BAP — Credicorp Ltd.

Summary of Credicorp Ltd. Q3 2025 Earnings Call

1. Key Financial Results and Metrics

• Return on Equity (ROE): 19.6%, reflecting strong performance across core businesses.
• Loan Growth: FX-neutral loan growth accelerated to 7% year-over-year; total loans increased by 1.5% due to the revaluation of Bolivia's balance sheet.
• Net Interest Margin (NIM): Improved to 6.6%, supported by a favorable funding mix and lower interest expenses.
• Asset Quality: Non-Performing Loans (NPL) ratio decreased to 4.8%, with a cost of risk at 1.7%.
• Efficiency Ratio: 46.4%, within expected range, indicating effective cost management.
• Total Assets: Year-over-year contraction of 2.1% due to Bolivia's balance sheet revaluation.

2. Strategic Updates and Business Highlights

• Digital Ecosystem Expansion: Focus on platforms like Yape, Tenpo, and Warda to drive financial inclusion and revenue diversification.
• Innovation Contribution: Innovation portfolio contributed 7.4% to risk-adjusted revenue, on track to reach 10% by 2026.
• Mibanco Performance: Continued strong performance with ROE at 18.8%, supported by increased loan disbursements and improved asset quality.
• Insurance Business Growth: Grupo Pacifico's underwriting results rose 7%, with a year-over-year net income increase of 23%.

3. Forward Guidance and Outlook

• GDP Growth Forecast: Peru's GDP growth projected at 3.4% for 2025, with expectations of continued resilience despite political uncertainty.
• Loan Growth Guidance: Anticipated loan book growth of approximately 6.5% year-over-year.
• ROE Target: Maintained medium-term ROE target of around 19.5%, reflecting confidence in business fundamentals and growth strategies.
• Cost of Risk: Expected to be at the lower end of guidance, around 1.8%, with potential increases in lending to higher-yield segments.

4. Bad News, Challenges, or Points of Concern

• Political Uncertainty: Recent impeachment of President Dina Boluarte raises concerns about stability and potential impacts on economic growth.
• Loan Growth Impact: Anticipated slower loan growth in early 2026 due to political uncertainties and pension fund withdrawals affecting consumer spending.
• Operational Expenses: Double-digit growth in operating expenses, driven by investments in innovation and core business, may pressure margins if not managed effectively.

5. Notable Q&A Insights

• Asset Quality Discussion: Management acknowledged better-than-expected NPLs and cost of risk, with expectations for gradual increases as the portfolio shifts towards higher-yield segments.
• Yape's Growth Potential: Yape's revenue is expected to triple by 2028, with a significant contribution to overall earnings, although execution risks remain.
• Bolivia Outlook: Positive signals from Bolivia's new government may present opportunities for growth, although the market remains small relative to Credicorp's overall operations.
• Dividend Policy: Expected increase in payout ratios, potentially exceeding 60%, while balancing capital needs for growth and investments.

Overall, Credicorp reported solid financial performance in Q3 2025, with strategic initiatives focused on digital expansion and innovation. However, political uncertainties and operational challenges present potential headwinds as the company navigates the evolving economic landscape.