Q4 2020 Credicorp Ltd Earnings Call
Good morning, everyone I would like to welcome you all to the credit Corporate Ltd fourth quarter 'twenty to 'twenty conference call.
We now have all of our speakers in conference. Please be aware that each of your lines is in a listen only mode. At the conclusion of today's presentation. We will open the floor for questions and at that time instructions will be given after the procedure to follow if you would like to ask a question.
With us today is Mr. Walter Bayly, Chief Executive Officer, Mr. John Franco Ferrari Deputy Chief Executive Officer, Mr. Alvaro Correa, Deputy Chief Executive Officer, Mr. Brian <unk>.
Aldo, Yes, then chief risk officer, Mr. Cesar Rios, Chief Financial Officer, and there's just no gross stickiness Investor Relations Officer.
And now it is my pleasure to turn the conference over to credit card.
<unk> Financial Officer, Mr. Cesar Rios, Mr. Rios, you may now begin.
Thank you.
Good morning, and welcome to book School for School.
For the fourth quarter to keep hold on to it.
In our previous conference call.
Ooh hustling to you at the data, but I can speak to it.
Hey.
In seasonally adjusted terms.
The last quarter to tells them to which is around 3% below pre pandemic levels.
Our estimates for Jade GDP decline of one three.
3% 2020, due to the COVID-19, pandemic, which is better than initially thought.
The job market has also continued to recover.
Good bye.
Well my Netflix for the vacuum textbook.
Kevin I'll take Bill has also provided favorably.
That's corporate prices reached levels not seen almost eight years, we expect GDP to rebound between 10% to 'twenty to 'twenty one.
If by high copper prices capital equals to emerging markets.
Thanks to monitory policies.
Policies to demo.
Yeah.
Next to slightly.
Two significant factors driving so it keeps reported first the sanitary situations in a way to put COVID-19 has to do.
In developed and emerging countries over the last few weeks to wounds that that for us. It's more how do you feel great lakes.
Gordon Haskett thousands to restriction nature.
Based on the severity of COVID-19 indicate to US which include the high very high I'm extremely pleased to levels for the January 28 people work for them.
So Alex logged out cost.
Generally fairly close to per se.
Already 14 regions stuff would you said extreme risk level COVID-19, eight gross.
Clothing for quality.
Yeah. Thanks for these first street shops will slow down the recovery in the corner Saturday safe to stop all safe dose, including nine Vichy.
Fishy manufacturing cost structure will continue to produce.
Downside to at least for.
Our cooling GDP growth forecast for 8% to 10% Mike.
Deciding to Tony situation need to wait for the always chasing flow pumps from Barclays.
Whoever vaccine doses Wheeler for I think they're moving favorably.
To the nation process will begin immediately.
It will hold.
Jones on April 11, 2021 day lead to solid show candidate Jewel for site, leaving Bolthouse preferences with 17 total bolt Carlo like Keiko Fujimori Julio with Bob.
I still need to work.
Making day for second place us up to date of the core EPS.
It will lead to great outcomes.
Police landscape continues to be market value I'm sorry.
But we play out in coming months. It is important to note that according to the latest <unk> 25 per cent for older are undecided.
To leave it folds flat for a week the sheet bottles. The second round of Brinci to ensure relate to show it's safe to be called on June six 2021.
For the really Lucky day in countries, which for the core beliefs include a low cost for Libya in January 'twenty to 'twenty, one, which gifts eligible borrowers the option for a six month Grace to you. This facility you seem to at least from to the loans.
The main thing from 'twenty twin, which linked to book interest with Atlas and.
CBOE to assuage impairment charge from December 2000 to it.
We are closing more neutral.
These measures our business Pcs peoples.
And chi relational we'd be called <unk>.
<unk>.
To the members of the Constitution, Allison regional haul or not maybe or cycles for me.
Generally lead to a bit.
For November 21 makes it slightly.
The Peruvian financial system hospitals to trade, probably hunting hung with economic recovery in the last quarter to tell us a day.
According to data from the Central Bank loan growth and December to stood at 12, 3% you're able to get at a constant exchange rate the highest growth rate since 2013.
Thank you.
If we include the textbook react to all loans auto loans.
So if we exclude it painful for me a fewer loans total loans declined four 6%.
Importantly, there are seeking out slightly colder than normal origination from the retail segment, which includes consumer and mortgage loans in these conflicts.
Boosted well hope to highest long growth rates in the region 20 trip for.
For 'twenty 'twenty, one we expect total financial system launching for route to growth of around two per se.
We have fewer loans, it's time to.
On the strength of the loans to core lastly, we would like to call me for recently banks from the economy.
Total promising to.
The Central Bank recently announced monetary measures per spot loans from Craig This hoping for it.
Excuse me everyone and please remain on the line as we reconnect with our speaker.
[music].
Yeah.
For.
[music].
Yeah.
Alright.
Net.
[music].
Hi, Ian from December 10.
Our December 2020 Congress passed a law will mean to if I see these scenes will be saved by the Central Bank, which we'd also say leading to try to just for certain fees the cash flow.
So every six months they cyclically Bryan for some below and allow patients to take the matter up to constitutional court.
In Britain from passing that makes those to the system.
Additionally, the minister of finance has to approve a degree that enabled us to not isn't asking also about intending to your cost of illustration to gain access to client deposits information.
Violence to succeed so repulsing an 800 volt lastly, when January 'twenty eight 'twenty to 'twenty, one the government announced the COVID-19, Golar to main guarantees program direct between debuted to Smes, we will be extended until March.
Went to force 'twenty to 'twenty, one is playing to all what last fall under this initiative.
And also reducing to risk weight on programming cost.
Change for additional government law school rush for daily specific segments of clients, we will continue to close money towards these developments to.
The valuation impact on credit cards operations.
It makes it slightly.
Economic reactivation Scottsdale is evident upgrading quarter for markets via C meeting or not choosing to you.
Use of digital channels.
For financial goals need to beautiful statements continue to trickle up to date, some problems such as more value I'm not sure they're used to a significant recovery in the fourth quarter book to concentrate.
Total sales in particular celebrated this quarter and on a full year basis.
To 2% in 'twenty from these expansion to placing a conference growth to help the channel due to immobilization nationals on social distances.
Assurance I'm not buying from wages are the proceeds are reported to be high school sales this quarter posting exponential.
400% with respect to journalists treatments.
Analyzing to full year, sorry from a claims with force.
Sure.
Average monthly number of transactional fees.
One five per cent made by visa transactions. We grew 91, 5% secondly, digital transactions have gone to a percent saving from seven 7%.
Total transactional this quarter the largest increase ensures a transaction what we used to buy yet which represents 19% for total transactions this quarter compared to 5% in the first quarter each year.
The spend for was driven by our new product yup.
Which allows BCP up non BCP clients to execute transactions. These new problems generating more than 1 million, new Yep Yep policy Twenty-twenty Unbanked almost.
400000 people go to the state.
Yeah.
Next slide.
Now I will comment on the highlights of credit cost per formats can be for Parker.
And the full year food cost something was sold show quarterly recovery in line with economic reactivation is how value for sold shows in a year over year in the loan portfolio grew more than 19 per se in Guangzhou and whatnot.
This is driven mainly by loans from the government relief programs after isolating to face these programs really corpses trucker loan portfolio fell to 2% in quarter end balances.
On a quarterly basis, making towards simple released to a contraction.
For 3% due to the impact of non recurring events and Seattle into to pretty low carbon charging for lithia, particularly if.
If we isolate non break during bad adjust.
Adjusted net income from.
My nose to a 0.8 percentage on a full year basis.
Adjusted net interest income contracted 1%. This evolution was fueled by lower interest rates and then less profitable assets.
Which was partially offset by the reduction in interest expenses generate lower cost funding cost structure.
These conflicts full year, a structural need to be treated.
For 0.78% no nationally was boosted this quarter by people, which increased 27 per cent quarter over quarter in line with more transactional activity at <unk>.
Sure fee waivers for.
Full year results non financial income dropped 10% due to a decrease in transactional activity slow to year full year insurance underwriting results were impacted by COVID-19 related to it but not to reported claims in the life business, which was partially offset by a decrease.
Incorporate young crestwood to be claims.
Provision expenses fell close to the build to the new sport to ban of economic expectations and improvements in client behavior lead to a truck for coastal fleet for 244 per cent. This quarter for your terms this truck for coastal police force.
5.7 per se in credit Suisse.
Yeah.
In this context, clearly called reported 653 million solid net income this quarter, which represents a return on equity for pinpoint April sales on a full year basis for the core Virginia rate 347, solid we isolate to altra cooling are bad.
Adjusted net income for 2026 to eight a 725 million solid and adjusted our OE for three five plus.
I will now explain to her so our main operations.
Next to slightly.
I will begin by explaining BCP stand alone EBITDA cushion in 'twenty 'twenty to total loans portfolio unit balances grew 18, 8% driven by fewer loans widen the structurally loan portfolio decreased four 1% now let me explain for the.
To the pollution, albeit a stately bought it because we try to May you will drive some margin for.
On a quarter over quarter basis loans, and I would hesitate to balances grew one 4% driven by for young people launch widen the structural portfolio to drop to five per se due to a contraction in the wholesale and SME segments.
On a full year basis total loan growth Novelis daily balances of $17. One per se was mainly driven by debt we ought to keep up program, which provides the launch prime loans to the middle market SME business SME peanuts.
If we exclude them react to buy program B C thesis truckload loan portfolio inaugural daily balances grew all for 1% in 2020.
Mainly driven by corporate banking mortgages, and consumer loans, which expanded seven 5% at any 0.2 per cent of 13, 1% respectively.
BCP is funding a structural has improved to active liability management.
We saw savings and demand deposits on a full year basis total Nikolsky school 30 per cent late late by low cost deposits in 'twenty 'twenty BCP materially reducing funding cost he has being able to repay more expensive sources of funding such as due to bad waitlist on senior bonds.
Husky's opportunities in a context of low interest rates to remain a timely liability management is.
Trucking.
Next slide please.
Regarding payment behavior and to reprogram portfolio in retail banking at BCP and the full quarter retail clients reduced to kootenay and they're paying indicate hunting hunt with economic back to H.
I'm payments unless truck to repay law, you reached 96% and the angle sensor cooling for 94 per cent in September by the end of the year on 20 per cent of the portfolio at cooling by programming cost as compared to 23%.
Finally, our high uncertainty portfolio, which is comprised of loans that are within grace period for those that hospital where geely.
Moving to represent 90 per cent for this truck for the long compared to 18% last quarter in this portfolio at the Insulet for.
To tell us that only 3% total loans, whereas in with English and six per se where over to you.
Next to slides.
Now, let me explain the evolution of cost of risk and asset quality indicators for <unk>.
With over quarter basis, the decrease in provision will spin to Easter travel Kabul for an improvement in macroeconomic expectations and updating to probability of default for this segment.
On latest assessments of transactional on payments.
For the full year basis provision expenses school was mainly concentrated in the individual segments is to cease.
The value consumer.
Higher wholesale banking provision expenses were to drilling by the evolution specific value from the airlines tourism Transportation and then you say for which has been highly impacted in the COVID-19 caucus. Indeed, a scenario the structural cost of weak he created a $2 33 per cent.
For the quarter for <unk> 74 per cent for the for Ya.
As anticipated to haul what last call figures for asset quality showed easy to ratio quarter over quarter, particularly in truck total loans in D C.
Given the crazy, Colorado consumer to Grace periods hub spot.
This was partially offset by a rebooting or write offs, which initiated in September after SBS mandates, we used to come to your base of delinquency is price.
We expect to observe the two ratio for the first half from telephone twin, particularly in the SME segment as Grace periods from this statement, we just filed.
India for mention coffee, the MPL progress ratio equates to 145 for 1% finally.
Fees piece accumulated prohibitions represent savings point 92 per cent.
Truck toilet port for.
Next slide please.
Going on to BCP Withholds Inc's interest income continued to follow an upward trend on rose 5.9% quarter over quarter in full year net interest income declined to 4%.
Adjusted by known for cooling events through the year, if we exclude non recurring event the full year adjusted 19 call.
And now to loosen shows force.
A decreasing adjusted interest income for 2% due to a dropping markets wait a net charge in the assets.
Which was partially offset by active investment portfolio management segment.
Adjusted net interest expenses fell to 19, 2% due to a dropping interest rates.
Ending chocolate improvement.
These conflicts adjusted net interest income rose 0.8 per cent and trying to quit.
In terms of the full year contractual 87 basis points was attributable to the aforementioned belvia shows and to the delusional Batesville protective alone.
Generates negligible.
Risk adjusted NIM. He created a two point, 28% this quarter on 1.0 tree per se from 'twenty correct.
Regarding non financially in terms of the quarterly evolution core item to school 13 point to per Se I mean constantly around the reactivation. These was the first full quarter for.
For the intersections.
Also for salt seeing calling expanded 12% Additionally, alongside and not taking transactional gain.
This transaction to 18, 1% for.
For the full year basis, non financial income fell 11% net.
Really driven by fee income and gains on FX transactions, which constructed 12, calling one per se I mean.
And 11%, respectively due to a decrease in transactional activity.
Next slide please.
This is basic efficiency ratio improved year over year after cost control measures were implemented in 2020.
Including reduced nonessential expenses and body.
<unk>.
Volume terms, although okay, reaching equal contracted.
<unk> four per cent bcp's adjusted efficiency ratio remains stable are for.
14.9, perfect. This evolution was sold our airports to speed up the.
Net proceeds to remain Bcp's transformation strategy, which pump goes from improving the client experience and efficiency levels. The table in visa slide shows our progress liberalizing accretion to drivers to move for work on our journey to optimize our cost income ratio for.
We accelerated our <unk> business to a fund.
At this stage the share or do you feel to transaction grew 16% points also sold 55 per cent for clients.
We are able to close.
Able to close to 20 branches to here makes it slightly.
Yeah.
With regard to Microfinance.
Let me explain did I not income bank gross loan portfolio I'm candidly from 'twenty to 'twenty, the total loan portfolio yearend balance.
<unk> 20.
Five per cent widen this truck for a loan portfolio decreased six per se.
Its trunk total portfolio construction is explained by debt so dealing part of the 10 day, Indeed micro businesses segment and the fact that liquidity buffer provided by clients to the government program now let me explain the detail the evolution for the rest of the balances which are major drivers of margin.
<unk>.
We're not a quarter over quarter basis loans average daily balances grew 90, 494% driven by government programs long winded truckload volume.
1.4%.
On a full year basis total loan portfolio grew $13 four per cent in Norwegians day he wants to.
Driven by Goldman and programs weighted shrunk a lot portfolio grew 1%.
With the onset of economic regulation during the second semester for Telcel and training for the national levels Pokebank losses truck for the portfolio is starting to recover in segments that are still within our risk appetite.
Regarding the evolution funding loans bank demand and savings deposits grew 37 per cent year over year, which allowed us to reduce the share of more expensive funding sources from total.
Hi.
All these factors led to a structural funding cost to fall.
From four 2% to 2019 to $3 three per se in 'twenty.
Next slide please.
Client payment of Keybanc cost continue to follow and not what channel and the high uncertainty portfolio has shrunk from seasonal.
Hmm.
<unk> gross client payment for four months, David did you start to substantial improvement and there was a drop in request for yogurt programming facilities Grace periods. Despite no conflicts, okay. Konami reactivation. Moreover, we're going to do payments to remain stable this quarter.
Analyzing is trucked to the portfolio of our programming figures we note for.
No we price up to day loans increased this quarter to represent 49% from the struck for the long at the end sport to be tougher cycle, you'll get a new portfolio is slightly increased this quarter client facilities as part.
<unk> reached 6% total struck for loans, primarily the higher searching for portfolio, which is comprised of loans that how do we then grace periods for those that have older abuse.
Moving to represent 24 per cent for structurally loans compared to 43% thus for.
This portfolio at the end of the fourth quarter of 2018 per cent of the structure of loans, whereas steel within Grace periods. The majority of these pillars will end by June 2021, and to remind you by the end from 'twenty 'twenty one.
Next to slides.
Regarding asset quality indicators.
Provision expenses decreased quarter over quarter due to adjustments in our crane risk model and better than expected trends in client behavior wherever it Houston economy economic reactivation.
The improvement was partially offset by the increase in delinquency as Grace periods. In spite of this evolution with expansion of this truckload of loan portfolio lit the structural cost from where you see create a pool points seven percentage this quarter.
This truck for the cost of risk secret to pinpoint six per cent and training trip.
In terms of portfolio quality.
Structurally M theater ratio, both for pinpoint to per se from 'twenty to 'twenty delinquency show and a peak at Grace periods. Despite some clients were unable to make right.
The increase in Npls was partially accumulate to buy.
Reboot of charge offs in this context <unk> gross NPL ratio increased to 178 per cent in training for it.
Next slide please.
Now, let's look up from your bank book results.
Entering to a single fell to $6 for same quarter over quarter up to being heat by accrued interest for those risk deals. Despite some clients would you start delinquency in full year figures niche Inc. First income declined $18 four per same impacted but for England traction from this trucker portfolio and the influence.
For the government program launch.
For context of lower interest rate and the interest rate.
Due to increase in delinquency to wages in terms of the full year construction for <unk>.
Basis points was attributable to the aforementioned operations was partially offset by an improvement in the funding cost structure in this context risk adjusted NIE C created a three 2% for 'twenty and 'twenty.
Regarding efficiency full year operating expenses increased $6 three per se due to cost control initiatives, including a reduction from head count non core expenses BARDA will compensation for.
For both non financial income reflected an uptick in bancassurance fees for all listening should I split them apart from portfolio operating income dropped at a faster pace.
Operating expenses, leading efficiency to deteriorate. It makes this slide.
Now I will comment on the results of the insurance business.
Full year basis, net income decreased due to growth in provisions related to excess mortality for COVID-19.
Partially offset by lower claims in the P. C business to decrease in claims in the P&C business, what a premium total to a trucking cases may day.
Cost line personal lines after movement, where it was treated 15 cost page Leigh.
Life net premiums increased to the alliance channel undue trucking Gleason, so I'm not sure.
And the value of the evolution of provisions this quarter indicate that there was a decrease in <unk>, but not to report to provisions in the life insurance business up to fewer COVID-19 related cases cases were reported for the year over year to basis whoever claims increased five to nine.
8%, mainly due to the impact of COVID-19.
In a quarterly basis, corporate health insurance and medical service for Houston, and increasing net income.
This evolution is explained by lower claims at the corporate selling insurance business on high.
Demand for medical services for the full year basis net income increased due to a draw it claims in the corporate pay insurance, which what I can wait to buy a decreasing to medical services income due to lower demand.
Nick for slides.
Regarding the potential from business assets under management from the system level drop year over to get it to fund withdrawals under the government mandate to proceed.
In the case of Prima total funds withdrawals amounted to $7 5 billion, which represents 7% book with plans for where available for withdrawal.
The law tightening by the expected to be in November who will lead to additional withdrawals in the first quarter of 2021 for a profit.
Approximately $3 4 billion photos.
Moving on for Oleds, Nicking, Couldnt increase quarter over quarter due to a recovery in the profitability of to if we so far in line with market performance. Nonetheless was partially offset by a decrease in income due to a decrease no affiliate contributions for the full year basis total fees decreased due to.
For higher unemployment, which reduced the labor to contribution safer contribution, let's say to perhaps you'd like to go over in April I'm. Finally, a decrease in assets under management labor cost to funds, where we draw to government mandated net.
This is leigh.
Please.
Regarding our investment banking and wealth management businesses total assets under management close to kind of increased from 34, 5% over the year.
Impacted by the exchange rate and driven by the asset management base makes it to engender and this was creepshot to third party funds from institutional clients to buy cheaper well.
On a quarterly basis for cooling income.
For 1%, mainly driven by asset management and corporate finance businesses for you kind of the decrease in day. One this contribution was mainly associated to it.
Growth and recruiting expenses, which Watson trunk breathing bike transformation into operating margin up by one off expenses from new subsidiary.
This was partially offset by growth in recurring income, mainly due to capital markets and asset management businesses.
For a number Julien for solos.
Also contributing to gains of 24 to really in a context in which no including equal weight to normal for Q&A.
<unk> expenses next to slides.
Now I will summarize credit card consolidated performance.
The analysis from the balance sheet. The structural shows credit course interest, earning assets increased to 29% from 'twenty Quinn.
Driven by both the loans and be personal portfolio.
We increase the size and duration investment portfolio, while maintaining interest rate, we are maintaining a solid short liquidity.
In 2020 credit cost on portfolio and year end balances grew from $19 one per se, but even by government programs, where the strength of the loan portfolio decreased to two per se.
So do you feel about losses, I mean for years basically to the loan portfolio grew 15, 8% led to strong total loan portfolio grew 4% as explained well what lines of business at this half with has been named.
Mainly to low cost funding sources. Additionally, we executed our inaugural International series Balky shrink our holding company leverage each year to increase how let me queasy.
Next slide.
Now to summarize the evolution of the main please indicate though there wasn't a significant quarter over what to dropping provision expenses, which was attributable to an improvement in expectations for 'twenty to 'twenty, one 'twenty improvement in client payment behavior for the full year basis provision expenses reflected the impact from COVID-19, which led to a.
Structural cost so pleased to see trade.
Point, who sell them per se regarding asset quality NPL increase quarter over quarter as the grace periods as part of our colon escalation of increase year over year to tweak.
136.1 per cent.
Important to note that this quarter was impacted by a zero interest rate loan impairment charge for 148 million solid net.
Context of regulatory changes to Walgreens.
On a full year basis to being constructed and see tweaking a 4.3 per se due 'twenty for functional structure to meet the impact from government programs and appealing to our fleet.
Next page.
In terms of full year efficiency, the cost income ratio C. Tweak it up $46 three per se, but to your ratio was driven by lower Eagle eye.
No maturing the bank most of our lines of businesses.
The total ratio about three weeks into my final wants to do you mean by a decrease in income from rebound in growth they will.
Consolidation will be like Oh, Columbia common equity tier one level for both BCP of Mi bands, where we made both Howard and total target.
Creating a $11 four per se and 18, 1% respectively.
It is important to mention that the capital ratio you bought for increased due to capital contribution for 400 full volume solid execution from December.
As mentioned previously our core tier one ratio how to calculate it really hasn't got book.
Suntrust use low cost 19, bookkeepers makes it slightly.
Credit card generated 653 million net income this quarter, which were per cent.
Pinpoint papers simple I've already if we isolate non controlling the bans registered this quarter adjusted net income of 725 million total quarterly adjusted I'll go East trades at 12 per se. It is important to mention that the Oh quite curious this risk.
For to impact to income and expenses were reduced to our P&L, but have not pocket for cooling business out to China.
We are not expected to recur on a cost system basis going forward. It is important to note that some variable cost such as variable compensation payments.
We call it lean provisions to play out.
Due to the crisis and to a dropping angle, we have states that Boeing for what these spot it will cost with reactivating our cost base from go how we call them to review our expectations, Let's go.
On to guidance.
Next page please.
Conflicts with uncertainty in creaming all wanted to.
<unk> for 2021 assume that the lockdown, we see less sweet and short for those pools not.
And then 'twenty Quinn, we used to take big whose GDP recall that 2021, a growth between eight per cent.
Okay.
In terms of normal origination we are spacing, our commercial transactions to continue on what training for 'twenty 'twenty. One are such we project growth between four on April Saint innovative safety by that.
For the total portfolio this will be driven mainly.
But if we paid back from the segments at BCP stand alone.
Bye bye.
Regarding <unk>, we used to safety interest rate to remain low in 2000 to 'twenty. One onwards loan portfolio, we continue to be impacted by the presence of low interest rate Goldman and loans. Accordingly, we expect to aim to situate between three nine.
For 4%.
From a quick one.
<unk> continues to improve provision for loan losses are expected to continue following a downward trend, bringing the cost of risk levels between one 8% to 3%.
Just to make to recall that our capacity to generate income this year belief that 'twenty 'twenty, one would be a year of transition in terms of the accretion in this context, we expect some variable cost such as variable compensation I don't recall, a big boxes to reactivate alongside higher.
Additionally, <unk> 'twenty 'twenty, one we will continue investing be from China and in transforming our operating margin to boost efficiency in coming years.
This is vishal.
Be sure to ratio is expected to see tweak between 44 and 46 per cent. These here.
Finally, we estimate.
Arbitrage ugly.
To reduce debt load or will be used to.
Each year to between 10% and 14% with these comments I would like to open the Q&A.
Thank you Sir if you would like to ask a question please signal IP.
Pressing star one on your telephone keypad.
If you are using a speaker phone. Please make sure your mute function is turned off.
Now your signal to reach out to Clinton.
Again, if you would like to ask a question. Please press star one now.
We'll pause for just a moment to allow everyone the opportunity to signal for questions.
We also ask that you. Please ask only one question at a time.
After each question has been addressed by our speakers you will be allowed to ask as many follow ups as needed but again. Please only ask them one question at a time.
Thank you. Our first question comes from our nest out capital window with Bank of America.
Okay.
Hi, Good morning, Walter I wanted to know Frankel right now the answer to that.
Thanks for your question Christian how important to point to.
My first question is from diner regulatory outlook.
Southern and they've got some bulk surveys from our president.
And the government to the potential deal to an break GAAP.
Oh, certainly got enough per day insurance on the deal.
So I'm not sure I'm a lives private pension funds.
However, we.
We have seen that Congress is expected to continue.
Pressure on both deals from the next couple of days, so wanted to prevent ability to drive.
To ask.
Can be chosen not to pursue.
<unk> touch of your loan portfolio is willing to risk rates above 50%. Thank you.
Yes.
The missile thank you for your questions.
Trying to tackle some of the the question that debt that you posted.
Thank you Sir.
Certainly we have.
Some risk on to write some day.
The low debt food.
Comps on commissions.
And interest rates.
It's still going to be to I would say probably linked to previous discussion.
It's probably.
So we don't need to to find out and there is a salesman bad.
If the.
This will go to us as to all the proceeds from debates.
Probably is going to impact probably more severely to institutions that operates in the very high interest rate segments.
To specialized institutions I'm, probably are going to be.
EBITDA impact.
And.
In the day, when you're going to sell.
Banking.
Institutions in the country.
Nevertheless, it's going to damage.
Access to credit and reduced the access to created for them a significant number of day Williams.
Okay.
Turning to <unk>.
Mhm.
Sorry.
Hello to you can share with us what percentage of the loan portfolio is enduring great to about 50% to.
Thank you.
I understand the question day will.
Yes can you share what is the percentage of your loan book portfolio, leading to a dream about 50%.
Okay.
Fair enough.
No I don't have to see what Uh huh.
We can come back with debt.
There's some from general guidance for them.
Okay great.
With my portion right.
Okay.
This is going to try to go with margin.
Why is that 50 per ton question.
How did you come up with all 50 per cent.
First of all.
Yes.
I'll leave that yes, so I believe that.
The small percentage of your loan book.
You have to.
About 50%.
Uh huh.
That's my bad debt.
What's the risk why 50% about 40 or 75.
Oh, yes.
Goodbye.
Yeah, hi to aggressively.
Other countries.
To give you that number but.
Well I'm trying to make the point because unfortunately.
No it's Bob wanted to happen.
Well, how about huge impactful to probably nationally from.
Okay excellent.
Given the rate below book.
Hum.
Blood to something like non exalt called financial inclusion on the appetite Warrington food.
Okay.
Great.
Is there anything tied to loans held for less than $100 and I'd.
All right.
And that value.
Given by God father, obviously, the argon to places like that day.
They started to move forward.
Oh go ahead sorry.
Great.
The amount of loans.
Larger umbrella for moly.
I'm trying to make up almost 50%.
There you go.
A 50% cut their coal micro finance industry.
90, something percent of those micro financing to suit.
It's very healthy.
Okay. Okay. Thank you. Thank you.
And I wish you and all.
Then my second question is from the police come from.
I've seen that they don't need to come and does not appear to seem to check from potential any decent growth.
Until we felt it important to me the potential from sensor is the president of the Central Bank, because all the cost away.
So this is creating uncertainty of who will be key to sensor so wanted to.
We will go to plots from Vince.
Vince.
Good day.
100 to study for them.
Yeah.
I think for me my first reaction is that we are in to.
And it's very early to tell.
And we have to say that on Saturday several pools.
And some of them day I'll tell you they don't come in those.
In the in the top position cycling bike.
Depending on the pools, but I will say that is very early to tell at this point.
Probably we need to to house to kill the proposed cost to go down the road and see how day proposals and the muscle to they can do this consolidates the next months.
Yeah, Doug just for them, but sometimes up to.
Bad debt.
With temperature.
Sure.
It's very cold, but focus on the provision I would say more on debt and the pandemic better than intellectually.
That is to move their like Kevin.
Now we did all of them to within the margin Volvo for.
For the time that Sean maybe too soon to tell.
And I do believe that we'll have to wait at least one more to help them.
More clarity on.
Thanks to the outcome for the electric.
Right. Thank you very much for your thoughts.
Thank you.
Again as a reminder, please ask one question at a time. Our next question comes from James Mullen with Scotia Bank.
Okay.
Okay.
Hi, This is Jason Marlin.
On the question of.
Medium and longer term asset and earnings growth versus capital optimization and dividend.
Walter you had provided some thoughts.
At the end of the third quarter call, where you spoke about the potential that shareholder returns going forward could ship more to dividends with slower earnings growth.
Ah versus what in the future versus what we've seen in the past have recent trends, giving you more conviction that this is what will drive future shareholder returns.
Yes, good morning, Jason This is Walter yes.
But we have to take out of the equation is here to this year's somewhat unusual here.
We're rebuilding our profitability.
And we do not expect.
We haven't made a final decision of the board, but this is not a year in which I worked have people waiting for a lot of dividends, we want to rebuild a little bit our capital base.
But going forward yes.
Dynamic the long term dynamic is that the country will grow less.
Whilst our go to Corp continues to.
Generate you know around 17% for return on equity.
Which we are will be a higher rate than to what our risk assets will grow, but we will be spending all excess capital regularly to our shareholders that that is the dynamic that I think should come back next year not this year.
Thank you very much.
Youre welcome.
Thank you. Our next question comes from Pizza Laval with Goldman Sachs.
Hi, Good morning, everyone and thank you for taking my question.
I guess my question I'll take it then in the longer term just looking at your guidance for this year and eventually getting back to <unk> 17 per cent that we as you mentioned.
Walter.
Thank you saw nice improvement in the cost and risk.
Net interest margin continues to be under pressure I mean, I guess, partly due to the bad you buy loans.
I think previously you've guided for maybe second half of 2022 is that how long do you think it'll take and is it mostly a function of getting you your margin back to where it was before.
And the margin to get back to where it was it for is it gets to reactive of loans coming off the loan book do you need to interest rate to go up a back to normalized levels to get to that doesn't seem to Nathalie just to trying to get a sense of the drivers to be able to get back to that long term. Thank you.
To probably.
If we consider that the asset base growth up high single digits.
We can obtain us needs from before I release for a high double digits.
This.
Growth is going to be driven by a country, that's what's going to growth, let's say three blasts per cent and the financial sector to usually goes to one five times nominal.
<unk>.
In terms of margins, but we should expect is that we're going to have at least a couple of years of very low debt.
Interest rate that takes our overall profitability.
And at the same time, we are going to come down with the relative weight to both reactive or loans that are there.
Risk casually to have to.
Going forward.
Two five years more.
Standing there is not any additional changes. So we are going to have I will say a couple of years in which we are going to help is still a very low interest rates and the presidential debates to book.
Loans from the book at the same time, we expect during this period to.
How are you.
The proportion of.
Retail.
Jim.
Loans in our book that Congress, how your margins.
To some more risk schools for the ratio will come down.
Good.
Segment level pre pandemic levels.
Adjusted by day, changing the compensation will be called more retail loans to them wholesale loans down the road and the fee income probably is going to growth.
Let's be virtually done day.
Assets due to digitalization that is going to put some pressure.
And fees.
At the same time to reality.
We're going to start gaining efficiency.
The benefits so they do you for transformation doesn't weehawken barred from all the company subject to the combination of these factors to lay down are not sustainable I E.
The high end, but would it be to us.
Mainstream once they've made from previously this is the.
Basically they not make I don't know if you want some clarification on when they specific topic.
Yeah. Thank you says that that's helpful. I guess, maybe just a couple of not to follow up on the margin side, given just the impact of that fever do you know if you got with the guidance you provided for $2 90 to $4 for do you know what that would look like if you exclude the path to Eva loans, just trying to get a sense of I guess that the normalized margin.
Excluding that and and then and it sounds like you would need for interest rates to get back to maybe more normalized levels to get that margin up higher and to get that ROE up higher is that correct.
Hey, yes, but.
I would say to react to that.
Probably.
80 basis points of the margin that is if it's is it day to slowdown is going to be progressive.
And the interest rates also impacted because we have a very low.
The funding base debt less valuable in relative terms now.
These proceeds I'd make to me is going to last at least to two years when everybody. When all of these two factors a D C P.
We are going to have a probably is higher margin driven by these factors, but no more competition, we wouldn't expect to reap the pool day any piece of these two factors that are due to the competition, but we.
We ought to be going to his team to remain profitable.
It is stronger.
No.
But let me add something this is Walter just a very to be very concrete.
We do not meet interest rates to go up to achieve the returns on equity that we have been accustomed to.
We can achieve without increase a general increase in interest rates. This is a year in which we will be rebuilding our profitability.
And we should see the results quarter after quarter until we reach in this last quarter.
Which will give us.
<unk>.
Good results still below book close to sustainable levels.
Okay. That's very helpful. Thank you Walter and sat there and just one final question just to confirm the 17%. Yeah. I think you had previously mentioned you can probably get their second half of 'twenty 'twenty. Two is that the correct timing how do we think about just the timing to get back to.
Definitely not this year.
Last quarter this year.
It'll be close to those levels, but still little.
Okay. So sometime next year. Thank you Walter.
Yep.
Thank you our next question comes from.
Georgia Friedman with Citibank.
Yeah.
Thank you very much for the opportunity to make questions. Good morning, everyone.
My question is regard than our assets quality Ah if I you know you could give us.
Some thoughts about when you think.
That Npls will peak, we have start to seeing the deterioration.
Due to the exploration of great spirits.
But.
I was even more interest in reconciling this with your cost of risk guidance, which is still above our 2019 levels. So just wondering if I know you think this is a new normal or just the cumulative effect of.
The pandemic and I wish it to have some normalization in 2020 to afterwards, thank you.
Okay.
Yes, there are two questions in terms of your expectations on from the increase from the M. P. O loans would you expect them to pick us, especially I mentioned and by the end of the first semester.
The second quarter, basically because we will see.
The performance from years to meet consumer consumer markets, where all of the great to previous expired.
In terms of their predictions I mean, there's still some uncertainty from the market does help issue, it's not over in Peru.
We have elections. So we we got to provide a I would say.
Right.
Cool.
Hum for Gaslog for what we feel the range could be that's why you have a ranging between one point.
And to 0.3.
Because there are still some clouds.
In the Sky and we're not sure what will happen.
Next year from India.
For the year to especially during the first two quarters.
Perfect and if allow me just to fill to lap of the year.
Because now you have more than 10%.
I'll share reported for doing it.
Government programs that you know have lower risk.
And those according to what I understood in the call do you expect that to last for two to five years. So would it be reasonable to expect the cost of risk evolving in 2020 to to levels below dose well deserved in 2019. Thank you.
Yeah.
I wouldn't expect them to go below what we had in 2019, probably remember there is that changing mix on more important growth in the regional markets I mean, the wholesale market for it.
We'll probably see numbers some from where it below what our guidance for for Britney for anyone that's been.
Yes.
Okay. Thank you.
Okay.
Thank you as a reminder, please press star one if you would like to join the queue.
Our next question comes from Geoffrey Elliott with autonomous.
Okay.
Yeah.
Hello. Good morning. Thank you for taking the question can you help us a little bad.
The net interest income I guess, you've given the guide on net interest margin, but the balance sheet size has clearly been pretty volatile Jerry.
2020 due to the patent then they can do to react to you've up ever. So can you help us either on the net interest income or the size of our interest earning assets, how how 'bout scanner.
So we can get a clearer idea of what you're expecting on that.
Okay.
We were hoping it would have been explaining to basic to basic dynamic could you clarify your question. Please.
Yeah, it's so.
You've given us an outlook on net interest margin.
The the balance sheet size, the interest, earning asset base that you are calculating that all that's being very volatile because of the pandemic because of reactive.
Net room, so I'm trying to get a clearer idea of how you're expecting that sort of old. So we can get.
Net a picture of what you were expecting.
<unk> on net interest income from here I mean, it may be.
Maybe a better way of putting it is how do you expect net interest income to evolve off the for 'twenty base. Once we've adjusted for the one off that you had to Bolivia This quarter.
It doesn't mean this year has been affected.
Hey, I'm going to summarize by.
The reduced interest rates that impacts how to what liquidity and investment.
Income we have a managed to portfolio to increase the day long term income the west coast for what we use in the mix do to react to Eva.
As I mentioned previously this product those are going to to wind down.
And they all look like to who's going to be the change in theme.
The composition of up to the portfolio towards retail in terms of the cost of funds we have already.
To make a significant liability management and the coast guard, notably to be reduced significantly so the proofing going to claim for one.
The relative less weight to that and the higher proportion of.
Retail.
Loans in our in our book.
And for some time day.
Increase in a general interest rate and to markets.
But this is going to to it takes a while.
Okay. Thank you the size of the Booth has to increase the types of the book has grown significantly this year due to I would say three factors.
We have to see what loans.
A significant increase of the policy that we have seen this 15 liquidity and in medium and long term bonds, but it sounds.
Funding increase is not to go into to repeat into 'twenty to 'twenty, one 'twenty 'twenty one.
Understood just to.
Follow up from that in 'twenty to 'twenty you had.
Really huge growth and to pulse, it's up 27% year on year, how how do you think deposit balances are going to resolve in 'twenty one.
They are learning to came down to more historical levels close to the growth for.
To the loans.
The significant increase in the policy be scary in the year 2020 was due to the liquidity provided by way of a fever.
Withdraws from day range from funds. This is one for a couple of one off events in 'twenty to 'twenty. One day train three is going to be similar to the growth of loans.
We probably on a couple of leases due to additional.
The liquidity measures provided by the central bank, but probably noticing magnitude down in 'twenty to 'twenty.
Okay, that's great that that really helps thanks very much.
Yeah.
Yeah.
Thank you. Our next question comes from Andres Soto with Santander Bank.
Okay.
Good morning, and thank you for the presentation.
Maybe I'll follow up on income itself I mean, I would like to based on the guidance I understand that you are expecting mean for to Boston on 'twenty, one to say to be at the same level as your structural or propylene.
They put adjustments in the fourth quarter will be up to close on in 'twenty. So I would like to understanding that it's all from the new origination, but you are seeing especially from the SME portfolio. What are the things that you are seeing it is difficult to to get our rates a bit closer to historical levels, you're going to do with the potential of an accordion effect.
But as it develops.
Okay.
My initial responses that not a day.
The decline in sales understand the difference and they they reported what.
Was feeling more by capacity to pay a neat Crowley on Frankel communities.
Better to Colo that's what's.
Once northern non coding effect.
To the guidance I understand it this is has a different program.
Yes.
Thank you for that.
Exactly I mean, we already have a lot of I agree with Brian.
For that.
Oh, God I P O loans.
In may.
In August September of last year.
Oh, there you are.
Moving on.
New loans.
Let's say normal conditions all day.
Completely understand the data.
Doing.
Longbow away from.
Market basically right on the subsea value.
Given by the Iraqi War.
So for that slope of issue cost debate.
Volume.
For walnut, helping them to follow.
Lot of compensation for right now.
There are some specific signal from the economy.
Uh huh.
It's very hard to.
An example to from so bad.
To that program may.
But when it comes to specific sectors, there's nothing Oh.
Great right, now, but something like that to make coming there.
A couple of months.
Matter of fact, I think to I'm thankful I previously what are you guys mentioned competition.
Another source of pressure to your margins, which specific segments or do you seem to us from gets competitive environment pretty these days.
But there's a lot of competition.
Let me go to put back.
They're from checkpoints or.
Some cost.
Which were backed by gold price to pre COVID-19 levels.
Those have to fit both where it goes.
With regards to competition.
To me mortgages is very competitive well Oh Oh.
Oh for Covid.
Corporate zone.
With new type companies, but they're largely tied to comprehend.
Thanks very much.
Much activity.
Okay or investment worthy sales.
The usual suspects for advisors.
All right.
From a financing facility.
I'm trying to build.
Total amount based on competition when they book corporate from the large case.
Market comment.
Hey, thanks for taking place specifically.
Good day.
The only thing does competition growth all of the segment of the card.
Well talk to her.
Among those to take them.
Perfect. Thank you Gianfranco unto itself.
Yeah.
Thank you. Our next question comes from Alonso Garcia with credit Suisse.
Good morning, everyone and thank you for taking my question I would like to touch base again on the regulatory front I mean, you already provided some color on the interest rate caps.
But could you please share your thoughts from the pension systems and it was for.
I mean quite probably to do you see your fees being approved in Congress.
Does it go to government support to appeal or not.
Tying me I'm also U S piece is what we know right now book there.
Rule on there are these new more or not at all any color would be appreciated. Thank you.
Okay, Hi, this is Tom I'll go to Korea.
And there the question.
It's difficult to answer Theres, a lot of uncertainty do they.
There is a.
A new law that has been.
Hum.
As we speak and there is a proposal from a specific commission a special commission to what's created last year.
That's a specific new regulation is a real transfer.
Transformation of the pension system. However.
It is difficult to say that it has.
I'm a strong support from all.
Parties, there's sales discussions and in Congress about.
About that.
And.
The time the timeframe for that is also uncertain some people's sales, it's going to come.
Come with a final decision in the next let's say 30 to 60 days other people talk.
Doug about leaving this to the next.
The next government tender next Congress.
That means that should be discussing about six to eight months from now.
So a lot of uncertainty and it goes through.
M is definitely and it has an impact on on three my I have to pay.
For sure because the model changes.
The funds will be auction to.
In an international auction and we tend to participate but it's not for.
For sure that everything will stay.
And as it is to date I mean, its true its not going to stay as it is today. So a lot of uncertainty we should have more color.
Color on debt in the next.
And the next call for sure. Thank you.
Thank you.
And lastly on the expense side could you. Please disclose regarding the allocation of fixed capex needs. Your debt related to your transformation is try to I mean, my subsidiary or which specific initiatives you're currently working on.
Okay.
Yeah.
Yes.
All the companies.
For the core R&D.
Going transformational growth relative to terms.
For the BCP share is either due to the relative size.
On day.
The evolution of the company I would say in terms of transformation.
They.
Oh lovely.
Two thirds are Olympics.
Oh, thanks, a little bit more than one third is capex.
The increase from 'twenty to 'twenty to 'twenty 'twenty, one is going to be significant probably more than 2030 per cent.
And out of these total DCP is going to be more down 50% of the total debt.
They they tie corporation.
But I would like to emphasize that all the companies.
Subject to the reality of each one.
And they're going to seek Newsweek unprocessed donor to investment in digital transformation.
Due to the specific needs of the specific segment that day to day Sir.
Understood. Thank you very much.
Thank you. Our next question comes from P. A debt Alessandra with credit Corp capital.
Hi, Thank you very much for a last question I had a question regarding the other expenses.
In the MD&A U S.
You mentioned all the salary ease the administrative expenses that are the expenses that interest significant point up to increase in total expenses year over year, it's not detail. If you could give us a bit more view regarding the other expenses within 2020.
<unk> and its development for 'twenty one to one.
I would be really bad guys yeah.
Yes, usually other expenses we record.
Right.
It's a special taxes not income taxes that can be contributions to surrounding institutions are operational.
Please it related expenses in midyear 'twenty to 'twenty, we have significant.
The operating expenses relating to two items one less donations.
<unk> made a 100 medium solis donation at the beginning of the crisis Bancorp also made a significant donation credit equal to capital.
He calls for this is a significant expense this year that is not recurring expense of course.
We also recorded in this item.
Expenses related to the management, though due to cause expenses to manage the COVID-19, we are talking about the specific that equation to premises.
O N E.
Messrs <unk>.
Protective equipment.
For the assumed book these two items cost being significant in each year.
And we for wholesale house on that relative uptick.
In April at the end of the year, but nothing to the magnitude that Florida to.
A concept that you mentioned.
Okay. So we could expect these to expenses, sorry, I would like to move to to clarify something down the road for 'twenty and 'twenty. One we are still is baked doing fewer in.
The COVID-19 related expenses, probably for the first half year Park with a year.
To get to the locked downtown all the security makes it doesn't even have to pay to protect.
Oh what.
Okay.
Right.
Thank you.
Hearing no follow up on net to our next question.
From Carlos Gomez with HSBC.
Hello, Good morning.
Okay.
Hello, Good morning.
My question refers to the lessons that to have learned from the last year.
Is that basically big choke for most companies. They say that this has to be nationalization of the change.
But have you seen anything that makes you think about a structural change at the company in the future to like perhaps to be more you mean children to have lessened insurance more abroad of less abroad.
As they start to eat changed in any way I said it was hard to Oh.
The pandemic and to here to present and.
But can you also tell us why your tax rate was so low this quarter. Thank you.
Okay.
Okay.
Tangles of downgrades in Atlanta as a strategy.
Okay, Okay, perfect relating to the tax rate.
We calculated tax rate based on local accounting figures and in local accounting figures, we have a I would say tools mixing unpopular one. He said we have increased for the year the size of the investment portfolio and we have for them.
Toxic same securities and particularly.
In the in the last quarter. We have also recorded significant provisions in local accounting.
So a the combining it faithful to these two factors has led to a drop.
In income.
Income tax.
Our cash.
Carlos.
Yeah to answer the second part of your question actually that was my last closing comments in my remarks at the end.
We have not modified our strategies.
But undoubtedly we have accelerated several new initiatives flow through world mentioned because of the accelerated due to digital channels.
So what this means is that we will probably deteriorate or short term efficiency ratios.
This is the smart thing to do.
For long term results and competitiveness, we have had very extensive review of all of our strategies with all of our business units.
And that's going to have dramatically changed.
To that has been laid off a half.
And then and this has just accelerated.
And I think that the lesson.
As a debt that I personally think from from this is that why do you feel that you're going to the right path.
Maybe book faster.
But that's my own personal loans.
Personal thoughts gross.
Thank you very much.
Thank you. Our next question comes from Jason <unk> with Scotiabank.
Hi, Hum as our cash.
Second question and maybe a follow up.
What Carlos was asking on.
Net earnings mix at credit Corp, considering its banking insurance pension net investment banking and wealth management businesses.
In General terms do you see a change.
In the earnings growth rate from the different segments that would alter your view of the composition of credit Corp's earnings going forward.
Okay. Let me take this one Jason it was all to.
We have several dynamics.
I think that well.
Zinc credit Corp for UCP.
We'll obviously continue to be by far the largest contributor and we still have a lot of room to grow in Peru to BCP and suddenly.
Of course, this is a year to read.
Sales to the profitability that to grow a lot, but we think that due to the competing for Ya.
Low levels for penetration.
The Peruvian population to the banking system, there continues to be a lot of.
Opportunities there, so where we grew more than vehicle by vehicle I would say that the segment in which we will grow will be in there I said knees and then the lower to the consumers on the configured to be opportunities both from a gross sexual side, considering our platforms as well as on the lending side.
As Scott will continue to be good.
<unk> in which we will grow more in Peru for obvious reasons because of the upper end of the consumer.
And all the talk to corporates and middle market companies are fully back.
To complement that we have wealth management, we continue to have a.
Nice opportunities, both in Peru, and Chile, and in Colombia, and we have a newspaper that we have for micro financing Columbia, which we will slowly prior to to see if we can capture the growth.
But in summary.
Where will the credit card growth.
<unk> segment for the population, which are consumers and there's a nice particularly in Peru.
And how does insurance fit into that.
That outlook Altair.
Got it it's quite nice three a week.
Developing every day and we get better at it.
<unk> product for prices for both segments of the population.
We've been very successful with our oncological insurance and we think that there are more.
Okay.
The ecological insurance that we can take to those segments of the population of course recognize that at insurance, there's still a lot more room for growth.
But it's much more difficult than in banking.
In general for insurance in Peru continues to be very low even.
Some of the higher end level, so for the consumer population.
So insurance complements quite nicely there.
And this pension is the outlook for pension growth with the changes I mean with potential changes or reforms is that something you think.
Could grow slower and in the new context or faster than we've been seeing the growth.
I think that one of the potential the potential outcome from the industry will be there to change dramatically. So I would expect ventures to pick up very very small contributor to credit B Corp going forward.
I really appreciate your views. Thank you all very much.
Youre welcome.
Thank you I would now like to turn the conference back to Mr. Walter Bayly, Chief Executive Officer for closing remarks.
Thank you.
We are.
We are very pleased to have less 20 tend to behind.
You would have thought it was a very remarkable year.
With Peru, having been impacted by the most severe recession in our modern history.
We were always very confident with the strength of our balance sheet.
We felt it was more than enough to take us to this severe downturn.
This position of strength led us to try to the extent possible bad with the assistance of our risk book to fully acknowledged and recognized in our results we expected credit losses in the most vulnerable portion so far for the fourth.
This with the idea to leave the losses mainframe behind.
Focus managements attention with the task of rebuilding our profitability, while accelerating our delivery of our products via digital channels.
Due to our conservative nature, our conservative nature, we took the precaution of issuing $500 million in five year bonds at the holding company cash.
<unk>, which is still sitting on our books.
We believe that this low rate environment allowed us at a minimal negative carry to have a second level of insurance, which has not been utilized.
Looking for work.
There continues to be to elements of our set to uncertainty.
It was mainly from the second wave of completion, which is currently taking place we believe debt as a country. We have learned lessons from the first place.
But given that the vaccines are.
Already are rising.
Expect the second wave to be less severe.
But definitely we will know for certain in the next 30 to 60 days.
Second element of our certainty is related to the political situation in elections, but for.
Political scenario continues to be a source of uncertainty.
But we will try to navigate those waters, we have had in the past.
For the business front. This is the year as I mentioned to rebuild our profitability. This.
This will be able to that should happen throughout this year and we should start to see the results quarter after quarter.
Until reaching as I've mentioned before the last quarter to results and returns still below but close to sustainable levels.
We have not modified our strategy, but I'm talking to people, we have accelerated several initiatives, which probably will deteriorate somewhat short term efficiency ratio, but we are confident that these decisions are the smartphones.
First for long term results and competitiveness.
Before we finish this call I would like to announce that we will be publishing our annual sustainability report prior to the end of the first quarter for us.
The first half of last year to fill.
For the strengthening our long term performance and capital markets, we operate in.
We launched the project to develop a strategy aimed at integrating sustainability more deeply consistently indoor business strategies as well as in all day.
To the activities.
Work for five months with a dedicated commitment of more than 30 theaters across six of our largest operating companies to identify sustainability related risks and opportunities that could create strategic or financial volume of growth.
While generating a positive impact.
For each of our businesses.
As a result, we redefined our vision purpose and values, which are now better aligned with our current role in society and businesses and established our 'twenty to 'twenty and 'twenty to 'twenty five commitment to sustainability product.
We could lose this plan to you in or we will introduce this plan to you at our upcoming for plaintiffs sustainability report.
We look forward to for you on your products and further expanding on our program in the future.
You everyone for your attention on today's call as always the team is available to meet and talk with you more about our performance operating environments and strictly.
Thank you all very much.
Thank you ladies and gentlemen. This concludes today's presentation you may now disconnect.
[music].