Credicorp .(US:BAP)2025-11-14 15:32Financial Data and Key Metrics Changes - The company reported a return on equity (ROE) of 19.6%, reflecting strong performance across core businesses and contributions from the innovation portfolio [11][15] - Net interest income increased by 2.7%, supported by a contraction in interest expenses and an increase in low-cost deposits, leading to a net interest margin (NIM) of 6.6% [16][34] - The non-performing loan (NPL) ratio improved to 4.8%, with a cost of risk falling to 1.7% due to enhanced risk management [15][16] Business Line Data and Key Metrics Changes - Universal banking and insurance and pensions delivered strong results, while microfinance progressed towards profitability targets [11][15] - In retail banking, loans grew by 3% year-over-year, with NPL volumes declining, particularly among individuals and SMEs [20][22] - Mibanco's profitability rose to 18.8%, supported by increased loan disbursements and improved credit risk management [26] Market Data and Key Metrics Changes - Peru's GDP growth for 2025 is projected at 3.4%, driven by higher export prices and increased domestic consumption [9][18] - Inflation in Peru remains low, forecasted at 1.8% for 2025, allowing for a stable economic environment [10][19] - The macroeconomic environment in the region shows signs of recovery, with Colombia's GDP expected to grow by 2.3% in 2025 [10] Company Strategy and Development Direction - The company is focused on three strategic pillars: scaling its digital ecosystem, unlocking growth through business synergies, and executing with discipline to enhance profitability [5][6][7] - The medium-term targets include an ROE of 19.5% and an efficiency ratio around 42% over the next three to four years [7] - The company aims to deepen financial inclusion and expand monetization through platforms like Yape, Tempo, and Guarda [6][25] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the economic outlook despite political uncertainties, citing strong private investment and consumption [17][18] - The company expects to navigate the dynamic external environment with a focus on long-term value creation [8][11] - Future loan growth is anticipated to be robust, supported by favorable economic conditions and strategic initiatives [37] Other Important Information - The company aims to expand its user base for Yape to 18 million by 2028, with significant room for monetization [24] - The insurance underwriting results showed a year-over-year increase of 23%, driven by improved performance in the life business [29][30] - The efficiency ratio for the first nine months of the year stood at 45.7%, reflecting disciplined cost management [35] Q&A Session Summary Question: Regarding asset quality and cost of risk - Analyst inquired about the better-than-expected NPLs and cost of risk, questioning if the guidance was too conservative [41][42] - Management acknowledged the positive results due to improved risk management and a dynamic economic backdrop, expecting cost of risk to be around 1.8% [45][46] Question: On operating expenses growth - Analyst asked about the growth of operating expenses and its breakdown between core business and innovation initiatives [47] - Management indicated that operating expenses growth was planned and expected to be lower in the core business while remaining stable in innovation [48] Question: On growth expectations for the first quarter of the next year - Analyst expressed concerns about potential deceleration due to political uncertainty and asked about ROE levels [53] - Management noted that while there may be a slowdown in the first quarter, the overall economic indicators remain strong [56][58] Question: Regarding loan growth guidance - Analyst sought clarification on whether the loan growth guidance was nominal and if it would be achieved [69][72] - Management confirmed that the guidance is nominal and considers the adjustment from Bolivia's restatement, expressing confidence in achieving the target [72] Question: On Bolivia's political changes and their impact - Analyst asked about the potential positive effects of Bolivia's new government on the company's operations [80] - Management expressed optimism about the new government's pro-market stance and its potential benefits for BCP Bolivia [82] Question: On capital returns and dividends - Analyst inquired about future capital returns and dividend expectations [85] - Management indicated an expectation for higher payout ratios in the coming years, with a focus on increasing ordinary dividends [87]