Credicorp .(BAP) - 2025 Q1 - Quarterly Report

Operating and Financial Highlights Credicorp reported robust 1Q25 operational results with significant net income and ROE growth, driven by strong performance in Universal Banking and Microfinance, alongside strategic advancements in innovation | Metric | 1Q25 Value | QoQ Change | YoY Change | | :--- | :--- | :--- | :--- | | Net Income | S/1,777.7 million | +57.8% | +17.6% | | ROE | 20.3% | - | - | | ROE (ex-extraordinary gain) | 18.4% | - | - | | Total Loans (ADB) | S/143,867 million | +0.8% | +1.5% | | Total Deposits | - | +0.3% | +9.7% | | Risk-Adjusted NIM | 5.24% | - | - | | NPL Ratio | 5.1% | -16 bps | -112 bps | | Cost of Risk (CoR) | 1.6% | - | - | | Efficiency Ratio | 45.7% | - | - | - Robust operational results were driven by Universal Banking and Insurance & Pensions, with improved momentum in Microfinance. The company is advancing its 'decoupling' strategy, with 5.4% of risk-adjusted revenues from its innovation portfolio, on track to meet the 10% target by 2026[3] - Yape, a key disruptive initiative, reached 14.3 million Monthly Active Users (MAU) with an average of 52 monthly transactions per user, contributing 4.8% of Credicorp's total risk-adjusted revenue[6] - An extraordinary gain from the acquisition of the remaining 50% stake in the Empresas Banmedica JV significantly boosted ROE to 20.3%. Excluding this gain, ROE was a strong 18.2%[4] - In March 2025, the revaluation of Bolivia's balance sheet using a market-reflective FX rate resulted in a 2.0% accounting contraction of Credicorp's Total Assets. Loan and deposit analysis in the report excludes this non-cash adjustment to reflect underlying performance[6] Summary of Financial Performance and Outlook This section provides a detailed overview of Credicorp's financial performance in 1Q25, covering key metrics, segment-specific results, and the company's outlook Loans and Deposits Loan growth in 1Q25 was modest, driven by Wholesale Banking, Consumer, and Mortgages, while deposits saw strong YoY growth fueled by low-cost sources. A non-cash accounting adjustment related to Bolivian operations caused a 2.0% decline in total assets, but underlying business trends for loans and deposits remain positive | Metric | QoQ Change | YoY Change | Key Drivers | | :--- | :--- | :--- | :--- | | Total Loans (ADB) | +0.8% | +1.5% | Wholesale Banking (working capital), Consumer (Yape), Mortgages | | Total Deposits (ex-Bolivia adj.) | +0.3% | +9.7% | Low-Cost Deposits (+16.9% YoY), representing 71.8% of total deposits | - A non-cash accounting adjustment in March for Bolivian operations, updating the FX rate, led to a 2.0% accounting-based decline in Credicorp's total assets without impacting cash flow. The analysis of loan and deposit trends excludes this effect[13][14] Net Interest Income (NII) and Margin (NIM) Net Interest Income (NII) rose 4.3% YoY due to lower funding costs from a higher share of low-cost deposits, though it fell 1.6% QoQ due to lower market rates impacting loan income. The Net Interest Margin (NIM) slightly compressed to 6.22% | Metric | 1Q25 Value | QoQ Change | YoY Change | | :--- | :--- | :--- | :--- | | NII | - | -1.6% | +4.3% | | NIM | 6.22% | -12 bps | -8 bps | - The YoY increase in NII was primarily driven by a reduction in Interest and Similar Expenses, resulting from lower market rates and a larger proportion of low-cost deposits in the funding base[22] Portfolio Quality and Cost of Risk Portfolio quality and Cost of Risk showed notable improvement due to enhanced risk management, a better macroeconomic environment, and specific client debt repayments. The NPL ratio decreased significantly both QoQ and YoY, and provisions for loan losses also declined sharply | Metric | 1Q25 Value | QoQ Change | YoY Change | | :--- | :--- | :--- | :--- | | NPL Balance | - | -5.9% | -17.7% | | NPL Ratio | 5.1% | -16 bps | -112 bps | | Provisions | - | -21.7% | -45.5% (ex-reversals) | - The improvement in portfolio quality was driven by debt repayments from corporate clients at BCP Stand-alone and a reduction in internal overdue loans at both BCP and Mibanco[24][25] Other Income and Insurance Other Income surged 21.4% YoY, largely due to an extraordinary S/ 236 million gain from the acquisition of the remaining 50% of Empresas Banmedica. Excluding this gain, Other Income still grew 4.5% YoY, driven by a 15.1% increase in Other Core Income from fees and FX transactions. The Insurance Underwriting Result also grew a strong 17.9% YoY - Credicorp recognized an extraordinary gain of approximately S/ 236 million from revaluing its previously held 50% stake in the Empresas Banmedica joint venture upon acquiring the remaining half[31] | Metric | QoQ Change | YoY Change | Note | | :--- | :--- | :--- | :--- | | Other Income | +6.8% | +21.4% | Includes extraordinary gain | | Other Income (ex-gain) | -8.1% | +4.5% | Driven by 15.1% YoY growth in Other Core Income | | Insurance Underwriting Result | +5.3% | +17.9% | Driven by improved Reinsurance Result | Efficiency and Net Earnings The efficiency ratio for 1Q25 was 45.7%, in line with guidance, reflecting a 15.6% YoY increase in operating expenses driven by core business and innovation investments. Net earnings attributable to Credicorp reached S/1,777.7 million, a 17.6% YoY increase, resulting in an ROE of 20.3%, significantly boosted by the Banmedica acquisition gain - The efficiency ratio stood at 45.7%, which is aligned with the full-year guidance. Operating expenses grew 15.6% YoY, mainly due to investments in BCP's core business and disruptive initiatives[38] | Metric | 1Q25 Value | QoQ Change | YoY Change | | :--- | :--- | :--- | :--- | | Net Earnings | S/1,777.7 M | +57.8% | +17.6% | | ROE | 20.3% | - | - | | Net Earnings (ex-gain) | - | +43.0% | +6.6% | | ROE (ex-gain) | 18.4% | - | - | Outlook Despite a strong 1Q25 ROE, Credicorp maintains its full-year 2025 ROE guidance at around 17.5% due to global uncertainty. The company expects results to be supported by accelerating loan growth in retail, resilient NIM, and controlled cost of risk - Credicorp maintains its 2025 ROE guidance at approximately 17.5%, citing global uncertainty despite the strong start to the year[52] - Future results are expected to be supported by: (i) accelerated loan portfolio growth, particularly in retail, (ii) resilient Net Interest Margin (NIM), and (iii) a controlled cost of risk[52] Financial Overview A comprehensive overview of Credicorp's key financial metrics for 1Q25, 4Q24, and 1Q24, highlighting trends in profitability, asset quality, and efficiency | Key Metric | 1Q24 | 4Q24 | 1Q25 | | :--- | :--- | :--- | :--- | | Net profit attributable to Credicorp (S/ thousands) | 1,511,657 | 1,126,713 | 1,777,697 | | Net income / share (S/) | 19.0 | 14.1 | 22.3 | | ROAE | 18.2% | 13.3% | 20.3% | | Net interest margin | 6.30% | 6.34% | 6.22% | | Risk-adjusted Net interest margin | 4.85% | 5.08% | 5.24% | | NPL ratio | 6.2% | 5.3% | 5.1% | | Cost of risk | 2.3% | 2.1% | 1.6% | | Efficiency ratio | 42.8% | 48.4% | 45.7% | Credicorp's Strategy Update Credicorp is actively implementing its 'decoupling' strategy through digitalization and innovation, with significant progress in its Yape platform and a new sustainability framework Credicorp's Strategy Credicorp is executing a 'decoupling' strategy to reduce its dependence on macroeconomic cycles by investing in technology and developing its innovation portfolio. The goal is for the innovation portfolio to contribute 10% of risk-adjusted revenues by 2026, with 1Q25 results showing progress at 5.4%. Key strategic priorities include talent, digital transformation, and sustainability integration - The core strategy is to 'decouple' from economic performance by diversifying income sources, with a focus on non-financial income boosted by digitalization and innovation[59][61] - The innovation portfolio accounted for 5.4% of Credicorp's risk-adjusted revenues in 1Q25, with a target to reach 10% by 2026[61] | Core Business Transformation KPI | 1Q24 | 4Q24 | 1Q25 | | :--- | :--- | :--- | :--- | | BCP Digital Clients | 70% | 76% | 78% | | BCP Digital Monetary Transactions | 83% | 88% | 89% | | Mibanco Disbursements through alternative channels | 22% | 24% | 26% | Yape Yape continues its rapid expansion, reaching 14.3 million monthly active users (MAU) and achieving significant growth in transaction volume and user engagement. The platform's monetization strategy is advancing, with the gap between revenue and expense per MAU widening. The Payments and Financial businesses are the primary revenue drivers, with the Lending business gaining significant traction | Yape KPI | 1Q24 | 1Q25 | YoY Change | | :--- | :--- | :--- | :--- | | Monthly Active Users (MAU) | 11.5 M | 14.3 M | +24.3% | | ** Transactions / MAU** | 36.0 | 52.1 | +44.5% | | Revenues / MAU (S/, monthly) | 3.4 | 6.2 | +80.4% | | ** Loans Disbursements (thousands)** | 472.4 | 3,097.1 | +555.7% | | Total Income (S/ millions) | 110.4 | 234.6 | +112.5% | - Yape's monetization is progressing, with monthly revenue per MAU (S/6.2) steadily increasing its lead over monthly expenses per MAU (S/4.7)[73] - The Payments business is the main income driver, representing 56% of Yape's revenue. The Financial business, mainly through floating volumes and a growing lending portfolio, contributes 40%[75][76] Integrating Sustainability Credicorp approved a new Sustainability Strategy for 2025-2030, focusing on three pillars: Inclusion, Finance for the Future, and Trust. In 1Q25, key achievements included financially including 200,000 new people through BCP and Yape, reaching 2.7 million clients with inclusive insurance, and disbursing over US$ 430 million in sustainable financing - The new 2025-2030 Sustainability Strategy is built on three pillars: Inclusion (financial inclusion, education, healthcare access), Finance for the Future (support for MSMEs, sustainable finance), and Trust (promoting trust in Credicorp and the private sector)[85][90] | Sustainability Indicator (1Q25) | Value | Note | | :--- | :--- | :--- | | People financially included (cumulative since 2020) | 6.0 million | BCP & Yape | | Clients in inclusive insurance services | 2.77 million | Pacifico | | Loan balance for micro/small businesses | S/ 11,629 million | Mibanco Peru | | Disbursements of sustainable financing | US$ 430 million | BCP Peru | Analysis of 1Q25 Consolidated Results A detailed analysis of Credicorp's consolidated financial results for 1Q25, examining performance across loan portfolios, deposits, income, expenses, and capital Loan Portfolio Total loans in average daily balances (ADB) grew 0.8% QoQ and 1.5% YoY, driven by short-term loans in Wholesale Banking and growth in Consumer and Mortgage segments. This growth was partially offset by declines in SME segments. The dollarization level of the loan portfolio increased slightly to 36.0% due to loan expansion in foreign currency, particularly in Wholesale Banking | Loan Segment (ADB) | QoQ Change | YoY Change | Key Driver | | :--- | :--- | :--- | :--- | | Wholesale Banking | +2.8% | +5.2% | Increased financing for working capital | | Consumer | +1.6% | +1.9% | Uptick in disbursements via Yape and BCP | | Mortgage | +0.7% | +3.9% | Increased demand due to favorable rates | | Mibanco | +0.7% | -8.3% | Stricter lending guidelines applied in 2024 | - Excluding the Bolivia accounting adjustment, loans measured in quarter-end balances contracted 0.7% QoQ but rose 2.8% YoY[95] - The dollarization level of total loans rose 45 bps QoQ to 36.0%, driven by loan expansion in foreign currency within Wholesale Banking[102] Deposits Excluding the Bolivia accounting adjustment, total deposits grew 9.7% YoY, driven by a significant 16.9% increase in low-cost deposits, which now constitute 71.8% of the total. This reflects successful fund capturing and improved deposit mix management. The dollarization of deposits decreased, and Credicorp maintained its market leadership with a 41.3% share of low-cost deposits - YoY deposit growth was fueled by a 16.9% increase in low-cost deposits (Demand + Savings), reflecting strong fund capture in a high-liquidity environment[108][113] - The Loan-to-Deposit (L/D) ratio at Credicorp stood at 89.6%. YoY, the L/D ratio dropped significantly at both BCP (by 565 bps) and Mibanco (by 1873 bps) due to strong deposit growth[121][123] - Credicorp (BCP + Mibanco) leads the Peruvian market with a 41.3% market share of low-cost deposits as of March 2025, an increase of 191 bps from March 2024[128] Interest-Earning Assets (IEA) and Funding Excluding the Bolivia adjustment, Interest-Earning Assets (IEA) grew 6.4% YoY, driven by higher liquidity (Cash and due from banks). Funding increased 6.7% YoY, primarily due to strong growth in low-cost deposits. QoQ, both IEA and funding were relatively stable, with a bond maturity at BCP being a key event | Balance Sheet Item (ex-Bolivia adj.) | QoQ Change | YoY Change | Key Driver | | :--- | :--- | :--- | :--- | | Interest-Earning Assets (IEA) | -0.1% | +6.4% | Growth in Cash and due from banks reflecting high liquidity | | Funding | -0.5% | +6.7% | Expansion in low-cost deposits | - The QoQ drop in funding was mainly due to a US$ 700 million bond maturity at BCP Stand-alone[135] Net Interest Income (NII) NII rose 4.3% YoY, driven by lower funding costs, but fell 1.6% QoQ due to lower market rates impacting loan income. NIM contracted slightly to 6.22%. Notably, the Risk-adjusted NIM continued to improve, reaching a record high of 5.24%, reflecting better portfolio quality and lower provisions - Risk-adjusted NIM reached a record high of 5.24%, an increase of 16 bps QoQ and 39 bps YoY, driven by a significant drop in provisions and cost of risk[139][144] | Metric | 1Q25 Value | QoQ Change | YoY Change | | :--- | :--- | :--- | :--- | | Net Interest Income (NII) | S/ 3,572 million | -1.6% | +4.3% | | Net Interest Margin (NIM) | 6.22% | -12 bps | -8 bps | | Cost of Funds | 2.42% | -14 bps | -56 bps | - The YoY NII growth was primarily due to a reduction in interest expenses, reflecting lower market rates and an increased share of low-cost deposits in the funding mix[138][142] Portfolio Quality and Provisions Asset quality improved significantly in 1Q25, with the NPL ratio falling to 5.1% and the Cost of Risk dropping to 1.6%. This was driven by enhanced underwriting, a stronger economic backdrop, and specific events like client debt repayments and risk model recalibrations. Provisions decreased 21.7% QoQ, and the NPL coverage ratio strengthened to 107.4% - The improvement in portfolio quality is attributed to a cumulative impact of fortified underwriting, a stronger Peruvian economy, and one-time events such as risk model recalibrations and pension fund withdrawals boosting repayments[155][158][159] | Metric | 1Q25 Value | QoQ Change | YoY Change | | :--- | :--- | :--- | :--- | | NPL Ratio | 5.1% | -16 bps | -112 bps | | Cost of Risk | 1.6% | -44 bps | -66 bps | | NPL Coverage Ratio | 107.4% | +308 bps | +1395 bps | - QoQ, the decline in provisions was mainly driven by BCP Stand-alone, particularly in Credit Cards and Consumer due to a base effect from prior risk model calibrations and improved payment performance[157][174] Other Income Other Income grew 21.4% YoY, significantly impacted by an extraordinary gain of S/236 million from the Empresas Banmedica acquisition. Excluding this gain, Other Income still rose 4.5% YoY, driven by a 15.1% increase in Other Core Income. This core growth was fueled by a 16.0% rise in Fee Income, largely from BCP Stand-alone and Yape's strong transactional dynamics - The acquisition of the remaining 50% of Empresas Banmedica generated an extraordinary gain of approximately S/236 million, recorded in Other Non-Core Income[193][196] - Excluding the extraordinary gain, Other Income decreased 8.1% QoQ but grew 4.5% YoY. The YoY growth was driven by a 15.1% increase in Other Core Income[193][194] | BCP Stand-alone Fee Income (S/ millions) | 1Q24 | 1Q25 | YoY Change | | :--- | :--- | :--- | :--- | | Yape | 54 | 120 | +123.1% | | Liability and Transactional Accounts | 179 | 200 | +11.6% | | Total BCP Fee Income | 705 | 831 | +18.0% | Insurance Underwriting Result and the Medical Services The Insurance Underwriting Result increased 17.9% YoY and 5.3% QoQ, driven by an improved Reinsurance Result, particularly in the P&C business. Following the full acquisition of the Empresas Banmedica JV, the EPS business is now consolidated into the underwriting result and a new 'Medical Services Result' line has been created, though its impact was not material in 1Q25 - Following the acquisition of the remaining 50% of Empresas Banmédica, the EPS business is now consolidated into the Underwriting Insurance Result, and a new 'Medical Services Result' account has been created[223][224] | Insurance Underwriting Result (S/ millions) | 1Q24 | 4Q24 | 1Q25 | | :--- | :--- | :--- | :--- | | P&C | 80.5 | 82.1 | 92.3 | | Life | 179.2 | 217.7 | 207.2 | | Total | 279.1 | 312.7 | 329.1 | - The 17.9% YoY growth in the Insurance Underwriting Result was driven by an improvement in the Reinsurance Result (primarily in P&C) and growth in Insurance Service Income (mainly in EPS and P&C)[222][226] Operating Expenses Operating expenses increased 15.6% YoY, driven by both core business activities and innovation initiatives. Core business expenses at BCP Stand-alone rose due to higher variable compensation and headcount, as well as increased administrative costs for advertising and IT services to support digitalization. Expenses for innovation portfolio initiatives grew 17.5% YoY | Expense Category (S/ thousands) | 1Q24 | 1Q25 | YoY Change | | :--- | :--- | :--- | :--- | | Salaries and employees benefits | 1,107,069 | 1,361,690 | +23.0% | | Administrative and general expenses | 821,748 | 869,834 | +5.9% | | Total Operating expenses | 2,112,810 | 2,442,089 | +15.6% | - The YoY expense growth was driven by core businesses at BCP Stand-alone (higher variable compensation, advertising, and cloud/IT costs) and a 17.5% increase in spending on innovation portfolio initiatives[233][239][240] Operating Efficiency The efficiency ratio deteriorated by 291 basis points YoY to 45.7%. This was a result of operating expenses growing at a faster pace than operating income, reflecting increased investments in disruptive initiatives at the corporate level and in core business growth at BCP Stand-alone | Subsidiary | Efficiency Ratio 1Q24 | Efficiency Ratio 1Q25 | YoY Change | | :--- | :--- | :--- | :--- | | BCP Stand-alone | 35.1% | 37.7% | +260 bps | | Mibanco Peru | 53.3% | 52.9% | -40 bps | | Credicorp | 42.8% | 45.7% | +291 bps | - The YoY deterioration in the efficiency ratio was driven by growth in operating expenses for disruptive initiatives and core business investments outpacing the growth in operating income[242][244] Regulatory Capital Credicorp's capital position remains strong, with a Regulatory Capital Ratio 138% above the minimum. BCP Stand-alone's IFRS CET1 Ratio stood at 11.62%, aligned with its 11% target, while Mibanco's was 15.89%, also aligned with its 15% target. Both subsidiaries saw slight YoY declines in their CET1 ratios due to RWA growth and dividend payments, but remain comfortably capitalized - BCP Stand-alone's IFRS CET1 Ratio was 11.62%, slightly down 24 bps YoY due to higher Risk-Weighted Assets (RWAs) from loan growth, but remains aligned with the internal target of 11%[246][253] - Mibanco's IFRS CET1 Ratio was 15.89%, down 18 bps YoY due to dividend declarations, but remains aligned with its internal target of 15%[247][258] - At the holding company level, Credicorp's Regulatory Capital Ratio was 138% above the regulatory minimum, demonstrating the group's financial solidity[248] Economic Outlook The Peruvian economy showed strength in 1Q25, with GDP growing 3.9% YoY, driven by non-primary sectors. Inflation slowed to 1.3% YoY, prompting the Central Bank (BCRP) to cut its policy rate to 4.50%. The external position is robust, with a record trade surplus and appreciating currency, providing a favorable macroeconomic backdrop - Peru's GDP grew 3.9% YoY in 1Q25, the third consecutive quarter around 4%, supported by the recovery of formal employment and real wages[260][269] - Annual inflation slowed to 1.3% YoY, approaching the lower end of the BCRP's 1-3% target range. In response, the BCRP lowered its policy rate by 25 bps to 4.50% in May 2025[261][272] | Peru Economic Forecast (2025) | Value | | :--- | :--- | | Real GDP (% change) | 3.2% | | Inflation, end of period | 2.3% | | Reference Rate, end of period | 4.25% | | Fiscal balance (% GDP) | -2.7% | Appendix The appendix provides supplementary information including detailed financial statements, loan portfolio quality data, regulatory capital figures, and a glossary of terms Physical Point of Contact This section provides information on Credicorp's physical points of contact Loan Portfolio Quality This section presents detailed data on the quality of the loan portfolio Net Interest Income (NII) This section provides detailed figures for Net Interest Income Net Interest Margin (NIM) and Risk Adjusted NIM This section details Net Interest Margin and Risk Adjusted Net Interest Margin Regulatory Capital This section outlines Credicorp's regulatory capital position Financial Statements and Ratios by Business This section provides financial statements and key ratios broken down by business segment Credicorp Consolidated This section presents the consolidated financial statements for Credicorp Credicorp Stand-alone This section presents the stand-alone financial statements for Credicorp BCP Consolidated This section presents the consolidated financial statements for BCP BCP Stand-alone This section presents the stand-alone financial statements for BCP BCP Bolivia This section presents the financial statements for BCP Bolivia Mibanco This section presents the financial statements for Mibanco Prima AFP This section presents the financial statements for Prima AFP Grupo Pacifico This section presents the financial statements for Grupo Pacifico Investment Management and Advisory This section presents the financial statements for Investment Management and Advisory Table of Calculations This section provides a table detailing various financial calculations Glossary of terms This section defines key financial terms used in the report