BAP — Credicorp Ltd.

Summary of Credicorp Limited Q4 2025 Earnings Call

1. Key Financial Results and Metrics

• Net Income: Achieved record high net income for Q4 and full year 2025.
• Return on Equity (ROE): 16.9% for Q4 and 19% for the full year.
• Net Interest Margin (NIM): 6.6% for Q4, with risk-adjusted NIM at 5.5%.
• Loan Growth: Total loans increased by 3.6% quarter-over-quarter, with BCP and Mibanco driving growth.
• Non-Performing Loans (NPL) Ratio: Improved to 4.5%, with a coverage ratio of 112.4%.
• Efficiency Ratio: 49% for Q4, indicating operational efficiency.

2. Strategic Updates and Business Highlights

• Universal Banking: BCP maintained leadership in Peru, enhancing digital experiences and achieving significant retail lending growth.
• Microfinance: Mibanco reported double-digit loan growth and profitability improvements, focusing on a hybrid model combining in-person and digital services.
• Insurance and Pensions: Grupo Pacifico expanded its policyholders by 50% over three years, leveraging digital innovation.
• Investment Management: Assets under management surpassed $20 billion, with a 35% increase in asset management.
• Digital Initiatives: Yape, with nearly 16 million active users, significantly contributed to revenue, with lending now accounting for 23% of total revenues.

3. Forward Guidance and Outlook

• 2026 GDP Growth: Expected around 3.5%, with loan growth projected at 8.5%.
• NIM Guidance: Anticipated to be between 6.4% and 6.7%.
• Cost of Risk: Expected to range between 1.7% and 2.1%.
• ROE Target for 2026: Projected at around 19.5%, reflecting solid core performance and revenue diversification.

4. Bad News, Challenges, or Points of Concern

• Political Uncertainty: Upcoming elections in Peru could introduce volatility, with a significant portion of the electorate still undecided.
• Operational Expenses: Double-digit growth in operating expenses may pressure profitability, although expected to moderate in 2026.
• Insurance Underwriting Results: A decline in underwriting results, particularly in the life segment, was noted, with expectations for a drop in 2026 results.
• Bolivia Exposure: Potential currency devaluation could impact loan growth and overall performance.

5. Notable Q&A Insights

• Political Landscape: The CEO discussed the high level of undecided voters ahead of the elections, emphasizing the importance of political stability for economic growth.
• Yape's Growth: Questions about Yape's lending strategy revealed a shift towards multi-installment loans, which may affect provisioning models.
• Cost Management: Management indicated that while they will continue investing in digital initiatives, they expect operational leverage to improve cost-to-income ratios in the coming years.
• Dividend Policy: Plans to distribute excess capital to shareholders were reiterated, with expectations for increasing ordinary dividends annually.

Overall, Credicorp demonstrated strong financial performance in Q4 2025, supported by robust economic conditions in Peru, while also navigating challenges related to political uncertainty and operational expenses. The company remains focused on digital transformation and expanding its service offerings to drive future growth.