Detailed Narrative
Peru's Economic Recovery and Outlook
Peru's GDP expanded over 3% in 2024, recovering from a contraction in 2023, with inflation falling to 2.2%, its lowest level in four years. The Central Bank lowered policy rates to support the recovery. Strong copper and record high coal prices, along with improved weather, boosted primary sectors. For 2025, the Peruvian economy is expected to grow around 3% for the second consecutive year, supported by historically high terms of trade, controlled inflation, and continued recovery in real wages, though pre-electoral uncertainty may emerge late in the year.
Strategic Priorities and Digital Transformation
Credicorp is advancing strategic priorities focused on attracting and retaining top talent, accelerating digital transformation, and integrating sustainability. AI-driven initiatives are yielding tangible results, such as a 40% increase in self-servicing transactions at BCP contact centers and a 30% productivity boost for over 1,500 developers using GitHub Copilot. The company has brought over 5.7 million people into the financial system since 2020 and allocated over $1.5 billion in sustainable financing across various sectors, demonstrating its commitment to financial inclusion and poverty reduction.
Yape's Growth and Profitability
Yape, now Peru's most recognized brand, achieved profitability in 2024 with nearly 14 million active users, representing 69% of the economically active population. It nearly doubled its transaction volume, expanded its reach to 1.8 billion users, and became Peru's fifth-largest e-commerce player. Loan disbursements rose 7.3x year-over-year, with a target of 5 million yaperos having a loan disbursed by 2026. Monthly revenue per active user reached PEN 6.5, outpacing expenditures despite seasonal marketing and IT costs.
Mibanco's Turnaround and Asset Quality Improvement
Mibanco Peru is recovering profitability, with its Q4 ROE contribution rising to 17.3%, moving closer to its 20% target. This improvement is driven by enhanced credit risk management and a reduction in the cost of funds. The NPL ratio fell for the third consecutive quarter, improving faster than peers, reflecting the positive impact of tighter origination guidelines, debt relief facilities, and improved debt collection processes. Mibanco Colombia has also improved significantly, becoming the third-largest private microfinance lender in Colombia.
Sartor Case and Client Prioritization
Credicorp made a PEN 259 million provision in Q4 FY24 related to the Sartor case, a third-party fund manager, which negatively impacted reported ROE. Management prioritized client interests by proactively protecting their investments in factoring funds, absorbing the risk. The provision was made at the Atlantic Security Holding and Atlantic Security Bank levels, not Credicorp Capital. While a partial recovery of funds is expected, management believes the major economic impact has been registered in the Q4 FY24 provisions, with no additional expenses anticipated for 2025, though the resolution timeline remains uncertain.
Capital Management and Dividend Policy
Credicorp's dividend policy is to pay out all capital not needed for business growth, with an aim for a growing dividend. The minimum core equity targets are 11% at BCP and 13.5% at Mibanco. The holding company bond maturing in June is not planned for refinancing, as there is no current need to maintain that debt. BCP's Tier 2s (2030s) are currently under assessment for potential call and refinancing, with a decision to be announced later.