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01/10 17:27
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary and Q&A highlight several positive factors: strong loan growth, optimistic guidance on NIM and ROE, and significant contributions expected from digital initiatives like Yape. While there are concerns about increased risk, the focus on risk-adjusted NIM and profitability is reassuring. No extraordinary dividend is a minor negative, but overall, the strategic focus and growth prospects suggest a positive sentiment for the stock.
Return on Equity (ROE) 20.7% for Q2 2025, supported by solid operating performance and disciplined risk management. This includes a positive 120 basis point impact from a gain in BCP's investment portfolio.
Loan Growth Loans measured in quarter-end balances dropped 4.1% year-over-year, impacted by the revaluation of Bolivia's balance sheet and depreciation in BCP's dollar portfolio. Excluding these effects, underlying loan growth was 2.6%, driven by mortgages and consumer loans in Retail Banking and by Mibanco.
Net Interest Income (NII) Increased 4.2% year-over-year, driven by a contraction in interest expenses after interest rates fell and low-cost deposits expanded, accounting for 57.2% of the funding base.
Non-Performing Loan (NPL) Ratio Improved to 5% this quarter, with NPLs contracting across the board due to tighter origination standards and improved payment performance.
Cost of Risk Fell to 1.6% year-over-year, supported by fortified risk management and improvements in the Peruvian economy.
Net Interest Margin (NIM) Remained resilient at 6.4%, supported by a contraction in interest expenses and an improved funding mix.
Fee Income Increased 8.2% year-over-year, boosted by transactional activity at Yape and BCP.
Efficiency Ratio Came in at 44.2%, within the expected range, highlighting scalability of digital investments and disciplined cost control.
Innovation Portfolio Contribution Contributed 6.2% of risk-adjusted revenues, keeping on track toward the 10% target for 2026.
Yape Revenue Doubled year-over-year, representing 5.5% of Credicorp's risk-adjusted revenue. Lending emerged as the fastest-growing segment, now serving 3 million users and accounting for 18% of Yape's total revenue.
Mibanco Profitability Stood at 16.3% for Q2 2025, supported by a rebound in loan disbursements, strengthened credit risk management, and effective interest rate strategies.
Grupo Pacifico ROE Stood at 21.1%, supported by solid operational dynamics in both the P&C and Life businesses.
Investment Management ROE Stood at 15.5%, reflecting favorable treasury performance and improved capital markets activity.
Core Income Increased 5.3% year-over-year, driven by a 4.2% rise in net interest income and an 8.1% growth in other core income, including fee income and gains on FX transactions.
Yape platform: Continued scaling with nearly 15 million monthly active users, equivalent to 75% of Peru's economically active population. Monetization strategy advancing, contributing 5.5% of Credicorp's risk-adjusted revenue. SME loans launched, expanding into higher-value credit products.
Tenpo digital bank: Soon-to-be-launched digital bank, part of the innovation portfolio to scale high-impact services.
Peru's macro environment: GDP expected to grow 3.2% in 2025, with domestic demand rising 4.5%. Inflation below 2%, real wages recovering, and formal employment expanding. Strong trade surplus driven by high gold, silver, and copper prices.
Regional investments: Investments increasingly spread across regions, supporting sustained growth.
Operational efficiency: Efficiency ratio at 44.2%, reflecting scalability of digital investments and disciplined cost control. AI tools driving over 30% productivity gains in co-generation and simplifying workflows.
Risk management: Improved credit dynamics with a record risk-adjusted NIM of 5.4%. NPL ratio at 5%, supported by tighter origination standards and strengthened collections.
Strategic transformation: Shift to a balanced model emphasizing fee generation, client engagement, and scalable innovation. Investments in digital onboarding, behavioral scoring, and ecosystem-based distribution.
AI integration: Embedding AI across operations to enhance customer experience, operational efficiency, and strategic decision-making.
SUNAT Tax Dispute: Credicorp is required to pay approximately PEN 1.6 billion in alleged unpaid income tax and associated interest. This payment impacts cash flow at the Credicorp level and eliminates the possibility of issuing extraordinary dividends this year. The legal proceedings could take 1-3 years in tax court or up to 5 additional years in judiciary, creating prolonged uncertainty.
Loan Portfolio Quality: While asset quality has improved, the cost of risk is expected to rise in the second half of the year due to stronger retail origination. This could impact profitability and risk-adjusted NIM.
Macroeconomic Uncertainty: Global uncertainties, including potential impacts from President Trump's copper tariffs and external economic conditions, contribute to unpredictability in the operating environment.
Operational Efficiency: Operating expenses grew 11.4%, driven by investments in innovation and variable compensation. This could pressure the efficiency ratio if revenue growth does not keep pace.
Regulatory and Market Risks: The revaluation of Bolivia's balance sheet and depreciation in BCP's dollar portfolio due to Peruvian sol appreciation have impacted loan balances and asset valuations.
Innovation Investments: While investments in digital platforms like Yape and Tenpo are critical for long-term growth, they represent significant upfront costs, which could strain short-term profitability.
GDP Growth Expectation: Credicorp expects Peru's GDP to grow around 3% in 2025, with domestic demand rising approximately 4.5%, representing the highest growth rate in 12 years excluding the post-pandemic rebound.
Loan Book Growth: The loan book is expected to grow around 6.5% year-over-year in end-of-period balances, equivalent to approximately 3% in average daily balances. Growth is anticipated to accelerate in the second half of the year, driven by Retail Banking at BCP and Mibanco.
Net Interest Margin (NIM): NIM is expected to stand at the upper end of the guidance range of 6.2% to 6.5%, supported by loan acceleration and a shift in the mix towards retail.
Cost of Risk: The cost of risk guidance has been updated to 1.8% to 2.2%, reflecting lower-than-anticipated provisioning levels in the first half of 2025 due to effective risk management and improved macroeconomic conditions.
Risk-Adjusted NIM: Guidance for risk-adjusted NIM has been revised upward to between 5% and 5.2%, driven by resilient NIM and lower cost of risk.
Fee Income Growth: Fee income is expected to grow in the low double digits in 2025, supported by economic activity acceleration and diversification of income sources.
Insurance Underwriting Results: Insurance underwriting results are expected to remain solid and relatively stable compared to 2024.
Return on Equity (ROE): Full-year ROE guidance has been increased to around 19%, including a 50 basis point impact from extraordinary gains. Long-term sustainable ROE guidance has been revised upwards to approximately 19.5%.
Extraordinary Dividends: The company does not anticipate issuing extraordinary dividends this year due to the impact of the payment to SUNAT.
The earnings call reflects strong financial performance, including record high net income and risk-adjusted NIM. While there are concerns about cost of risk and political uncertainties, optimistic guidance on loan growth, dividends, and strategic initiatives like Yape suggest positive momentum. The Q&A indicates analysts' confidence in management's ability to navigate challenges, supporting a positive stock price outlook.
The earnings call summary and Q&A highlight several positive factors: strong loan growth, optimistic guidance on NIM and ROE, and significant contributions expected from digital initiatives like Yape. While there are concerns about increased risk, the focus on risk-adjusted NIM and profitability is reassuring. No extraordinary dividend is a minor negative, but overall, the strategic focus and growth prospects suggest a positive sentiment for the stock.
The earnings call highlights strong financial performance with increased ROE, net interest income, and fee income. The shareholder return plan is positive with increased dividends. However, management's reluctance to update guidance and unclear responses in the Q&A indicate some uncertainty. The positive aspects, such as improved asset quality and diversified income streams, outweigh the negatives, leading to a positive sentiment.
The financial performance is strong with increased net income and ROE, and a special dividend indicates shareholder value return. The breakeven of Yape and improved loan portfolio quality are positive. However, operational expenses and market competition pose challenges. The Q&A suggests confidence in risk management and ROE targets, though some guidance was unclear. Overall, the positive financial metrics and strategic initiatives outweigh the negatives, leading to a positive sentiment.
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