Q1 2021 Credicorp Ltd Earnings Call
Ladies and gentlemen, good morning, everyone.
I would like to welcome all of you to credit card Ltd first quarter 2021 conference call. We don't 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 at that time instructions will be given as to the procedure to follow if you would like to ask a question with.
<unk> today is Mr. Walter Bayly, Chief Executive Officer, Mr. Alvaro Correa, Deputy Chief Executive Officer.
Mr. Gianfranco Ferrari Deputy Chief Executive Officer, Mr. Reynaldo, Llosa, Chief Risk Officer, Mr. Cecil Rios, Chief Financial Officer, and Mr. Milloy gross to go in US Investor Relations Officer and now it is my pleasure to turn the conference over to your credit course, Chief Financial Officer, Mr. Cesar Rios, Mr. Rios, you may begin sir.
Thank you.
Martin on welcome to critical to Sculpsure in school, our revenue for the third quarter book to tell us on 'twenty one.
I Hope you are on your families are healthy.
As you know the cooling sanitary situations to us.
Well I say political landscape keep plateaus.
Got it.
How do you see to Asia in Peru on Metropolitan Lima, as not the growth in recent months reflect.
Reflected in that that will make this more.
So back to see nation rollout, which you began your favorite Ravi has progressed to a slower pace.
All the countries in the region Nonetheless, the government has announced.
E on acceleration when they say from Pearl in the coming months in these challenging comp we continued to.
The wellbeing of Crazy called simple use force as we focus on ensuring operating continuing to I know from financial solutions to clients and employees alike.
Our ultimate goal is to serve society as we continue to create button on.
The political Levine.
They don't have to you on K Cup, when you're moving will face off in the second round of presidential elections on June six day.
The latest polls show candidates Pedro Castillo and delete Mr to cut steel from.
On the political party Libre has proposed a number of nations.
According to the proxies Boardman plan eating tends to shift to weight the cooling market, where we didn't take on how big molded.
One that you're going to tie a so-called opened already calling on with markets.
This more than the state we play much more active role businesses.
This plan also includes holding a constitution are simply to write a new constitutional nationalizing, so call it strategic segments.
Mrs put you more equal interest fables maintained on economic model that supports national on flooring investments on Apple case.
Restricted on sequel W wall for the state and the cost me. He's pulled your movie also believes that the cooling constitution will remain in effect.
To predict the Alco to book these election polls can sheet considerably in the Peruvian public which is marked by high leg on this whole border decision.
In your scenario to be doing say to the branch, we need to generate from sensors to be able to implement changes to rethink elected to Congress is highly fragmented on goalposts painful you think are spot on.
Random on elements of any court of the racing conflicts in Colombia.
Decorative branch recently withdraw the beef pork actually form that is submitted to Congress, which represents the 15 book, it's kind of 18 to 19, one on new beef will be formulated cheaply elections will be held on may 15th and 16th primarily to determine.
Members of the constitutional law.
Next slide please.
Regarding to the economy economic activity recovery continued in the first quarter to tell us on 'twenty, one despite localized locked up.
Our estimates suggest that GDP cool a wrong corporate sales year over year.
First quarter to telephone to any one this is the first positive to reduce the high score card.
In seasonally adjusted terms GDP in the first quarter of 2021 expense day already close to the pre pandemic levels.
Demand also continues to recover in the first quarter 'twenty, one and to Pos, albeit slightly pre pandemic levels.
As to political uncertainty silver into real interest rate cost increase primarily for medium and long term maturities.
ILUVIEN, so hustle to depreciate it to heat a record cold day.
Global economy continues to improve but interest rates on FX levels remain volatile.
Commodity prices continue to be able to bolt on the price of COVID-19, which is relevant for people to reach a peak or formed or less on 40 twist sales almost a 10 year peak.
We used to pay for it.
GDP to rebound to 9% in 2021 on their opinion by high corporate prices cost when it didn't seek monetary piece.
Policy snakes to slide please.
No.
I will comment on the evolution of the financial thing under regulatory body.
According to data from the Central Bank loan growth Mark stood at 94 point per se yield they're geared at a constant exchange rate driven by the self reactive alone. If we exclude the effects of reactive on loans total loans to decline seven per se, but yet.
Because I think economic policy and therefore, the total environment I would like to highlight that although it sure.
Gross have who are new private angel funds withdrawal under this plan Bob cooling contributors from non contributor will be able to withdraw up to 17 six to 17 600 soldiers. It is important to note that the munis to find out hustle announced it will propose thinking below to the constitutional court.
Is that the new regulations Congress also approved the withdraw 100% of C. P. S accounts until December 2021.
Ravi Cpus to policies totaled 21.8 billion solid system wide.
Moreover, the government approvals rescheduling of reactive alone or a total.
<unk> 19, 5 billion installed base, along with the pylons to point 1 billion on Salt ball until July two to the rescheduling process includes a new grace periods.
To 12 months.
The executive branch has announced it will bring to la <unk>.
To risk rate caps on to your restrictions before the constitutional court.
David on private institutions per cent legal actions that may also be taking before the constitutional court.
The restrictions hustle really being implemented while recent guidance from the Central Bank has based on interest rate cap of 83.4 per cent for a small consumer might book business loans from May to October 21.
We will continue to closely monitor these developments to evaluate eight impact on critical operations.
Next slide please.
Now I will comment on credit cost performance in the first quarter of controls on 'twenty one.
The cost net income totaled 661 million solid this quarter, which represents an increase of 215, 8% year over year on reflects the pipe that's in 'twenty to 'twenty, we sit to Hiseq music on provisions to mitigate the impact of the front desk.
Despite an adverse environment due to COVID-19, we continue to recall there are posted a return on equity of pain points six per cent of these quarters.
The upward trend in recent quarters has been driven mainly by a decreasing Felicia and reflects the favorable evolution is quality and now he can see.
This was offset by a decrease in the net interest margin and on increasing the life insurance claims.
Our quarter over quarter evolution, I would like to highlight the loan portfolio remain flat in terms of quarter end balances our schools posted in consumer loans mortgages basketball was offset by contractions in corporate banking and credit cost.
Net interest income grew to 6%.
This result includes 18 8 million solid in expenses related to a liability management operation at BCP stand alone, which will generate savings moving forward.
With lower cost funding with these with salt needs to remain flat at <unk> 73 per cent.
Provision expenses sales due to the ongoing improvement in volume paint and behavior.
Which led to a cost of waste or 163% and on the structural cost of risk book, 192% to sport.
Within non financial income fee income contracted four nine per se, which was mainly attributable to a decrease in transactions due to seasonality on a localized lockdown.
The net gain on Securities also posted a decrease of fixed income securities from ASB preparatory portfolio reduced to that drop in value in a context of higher interest rates.
Insurance on the rights on Brazil, whereas if they were really impacted by a considerable increase in COVID-19 related claims and in Q, but not reported provisions in the life business expenses remain under control.
Finally, our balance sheet remains strong with ample liquidity.
And adequate capital to wage Nixon.
Next slide.
In terms of the performance of our lifestyle business each of our subsidiaries eating in a different stage of the recovery in.
In terms of the subsidiaries I would like to.
I liked BCP stand alone drove recovery without illness contribution saving 125 million soldiers, which represented an 18, 4% return on it.
I mean bank cost recoveries as sluggish with an earnings contribution of 14 million on solid.
On a 2.7% return on equity of <unk> business was the most impacted by the Etame this quarter on reduced to 96 million solid from losses in.
Investment banking on what's my much mentioned term reported on earnings contribution was 37 million, which was close to pre pandemic levels will now explain the key dynamic niche.
Our lines of business this quarter, which led to mix with bolt on.
We will be reviewing D. P. I work closely day late conceit consolidated performance lightweight line.
Next slide.
Yeah.
Going into new virtual bank.
This line of business drives that recovery this quarter.
The reduced to read the most difficult quarter Indians history in the second quarter of 2020, BCP stand alone remain on track to earnings recovery posting on earnings contribution to credit Corp book 725 million solely on it.
Return on equity of $18 four per say in this quarter.
Net interest income decreased.
Pinpoint for per Se yoga to yet, which was dreaming by a decreasing market interest rate a contractual English truck for a long on the presence of Goldman Sachs.
These impacts were partially offset by growth in low cost deposits actions to take advantage of lower rates from liability management may start to ease and the increase of the investment portfolio.
<unk> expenses decreased 65 point.
Five per se in year over year. After the majority of Grace periods expire on clients reduce their improvements in payment behavior.
This context cost of risk was one point around 7% on a structural cost of risk was 162%.
Income increased $6 two per saying year over year, given that the first quarter last year was impacted by T assumptions on a quarter over quarter basis, whoever fee income fell somewhat due to a decrease in transactional activity on my localized lockdowns and the initial impact on golar mandated fees.
Restrictions.
<unk> gains from securities increased $73 million year over year after posting losses in the first quarter of 2020 due to a general decline in capital markets in the context of the first wave of COVID-19.
On a quarter with of course to issues with salt were mainly driven by sovereign bond sales in the banking book portfolio.
Finally operating expenses remain under control this reflation normalization to the level of variable compensation and the impact of all the cost controls.
The Bolivia the business was to positive earnings contribution given that the last quarter of hotels on 'twenty was impacted by new government regulations on <unk>.
Program launch next slide please.
Microfinance Bank.
And cost recoveries, taking long after resuming growth.
In the second half of last year, the bank reduced to 14 million solids narrow net contribution this quarter.
<unk> cost clients want primary to micro businesses felt the impact of lockdown measures more than a lot of European to clients at BCP non.
Liz me bankers progress in implementing our hybrid business model cost, partially offset these effects also resold or nation decelerate in the loan portfolio growth.
0.5 per cent quarter over quarter, there were new needs for grid facilities as grace periods expire on delinquency increase.
Yeah.
Net interest income contracted year over year.
This reflected the ethane of lowered interest rate and the fact that through 2020.
We target to lower risk clients.
So on increasing the average ticket.
On a rig Houston, a decreasing yields. It also includes the net effect on interest reserve.
The Rip program non reprogramming longtime on amortization will be on impairment.
One zero interest rate loans made last year.
Simply the average ticket trend is moving in the opposite duration as the average ticket decrease it and origination yields increase these trends coupled with a decrease in the cost of funds led to net interest income to grow four four per same quarter per quarter.
So at least on expenses increased 17, 6% quarter over quarter.
Which was driven primarily by a deterioration on portfolio quality and by alignment with growth in coordination as competitors delinquency increased non card national legal contracted 2% quarter over quarter, even that last quarter, we recognized extraordinary 90 feet.
Oh, great to life insurance commissions related to the programming loss for the full year 2019.
Operating expense level Evanko for solar reflect the positive impact on a gradual implementation of the <unk>.
Hybrid distribution model Columbia Melancon posted positive results for the first time since the acquisition of on copper pillar in 2019, low moving in Asia equal weighted a pre pandemic levels on commercial productivity has been improving Additionally, overdue loans improved from.
Five per cent to $4 five per saying quarter over quarter.
Next slide please.
Regarding insurance on bench.
Illegal slight business generated stable earnings in the first half growth.
'twenty to 'twenty.
It began to reflect the weight of day link.
In the third quarter of last year in the first quarter of 2021 simple way from COVID-19, reaped through the country to say, they're really impacting the life piece on sequentially.
Difficult posted a negative earnings contribution of 95.5 million solid this quarter driven by 260 million on solid claims on.
<unk> on our search for COVID-19 year over year on a quarter over quarter. The evolution of earnings was driven by an increasing life claims and I'd be on our provision, which was partially offset by a decrease in claims and the appropriate GAAP cash flow business due to mobility restrictions and an increasing need to.
Income from the medical service business due to higher day.
Regarding the pension business.
Greenhouse offense on their management expanded year over year, reflecting the recovery of capital markets offset by deposit withdrawals 072 billion solids in 'twenty to 'twenty and to 5 billion solely in 2021 due to golar them on Monday, just proceeding on a per.
Quarter over quarter basis assets under management contracted three 2%.
He contracted pie five per saying year over year due to a decreasing on affiliate contribution but showed an improvement quarter over quarter due to growth in average salaries I mean, the number of artists on treatment.
Next slide please.
Regarding our investment banking and wealth management businesses assets under management and income growth year over year, given that the steepest decline in the capital market was seen in the first of all instead of to helps them to date.
On a quarter over quarter basis, I would like to highlight.
Total assets under management increased three 3%, mainly driven by net new money in the asset management business day.
New subscriptions was partially offset by the evolution of asset value, which were affected by an increase in interest rates regarding procuring income contribution to contractual was driven by a dotcom and capital markets on corporate finance capital markets to be seen cost security just from the broker tariff portfolio.
It used to it had dropped in value in a context on higher interest rates and corporate finance income was affected by seasonality posting lower level corporate transaction executions.
This was all partially offset by growth in income and wealth My last week, which was primarily associated with higher gains from book Russian investment products I'm familiar with asset management income growth.
By traditional in a turnkey financial as well by the distribution of third party problems on growth in the Treasury book.
Which was affected by devaluation loan Oh broke Italian base.
Next slide please now on.
We'll discuss credit card consolidated performance.
On the asset side credit card interest, earning us at school.
<unk> 6.9 per saying year over year, driven by government program loss on investments.
The structural to portfolio dropped off to wholesale clients has less need for liquidity, which led to an increase in cancellation of short term loans on a quarter over quarter basis, I would like to highlight interest earning assets decreased to 9% driven by the investment portfolio at BCP stand alone this quarter, we increased persistency.
The short term investment portfolio and Manish exposure in the medium term banking book in a context of rising interest rates.
Water on portfolio constructed to appoint three per cent quarter over quarter in average daily balance, which was mainly due to a drop in the wholesale banking as truckload portfolio and to a lesser to spin to prepayments and sunk reactive.
This was partially offset by the exponential pasta in retail banking.
And I believe on corn volume.
The 1.3 per same quarter over quarter to an essential retail banking loan portfolio what to do you mean by mortgage consumer on the SME segment.
This will lose from was partially offset by our cost structure SME business, which was.
High.
Levels of liquidity and in credit card, which reduced to load balance is due to a drop in big ticket purchases on higher cost swings in the risk appetite for consumer.
Mi band can flow portfolio expanded to one 9% normal origination this segment decelerate to the February due to mobility restriction, but growth assume in March.
Next slide please.
Glad to be funding a structure total deposits grew 20.3 per se year over year expansion wants to be win by an increasing demand on saving deposits due to an injection of liquidity to oberman proton facilities on higher savings rates among individuals the aforementioned coupled with lower interest rate and not to.
Liability management led to an improvement in the copy in the funding cost.
Got any funding management this quarter I would like to highlight.
<unk> increased driven by growth low cost deposits in a context of high market liquidity.
P. A standalone executed at noon on new liability management sanction fees exchange to callable subordinated bonds are bonds.
Our 2026 book at Seaport 687, five per cent and on 2020 to say that bond a 6.1.
Five per cent for a new subordinated bonds of $500 million.
$3 25 per cent that matures in 2031, this transaction, which will allow us to capture savings going forward fever related charges from financial expenses or 88 million soldiers in model 2021.
The structural funding cost dropped one point, 35%. This quarter. If we include funding relative to government programs and charges related to liability management operation the total funding cost to.
Great 143 per se the sport.
Next slide please.
The evolution of book paint.
Payment behavior on portfolio quality group in retail banking and the situation that would be buying pool, plus less favorable clients.
Clients in these segments have been more impacted by the second wave of COVID-19 at BCP stand alone retail clients sustained strong payment performance on <unk>.
On payments on long west.
<unk> 95 per cent to much higher volume sales Rep program lungs, Despite known Rip program up to day loans increased this quarter to represent.
76 per cent of used trucks on alongside the high on certain portfolio, which is comprised of rent per on loans on our within Grace periods on those that Todd I'll go to you reduced to five per cent compared to 9% last quarter that'd be bankable on.
Payments from law do you remained at 93 per cent in a context marked by increasing exploration on the Grace period.
To get a quasi analyze and destructive at portfolio figures. We know first non print program up to date loans posted on not warranted.
This quarter to represent 57 per cent till their stroke to relaunch compared to 49 per St. At the end of 'twenty to 'twenty second yoga, new portfolio increased this quarter from 6% to 9% of our structurally laws as clients see links to spine and clients were impacted by Lockdowns fine.
Ali to higher certain portfolio was reduced to 19% of our structural lungs compare to 24% last quarter and this portfolio 10 per se no structural alone, whereas steel with Dean.
Grace period, which will be used by mainly by June 2021.
Regarding portfolio quality ratios that majority of really core to structurally MPL ratios increase this quarter.
Retail banking book of BCP stand alone proof he says truckload of NPL ratio this quarter.
To a decreasing overdue loans in the consumer credit card statements, reflecting a positive payment behavior and increasing write offs on DAU growth also fuel a drop on the wage deterioration on the name for wholesale banking was attributable to specific clients seem to me that market segment in.
In <unk>, the NPL ratio deteriorated this quarter due to higher delinquencies update about large trench.
Grace periods to spikes on client payments to be got to reflect the impact of the lockdown in February as a result credit corpses trucks or NPL increase to.
6.05 per cent finally, the NPL coverage ratio decreased to <unk>.
142, nine per se this quarter, reflecting also saving hundred 60, saving millions soulless on write offs.
Next slide please.
Okay.
Now I will explain.
Also frees dynamics from.
<unk> expenses continue to follow on notable non what trend, which was attributable to on improvement in client payment behavior and antiquing transactional activity at BCP stand alone mainly in retail banking segment on me.
Banco book.
Squeeze this quarter due to two factors an upswing in delinquency up to grace periods, despite external alignment, giving our competitors delinquency levels gross silver sold credit card struck on the allowance for loan losses or the total is structurally long ratio fell this quarter to eight five per cent.
Regarding the evolution of the trucks on the cost of at least quarter over quarter at BCP stand alone.
<unk> reduced it a significant constructional 95 basis points on situated at $1 62 per cent widely Bangkok ratio increased 73 basis points to ctrip.
Fine point 45 per se.
Credit cards to structural cost of waste contract at 72 basis points on situated at one point, 92% finally credit cost total cost of lease contract to 50 basis points quarter over quarter, posting a level of 163% next slide please.
Upgraded core NIM remained flat this quarter at 373%. This was attributable to the fact that increasing net interest income was offset by growth in average interest, earning us naeem includes a negative impact.
Seven basis points from charges related to the liability management transaction at BCP stand alone.
Structurally need Trump 12 basis points this quarter affected by less paper to mixing interest, earning assets on lower or the initial rates of D. C. As planned BCP stand alone finally risk adjusted NIM increased 34 basis points this quarter in line with lower per patients.
BCP Standalone NIM contracted 37 basis points quarter over quarter Halloween the same dynamics seen Alcoa Corp level.
Ankeny increased 17 basis points quarter over quarter, given that the structural non dynamics continued to recover despite the lockdown imposed by the government on interest rates on new loans, increasing line with a drop in the Irish law ticket next slide please.
Non national income expanded $24 seven per saying year over year, driven by nine 3% growth in fee income given that the first quarter of last year was impacted by T. S sections on growth in the net gain on securities EBITDA. The first quarter growth last year reported losses in line with the steepest declines.
And value in the capital markets due to the onset of the pandemic on a quarter over quarter basis, non financial income contracted pinpoint to person, which was driven by a decrease in net income securities have difficult games, what book in the last quarter of 2000 to it. This drop was driven by losses, we used it in fixed income securities to go.
S B brokerage Terri portfolio due to a drop in volume in that context from higher interest rate. These losses were offset by gains on sales of sovereign bonds at BCP Standalone banking book portfolio, a decrease in fee income on BCP. After an extraordinary free square register in the fourth quarter of 2024 reproach.
On loans during the full year 2000 to trade.
Yeah.
Next slide please the income.
Sure on the right time to solar was severely impacted this quarter on posted a loss of six to $165 2 million songs.
Main driver on the first of all what's the life insurance business on.
On a year over year basis, the increase in the loss ratio in the life business white driven by excess mortality.
Related to COVID-19, this was partially offset by growth in net premiums from Cisco five after higher fees were obtained to the new auction for a day mortality with Chicago Rush.
Adjustments were made in the greatest life business in the case of progress on casualty the loss ratio improve after to claim level dropped across businesses due to mobility restrictions.
Material quarter over quarter increase in I b on our provisions from COVID-19, due to two factors mortality was driven by the retired population in the first week on by members of the Columbus to get economically active population in the second wave.
Credit exposure in the second group was consequently Hyatt.
Provisioning in the context on daily has been challenging and initially and book our base estimates even that there is a lack between day week.
Which cases to cure on when they are reported.
Our lending has increased significantly seem to beginning of the crisis on such US we have adopted our I b on our model to reflect the potential impact of increased mortality.
These to show that mortality rates are beginning to decrease on.
I b on our share.
We'll follow that trend.
Next to slides please.
To the core operating expenses remained under control.
The year over year deterioration in credit cost efficiency ratio, which equated to 44% what to do you mean by decreasing income due to lockdowns and charges for BCP Standalone scalability management drops section. Excluding these charges credit cards adjusted efficiency ratio was 43 point or 6%.
Which represent a year over year improvement or 32 basis points expense controls at BCP stand alone Westwood click to primarily and a reduction in variable remuneration expenses Mi band control has made significant progress in implementing a hybrid distribution model, which is more cost efficient.
Next slide please.
In terms of our liquidity do you bring linked to ammonia towards that 30 day liquidity coverage ratio on BCP stand alone on me about.
On tank levels, well above the regulatory minimum Boston solid on your dog's Weber the management decision we use.
Morris Tringle indicate to relying on liquidity coverage ratio of <unk> 30 on 60 days, who says standard all aligned with basically in this context, we have maintained our high quality liquid assets at high levels.
Regarding capital each of our subsidiaries maintained adequate capital levels, which ensures that solvents.
The slight reduction in core equity tier one at BCP stand alone is related.
The reduction of unrealized gains, which in turn is related with increase in going to our interest rate and solids me vanquish core acreage to one decrease this quarter given that the local accounts in there.
Capital increase of 400 million sold as reported last year it was canceled out by it.
The faithful constituting a similar amount of voluntary provision on so that support these books. It was reduced in the first quarter due to tell us on 'twenty one.
Next slide please.
We have our bonds on our digital journey.
A slow rate in digital initiative about the business on critical clearance of BCP stand alone digital value fueled growth. The strength has accelerated over the last year, we continue to be key going forward.
Utilization has grown on a physical were almost 64 per cent of his clients are now able to soak Sir for the different types of transactions Acme bank on the hygiene molding has boosted the productivity of lung officer on group efficiency.
Our credit card lately, we are in the process of building an ecosystem to pockets on the needs of SME clients. We aim to provide these businesses with a consistent on integrated offer to our platform with unique user experience to standard and heightened activity. This will enable us to process that.
Transaction sufficient.
Our goal is to innovate to provide clients with solutions to the payload on growth increased customer loyalty and generate and you're supposed to smoking.
Next slide please.
March credit cost publish it towards sustainability to report.
Holding level.
We detailed on Pizza 2020, 2025 sustainability program.
As part of the exercise the company developed a new purpose diesel on value you should know guy to facial features tried to link on decision.
Additionally, credit card has defined two pillars oriented to sustain long term value creation and alignment we beat.
The United Nations sustainable development goals create a more sustainable and inclusive economy improves to the financial health of citizens.
Finally, empower our people to twice.
We bite on what investor community to navigate through our sustainability report, where you will be able to find the dates of our ESG businesses thrive.
Our analysis of risk and opportunities our governance structure on our commitment to the future.
Finally as always.
We are glad to receive any feedback you may have on.
On our sustainability approach, we believe it will contribute to 12 bonds poorly in D. Jordan next slide.
Regarding our 2021 guidance.
To date, we maintain our expectation for GDP growth between 8% to 10% for this year loan portfolio dynamic cost being weak.
As such we expect loan growth to be in Delaware into guidance net interest margin was sluggish in the first quarter looks to Tulsa on 'twenty, one the recovery of the syndicated to.
Here will depend on the structural on dynamics on the other.
Cost of risk has improved faster than expected on east <unk>.
Conditions hold we expect this trend to continue the efficiency ratio posted in the first quarter to tell us on 'twenty. One is under control on what our ability to maintain the efficiency ratio within guidance will depend on ink on dynamics.
All in all we might tangle or with Tony on average.
Equity guidance then on all the factors that May impact. However was falls this year that I would like to mention per rig.
Regarding the new law that states interest rate caps on with streaks on piece, while we estimate that these we have a limited impact on credit Corp. Your on net where we are concerned about the negative impact on this measure so on financial inclusion on pivotal cycling regarding life insurance claims IV on <unk>.
Moving forward, we have fine tuned our model to better estimate potential losses, if the mortality COVID-19 started to east.
In Peru, we expect these IV on our provisions to reach the maximum level in the second quarter of this year finally, as we communicate to the market previously we have postponed our decision on DVD didn't payments until our search engines on the local it seems on display.
With these comments I would like to get to the truth.
To Walter Bayly, who like to add some remarks before starting the Q&A session.
Thank you.
Good morning to all of them.
To summarize results.
Fourth quarter pulp on pulp.
I'll talk on an open Q&A portion of our call.
Deliver its full force.
On eight 4% on her life.
Yeah.
We're still not seeing growth loan book.
No.
And loan growth.
Blogish lots of growth.
With strong results.
Good, but lower cost of course.
Uncle spot to recovering well.
But like a lot on vessels.
Loan origination.
This equation will save lives.
Comfort zone.
Powerful and still deliver high single digit what's wrong with you.
Sure.
Well, it's difficult to results or suburban impactful part of the second wave of COVID-19.
COVID-19 related deaths.
This was exacerbated it changes from Dublin for college and utilize Aqua.
How close to core.
Reported claims.
We should see the tail end of the second one the second quarter.
But nevertheless, that's it from there.
We'll go to that.
Indicates that the full from a weighted.
It's already to climate.
The revised from from what I've seen.
Who on principle.
On our claims.
A third way not to move out.
Oh from Ford.
So vertically to be less.
The vaccination cost, which is already underway with a book.
Slipped from 5% of the population.
Simple.
But the volume with FERC.
Not related to them before.
Sure.
Around legislation on politics.
Sure Paul.
So two parts.
Legislation around equal to rates, but if it's lower.
From a political pulled back from.
All subjects will be more focus from us.
Sure.
This legislation is more relevant.
Although loan origination sales force to other segments.
It could even be marks on the more profitable.
Income level Microfinance loans are not the most profitable, but our core book.
The submission on financial income.
This important legislation.
But there's an article on Super swap it will have on that.
You got to pull back.
Good.
Although from Solutia worth mentioning we thought I think sugar free from them.
The private pension system.
Yes.
So from Fox.
One 4 billion on Sundays or four cents on the managed.
But of course, the license to routes Frankfurt, it's Rob the upcoming second lump sum elections.
Yeah, Yeah with important appointments on the population.
Got it.
The results were.
Well, we will have a clearer picture of election day comes from.
It is very burdensome with one of the public to public statements regarding its pockets from pension and shutdown on alumina.
Institutions such vehicles from somebody.
So to more importantly.
Most of our Democratic system.
Furthermore, it I'll leave it to program mentioned with taking over oil gas volume.
From all of a checklist of things will go back to the site.
Good day.
The boss.
Over countries very backup to consult on production levels below book.
Guttman overall from on the well.
Sure.
Members of Congress already to be lessened.
And we will have a very fragmented Congress.
Whoever becomes to person to have a heartburn back to.
Legislation.
Okay.
The strength goblins within the boundaries of the block of checks and balances from Hudson City.
Having said that.
This political and economic volatility is extremely bad.
When it comes on board.
One to one was struggling to recover from the worst phenomena.
Sales quite since to the system.
Bruce population pretty much.
On the back by the council of economic crisis on Cogs.
We will be able to compete with on that.
On the phosphate grades the work flow.
When successful.
Paul.
Moving to Florida.
Right.
When they talk to their smart government.
You are very socially.
Thank you.
Thank you, Sir ladies and gentlemen, if you would like to ask a question. Please signal by pressing the star on one on your telephone keypad. If you are using a speaker phone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment again press star one to ask a question, we'll pause for just a moment to to allow everyone the opportunity for <unk>.
We also ask that you. Please only ask one question at a time. After each question has been addressed by our speakers you will then be allowed to ask as many follow ups as needed but again. Please only ask one question at a time. Thank you.
Our first question comes from Mr. Guffey, Lando with Bank of America.
Hi, Good morning, Walter handsets are thanks for your presentation.
I have on a couple of questions. So I went on was the first wanted to I will let you to answer and then I won't dwell on my second question. So the first one is on the political outlook just wanted to know your thoughts on what could be the reason for the financial sector. Yes cost is elected president.
Yes.
It is very unclear on that.
That's what.
And it's nice to be paths revolving.
The financial sector.
Nothing specific.
The novel program.
So look as we can from them.
Okay Perfect and then my second question needs to go on your cost to rent, which came at one 6%. So you know what your guidance had 1.8% to 30%.
Do you think that now the cost of risk.
More in the low end of your guidance.
Okay.
Hello, and I felt because of our non Doe work.
On the performance from the portfolio, Great General has been quite or quite good right on a respected by the end of last year.
So in your own report card.
Perfect Alright.
With respect to the performance continues to ease.
Good friends on the loan slightly above our guidance.
Perfect. Thank you so much.
Okay.
Thank you. Our next question comes from Brian <unk> with Citi.
Yeah.
I wanted to.
Okay.
Watson.
Turning to guidance you mentioned.
It wont be Nathan to Green.
So.
Hi.
And then.
Paul.
Interest expense.
You didn't work.
Mhm quarter themselves.
Thank you Bill.
Yeah.
I couldn't hear very clearly.
Yeah, Brian in terms of a couple of points, we haven't changed from guidance.
There are still some I'm sorry to beat on that.
On the future.
There's a.
Why.
That's an important insights on the portfolio, which is still on on reprogramming facilities without payments. So we haven't changed that guidance.
At this point, having said that as I mentioned before we are positive on on the trend and on a per.
Most more segments of our market.
So we probably we are expecting to be on so I mentioned that in Delaware and sorry to all of our guidance for the next quarters.
Yes.
Right. Yeah, I think you made an additional question, but I couldn't hear you clearly.
Okay.
Returning to growth.
We still have a clue.
So if I think about.
On Fulton Street.
Welcome to me.
If I hear you understand well are we think are our expenses are on their under control and what we saw during the.
The last year was a reduction on variable compensation, but able to compensation now he's going to be adjusted.
More in line with the colon was sold on to normalized levels on the same time, we are enforcing a number of initiatives to.
To control older older expenses and increase efficiency, particularly for example in Gabon income so.
In terms of cost we think that we are going to be very much in control.
The combined ratio to the cost to income ratio is going to be a more affected by the trends of income.
That as we used to date to during the day. The initial remarks on somewhat challenged in terms of margins.
Thank you.
Thank you. Our next question comes from Tiago with U P. S.
Yeah.
Yeah, Hi, guys. Thanks for the opportunity I had one question on both on the Bancorp.
Maybe I'm going to used to have in a row of.
Close to to Daniel or even though both 'twenty and before COVID-19 do you see this level again, oh sitting on more normal proven a box on Io or are there are any maine or any relevant change to market that should prevent data read through to to return to this 20% level.
Yes.
Thank you for your question.
Oh, Thank you Walter.
Yes.
We've had from huh.
Income from Bankole.
Banco book.
On the return on cost return on equity next year this year.
As I mentioned in my comments seems to have.
Probably be comfortable on department.
High single digits.
Hum.
On slide four.
On the profit to vote for proposal on the Bancorp are soft.
Soft from the lock that.
The ratio of our thoughtful performed it was about four months. So a couple of months, we brought in a sluggish loan origination.
Bob's really shrunk the book.
On the Central Ward.
So we would think we can pull back on.
Once all of them.
She gets normalized to ourself of all sales.
Sure.
We are also making a lot of efficiencies on the hybrid model, which is not to.
It's dependent on the sales person so short.
Sure.
He got from before.
If you talk to a firm.
Not this year next year.
Perfect politically.
Thank you. Our next question comes from Jason <unk> with Scotiabank.
Yes, Hi, Hello.
Hello, everyone.
My question is is there a general question about.
The current context of the uncertainty that you mentioned it can be given.
Political scenario.
How and you've dealt with this kind of political uncertainty and in the past how should we think about what pretty corp can do to prepare now.
Just with the uncertainty are there are there you know actions to be taken in terms of.
Barring a position in U S. Dollar positions are there things you're doing now to prepare for a lack market friendly environment.
But to do that.
One.
Hi can you hear me.
Yes could you hear me.
Yeah.
Yes.
Are you there.
Yes.
Yes.
We are we are repairing I will say in two different two different fronts one in.
In the short term, we are managing the day it takes possession and the sensibility on our books to the volatility of interest rates and in part on that we are analyzing.
How we can.
Navigate.
Different in your scenario, but I would like to emphasize the experience opening institution and the management team in general dealing with uncertainty on complicated situations to all the history of the company, we have a challenging situations before.
And tries to increasing day the capabilities to do you see these kind of times so.
With <unk>, we are preparing.
In the short turns on.
Okay sure.
We in general.
Things that we have the capabilities to adopt and.
The main uncertainty dull day World is still early to say what to specific that impact day.
It could have but they will rely on these strengths to companies on the.
Yeah.
Let me add something to what FERC I've just mentioned.
Apart from the very obvious.
Grief from liquidity.
Maybe from ethical synchrony.
Attitude or net.
Net exposure to interest rates.
We are long from whom we are having to push.
Sure.
Uh huh.
And Oh.
Good luck.
We did that was so margaret to who can.
Articulate, but more important we will we have all sorts of navigators the basketball.
It's difficult.
Patients and we think we can continue to produce hole, but we have a force to something obvious gross liquidity from a technical solution.
On the limits of what is reasonable.
Thank you very much I have seen them credit Corp, really manage some challenging situations so I understand that.
Is there anything that's different this time than what we experienced in the past in the room in the last 45 years.
Oh no no.
Uh huh.
One one restaurant per bottle on that electric.
We went to Lloyds similar situation.
And.
And just wanted to know.
Thank you very much to the comments.
Ratchet patients on the results from this tough environment.
Yeah.
Thank you Bruce.
Thank you. Our next question comes from Alonso Garcia with credit Suisse.
Hi, Good morning, everyone and thank you for taking my question I wanted to touch base on the interest rate caps I mean to the Central Bank Korea announced I live alone 83, 4%, which was actually much higher than we had expected on much higher income approach to it caps in Colombia, and Chile, So certainly oh.
From a more benign.
Our outlook for pretty Corp, based on these rate caps, but could you. Please share your views on on the potential impact or the cost, but there's a percentage on your portfolio that would likely be impacted in case. The rate cap is you need to set at $83 four per cent and also if you could discuss the timing of the potential.
Timing for implementation of these Red Cup. Thank you.
Yeah. This is John per article, let me take to.
The question good morning to everyone.
I tend to disagree with your comment on being a benign rate you'll have to wait.
The level of formality.
The.
Economy, and frugal therefore to be.
Both the.
Cost assessment, though.
Oh very lucky to distributional costs are very high in our market.
Major impact is going to be in technical financial and commercial.
From from study start to say that over a million.
Currently probably nationally.
Good.
But on a alone would be excluded in the upcoming months production, that's actually the major impact regarding the BCP.
There are both basically on your article Unfortunately that the.
Small ticket.
Loans are going to be here.
The most.
That's not relevant in terms of size of the portfolio, however, relevant again in <unk>.
And then in our financial and flew from a J.
Bob.
Regarding your question on timing cost.
Actually all.
Monday.
The 11th.
Yes.
Cop.
Docks to be anyway.
Okay.
Thank you Richard and just as a follow up is there a like a legal challenges to the straight GAAP in place or.
Uh huh.
It will be indeed.
To put in place next Monday.
Yeah, Yeah, yeah, Okay, Yeah, Oh, well first of all the expected to powerhouse confirmation on that day.
Please stand up.
Although I have to stay at all.
A proposal a requirement to their cost of goods you I'll preview on in order to go out for asking for what they call the that this.
This growth in constant push on all day.
There are no other.
Colloquial that below that.
Uh huh.
But would you go private.
Our Fisher social competed.
The same requirement on there are from.
Bushels.
There are couple of revenue.
That on Lora type of law legal requirement on the answer to your question is yes.
Yeah.
Thank you.
Yes.
Thank you. Our next question comes from Yuri Fernandes with JP Morgan.
I always think of Porto per tend to Ah I had a question regarding effects deposits, we saw some inquiries on.
Okay.
Yeah.
It looks like Mr. Fernando to refine what's there.
Cut out I'm, just going to go into our next question, Brian So your Orange with Citi.
Okay.
Alright.
I think both of them.
Okay.
Hum.
On June one.
I couldn't see it.
From a lot.
Yeah.
So just wanted to go to work on the dividend.
On the last conference call.
But.
Hum.
One day.
The capital base.
Okay.
Okay.
Sure.
Hum.
Thank you.
Yes.
I'm sorry.
Brian I forgot to Super question.
It wasn't related to COVID-19.
The thing that's I think was the question.
Well.
Topical thing to have.
Okay.
The year to hold the uncertainties around the whole situation on the latest information.
Our annualized dividend.
Dividend income.
I picked up with a question on sorry.
It's not very clear.
We had a quarter to quarter.
Thank you.
Thank you. Our next question comes from Alonso Aramburu with BTG Pactual.
Yeah.
Yeah, Hi, good morning. Thank you. Thank you to Nicole I wanted to follow up on the interest rate copper.
<unk> is supposed to want to quantify to impact the fee income from his flow and do you know to challenges is a constitutional challenges presented.
To attract these fees also impact that day.
The fee income or the constitutional attorneys on before the interest rate card.
Hello.
Our growth towards both a hardware.
Actually for both.
Oh, Okay from a forget about D C D day.
My hire.
On the fee side, rather than on or the interest rate.
I.
Book, How would you expect to your of up to bear on.
So sorry, if you have from from vehicle there.
Oh, Hey, good day.
The impact in interest rate is actually very modest.
Impacting the number of clients significantly edge on Franco mentioned before that a the fee income impacts around 4% both the fee base on a yearly basis.
Yeah.
That is 4%.
Yes.
Okay, and then you're annoyed that the challenge will also.
The challenge the constitutionality of the of the fees being imposed or being taken out.
Yes, yes, no that's on the reality of.
Hard to hold their coal.
Flow, allowing for Volvo side on the.
Great Scott.
Okay. Thank you.
Okay.
Thank you. Our next question comes from Andres Soto with Santander.
Good morning, everybody I would like to hear your thoughts regarding margins, obviously credit card. It is facing a low rate environment, but as it meets has probably been a bigger impact on your name to per month recently, given the increase weighted on securities that are supposed to launch in the relative composition. So can you. Please comment on your on.
Moving on long trains and also if you can exclude from that the effect of Oh per active on how your current levels compared to with both before the pandemic.
Yes, I will say that even if you exclude it beyond T that loans. We now are on operating on a lower margin that is the reflection of day low short term interest loans that that take the investment portfolio, but also the short term callable.
Great.
To a price loans that aren't significant parts of the portfolio. So this is impacted and he is going to be impacted as long as interest rates a slow on a slow it is.
Now in terms of mix, we have a us what's explain in the remarks Beasley by two two to two factors in the case of BCP, a lower demand and corporate loans to companies are optimizing the balance sheets on I didn't get on tranche liquid so lower demand in corporate the lumps on.
And in the retail portfolio, we have on impact, particularly in credit cards to Youtube to factors.
One is the big ticket discretionary expenses on a lower level on this is going to be the case until day Lockdown you can place on restricted make sure it's on in place.
On some restrictions on reasonably tight for the consumer segment.
Parts of the portfolio on growing it.
It tends to be pace and in the case of Mi band called Us.
Yeah, Walter mentioned, we have on decreasing.
And volume recovering now and also we are transitioning from lower waste lower margins to a higher <unk>.
Margins with a little bit more waste down the road.
These mix are going to be a b C boil down the road back on.
The pandemic is is still with us.
The mix is going to be affected in the <unk> sector on the craziest times, particularly on them.
But maybe just a quick.
Comment on additional I commented on on what's the differential is over the last I would say 30 days are also the mortgage for.
The mortgage performance in terms of origination slowed down which makes total sense with the political uncertainty.
The last quarter to quarter of last year on maybe the first couple of months of this year or free months of this year were very positive in terms of the mortgage growth. However from as we speak to the state though.
So has slowed quite a bit.
For the last 45 day.
Thank you on on my second question is regarding.
Although may force laws on have been approved from Congress, one regarding new AFC would throw off a significant amount almost $10 billion I called according to some estimates.
And also on the one approving day withdraw from a P. P. S accounts, which I was going to impact sorry to harp on the funding on the funding side, but decided to be you know this negative effect on your on your businesses.
Any opportunities that you see given these high levels of liquidity.
We are going to have in Peru, as a consequence to all of these measures.
Yeah, Let me take the question.
And on maybe someone else comes to let's start on that.
On C D is.
Is that right.
Our game on for let's give it to you so.
The institutions that they're going to keep building being hit the most are they got off to pilots on the on other financial institutions.
Their funding structure. It was all day long term funding structure was heavily based on on C. D is that's not the case, neither for me viable or Oh BCP.
Well in terms of a Dutch on opportunity for US we would we would see a cost, especially.
In the micro finance business.
It is several.
Turning to Bush on stuff that we're gonna have a problem well both in terms of like we need to eat on funding or.
On normally what happens for us because from their market share we have I'm talking to a lot of BCP is that we end up at.
Get core deposits in terms of what's on the.
Current accounts.
Don't know who wants to pick up the balance on the course on pension funds.
A lot to either.
I live here.
Hello, everyone. Good morning, yes on pension funds the the challenge to they are with this new law.
To manage investments in order to minimize the impact on values and therefore could not affect us much those customers who stay at the fun.
And in turn.
To do the they're required to.
Payments without any major stress.
As you know that our investments are in the local markets, but also in those foreign markets and in order to keep the balance on the portfolios probably both of them will we will have to be used but that's the challenge the opportunity for critical Kai I would say.
Has to do with what happens with those with all those people go and the bus at that on the financial system.
And that's.
That's typically something that benefits.
The most solid late financial institutions, and especially over the last year was a.
Beneficial for BCP to pass it. So that's that's the opportunity that that eye finding that.
Vince.
Perfect. Thank you for the answers on congratulations on the results.
Thank you. Our next question comes from Matt.
Surgery Dubin with Harding Londoner.
Hi, Yes. Good morning, Thank you for the presentation.
My first question is with regard to your guidance on the loan growth.
Are you assuming.
You know sort of a stable political scenario here and you know how.
If there was a you know a victory of caterpillar on the election, how can how could how should we think about the loan growth.
Going forward.
And third question.
And then my second one.
Let's listen to the first one first and then I'll ask the second one later.
Okay, Yes, our guidance assumes.
I would just say the continuation of the economic model I think is they'll be able to lead to.
Yeah.
Hi to to predict the impact of a change in the case of a cause to your wins and Mr. Guffey Your wins and we need to hear the specific measures that day.
Maine to propose.
So on the electorate, he or she says I'm not a candidate.
But maybe just to complement that there's a high correlation between GDP growth on.
Loan growth.
The east on yourself on to that Oh go to sleep.
Helix Fig.
Moving to grow anything between eight to 10 per cent, therefore that there should be on a growth in on.
As I reported on growth on our portfolio.
Obviously, the political uncertainty there.
January from.
From from them.
On.
Have a day of economic agents to be much more concerned about it. That's the reason on why I was mentioning.
But this is going on but what are you currently going on to work with mortgage the mortgage portfolio, obviously, the corporate cultural vehicles per day, so again G fees.
Gross.
Very strong pace this year there for loan growth should follow that plan, but the political.
So not a real feel.
They have to be seen.
Okay.
And then the second question is related to that in terms of I think you mentioned before but I'd like to maybe elaborate on that.
What is kind of what are the specifics I know it's been a card to know because you still don't know what is being proposed on what what's being.
You know what kind of rules that are going to be put in place, but you know the management team.
Directionally what are you seeing in forms of worst case scenario preparations like there's a need I think you mentioned something about reducing foreign currency exposure can you maybe elaborate on some of the steps that you may be taking and also what the impact you know without specific numbers, how should you think.
To the way about about the impact from these measures.
Okay.
Hi.
I take initially.
What we on trying to in the very short time on these this note on on their strategic response, but this is a tactical one is to it.
To be launched in the ethics.
Right.
And man on the exposure to medium term.
The bonds.
But this is high on that this is a tactical on a tactical response.
So does that mean that.
You want to increase.
Your FX holdings on FX.
<unk> exposure, because you believe them to the current risk of currency.
Yes.
Yes within the day.
The day, they establish leaving to buy day a figure.
<unk>.
In any case it would be helpful.
Molded routine bucket in total to results.
Okay. Okay. Thank you.
Yeah.
Thank you. Our next question comes from Yuri Fernandes with JP Morgan.
Turning to again guys hope at this time it looks well congrats on the DCP special our results this quarter I Havent first question regarding on liability motivated deposits in dollars. We saw some inquiries on the squad to right in time deposits in dollars.
Backtracking on Italy for you in April and May and you can just change to continue.
This is likely to build organizational somewhat card liability.
How that impacts on margins. So that's my first question and if possible I'd like to make a second question later.
Okay. We have seen in terms of liquidity on doing that to level. The policies, we have not seen any day.
Negative.
This trend we have seen some change in composition of the deposits.
Slight decrease in Salt Lake to pulse it on an increase in a.
A dollar to deposits and we maintain.
Our book regarding that even the ample level of liquidity on their relative low rates book in dollars and solid day.
The short term impact of these inquiries as to how to mine it.
We think in a.
The very short term fed funds.
Turning to let's say 19 basis points or the Central Bank 25 basis points in difference between one and another is if it's real but mine.
Super clear.
Maybe a second question regarding believe you can you just talk a little bit about the channel you face the council not for COVID-19, but even before COVID-19.
We saw that we believe in units was pretty cheap like 11 12 per cent or are we that is lowered from the group. So can you explain a little bit like historically, what toward a channel to sell in believes to be I like to what explained is that are we get is is that these are different from the scale is a different something to creation.
As a way to get you shouldn't believe on like what can you talk a little bit about the begin to that country. Thank you. So net net.
Let me take that one actually is all of your book.
Valdivia doing business in Bolivia on especially due to it being in the banking sector in Bolivia is really challenging Ah theres, a lot O or I would say excess book regulation. There are both interest caps on the on the loan side on the lending side on also on the deposit.
There are also like.
You have to have a specific portfolio in some sectors.
Subsidized rates are on and on top of that recently due to COVID-19 there have been a lot of.
Limitations in order to both of them.
It is to collect actually interest on on on installments. So so it is quite complicated to do business in Bolivia. It is unfortunate.
It's just unfortunate because we do believe that we have a strong.
Franchise from Bulgaria, specifically in there and to me it makes life on corporate.
Actually I would say, it's all of the above.
While it is still a country that there's a lot of potential to grow to two to do business about the current political situation on economic way.
Policies.
On government it makes it very complicated.
Perfect. Thank you very much.
Thank you. Our next question comes from Brian <unk> with Citi.
Uh huh.
Okay.
To break ups.
The fourth person.
Both of them to one item.
Thank you.
Okay.
Okay.
Clearly.
Yeah.
Brian sorry, I couldn't hear clearly.
Okay.
Hum.
No.
Yes, yes.
Better.
Right.
Okay perfect.
On June four months on the Greenfields.
Sure.
Hum.
Per se.
My question.
But from what I see.
Yes.
If I understood well.
One additional companies with other than to interest rate caps on fees restriction to the percentage that I mentioned on a corporate spend was related to the impact is to the fever restrictions impact on the fee income line when you annualize basis.
The interest rate impact as we've mentioned previously small day rate it.
Yeah, but let me.
For let me express my previous comment on that might be up.
A very short term.
In addition, our answer.
What concerns me on what concerns us is.
Going forward does the Q.
That's a huge potential for growth in.
Lower segments, all day of the Alk population. These interest rate gap is going to have a huge impact on that both on the on the business for the financial institutions by smoke, but more importantly on the on the Unbanked or Underbanked.
Okay.
Moving.
Thank you. Our next question comes from Carlos Gomez with HSBC.
Hi, Good point, you might have already on.
Jonathan I apologize that I tried to correlate.
Good day.
Now if you could comment on day allowed to travel for Cps on insurance component pumps.
To that that could affect any of your business on units and with a tack on effective on system has to hold because I understand that's an important part of the funding for Shanghai smaller banks.
Second on day Smith.
Okay.
Yes, it does.
Yes, we have a system wide that round 30, 21 billion, one 7 billion at BCP as we mention in situations like these and we will estimate and importantly, we drove these funds, but what usually happens is that they have with proceeds came back is in another forum or example, saving to policies or.
Sure Tim.
D C DS.
Yeah.
And in the previous cases BCP in gaining share in another to firm up the posted by the impact in CS thing why can be significant for the smaller institutions to ask when do you see pilots going on food analyst to pass a significant part of these funds. The funding based on C. T is a high interest rate.
For then it can be a significant pressure in terms of funding.
Do you expect these funds to have a very conclusive.
Usually the fungicide recycled, but usually change in the foreign subsidiaries that that restricted funds into more transactional funds or certain parts goes to the policy. It's a short term issue.
Yeah.
Fun investment fund, but in different institutions, what is usually happen.
In situations like this.
Good day.
I think it's not going to disappear to <unk> 1 billion, so listen I'm not going to disappear on a going to be recycled a month institutions in the system.
We understand that that the cost to push more with or I'm going to just a form of lung cancer and we wonder if in the future if he's going to be rebuilt to ot to something that's consistent with how to launch Portland.
No no. It is not like I know that makes you want to have not taken the day. They the plans how to going to reveal a.
That is going to be a lengthy process because.
What these day Pulsates East 112 book the yearly income.
On a yearly basis.
With to deposits so to to reach these levels, it's going to take probably three or four years in day extreme case at all to the call sheets are taken out that'd be signs of strength case okay.
On the basic cost scenario.
Okay, that's very clear and if I can answer on a question regarding to reinsurance business. Obviously, you have had an impact to short term because of the high again, which is completely understandable I imagine that you would continue to have it. This year I don't know if you'll have to keep in Shanghai than in the long run and talking 345 years from now do you see an insurance business changing.
For the better or for the worse because of.
The challenge and the experience of coffee.
Carlos I think Walter.
Wilson.
Very simple conversation at the board.
To be called.
Or cash.
Whether our portfolio breaks.
I refer you to.
That's it.
Given the changes that have happened.
To COVID-19.
What's not going.
Nope.
The portfolio that we have.
She is highly skewed towards sales go to banks.
Basketball.
On the Bancorp.
Okay.
And a very Ah Ah Ah portfolio that is mostly individual's problem.
Corporations.
It is a good volume.
Extremely pocket.
And we are we think that what we used to.
On the larger.
People continue to be profitable for the photograph to put me in the past.
Yeah. Thank you so much.
Yeah.
Thank you at this time, we have no further questions. So I'll turn it back to Mr. Walter Bayly, Chief Executive Officer for closing remarks.
Yeah.
Okay. Thank you. Thank you all for joining this conference call a good.
It's hard to challenging times.
We hope that by the next conference call a simple will.
We will be better.
We will be able to continue the path of growth.
Alright.
With all the finances.
This is very simple.
We are working towards recovery or visibility on.
Hum.
On a computer with all of our friendship.
This investment to support.
Again, thank you all for joining us and see you that.
Comfortable with it.
Well thank.
Thank you all.
Ladies and gentlemen that concludes this morning's presentation. Thank you for your participation you may now disconnect.