Sep 23 | Jun 24 | Sep 24 | QoQ Change (%) | YoY Change (%) | |:---|:---|:---|:---|:---|:---| | Retained earnings | 5,104,881 | 4,674,213 | 6,076,551 | 30.0% | 19.0% | | Total CET1 IFRS | 19,806,164 | 19,332,463 | 21,082,641 | 9.1% | 6.4% | | Adjusted RWAs IFRS | 151,843,249 | 160,418,064 | 157,046,547 | -2.1% | 3.4% | | CET1 ratio IFRS | 13.04% | 12.05% | 13.42% | 137 bps | 38 bps | Mibanco Common Equity Tier 1 IFRS (S/ thousand) | Metric | Sep 23 | Jun 24 | Sep 24 | QoQ Change (%) | YoY Change (%) | |:---|:---|:---|:---|:---|:---| | Retained earnings | 267,299 | (26,918) | 36,907 | -237.1% | -86.2% | | Total CET1 IFRS | 2,585,288 | 2,315,848 | 2,384,488 | 3.0% | -7.8% | | Adjusted RWAs IFRS | 14,719,637 | 13,852,449 | 13,291,063 | -4.1% | -9.7% | | CET1 ratio IFRS | 17.56% | 16.72% | 17.94% | 122 bps | 38 bps | 12.6. Financial Statements and Ratios by Business This section provides detailed financial statements and indicators for Credicorp Consolidated, Stand-alone, BCP, Mibanco, Prima AFP, Grupo Pacifico, and Investment Management & Advisory [12.6.1. Credico