Credicorp .(BAP)2025-05-16 15:32Financial Data and Key Metrics Changes - The company reported a high Return on Equity (ROE) of 20.3%, boosted by extraordinary gains from the acquisition of a joint venture stake, while the operating ROE was 18.4% [10][20][51] - Total assets contracted by 2% due to a revaluation of Bolivia's balance sheet [20][46] - Net interest income increased by 4.3%, with a resilient Net Interest Margin (NIM) of 6.2% despite a year-over-year contraction in asset yields [22][54] Business Line Data and Key Metrics Changes - Loan growth was robust in wholesale banking and short-term loans, with an overall increase of 1.5% in average daily balances [21][12] - Non-performing loans (NPLs) contracted, with the NPL ratio standing at 5.1% [21][48] - Fee income grew by 16%, driven by transactional activity at Yape and BCP [22][50] Market Data and Key Metrics Changes - Peru's GDP grew by 3.9% year-over-year in Q1 2025, supported by private spending and low inflation [25][6] - Inflation remained within the Central Bank's target range at 1.7% year-over-year in April [26] - High-frequency economic indicators such as car sales and imports are growing rapidly, indicating a recovery in private consumption [25][26] Company Strategy and Development Direction - The company is focused on modernizing core systems, expanding digital capabilities, and enhancing client journeys across various business lines [10][14] - Sustainability is deeply integrated into the company's strategy, with initiatives aimed at financial inclusion and environmental risk management [14][103] - The company aims to achieve a structural ROE ambition of 18% by 2026 while expanding access and generating shareholder value [103] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in Peru's macroeconomic fundamentals and the potential for growth despite global uncertainties [5][15] - The outlook for Peru's economy remains positive, with expectations of around 3% growth in 2025, assuming global recession risks are contained [15][56] - Management is closely monitoring global developments, including trade tensions and their potential impact on commodity prices [8][16] Other Important Information - The company announced a dividend payout of PEN 40 per share, reflecting strong solvency and support for long-term growth plans [13][24] - The company achieved 5.4% of recent adjusted revenues from new businesses, progressing towards a 10% target by 2026 [11][54] Q&A Session Summary Question: Guidance and ROE Expectations - Analyst inquired about the reasons for not updating guidance despite strong Q1 results and the potential for higher sustainable ROE levels [59] - Management indicated that while they expect to exceed current guidance, global uncertainties, particularly related to tariffs, are a concern [62][63] Question: Cost of Risk and Model Revisions - Analyst asked about the drivers behind the reduction in cost of risk and the potential for further model revisions [71] - Management confirmed that improvements in the macroeconomic environment and adjustments in credit policy have contributed to lower expected losses [74] Question: Loan Growth Dynamics - Analyst questioned the slow loan growth despite strong economic indicators and asset quality improvements [76] - Management explained that loan growth typically lags behind economic recovery and expressed confidence in future acceleration [81][86] Question: Sensitivity to Interest Rates - Analyst requested clarification on the company's sensitivity to interest rate changes [90] - Management provided details on the expected impact of a 100 basis point decline in rates on NIM, emphasizing limited risk [94] Question: Lending Opportunities through Yape - Analyst inquired about lending growth through the Yape platform and the focus on individual versus SME lending [96] - Management highlighted that individual lending is the current focus, with plans to expand into SME lending as capabilities develop [100]