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    BAP
    Earnings call· Mar 2025(Q1 FY25)

    CREDICORP Q1 FY25 earnings call BAP

    May 16, 2025 Source

    Executive summary

    Credicorp Q1 FY25 — Strong Operating Results and Reaffirmed Outlook

    Credicorp delivered solid Q1 FY25 results, with strong operating ROE and resumed loan growth, benefiting from Peru's faster-than-expected economic rebound. The company maintains its full-year guidance despite global uncertainties, emphasizing strategic investments in digital capabilities and risk management. Management expressed confidence in Peru's macroeconomic fundamentals and Credicorp's ability to capture growth, while also reviewing its long-term sustainable ROE target.

    Highlights

    5

    • Reported ROE of 20.3% (18.4% excluding a one-off gain) exceeded expectations.

    • Peru's GDP grew 3.9% year-over-year in Q1 2025, marking the third consecutive quarter of growth.

    • Loan growth resumed, expanding 1.5% in average daily balances, particularly in wholesale banking and individuals.

    • Risk-adjusted NIM improved year-over-year, driven by lower provisioning and resilient underlying NIM.

    • Fee income increased 16% year-over-year, boosted by transactional activity at Yape and BCP.

    Concerns

    3

    • Global uncertainty regarding trade tensions and potential recession risks remains a key concern.

    • A non-cash equity adjustment of PEN 257 million stemmed from the revaluation of Bolivian assets.

    • Grupo Pacifico's profitability was impacted by credit downgrades in the investment portfolio.

    Guidance & targets

    10
    CategoryTargetConfidence
    Peru GDP growth
    around 3%
    high materiality
    Medium
    Loan book year-over-year growth (average daily balances)
    around 3.5%
    high materiality
    Medium
    Loan book year-over-year growth (quarter-end balances)
    around 6%
    high materiality
    Medium
    Net Interest Margin (NIM)
    between 6.2% to 6.5%
    high materiality
    Medium
    Cost of risk
    approach the lower end of our guidance range
    high materiality
    Medium
    Efficiency ratio
    maintain our guidance range
    medium materiality
    Medium
    Fee income growth
    low double digit
    medium materiality
    Medium
    Insurance underwriting results
    remain solid and relatively stable compared to 2024
    low materiality
    Medium
    Return on Equity (ROE)
    around 17.5%
    high materiality
    Medium
    Structural ROE ambition
    18%
    high materiality
    High

    Segment performance

    5
    SegmentRevenueYoYQoQMargin
    BCP (Universal Banking)
    BCP posted strong performance driven by improvements in asset quality and diversified revenue sources. Loan growth was fueled mainly by wholesale banking and consumer loans. NPLs fell across segments, and the cost of risk improved. Operating expenses grew due to variable compensation and IT investments.
    Total loans (average daily balances) growth QoQ: 1%NIM: 5.8%NPL volumes fell: 4.7%Cost of risk: 1.3%Risk-adjusted NIM: 5%Other core income growth YoY: 17.8%Efficiency ratio: 37.7%
    		———ROE 27.1%
    Yape
    Yape continues to demonstrate strong user growth and engagement. Revenue generation remained strong, with the gap between revenues and expenses gradually increasing. Payments business is the key driver of revenue growth, and the financial business expanded due to improved lead effectiveness.
    New active users added: >0.5 million per quarterTotal active users: >14 millionAverage transactions per active user: >52 per monthAverage functionalities used per active user: 2.6Revenue generation as % of Credicorp's risk-adjusted revenues: 4.8%Payments business as % of Yape's revenues: 56%Lending revenue as % of Yape's revenues: 13%Multi-installment loans as % of loan balances: 50% (vs 25% at beginning of 2024)
    		————
    Mibanco Peru
    Mibanco Peru sustained mid-teen profitability with strengthened asset quality and resumed loan growth. The NPL ratio fell for the third consecutive quarter, reflecting positive impacts of adjusted origination guidelines and debt collection. NIM contracted QoQ due to asset mix but remained strong.
    Loans (average daily balances) growth QoQ: 0.7%NPL ratio: 6.4%NIM: 13.9%Cost of risk: 5.1%Risk-adjusted NIM: 10.1%Efficiency ratio: 52.9%
    		———ROE 14.7%
    Grupo Pacifico (Insurance)
    Insurance underwriting results remained strong, supported by solid commercial dynamics. Profitability was impacted by credit downgrades in the investment portfolio. Net income rose 8% QoQ due to lower operating expenses, but dropped 16% YoY primarily due to an increase in net loss on securities.
    		—-16%8%ROE 19.3%
    Investment Management and Advisory
    Operating dynamics were strong, reaffirming the strategic approach. Net income rose 47% QoQ, fueled by seasonal growth in operating expenses and asset management income. Net income increased 10% YoY due to lower operating expenses and higher income from asset management and capital markets.
    AUM (USD) growth QoQ: 12%AUM (USD) growth YoY: 20%
    		—10%47%ROE 18.4% (16.9% excluding one-off charge)

    Operational metrics

    29
    Risk-adjusted revenues from new businesses
    5.4%advancing toward our 10% target by 2026
    Q1 FY25

    Advancing toward a 10% target by 2026.

    Low-cost deposits market share
    41.3%
    Q1 FY25

    Gained market share in low-cost deposits.

    P&L one-off gain (Pacifico health business revaluation)
    PEN 236 million
    Q1 FY25

    Related to the revaluation of Pacifico's health business under IFRS accounting.

    Non-cash equity adjustment (Bolivia asset revaluation)
    PEN 257 million
    Q1 FY25

    Stemming from the revaluation of Bolivian assets following the adoption of a more market-reflective exchange rate.

    Bolivia balance sheet contraction
    2%
    Q1 FY25

    In Credicorp's total assets due to revaluation using a more market-reflective exchange rate.

    Core income growth
    7%YoY
    Q1 FY25

    Driven by other core income, which increased 15% on the back of recovery strategy.

    Operating expenses growth
    15.6%YoY
    Q1 FY25

    Driven primarily by the core business at BCP and by investments in the innovation portfolio, mainly increased provisioning for variable compensation and IT expenses.

    NIM sensitivity to 100 bps parallel shift
    17 bps effect
    2025

    Theoretical exercise for 2025, not expecting more than 25 bps rate cuts locally.

    Yape active users
    14 millionadded over 0.5 million new active users per quarter
    Q1 FY25

    Surpassed the 14 million mark in Q1 FY25.

    Yape average transactions per active user
    52
    monthly average

    Active yaperos conduct more than 52 transactions a month on average.

    Yape average functionalities used per active user
    2.6
    Q1 FY25

    Active yaperos use 2.6 functionalities.

    Yape revenue generation as % of Credicorp's risk-adjusted revenues
    4.8%
    Q1 FY25

    Yape's revenue generation remained strong.

    Yape payments business revenue contribution
    56%
    Q1 FY25

    Of Yape's revenues, mainly driven by build QR code and checkout payments.

    Yape lending revenue contribution
    13%
    Q1 FY25

    Of Yape's revenues.

    Yape multi-installment loans as % of loan balances
    50%compared to 25% at the beginning of 2024
    Q1 FY25

    Accelerated and now represent 50% of loan balances, with better asset quality profile.

    Mibanco Colombia results
    improved significantly
    Q1 FY25

    Despite a challenging business environment, thanks to focus on efficiency and disciplined risk processes.

    Grupo Pacifico net loss on securities
    —
    Q1 FY25

    Continued to be impacted by a credit downgrade in the investment portfolio last quarter.

    Investment Management and Advisory AUM growth
    12%
    QoQ

    AUM in U.S. dollars were up 12% QoQ.

    Investment Management and Advisory AUM growth
    20%
    YoY

    AUM in U.S. dollars were up 20% YoY.

    Peru GDP growth
    3.9%YoY
    Q1 2025

    Marking the third consecutive quarter of growth.

    Peru inflation
    1.7%YoY
    April

    Within the Central Bank's target range, among the lowest reported in advanced and emerging economies.

    Peru Central Bank policy rate
    4.5%lowered 25 bps
    May

    Central Bank lowered its policy rate by 25 basis points.

    Colombia inflation
    5.2%YoY
    April

    Remains above the upper bound of the target range of 4%.

    Colombia Central Bank policy rate
    9.25%cut 25 bps
    Q1 FY25

    Central Bank decided to cut its policy rate by 25 basis points.

    Chile inflation
    4.5%YoY
    April

    Remained pressured upwards.

    Anchovy fishing season quota increase
    20%higher than last year's
    Q2 FY25

    Marked a 7-year high, benefiting the fishing and primary manufacturer sectors in Q2 FY25.

    Gold exports as % of total exports
    20%
    2024

    Gold constituted nearly 20% of Peru's exports in 2024.

    Copper exports as % of total exports
    31%
    2024

    Copper represents 31% of total exports, Peru's main export product.

    Gold shipments growth
    twicethat of 2023
    2025

    Gold shipments this year could be twice that of 2023 and approach the level of copper.

    Industry KPIs

    12
    MetricValueDetails
    Loans1.5%%
    Deposits59%%
    Rotce ROE20.3%%
    Capital returnsPEN 40 solesper share
    Fee income lines16%%
    Allowance reserves107.4%%
    Net interest income4.3%%
    Net interest margin6.2%%
    Net charge offs npls5.1%%
    Total operating expenses15.6%%
    Provision for credit losses1.6%%
    Efficiency ratio operating leverage45.7%%

    Deals & partnerships

    1
    Empresas BanmedicaAcquisition of remaining 50% stake in joint venture

    Acquisition of the remaining 50% stake in the joint venture with Empresas Banmedica, which included a P&L one-off gain of approximately PEN 236 million related to the revaluation of Pacifico's health business under IFRS accounting.

    Risks & headwinds

    4
    Global trade tensions and tariffsOngoing

    President Trump's announcement of a 10% tariff on U.S. imports from all its trading partners.

    Mitigation: Closely monitoring developments and prepared to act as necessary; recent progress in trade negotiations between U.S. and partners is an encouraging sign.

    Slower global growth and commodity pricesOngoing

    Broader concern about how slower global growth may affect external demand, commodity prices and overall market sentiment, given Peru's position as a small and open economy where up to 60% of GDP volatility originates from external factors.

    Mitigation: Credicorp's ability to adapt across different economic cycles; strong capital base, digital infrastructure, and client-centric model.

    Political uncertainty in PeruLater this year (2025) and 2026

    Lingering political uncertainty, potential impact of 2026 elections on sentiment later this year.

    Mitigation: Peru's macroeconomic policy has remained broadly responsible despite political noise; management believes macro figures are solid.

    Credit downgrades in investment portfolioLast quarter and Q1 FY25

    Impacted Grupo Pacifico's profitability and net income.

    Mitigation: Not explicitly stated, but implies ongoing management of investment portfolio.

    What to watch in Q2 FY25

    5

    Loan growth acceleration

    Q2 FY25, Q3 FY25
    Current0.7% QoQ for Mibanco, 1% QoQ for BCP (average daily balances)
    TargetSignificant pick-up in Q2, acceleration in Q3

    Why it matters

    Loan growth has lagged economic recovery; acceleration is key to achieving full-year guidance and driving future profitability.

    we are expecting the second quarter to pick up and then actually accelerate more in the third quarter as all of our risk capabilities, we're going to be more comfortable with them.

    Q&A highlights

    6

    Why isn't guidance being updated given strong Q1 results, and is a higher sustainable ROE above 18% achievable?

    Management acknowledges Q1 performance is ahead of guidance but maintains it due to global uncertainties (trade wars, commodity prices). They expect a revision if conditions stabilize. A review of the longer-term sustainable ROE (above 18%) is underway and will be communicated in a few months.

    “from what we're seeing today, we would expect to be probably above of the current guidance of around 17.5%, but given the world situation... we intend to give new guidance, assuming things remain stable, and we have more clarity. So yes, you could expect some revision.”

    asked by Brian Flores · answered by Alejandro Perez-Reyes

    2 min read6 chapters

    Detailed Narrative

    01

    Peru's Economic Rebound and Macro Fundamentals

    Peru's economy is rebounding faster than expected, with Q1 2025 GDP growth of 3.9% YoY, marking the third consecutive quarter of growth. This momentum is supported by private spending, lower inflation (1.7% YoY in April), and record terms of trade. Business investment expectations have hit a historical peak, and the Central Bank lowered its policy rate by 25 basis points to 4.5% in May. Despite lingering political uncertainty, Peru's macroeconomic policy has remained broadly responsible, positioning the country for continued growth.

    02

    Strategic Investments and Digital Transformation

    Credicorp's strong Q1 performance is underpinned by intentional strategic investments in modernizing core systems, expanding digital capabilities, and redesigning key client journeys across universal banking, microfinance, insurance, and wealth management. These efforts are driving diversified income streams and scalable growth. The company's digital payment platform, Yape, continues to demonstrate strong user growth, adding over 0.5 million new active users per quarter to surpass 14 million, and its revenue generation represented 4.8% of Credicorp's risk-adjusted revenues.

    03

    Improved Asset Quality and Risk Management

    Asset quality has materially improved year-over-year, with NPLs contracting in retail banking at BCP and Mibanco. Credicorp's NPL ratio stood at 5.1%, and the cost of risk fell to a low of 1.6%. This improvement is attributed to proactive measures taken since 2023, including tightening origination standards, repricing risk, strengthening low-risk scheduling, and investing in analytics, alongside a favorable macro environment. The company's risk transformation project is expected to deliver more material impact starting in 2026.

    04

    Capital Allocation and Shareholder Returns

    Credicorp's strong solvency has enabled it to increase its dividend to PEN 40 soles per share, while also supporting plans for sustained long-term growth. The company is moving capital levels closer to target across its subsidiaries. This reflects a commitment to returning capital to shareholders while maintaining a robust capital base for future opportunities.

    05

    Global Uncertainty and Trade Dynamics

    Management is closely monitoring global developments, including President Trump's announcement of a 10% tariff on U.S. imports. While the direct impact on Peru's GDP is expected to be limited, concerns remain about how slower global growth and commodity prices may affect the small, open economy. Recent progress in trade negotiations between the U.S. and its partners is seen as an encouraging sign that could mitigate potential risks.

    06

    Sustainability Framework Update

    Credicorp published its updated sustainability framework for 2025 to 2030, reflecting a commitment to inclusive sustainable growth. The framework focuses on initiatives such as inclusive finance, financial education, green loans, environmental risk management, and the development of social impact metrics, aligning sustainability directly with long-term value creation.

    AI-generated summary of the company’s earnings call. Not investment advice.