Q4 2021 Credicorp Ltd Earnings Call

Yeah.

Speaker 1: Good morning, everyone. I would like to welcome all of you to Credit Corp limited fourth quarter 2021 conference call. We now have all our

Good morning, everyone I would like to welcome all of you to credit Corp Limited fourth quarter 2021 conference call.

We now have all of our speakers in conference.

Speaker 1: 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.

Please be aware that each of your lines is in a listen only mode.

Conclusion of today's presentation, we will open the floor for questions. If you would like to ask a question. Please signal by pressing Star then one on your telephone keypad.

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Speaker 1: With us today is Gianfranco Ferrari, Chief Executive Officer, Cesar Rios, Chief Financial Officer, Francesco Raffo, Chief Innovation Officer.

With us today is Gianfranco Ferrari Chief Executive Officer, <unk>, Chief Financial Officer, Francesco Russell, Chief Innovation Officer.

Speaker 1: Renaldo Yolsa, Chief Risk Officer, Diego Coveiro, Head of Universal Banking, Cesaro Rivera, Head of Insurance and Pensions, and Malagoras-Ceguenas, and the Three Relations Officer. And now, it is my pleasure to turn the conference over to Credit Corp's Chief Financial Officer, Mr. Cesaro Rios. Mr. Rios, you may begin.

Although you also chief risk Officer, Diego Cordero head of Universal banking.

The Saar Rivera head of insurance and pensions and the lactose subordinate Investor Relations Officer and now it is my pleasure to turn the conference over to credit Corp's, Chief Financial Officer. Mr says Oreos. Mr. Rios, you may begin.

Speaker 2: Thank you very much. Good morning and welcome to the conference call for 2021. I hope you and your families are healthy.

Thank you very much good morning, and welcome to pay Gold's Conference call.

So for the fourth quarter of 2021 I hope you and your families.

Speaker 2: The latest available official data shows that economic activity grew 3.5% year over year in November and 1.3% compared to the figure reported in November 2019.

The latest available off the shelf, but show that economic activity grew three 5% year over year, but on one 3% compared to the figure reported in November 2019.

Speaker 2: Our estimates indicate that in the fourth quarter of 2021, the economy expanded around 3.3% year-over-year and 1.8% in the benchmark comparison with 2019. Consequently, Peru's real GDP rebounded around 13% in 2021, which was better than initially expected in a context marked by record highs for corporate prices, expensive monetary policy and fiscal policy.

Our estimates indicate that in the fourth quarter of 'twenty, one the economy expanded around three 3% year over year on one 8% in the benchmark comparison with 2019 Consequently.

Real GDP rebound at 113% in 'twenty, 'twenty, one which was better than initially expected.

It's marked by record highs for corporate prices expansive monitory policy piece called policies.

Speaker 2: and highly quitting people internationally and locally.

We get both nationally and locally.

Speaker 2: Regarding the sanitary situation from the cron, daily infections have increased rapidly, and are currently at local levels of four times higher than in the peak of the previous wave. Mortality rates, however, are significantly lower in part. Daily days in Peru represent just the tens of those registered at the previous wave.

Regarding the 70 20 situations from Daily Pictures Husky recent rapidly on that equivalently lingual.

So four times higher than in the previous.

Previous peak mortality rates were significantly lower.

Basically they seem to move with I'd say it just depends on those reduced their previous weight.

Speaker 2: Dispollution reflects the progress of the U-vaccination Program, which 84% of the population, 12 and older, has received at least to those.

These people will be June reflects the appropriate vaccination program.

84 part of the population.

Asked received at least two doses.

Speaker 2: If mortality rates stay low, the economic impact of new COVID-19 wave should be limited to an antique in employmentism and supply chain delays. More sweeping impacts such as lockdowns are not expected.

Rates have stayed low.

Let me begin by both new clothing, 19 wave should be limited uptake in employee absenteeism and life changing late more sweeping impact such as Lockdowns.

No.

Next slide please.

Speaker 2: Inflations have reared his head across the globe. Given by shortages of inputs, problems with supply chain and increases in international crisis for oil, metals and grain commons.

Felicia how should we hit a quota deal.

Leaving by shortages of equals problems with supply chain and increase it.

All right.

Nathan and grain commodities.

Speaker 2: This inflationary environment, good pressure on the central bank around the world, with regards to Peru consumer inflation is expected to stand at 3% at the end of 2020.

This inflationary environment puts pressure on central banks around the world with regard to consumer inflation perspective.

Cheaper.

The end of 'twenty to 'twenty two.

Speaker 2: We're also 6.4% at the end of 2021. In this context, Peru will capitalize on the designation of an in-or-highly-regard-based professional central bank governance. This new work, less by Julio Belarde, is expected to expect if he steals the central bank's policies to control him.

$6 four per say at the end of 2021 in this context.

We capitalized on the basic nationwide English Eylea, we got good professional notes.

Central time.

These new board.

A lot of things you can fix.

Fix it effectively is the central banks only seems to control inflation.

Speaker 2: Accordingly, the Central Bankhouse rights is policy-grade by 275 basis points in follows. This rate currently stands at 3% and we expect additionally.

The Central Bank has raised its policy rate by 275 basis points each office lease rate.

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Additionally increases OLED.

Speaker 2: All of the measures adopted include an increase in bandwidth service required.

OLED measures adopted included increasing bandwidth requirements.

Speaker 2: Regarding the change rate, its recent decline was driven by reduced perception of political uncertainty and of record trade saw.

In the exchange rate. Its recent decline was driven by reduced that cepstrum political uncertainty and the record Chase office leasing.

Speaker 2: This decline will also have an impact in its low end down inflation in 2022. Moreover, net international reserves stand at $78 billion at the beginning of February , which is close to its record-for-hats.

These declines we also have an impact slowing down inflation in 2022.

They're making not firmed up reserves is 10 78 billion Boulevard at the beginning of February which excludes political hot.

Speaker 2: The aforementioned factors are dealt with a high-tech line in the fiscal decision.

Yeah, Nathan its top dose.

The decline in the East coast.

Speaker 2: which went from representing 8.9% of GDP in 2020 to 2.6% in 2021 has eased concerns and reflected in less volatility of the rules, sovereign loan term bonds.

Which went from eight.

Eight 9% of GDP in 'twenty training to two 6% in 'twenty one is concerned.

Reflected in less volatility.

Long term Baltimore rates finally.

Speaker 2: Finally, from the political side, President Castillo has yet to point a new cabinet as the last prime minister for science has been just four days in on.

A site visit.

You touched yet appoint a new cabinet the last Brian Ministry, if we sign.

Josh for Synopsys or lead because instability lingers.

Speaker 2: political stability lingers into that our economic fundamental remain strong.

Our economic fundamentals maintenance problem.

Next slide please.

Speaker 2: In California, we continue to foster financial inclusion and business roles while we consolidate our time to profitability. In 2021, we include it over 1 million individuals in the financial systems of Peruvian, Colombia, and Bolivia. Furthermore, over 5 million individuals and micro-businesses have benefited from ABC, our financial education program, at BCP and ASC.

And clearly we continue to put some financial inclusion business rules, while we consolidate all of our clinical study in 2020 . One we included over 1 million vehicles in the financial assistance from Peru, Colombia.

More or less 5 million, indeed beautiful micro businesses.

From a D C. Our financial Education program at BCD.

Speaker 2: In the fourth quarter of 2021, our multitroning distribution model continued to evolve. By year ends, digital transactions and PCP accounted for 51% of total transactions, 44% of these Boltzmanns and Divanko were executed to alternative charge.

In the fourth quarter of 2021, our multichannel distribution model continue to evolve by yearend digital transactions with BCP accounted for 51% of total transactions.

4% of disbursements.

What execute this the way you're talking about these trials our base planning needs.

Speaker 2: our anticipation of client needs and past tracking of the black investments of the digital firm have allowed us to enhance user experience in a context of heightened demand for digital transactions and services. And welcome.

Tracking okay.

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In a context of heightened demand for these sorts of sexual incentives.

Our quarter over quarter was sold show.

Speaker 2: Long-go measure in quarter-end balances remain flat. If we isolate the negative exchange rate effect, the 4.2% of kick in a structural launch were obsessed by a 11.2% drop in governor programs portfolio. According to which is composed of netting.

Loan growth measure in what they've been balances remain flat, if we isolate the negative exchange rate effect.

At 4.2% uptick in it.

Loans were up by 11, 2% drop in Golar programs portfolio core equal, which is composed of mixing towards equal pay.

Speaker 2: CB-Incon and effects transactions is and the 2.9% due to growth in structural norms and a lower cost deposit mix due to seasonal transactional activity and higher effects volatility, respects.

Income and it takes transactions on the coupon of 9% due to growth in our structural logs and a lower cost deposit mix you do see some of that transactional activity and higher volatility prospectively.

Speaker 2: Provision expenses drop to a sectional low-level discordant driven by improvements in payment behavior, higher recoveries of within-of-long lower risk origination volumes and improved GDP levels that are captured in expected loss models. We select the cost of risk to drop to 0.34%

But we shouldn't expenses dropped a central low levels this quarter driven by improvements in payment behavior, how you recall very soon.

Lower we used for origination volumes and improved GDP level that that a cultural inspected little smaller slip.

Flip the coastal waste to drop to 34% insurance underwriting English holdsworth plummeted.

Speaker 2: ensures on the right in the results, they're turning to pre-pandemic levels, this quarter, driven mainly by an increase in net permanent premiums in both life and property and casual diseases, and a decrease in property and casual complaints. Expenses were higher this quarter, driven by anastic transformation expenses, variable compensation, and due to the usual poor worker expense increase, seasonal.

This quarter, driven mainly by an increase in net earning premiums in both life and property and casualty businesses and a decrease in perfectly uncollectible claims expenses were higher this quarter did even by you're not seeking transformation expenses variable compensation.

Usual or what explains the increase.

Speaker 2: In this context, credit clause net income was 1061 million solid, which were the same and ROE of 16.4% as quarter.

In this context could eclipse net income was 1006 1 million soldiers, which grew up as same anomaly or 16, 4%.

Okay.

Speaker 2: In full year terms, for incongestand, 13.8% driven by higher net income is in line with an uptick in the structural portfolio, rising rates and lower cost funding structure. The incongame, which were triggered by higher volumes of transactional activity, but negatively impacted by regulatory restrictions for people.

Full year terms core income expanded 13, 8% driven by high you have made it into a single line, we cannot peaking the structured portfolio licensing rates and lower cost funding structure.

Income gains, which were triggered by higher volumes of transactional activity, but negatively impacted by regulatory restrictions for Pete.

Speaker 2: and an increase in net gains on SSTR and transaction to develop pricing capabilities for more volatility. The cost of risk draws...

And an increase in net gains.

Sexual and get to better pricing capability and more about the T V.

The cost of risk dropped eight point.

Speaker 2: 0.82% in an environment characterized by higher than expected role in economic activity, positive payment in cable and the reduction in the volumes of risk airport home.

82% in an environment characterized by higher expected economic activity positive payment behavior and the reduction in the volume. So we schedule holds.

Speaker 2: The agonization factors were partially offset by the negative insurance and the right in the results due to higher quality related gains and an increase in transformational expenses. So, the credit growth net income was 3585 million solid in 2021, which reflects an ROE of 13.9%. Finally, our balance sheet remains strong with ample liquidity and adequate capital ratios.

Old National factors were partially offset by the negative insurance underwriting results due to higher Cogs related King and then increase in transformation expenses almost all credit costs. Net income was 3500 85 million solvency 2021 which were placed in our own E.

14, 9% finally, our balance sheet remains strong with ample liquidity.

Adequate capital ratios.

Makes it slight peaks.

Speaker 2: We continue to abandon in our sustainability journey. This quarter...

We continue to advance in our sustainability journey this quarter.

Speaker 2: MSCI informed us that our ESG rating has been elevated to the leaders category within the school of the OAPA. This new school recognizes credit card leadership in Manage, managing the most significant ESG risk and opportunities in the industry. Additionally, credit card was selected to form part of the

Cie informed us that our ESG ratings and being elevated to the need us favorably with underscore the leap a decent new to school recognized with greater quantity that are shipping managed managing the most significant issue at least on the whole.

You may be seeing in industry. Additionally, created called was elected.

For them all today.

Speaker 2: In some mean, the video, the root general ESG index, the representative ESG benchmark of the teruvian equity market.

B B B L.

E G.

The sense that the ESG benchmark hopefully to move in.

The equity markets.

Speaker 2: environmental front with the development of H.H. Human-Bisitive Financial and Work at Interline with international standards and became the first Latin bank to obtain a strong S&P rating for this kind of framework. Our subsidiaries continued to adhere to commitments to combat climate change in this regard, which is more known in the critical capital asset management became at the CFD in support.

He'd been vitamins upfront, we did they look they cease to mobility financial putting what they can to language, but nationality and became the first bank to obtain it gets tough S&P rating for these kind of framework I'll be familiar.

Our subsidiaries continued to adhere to commitments to combat climate change in this regard it is worth noting that clearly core capital asset management became a D C. If deemed shall court.

Speaker 2: In the social point, we have been recognized by prestigious institutions, corral work efforts on the financial inclusion, education and gender equity forms.

The social front, we have been recognized by prestigious institutions for our airports on the financial intuition education agenda equity plants.

Speaker 2: regarding governance, we continue to develop policies, codes and structures that are aligned with international best practices. In the past few years, we have focused on improving our G.S.G. disclosure. We are pleased to report that we will be publishing our 2021 annual unsustainability report, which is aligned with international sustainability reporting standards such as S.A., S.B., and GRI. Make us like please.

We've got the Golar, unless we continue to develop policies codes and the structures.

Lines with international best practices in the past few years, we have focused on improving our E. G. Disclosure. We are pleased to report that we will be publishing our 2021 onwards, and she's done that really to report, which is aligned with that national has just taken a beating two reporting a standup sacha.

S H E B and D. R I mean.

Next slide please.

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Yes.

Exactly when we would hold back.

Speaker 2: In the fourth quarter of 2021, BCP consolidated its return to profitability. Quarterm over quarter was sold, where driven by an increase of 4.5% in Corringo. This was attributable, but not picking a structural allowance, namely to retail banter, and 7.5% growth in FIINGO.

In the fourth quarter of 'twenty, one BCP consolidated square tones or could there be.

Quarter over quarter was sold.

It was driven by an increase of four 5% in Korea. This was actually what's a little but not keeping a structurally lungs, namely truly paid by seven 5% growth in fee income, which was fueled by an increase in transaction volumes to new services and digital channels this quarter.

Speaker 2: which was fueled by an increasing transaction volume to new services and digital channels. With quarter, the internet page transaction will be mutually high.

Thanks, and if this transaction were mutually high which reflects our ability to live with us intelligence capability volatile fixed month.

Speaker 2: which reflects our ability to leverage intelligence capability in a volatile effect.

Speaker 2: The aforementioned was observed by higher probes.

The aforementioned whilst offices by higher provisions, which are still at very low level.

Speaker 2: which are still at very low level, additionally, operating expenses increase due to seasonality, in this context, return from Agra Shake with us to at 20.7% before.

Sure.

Operating expenses increased due to seasonality in this context, we're tunnel I'm going to shake with Houston.

27% this quarter.

Speaker 2: on a full year basis, a 9.9% growth in growing of wasp yield by growth in net interest income, which was driven by a 16.1% upkeep in structural loans measured in quarter-end balance.

On a full year basis, a nine 9% growth in Korea was fueled by growth in net interest income, which was three things.

Yes, 16, 1%, a peaking of structurally loans measured in quarter end boxes, our bus routes improved by labor Rajeev that tend to lead the company.

Speaker 2: Our research improved by leveraging data analytics and paying you two small things to help us penetrate new SNS sub-facements and drive self-to-visual.

Two smallest to help us penetrate new it's a neat sub segments and drive sell through digital channels.

Speaker 2: In fact, by year end, digital sales represented 34% of total sales while 71% of unsecured consumer loans were visible to digital channels. In addition, our efforts over the last few years to optimize our balance sheets have led to a reduction in our funding costs.

Hum by year in digital so represent 34% of total sales while 71%.

Unsecured consumer loans were from schools to be both channels. In addition, our airports over the last few years to optimize our balance sheet.

Addiction in our funding costs.

Speaker 2: Another aspect that drove two years ago to Corineco was the 20% increase in Cineco, which opused despite the challenging regulatory environment and was driven by its function in transaction balls.

All of that aspect of to go from here for both Korean what's at 20% increase in people, we took Q. Despite the challenging regulatory environment and that was driven by expansion in transaction volumes.

Speaker 2: Finally, in a context mark by an exceptional low cost of risk, BCPs registered and improved in profitability in a spike higher personal expenses that reflect the normalization of variable compensation with use in 2020. Also.

In a context marked by an exceptionally low cost of risk.

Bcb's reduced it I mean boost in profitability, despite higher personnel expenses, but which links the normalization of variable compensation can be used in 'twenty Hudson. These beds of Russell's we're able to offset the higher investments in digital transformation also sold BCP reduced.

Speaker 2: These federal households were able to offset the higher investment with digital transformation. Also, the SOD, BCP registered a return of average equity of 19.7% in 2021. Valior and BCP's core equity to one ratio is 2 at 11.8%, which is within internally.

Return on equity of 19, 7% in 2021 by year end is core equity tier one ratio stood at 11, 8%, which is within internal limits.

Speaker 2: At PCP Bolivia, our risk-high remains low in an un-13 macroeconomic environment. In this context, our delinquency rate was below 1% one of the lowest in the market.

If people leave you our Italian remains low and then 13 microeconomic environment.

Our delinquency rate was below 1% one of the law with the moc.

This is like this.

Speaker 2: Over the last year, YAPA users have growth exponentially. At the end of 2021, total of 8 million users, 54 of whom are active users that make at least one transaction per month. The YAPA card is an important level of growth in financial inclusion and is used by 38% of YAPA.

Over the last year, you have to use such has grown exponentially.

At the end of 2021 .

Total 8 million use 50 total who are active users that make at least one transaction per month.

Because it's an important pillar of growth internationally and crucial unleash used by 38% of Yep Yep.

Speaker 2: You cannot bring a mobile wallet with their national event application.

You cannot be nimble way, while if we they're masking that.

Nation.

Speaker 2: of total number users, 19% are within compliance. Our focus moving forward will be in capturing new users in the segment where 90% of transactions are still making cash. Yappet is a natural conduit for financial inclusion and also brings new clients into the DCP poll.

Total number you assess 19% our SME clients, our focus moving forward will be capturing new users in the segment were 90% of transactions are they still may be touch yuppie natural outcome for.

Financial inclusion I'm also brings new clients into the BCP pooled yep.

Speaker 2: Yappes indicate those for frequency of use and number of transactions continue to rise. Today, after use is executed and averaged of 12.7 transactions a month compared to 8.2 in December last year, total monthly transactions reached PTA in Nilion with a transaction volume of 3.7 billion dollars.

<unk> is indicated for frequency of use a number of transactions continued to rise today I still use it executed and avid Arsenal 12 separate transactions eight months compared to $8. Two in December of last year total monthly transactions reached peak E media, we did transected volume or three.

Saving billions.

Next slide please.

Speaker 2: 2021 has been a year of recovery and growth for both the Vancouver and Colombia and the strength accelerated in the last quarter. Regarding the Vancouver, the hybrid model shows signs of consolidation and boosts the commercial productivity and efficiency.

2021 has been a year of record growth for both the bank and Colombia and this trend accelerated in the last quarter.

I'm thinking about Comping, the hybrid molded showed signs of consolidation.

Commercial productivity and efficiencies.

Speaker 2: This model based has a platform to full respect for life assessment capabilities in 2021. Now we can efficiently process information on potential low, the seedings from multiple sources, and consequently improve the risk of high for the structural reform in addition.

This call will be tougher for them to Florida centralized assessments of liabilities in 2021 now be counting efficiency processing information on.

Potential long the CPM for most of the sourcing and consequently improve the risk profile for the structure of the portfolio.

Sure.

Speaker 2: Nivanko embrace digital channels as a coin with pork house effecting long-world. This capability is covered with economic recovery and gear.

Ivanka embrace digital China. According to the port cost affected loan growth. These couple of even this coupled with the economics of the Covid here.

Speaker 2: I am and of here to thes?nality prop terribly broke in fue jealous america.io

And then if you see somebody you can propel as truckload sportsman platelets to record high last quarter.

Speaker 2: In this context, this quarter may ban to consolidate this recovery. The quarter of a quarter analysis shows a structural resignation which a record high and would 5.0% in average daily balances. Alongside, years on loans rose, triggered by enhanced pricing capabilities.

In this context this quarter couldn't be vanco consolidated this recall.

The quarter over quarter analysis shows as truckload originations reached a record high.

Eight point towards saying now that actually would be bothered alongside yields on loans rose trigger in handset pricing.

Speaker 2: These positive dynamics were partially observed by an increase in cost of funds in the context of recent interest rate hearts. They have resolved our net interest in Google by 2.5%.

These positive dynamics were partially offset by an increase in cost of funds in the conventional leasing two or three hubs.

So our net interest income.

By two 5%.

Speaker 2: despite mandatory field restrictions, already in promotion group in line with an act meeting bank assurance commissions, which was driven by group in original level and a decreasing commission's pay to commercial partners. In this context, Coringon Group 4.4% quarter over.

Despite.

These restrictions auditing propulsion goofing language teaching Bancassurance Commission, which was driven by growth origination levels and a decrease in commissions paid to commercial partners. In this context core income grew four 4% quarter over quarter.

Speaker 2: Lastly, Mibanko's long-provision significantly dropped this quarter due to model adjustments, lower risk of elimination and improvements in collections, which reflect the more favorable economic environment after the COVID-19 restriction fee.

Lastly, the Broncos loan provisions significantly drop this quarter due to model adjustments lowered risk will be in Asia and improvements in collections, which reflect the more favorable economic environment with COVID-19 restrictions piece.

Speaker 2: and Ivanko Colombo, who was sold for driven by higher elimination volumes and lower total.

Banco Columbia, where sales were driven by higher origination volumes and lower provisions.

Speaker 2: In 2021, we increase our commission, law side and maintain productivity. Those boosting our presence in the Columbia Microfinance Market.

'twenty, one we increased our commercial muscle maintain potent dose boosting our presence in the Columbia Micro finance market.

Next slide.

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Speaker 2: The insurance business has consolidated issue calling. So, I'm calling over, what with the steps?

The insurance business has consolidated its recovery from quarter over quarter perspective.

Speaker 2: Group of Pacifico's insurers had the right to resolve their turn to pre-pandemic levels of the quarter. These results were driven by solid growth in natural impremios in both life and projects on casualty businesses and via decreasing property and casualty.

Grupo Pacifico insurance had the right to return to pre pandemic levels. This quarter. These results were driven by solid mid tier and premium box life and property and casualty businesses and by a decrease in Brooklyn.

Will it be claims.

Speaker 2: The aforementioned dynamics were partially updated by an increase in the net claims in the life business, driven by an increase in IDNR reserves. Our corporate health insurance and medical service business reduced the lower earnings attributable to growth in IDNR claims in corporate health insurance. This factor was partially updated by solid results in medical services in line with increased revenues from outpatients.

Gordon mentioned dynamics were partially offset by an increase in the claims in the life business driven by an increase in I b on ourselves, our corporate health insurance and medical services businesses reduced lower earnings attributable to growth in IV on our claims and corporate health insurance. These type, but was partially offset.

By solid results in medical services in line with increased revenues from outpatient services all in all Grupo Pacifico through return on equity stood at 11, 8%.

Speaker 2: All in all, group of Pacifico-Fretorno-Nepu-D-E-Stude at 11.8%

Speaker 2: Finally, bring up the policy to a person in the info goal, quarter to quarter, driven by a recall in the placement performance of the reserve fund.

Our nanny premium posted a 12% net income quarter over quarter, driven by a recovery in investment performance, particularly sort of funds.

Speaker 2: On a full year basis, group of 60% insurers and the right on results ended up in negative territory after light claims rose considerably during the second wave of COVID-19. This impact was partially hosted by solid permanent premium growth in both life and product and cultural businesses associated mostly with increasing premium levels from disability and so by-boshing insurers and the positive evolution of our business.

A full year basis, Grupo Pacifico insurance on the REIT in Brussels ended up negative territory. After like claims Roseland C that I'll be doing the second wave of COVID-19. This impact was partially offset by solid volume growth, both life and property and casualty businesses.

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Absolutely viable should be shorter and the positive evolution.

You bet.

Speaker 2: The strong performance of medical services also helps boost the consolidated results.

The strong performance medical services also helped boost the consolidated results.

Speaker 2: Finally, pre-MAS 2021, PERMIS CELL 1.4%, which was as pure by higher expenses for trying the company ID infrastructure. This investment positioned the company to 100 and unprecedented level of service requests for alternative channels.

Pretty much 2021 .

One, 4%, which was fueled by higher expenses to strength the company infrastructure. These investments position the company to Honda unprecedented level of service requests.

Talking about the channel.

Slide please.

In 2021 .

Speaker 2: Regional consolidation of our investment banking and wealth management business continued to be interaction. On a quarterly basis, for sure, what's breathing? By 0.5% growth in assets and their management measured in US dollars. This evolution was triggered by 2.6% growth in wealth management, which was fueled by non-active and brokerage convolving.

Consolidation of our investment banking and wealth management business continued to gain traction on a quarterly basis. We're told we're drilling 5.5 dollars single in assets under management measured in U S. Dollars. This evolution was triggered by two 6% wealth management, which was fueled by not teaching brokerage portfolio.

Speaker 2: Regarding income contribution, positive results in asset and wealth management business were offset by a contraction in capital markets. After a negative result were reported.

Regarding income contribution positive results in asset and wealth management business were offset by a contraction in capital markets update in may that the social work reported.

Speaker 2: for a fixed income property portfolio due to lower gains from market operation. This led to contribution of investment banking and wealth management line of business to fall. Minus 5.6% quarter of a quarter, in full year figures, asset and management registered as minus 7.2% construction, mainly due to significant the ruby and mutual funds outflows, which were partially redirected to our offshore platform at lower.

For our fixed income property portfolio due to lower gains from market operation.

The contribution of investment banking and wealth management business to Paul.

And those five 6% quarter over quarter and full year figures assets under management.

Mine was seven 2% cost structure, mainly due to significant Peruvian mutual fund outflows, which were partially related to our offshore platform at lower fees.

Speaker 2: A fake non-term income generation. The expansion in income mainly driven by asset management and work management was partially attenuated by a construction and capital market, which led to investment-bound on a wealth management line of this to reduce the growth of 8.4%.

Long term, England generation expansion in ankle, mainly driven by asset management wealth management was partially attenuated by a contraction in capital markets, which led to investment banking.

Instrument line of business to reduce political eight 4%.

Speaker 2: regarding our transformation process in 2021. We achieve significant milestones that we allow us to optimize operating processes and lay the foundation for scalability.

Regarding our transformational process in 2020 , one we achieved significant milestone stuff, we allow us to have to mindful.

Processes in late <unk>.

<unk> for its color Pete.

Speaker 2: Among these ASB-DANG core absorb ASB, changing its domicile from Panama and degrading score banking systems to the cloud. Finally, we implemented a shared service center in Colombia where we have successfully upgraded over 70% of our target processes in one year.

Among these ASB bank core absorb ESP changing dummies hired from Panama and the Great thing is core banking systems to the cloud.

We can maintain that.

Sure Service Center in Colombia, where we have such system to be believed it over 70% of our packet processing one year.

Slide please.

Speaker 2: Now, I will discuss critical consolidated performance from the asset side from a quarter of a quarter perspective. The asset needs became more profitable in line with a 2.7% expansion in a structural allowance, which was driven by retail banking and the bank. Year over year, a structural allowance group 14.1% which was always fueled mainly by wholesale banking which reduced the growth of economic activation and strong campaigns in their cultural ambitions.

Now I will discuss credit core consolidated performance for the asset side from a quarter over quarter perspective.

Yes, it needs.

Being more profitable lines.

Coupon, 7% expansion in a structurally launch which was driven by retail banking.

Year over year structurally loans grew 14, 1% you first of all was fueled mainly by wholesale banking, which reduced the road economic reactivation strong campaigns in different cultural outpatient centers.

Speaker 2: from the liability file for an older or older perspective grown in low cost deposits in the name cloud while all over funding sources failed, but 4.9% which allow us to maintain a low funding.

On the liability side put in a quarter over quarter perspective, growing low cost deposits remained flat while all other funding sources.

Four 9% allowed us to maintain our low funding costs.

Speaker 2: Over here, it is important to highlight that low cost deposit grew by 10.5% while battery?my

Year over year. It is important to highlight that low cost deposit grew by 10, 5%, while severance and they need to close it gets dropped 48, 1% in line with an economically poorly that freed up these funds, but we do.

Speaker 2: all these leads to a decrease in our funding cost, which is 2 at 1.24% of this quarter. On a four-year basis, the funding cost decreased, but 49 basis points to a stand at 1.29%. This was given by the aforementioned growth in low cost deposits and value optimization of the cost of funding cost at VCP in a context of low interest rates.

All this led to a decrease in our funding cost which stood at 124% this quarter.

Basically the funding costs decreased by 49 basis points to stand at 129%.

Good evening by the coordination of grow low cost deposits by the optimization of the wholesale funding close at BCP.

Conflicts of low interest rates.

It makes it slightly.

Speaker 2: This quarter, both the structural and local volume payment behavior continue to evolve favorably at a critical level, consequently, but the structural MPL ratio and the structural cost of risk improve loan volumes and on time payments remain.

This quarter, both the structurally loan portfolio of payment behaviors continue to evolve trade broadly I think really good leather consequently bulk the structural the NPL ratio on the structural cost of risk improved loan volumes and one time payments remaining strong.

Speaker 2: in our banking businesses. This positive evolution was a tribute level to economic activation growth in individual liquidity due to government release and an increased transactional activity. Additionally, NCL's balance was favored by higher right-offs mainly from the bank. The aforementioned was partially observed by higher belief analysis in the semi-team segment, which was a tribute level to clients who also hold.

In our banking business is this positive evolution of what's attributable to economic reactivation growth you'd be able to.

Liquidity due to government relief and an increased transactional activity. Additionally, mpls balance what table by higher write offs, mainly from the aforementioned was partially offset by higher delinquencies in the SME segment, which was up two words I want to try and force a whole golar new programs launch.

Speaker 2: government programs launched in this complex, credit calls, a structural MPL student of 4.9%, which represented a quarter of a quarter of the version of fairly basic points.

In this context credit culture, structurally NPA Street, a four 9%, which represented a quarter over quarter reduction of 30 basis points prohibitions continued to follow a downward trend across our banking businesses, reaching record lows. This quarter. This improvement was driven by positive opinion behave.

Speaker 2: Provision's continued to follow a downward trend across our banking business is reaching record lows which were this improvement was living by positive payment behaviors lower risk levels and higher riders mainly in basic and economic segment and the aforementioned was partially observed by an increasing provision of wholesale banking after a limited number of corporate clients advanced to higher space of the language in this scenario. Credit courses structure across of which constructed

No at least flavor on how you write offs, mainly and basically making a statement.

The aforementioned was partially offset by an increase in provisions on wholesale banking. After a limited number of corporate clients that sounds too high of a specialty in this scenario because it eclipses trucks out of cost of risk constructed Corp.

Speaker 2: 0.54% to 0.22% co-operative at work. On a full year basis, we have registered significant lower provision expenses in a context of better than expected economic activity, positive pain and behavior, which reflect an antique inclined sequence.

Hero points.

Sent to Cedar point, 22% quarter over quarter.

Basically we have been.

You spent a significant lower provision expenses in a context of better than expected economic activity positive indicators, which reflect an uptick in clients.

Speaker 2: and decreased increase in the low-movination levels as long as bandwidth means to lower risk-retail problems in this context, a structural cost of risk drop from 5.12% to 0.89%.

Uh huh.

The decrease in waste and the normal origination levels as normal spending, namely to lower risk. We pay problems can be complex is truckload close off lease drop from.

Hi point, 12% to zero point 18, 9% the level of this chart total allowances for loan losses at year end was equivalent to six 4% booked for the club loan portfolio.

Speaker 2: The legal office shortly allowances for long losses at year end was equivalent to 6.4% of credit cards loan portfolio.

Speaker 2: In our government program portfolio, bridge fields expire and reprogramming facilities conclude. We have a health decline base and the link with it is concentrated in early stages, nevertheless, over new loans in late stages of our real-sounding recovery to state work.

In our government program portfolio Grace periods expire.

And Rick programming proxy this conclude with Italian base and delinquency is concentrated in real estate. Nevertheless over new loans. In later stages will probably read as had been recorded through a stage where it peaks.

Slide <unk>.

Speaker 2: The Corsi will continue another trend to stand at 4.25% of the court in line with a more profitable asset.

Can you Cook screen continue an upward trend percent, 425% this quarter.

With a more profitable risk.

Speaker 2: Resadjusted means increase 9 basis point, quarter to quarter to stand at 4.04%.

Risk adjusted NIM increased 90 basis points quarter over quarter Tristan.

All 4%.

Speaker 2: in a four year term. In each interesting, expanded night, going to per se in fuel, but a structural on-road, an update in low cost deposit, and an optimization of wholesale funding. Corinco increased to 0.9% quarter-required, which was primarily driven by 8.1% growth in Finco. Finco was bolstered by an active consumption, to POS transactions with the returns of the established.

On a full year terms net interest income expanded nicely, 2% fueled by the strength of alone in that peak in low cost deposits and an optimization of our wholesale funding core income increased two 9% quarter over quarter, which was primarily driven by $8 one or single people think what bolster.

By an uptick in consumption with P. O S transaction with debit cards have established it is known that growing consumption was driven by the smallest establishment, we generate higher fees. Finally made gains in U S transactions increased three 8% quarter over quarter in our content supply if they explore that improved pricing.

Speaker 2: It is known that welding consumption was driven by the small establishment which generates higher fees. Finally, need gains and efficient suction increase to 8.8% quarter-requalting in a context of high-effects volatility in crude price and distribution capital.

Distribution a couple of them.

Speaker 2: on a full-year basis, core income expanded, 13.8%, which was primary attributable to growth in interesting and secondary rules, got an increasing income due to higher transaction and liquidity. The income closed a year, above the pandemic, even despite recent regulatory restrictions.

On a full year basis core income expanded 13.

Dean, 8%, which was primarily attributable to grow entry interesting and secondarily, Glenn and increasing fee income due to higher transactional fee.

<unk> closed the year at both the pandemic.

By recent regulatory restrictions makes it slightly.

Speaker 2: on full-wheel basis, clarity close efficient simulation for all the basis point here over here. Improvement for the main delivery by the positive evolution of operating income in the microfinance and insural pension line of this.

On a full year basis traded clubs the efficiency ratio improved 40 basis points year over year improvements were mainly driven by the positive evolution of operating income in the micro finance and insurance pension line of businesses decent Felicia ups at high unit stainless at BCP stand alone related to be perpetual in nature.

Speaker 2: This evolution of higher expenses at BCPS and alone related to digital transformation. At the bank operating in Google 19% in 2021, while operating expenses grew five percent.

Operating income grew 19% in 2021, while operating expenses grew 5%.

Speaker 2: It's been so many under control which reflects large part of the ingots that Mivanko has made in consolerated with high-good business malls.

Expenses remain under control, which reflects a large part of the Ingalls 70, Wankel husnain culturally they fit the type of business model.

Speaker 2: Asificos incontrolised this growth this year after it won two additional tranches of the Cisco 5 tender for AFP related corridors. The premium rate for this tender was higher than the rate and the Cisco 4, the previous but annual problem.

A C people's incomes.

Growth this year.

Two additional tranches of the Cisco five tenant or a deal related.

The premium paid for the standard was higher than the rate in this fiscal for the previous Jan one program.

Speaker 2: If we exclude our investments in the first initiative, such as Yahweh and the portfolio career, from calculation rate, the efficiency rate will stand at 44.3% which is 160 basis points below the reported rate. Next slide please.

If we exclude the way business and disruptive initiatives such as ERP on the post portfolio of Kodak from calculation based efficiency ratio stands at 44, 3%, which is 160 basis points below the reported range.

Next slide please.

Speaker 2: Our ROE stood at pre-tandemic level at semester.

Our arrow stood at pre pandemic levels a semester.

Speaker 2: We are at the top end of a challenging two-year period, which was marked by sanitary crisis and it is also potential instability. We managed to raise our host by leveraging our strong balance sheet and took advantage of opportunities to emerge what has strengthened completely position. First, we decided to accelerate digital investment.

We are at the top end of a challenging two year period, which was marked by a sanitary crisis.

We sold some potential stability, we might initially at least on the whole by utilizing our strong balance sheet and took advantage of opportunities for managed with a strengthened competitive position first we decided to accelerate digital investments.

Speaker 2: through the crisis and have leveraged capabilities to penetrate new segments as we consolidate our market leaders.

It's really crisis unharmed labor rush capabilities.

Penetrate new segments as we consolidate our market leadership over the past two years, so whether it's trucks or the loan portfolio grew 11, 5%.

Speaker 2: Over the past two years, our instructor along the portfolio grew 11.5%. During the same period, we reported not working expansion of 66.6% in our low cost deposit base. This covered with adequate management of wholesale funding. In a context of favor of interest rate, we provide a funding cost advantage as we move into a cycle of interoperate's high.

The same view, we reported north walked into expansion of 66, 6%.

Our low cost deposit base this coupled with adequate management of our wholesale funding in a context of favorable interest rates. We've provided funding costs about especially as we move into a cycle of interior of wage hikes.

Speaker 2: Second, we steer our loan portfolio towards a better rich profile than in hunting our underwriting models and shifting some products from revolving to non revolving facilities involved. The SNEET and consumer segments. Third, we optimize the income by re-regorating pricing intelligence and focusing on building transaction capabilities. We have, along the number of months, transactions rose by 24 in the last two years.

We steer our loan portfolio towards a better risk profile lending hunting, all what I said.

More of that sense shifting some proceeds from revolving to non revolving facilities in both the SME and consumer sentiment.

We optimize fee income.

Zinc price intelligence are focusing and building transactional capability to yuppie alone the number of months of transaction growth like 20 fold in the last two years for although our insurance business lets say better really heat, we laid the foundations to increase profitability by strengthening our digital on blood pressure.

Speaker 2: For although our insurance business was very heat related foundations to increase profitability by strengthening our digital and infrastructure chain development business at the base of the Pyramid and refining our pricing and risk models. Finally, we accelerated investment and reduced our operating models to improve it.

And then China developing business at the base of the tyramine and refining our pricing on with small that's finally, we accelerated investment and revisited our operating model is to improve the efficiency and cost control unit.

Speaker 2: Nivanco's consolidation of the hybrid model is already shown tangible results in this product. We will capitalize on our first deposit of bettive positions to 2022 and beyond.

The hybrid model is already showing tangible results from these cross.

We will capitalize on our competitive positions to 2022 and beyond.

Next slide please.

Speaker 2: Against this backdrop, we share the following expectations for 2020.

Against this backdrop, we shared the following expectations for 2022, assuming that the cooling COVID-19 wave we have a limited some transitory impact on economic activity. We expect the ruling GDP to grow around two 5% in terms of our loan portfolio we estimate.

Speaker 2: Assuming that the current COVID-19 wave we have a limited and transitory impact on economic activity, we expect the rules GDP to grow around 2.5%

Speaker 2: in terms of how a long portfolio, we expect lending activity to follow dynamic civil and broadels in current. In this context, we expect our instructor long portfolio, which excludes reactive loans to grow between 80 and 10% in average daily balances. The evolution in total loans will depend on the pace of which reactive balances are a more tight.

Lending activity to Hollywood dynamics, even if the dose in cooling.

Context, we expect our structural loan portfolio, which excludes react he will launch to grow between 8% 10%.

Daily bought out the evolution in total lungs will depend on the pace of which we have to keep our balances are a month's time.

Speaker 2: Regarding name, we expect interest rate to continue the upper trajectory as our long group sheep more towards retail. Accordingly, we expect name to sitrate between 4.3 and 4.6%.

We expect interest rate to continue their upward trajectory.

As our loan book shift more towards retail.

Accordingly, we expect NIM to see trade between four three and four 6%.

Speaker 2: We anticipate that the cost of price will fluctuate between 0.8% and 1.1% as positive payment trends continue and we leverage our enhanced intelligence capabilities.

D C pace that the cost of risk will trade between four.

8% one 1%.

Payment trends continue we leveraged our enhance intelligence couple of week.

Speaker 2: in 2022, and will continue to invest heavily in our digital process.

In 2022, who will continue to invest heavily in our brokerage ecosystem.

Speaker 2: As such, we expect our efficiency ratio to stand between 45 and 48%. It is important to note that we estimate that each graphic expenditure will impact the efficiency ratio by around 300 basis points.

Such we expect our efficiency ratio to spend between 45 and 48%. It is important to note that we estimate that we struck with expenses will impact the efficiency ratio by a long 300 basis points, we expect our insurance underwriting Brazil to end the year slightly above refunded.

Speaker 2: We expect our insurance and the working results to end the year slightly above the pandemic levels, provided that no additional material impacts from the sanitary situation are worth. As a result, we expect our RWE to be insituated between 15.5 and 17.5%.

At levels provided that no additional material impacts from the tiny tiny situations arise as a result, we expect our wherever we can to BDC traded between $15 five and 17, 5%. This improved prospects for profitability will allow us to continue building down on transport.

Speaker 2: This improved process for profitability will help us to continue to build the downforce of our national investment and increase dividend payouts. We discounting our would like to start the Q&A session.

Investments and increased dividend payouts with these comments I would like to start the Q&A session.

Thank you very much.

Speaker 1: We will now begin the question and answer session. If you would like to ask a question, please signal by pressing star than one on your telephone keypad. If you have connected to the call using the HD web phone on your computer, please use the keypad on your computer screen.

We will now begin the question and answer session.

I would like to ask a question. Please signal by pressing Star then one on your telephone keypad. If you have connected to the call using the HD web phone on your computer. Please use the keypad on your computer screen.

Speaker 1: If you're using a speaker phone, please make sure your mute function is turned off to allow your during the check.

Since you are using a speaker phone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment.

Speaker 1: You will pause for just a moment, Tula. Everyone the opportunity for questions.

We will pause for just a moment to allow everyone the opportunity for questions.

Speaker 1: You also ask that you please only ask one question at a time. After each question has been addressed by our speakers, you would then be allowed to ask as many followers as needed. But again, please only ask one question at a time. Thank you.

We also ask that you. Please only ask one question at a time.

After each question has been addressed by our speakers, who will then be allowed to ask because many follow ups as needed but again. Please only ask one question at a time. Thank you.

Yeah.

Speaker 1: And the first question today will come from Ernesto Gabelondo. Thank you for America. Please go ahead.

And the first question today will come from Ernesto <unk> with Bank of America. Please go ahead.

Speaker 3: Hi, good morning, young thankful and sister, good morning to all your team and good morning everyone. Thanks for the opportunity to take question.

Hi, Good morning, Ron Frankel and Kirk good morning per worker cream and good morning, everyone.

Thanks for the opportunity.

Sure.

Speaker 3: My first question is on your net interest margin. I'd like to understand the potential drivers behind the MIME expansion for this year, like high rates of how much additional heights are you expecting. I don't know, an increased exposure from retail loans and the bankroll, and maybe some amortizations in directiva loans. So anything that you can give us on MIME expectations, I think will be helpful.

My first question is hunger Martin Martin.

Well I can understand it per gram for drivers behind room expansion producer here like how your role how more traditional hi, how are you expecting.

I don't know an increase exposure from repair loan from the banker.

Maybe some of them are conclusions and directive alone.

How do you think about your computer.

I think it would be Parker.

Speaker 4: Sorry, I wasn't in Japan, I was running. Maybe some time I get a bit nervous, but yeah, go ahead and tell him I'll make some closing remarks. Yes.

Sorry, I guess I.

It wasn't I wasn't here, so I'm kind of a warning.

Maybe you can.

There's something about.

Go ahead Sir.

In closing for me.

Speaker 2: Thank you, young people. I think as I mentioned previously, I think we are going to have several forces at the same time. We are going to have a backdrop of increasing interest rate. We have had significant increase during 2021 to 175 basis points. And we expect that this trend to continue probably with additional 100, 100 additional basic points to the year.

I think Uh huh.

I had mentioned previously I think we are going to have several choices at the same time, we are going to have a backdrop of increasing interest rates. We have had a significant increase due in 2021 275 basis points.

Is that these trains to continue probably with additional 100 100 at least from a basic fronts.

It points to the year this is going to be translated gradually.

Speaker 2: This is going to be translated gradually to a higher nominal interest rates in our portfolio, coupled with...

A higher.

As interest rates in our portfolio.

We.

Speaker 2: with an increase in cost of funds, particular in the bank.

The increase in cost of funds, particularly in Nevada.

Speaker 2: As a result, we expect an increasing nerve margin driven by this underlying trend and a gradual transition to more retail portfolio. We need to consider also that during 2020 and 2021, we have been originated lower risk, lower yield loans. So we need to gradually increase the rates reflecting a more normal portfolio to the 2022.

So do we.

As stated on an increasing margin driven by this underlying training and a gradual transition.

A more retail portfolio, we need to consider also that during 2021 2021 we'd have been what would you need to lower risk lower yield.

So we need to gradually increase the rates, reflecting a more normal portfolio through the 2022.

Speaker 3: Thank you very much, sir. And just my second question is on operating expenses. As you mentioned in your remarks, you're expecting to...

Thank you very much for I'm just my quick one question here from an operating expense.

You mentioned in your remarks, you're expecting too.

Speaker 3: do digital investment this year. So how should we think about the up explore? I think last year was around 16%. Should we expect a similar growth this year? And considering next year's.

Duke Berkman from here.

So how should we think about the epic throughout it bring a lot of your work around 16%.

We have.

Similar royalty here considerably next year.

Speaker 3: When do you expect this up to normalize? I don't know if it would be reasonable.

Yeah.

When do you expect a pit crew out to normalize I dunno incurred would good Christian number.

Speaker 3: the upper 12 morning line inflation in the next year.

Thank you Yakov.

More in line of inflation.

Sure.

Speaker 2: Thank you. I think it's important to understand the dynamics of the 2022. I would like to emphasize that in 2022 we have the impact of significant higher operating volumes that carries additional costs. We expect this continues, this trend to continue. In 2022 we also normalize the variable compensation that was severely colours as well as in 2021.

Thank you I think perfect important too on the underlying dynamics of the 2022 I would like to emphasize that in 2022 we have the impact of <unk>.

Significant year over 18, but we'll use the car with additional costs. We expect this continued these trends to continue.

In 2022, we also note in my life, the variable compensation that less severely quickly doing 2020.

Speaker 2: and this trend is going to continue based on top line and bottom line results in our main businesses.

A these chunky is going to continue based on topline and bottom line results in our main businesses.

Speaker 2: And the only factor that I think I is going to make that our expenses are going to grow more certainly more than inflation is that we are accompanying the increasing volumes in different channels with a significant additional expenses in transformation investments. So, as I mentioned previously, the impact in cost to income.

And the other factor that I think.

Willing to make that our expenses are going to grow certainly more than inflation is that we are a companion.

Leasing volumes can be put in China with a significant additional expenses and transformation investment so.

As I mentioned previously the impact in cost to income is going to almost double considering the margin in this space. The investments that we expect and transformation initiatives. So we are going to maintain it.

Speaker 2: If going to almost double, considering the margin of respect investment that we expect in transformation

Speaker 2: So we are going to maintain a good control of the COS-COS-Lincon ratio, but we are going to, still, grow in expenses above inflation.

Good control of the cost to income ratio, but we are going to experience it.

<unk> growth.

<unk> above inflation.

Speaker 3: And this just well, I understand perfectly this year, but thinking more about the medium term, like for the next years, should we continue to have these same pace of growth or next year should be again going back to growth in line with the play?

Sure Andy.

Well I understand perfectly do here, but thinking more about the medium term like for next year.

Continuing to.

Improve her grown or next year.

Again going back to grow in line with inflation.

Speaker 2: First, I think our expenses shouldn't grow in line with expansion, but in line with the volume of business and operational efficiencies. We expect to have a significant additional investments in transformation initiatives for at least two, three years. And after that, we are going to see less impact of these additional expenses and more clearly the positive impact of the income that these investments bring to the book. Okay, perfect!

First I think alerts expenses shooting grow in language expansion, but in line with the.

The volume of business and operational efficiencies, we expect to have a significant additional investments in transformation initiative for at least two to three years and after that we are going to see less impact of these additional expenses are more clearly the positive impact of the ink conduct these investments spring.

The book.

Okay perfect.

Good luck.

Speaker 4: And maybe just to allow on what SESA mentioned, I would say that we have to like separate in two the expense the expenses account. One is the one that is related to growth

So maybe just to add that or what I would tell you that.

<unk> like separating two the expense or the expenses account one is the one that is related to growth.

Speaker 4: And as I mentioned before, the number of transactions and activities that we have seen through 2021.

So as I've mentioned before.

The number of transactions and activity that we have seen through.

I think one I would tell you that it's going to keep up.

Speaker 4: I would say that it's gonna keep up. This strategy we started five, seven years ago, the war on cash strategy that has grown a lot because of obvious reasons which is the pandemic. That trend should continue, but obviously, that a growth trend, that growth in the expected, sorry.

Part of the strategy, we started I don't know five to seven years ago with the war on Apache sorry busy.

Has it grown a lot because of obvious reasons would you see that trend should continue but obviously some of it.

Uh huh.

Hum.

Oh I'm sorry.

Speaker 4: I recorrelated to a growth in income and in income basically. The only part is the investments we're doing are the digital transformation and on new ventures. And even though we're

How did your coordinator for growth and income.

Oh Gee income basically the only part.

Restaurants were doing on the digital transformation.

And even though we don't wear.

Speaker 4: I believe we have an aggressive lander, which we will share with you in March. Obviously that sage gave us a kind of investment as far as the investments flow well, we will keep investing. Obviously they don't inform what the way we expect.

I believe we have a slot.

<unk>, which we will share with you all.

In March.

Obviously, that's a fitch.

They gave it a type of investment.

As far as the.

Oh, well, we won't keep investing obviously in any way.

Way, we inspect them.

Our dental portfolio.

Speaker 4: then to perform we will reduce in vessel or even shut down those those ventures.

But you also have parents have already been shut down those stone centers.

Right.

However, currently you're a banker.

Speaker 1: Thank you. And the next question will come from Jason Mullen with Scotia Bank. Please go ahead.

Thank you and the next question will come from Jason <unk> with Scotiabank. Please go ahead.

Yeah.

Speaker 1: Hello, my question really is a follow up on part of the first questions, which is on expenses and

Hello. My question really is a follow up on on part of the first questions.

On expenses and efficiency.

Speaker 5: We are in particular the digital transformation and the hybrid model. I mean, how are you viewing the ability of the bank and the group to really bring the, let's call it the non-physical?

Where in particular.

The digital transformation and the hybrid model I mean, how how are you viewing the ability of the bank and the group to really bring that let's call it that.

Non physical network expenses.

Speaker 5: network expenses, how to incorporate those even more, and how we should see, is that really gonna be still negatively impacting for multi years this investment in physical transformation?

How to incorporate those even more and how we should see like is that really going to be still negatively impacting for multi years. This investment in digital transformation.

Speaker 5: And if you can repeat the medium and long term efficiency ratio targets. Thanks.

And if you can repeat the.

Medium and long term efficiency ratio targets. Thank you.

Speaker 5: So, project, could you answer the part on the, on the regional investment, complement, the regional? Yeah, I mean, maybe you could give a sense of, like, in 2022 and 2023, are we gonna see similar levels that we saw in 2021 and 20, should they be trending down? How should we think about those and how they, you mentioned?

Sure.

The project or procure.

Part of the vehicle.

When you're building versus a couple of months I mean, maybe you could give a sense of where like in 2022 and 2023 are we going to see similar levels that we saw in 2021 and 20 <unk>.

They've been trending down.

Should we think about those and how how that you mentioned.

Speaker 5: the growth portion of expenses increasing and the digital transformation. Maybe you can give us a sense of what corresponds to each portion.

The growth portion of expenses, increasing in the digital transformation, maybe you can give us a sense.

Of what corresponds to each portion.

Yeah.

Speaker 2: I'll share the view of the insurance of our strategic intent and then I will slowly compliment me in terms of the cost.

Oh sure they'd be in terms of our strategic intent and then stuff that will probably complement me.

I've been picked off.

Speaker 6: The way we are viewing our transformation towards non-physical channel is by expanding our summer base in the retail and the SME business.

The way we are viewing.

Foundation toward non 50 calls.

The channel.

Is it.

Fine.

Customer base.

Retail and <unk>.

In the business.

Speaker 6: And we are approaching this on a customer journey type of view, which is first acquire the customer and then continue with their transaction, the day transaction and then their next product sale related to cross selling and a good solid relationship.

And we are approaching D N a.

Customer journey type of view, which is first acquire the cost on that and then continue with their transaction daily transaction, and then make sale related to a cross.

Cross selling and solid relationship. Therefore, this is a multi year journey.

Speaker 6: Therefore, this is a multi-year journey. And we are beginning to analyze and to control the multi-tunnel kind of view. So we start directing customers towards only non-tritical channels.

And we are beginning to to analyze and to control them.

They moved the tunnel kind of view, so we start directing customers towards.

The only non physical channels.

Speaker 6: and to have a better service level around us.

To have a better service level around that.

Speaker 4: Maybe just to compliment that, I think that has also been a little bit of a Jason. A concrete example of what can be achieved is what was going on in the bank. In the bank, we are in the process of destroying the hybrid model. And in the last quarter, we got record level in terms of sales.

Maybe just a couple of different duck, yes listen.

Going to the details of it.

Jason.

Okay.

What can be achieved.

What's going on in the vertical market, we are in the process of deploying.

Hybrid puzzle.

And the last quarter.

We're winning record level.

Hurtful Trail.

Speaker 4: month by month with roughly 15% of red cells. And that's because we're leveraging on the digital investments we've done in the past in the AgniBanko. So that's a kind of example of what we're trying to give, obviously some investments are to us.

Month by month.

15% of lift for us.

And that's because we're leveraging on that.

Reimbursements were done in the past.

So that's a hurdle or a couple of woodwork trying to Rajiv obviously.

From some of our more.

Speaker 4: certain results at higher intervals where modern models don't pay for ihre et oleis fried food? no, no it's sano, um...

Hum.

However, our results our short term results.

Were there or it could be.

<unk> no longer longer tenor.

<unk>.

Speaker 4: We are going to be done with a longer, longer term view.

Well done are being done with a longer longer term view.

Speaker 2: What are some sort of things? Maybe I can compliment you in Franco, this is the O Cabero. We have been very successful in Kimbap, we created in my great team actually held by the bandit and the COVID-19 reality in my great team, transactions from the physical to the digital networks. So transactions in the branch.

Go ahead Sir.

Maybe maybe I can complement you on but I'm going to yoga at all.

We have been very successful in conducting it today, though we migrated the actually field based up on the web.

Bobby 19 reality.

In migrating from section from the physical because I didn't get the Midlands. Okay. So so it's been sections in the branches.

Speaker 2: They used to be 7% of the total transactions of the PCB, the monetary transactions. As of today, they are only 2%. And the number is this has reduced from 7 million, something to...

They used to be 7%.

Sanctions of ECB monetary transactions.

Today, they are only 2%.

<unk> is reduced from 7 million a two to four point something million infections monetary transactions, while at the same time the digital channels.

Speaker 2: four points, something million of transactions funds are

Speaker 2: Well, at the same time that digital channels have blown out, no, they've grown more than two times. So...

Blown out no.

Have grown more than two times so.

Speaker 2: Now we have to work actually and continue in this migration, not only in construction, but also in sales and services.

Now we have to work actually continuing these migration not only transaction, but also saves them services and doesn't mean that it will be much more efficient.

Speaker 2: and that will be much more efficient in the future.

Future.

Yeah.

Yeah. Thank you very much.

Okay.

Speaker 1: Thank you and the next question will be from Tito LaBarda with Goldman Sachs. Please go ahead.

Thank you and the next question will be from Tito BARDA with Goldman Sachs. Please go ahead.

Speaker 5: Hi, good morning. Thank you for taking my question. My first question is on your cost of risk. You show guidance between 0.8 to 1.1, increasing a bit.

Hi, Good morning, and thank you for taking my question.

My first question is on your cost of risk you show a guidance between 0.8 to 1.1, increasing a bit from 2021, but you know well below historical levels.

Speaker 5: From 2021, but well below historical levels, if you can give a little bit more color on that in terms of your expectations for asset quality, does this imply your coverage will come down at all? And beyond 2022, do you expect this to normalize back closer to the historical levels, closer to 1.8% to 2%, so you can give some more color on that. Thank you.

If you can give us a little bit more color on that in terms of your expectations for asset quality we come.

Does this imply your coverage will come down at all.

And beyond 2022.

Do you expect this to normalize back closer to the historical levels closer to one 8% to 2%.

You could give some more color on that.

Okay.

Great.

Got it.

Yes.

Yes.

Speaker 2: Regarding these years' expectations, I would say it's a mix of the high level of information we made in 2020, and also the good performance in all portfolios in three markets with been watching in 2021. So I would say this year we will continue seeing good results based on those two facts.

Regarding these these years expectations.

So it's a mix of all the high level of provisions, we made in 2000 and printing.

And also the good performance in all portfolios in every market.

Been watching in 'twenty one.

I'd say this year, we will continue.

Results based on those two factors.

Speaker 7: Regarding the future, probably this number will start rising a little bit and starting in 2023, getting close to pre-COVID-Covid levels. That's our expectation as of today.

Regarding their future brewery. These numbers will start rising a little bit of starting 2023 getting close to pre COVID-19 recovery levels, that's our expectation as of today.

Speaker 5: Okay, thank you for that. One follow up there on the coverage ratio. Do you see that? It's around 115%. Do you think that would come down a bit this year or kind of keep it around those levels?

Okay. Thank you for that just one follow up there.

On the coverage ratio do you see that it's around 115% would you think that would come down a bit this year.

Or kind of keep it around those levels.

Speaker 7: Well, we as in all metrics a week, we have a different approach in terms of the structural numbers and the global numbers.

Well, we as.

In old metrics, where we will have a different approach in terms of the truck world numbers.

The total numbers.

Speaker 7: The 2015 includes the government loans and those entrepreneurs are probably going to be impacted, but there we have, as you know, a big coverage of state guarantees. So we don't look that number very closely. The number we have in terms of coverage as of December 2021 or 132%, it is still above what we had in 2019.

The one thing you can do with the government the government loans and Ngos among them are supposedly going to be impacted but there we go.

As you know a big coverage.

State guarantees. So we don't look that number very close to me on the number we have right in terms of coverage as of December 2021, North of 132%. It is still a bulk of what we got there.

2019.

Speaker 7: And I think we will cover all with that number. It might go down a little bit.

We were comfortable with the number.

A little bit.

Speaker 7: in 2022 but still at pretty good and sound level.

2022, but it's still a pretty good.

Some labels.

Speaker 5: okay that that's very helpful thank you uh... for that and then my second question is on your digital list it is particularly you know you know over eight million clients uh... a little bit more than half or or active it could give provide maybe some more color on your expectations for you know how does that client base growth from here uh... water

Okay. That's very helpful. Thank you for that and then my second question is on your digital initiatives, particularly Yafei you show over 8 million clients, a little bit more than half. Our active can you give provide maybe some more color on your expectations for how does that client base grow from here.

What are.

Speaker 5: you know what what percentage of those clients are bcp clients first non bcp clients and if you have any other metrics that you can give like you know with the average revenue are per client you know any loans from your bid deposits any any unit economics or you know numbers that you can help us quantify how you have to show girl

What percentage of those clients are BCP clients versus non DCP clients and if you have any other metrics that you can give like what's the average revenue.

Per client.

Any loans from Yafei deposits any any unit economics or numbers that you can help us quantify how your outpatient girl.

Francesco we'll get that one.

All of it.

Speaker 6: Yes, yes, I'll take that question. About a term of the customers for Yaday are non-BGP customers.

Yes.

I'll take that question and goodbye.

About a third of the customers for Troy Yeah. They are non <unk> customers.

Speaker 6: And what we are continually doing is finding new ways to monetize them more than just transaction in terms of the P2P or the P2M model.

And what we have and continually doing is finding new ways to monetize them more than just transaction in terms of the PTT or they'd be two <unk>.

Speaker 6: We are beginning to see a very high transaction rate in terms of pop-ups, which is a top-up for cell phones. And we are going to begin a distributed pop-ups.

Model.

We are beginning to see Oh.

A very high transaction rate in terms of pop ups, which is a top ups for cell phones.

And we are going to begin.

This treaty.

Speaker 6: for the lower end of the segment that is a tiny non-stop.

Yeah.

For the lower end of the segment that is highly <unk>.

Speaker 6: We're also moving towards a more of a super app type of view, where we think we can deliver high-value products on the lower end of the scale for retail, in terms of access to good quality products for a lower end segment of the retail market.

We're also moving towards a more of a super up type of view, where we see.

I think we've done they neither.

I view it.

On the lower end of the scale for retail.

In terms of access to good quality patents.

Lower end segment.

Retail market.

Speaker 5: So thanks for that. And anything that you can give on revenues for clients, or loans for clients, or deposits, and how you think that would have...

Alright, thanks for that and anything that you can give on like you know revenues per client or loans per client or deposits.

And how you think that would evolve.

Yeah.

Speaker 6: Not at the current time because this is something that we are beginning to view in terms of monetization per customer. Today we've been focused on growth and growing the customer base and having a lot of transactions, having active customers. So during 2022 we will be seeing those metrics.

No that's not at the current time because this is something that we are beginning to view in terms of monetization per customer today, we've been focused on growth and growing the customer base and having a lot of transactions, having active customers so doing.

So we will be seeing those metrics.

Okay. Thank you very much at all actually.

Peter This is John Franco actually were also nicely.

Speaker 4: Paris, Jean-Franco, actually, we are organizing a city digital day, I believe it's March 15th in New York. So even more than all of you, more than invited to...

<unk> digital they are I mean, if it's March 5th place in New York for even more or all of you more then invited to.

Speaker 4: but then we will be much more specific on our issues also, but obviously on Japan. Great. Thanks, Yafrakuya.

But then we will be much more specific on.

Other issue. It's also about obviously on dumping.

Great. Thanks, John frankly, I hope to be there too.

Okay. Thank you and the next question will be from Lovell Orthos, though with UBS. Please go ahead.

Speaker 1: Thank you and the next question will be from Alavo Arcuzo with UBS. Please go ahead.

Speaker 4: Okay, good morning everybody. Thank you for taking me.

Okay. Good morning, everybody.

For taking my question.

Speaker 7: Actually, I wanted to hear from you about this strategy with the 60 billion of the group, I mean, after 2020, the area of the East East.

Actually I wanted to hear from you about the strategy with the yard of the group I mean after 2020.

Can you spend a lot of things.

Speaker 7: So basically return to the 20s, we showed why some operations like this people leave that must be called critical capital are still lagging behind with the possibility, well, well, the cost of capital is operation. So.

Turning to the training and really show, while some operations, but before he does.

Q4, or the core capital.

Few lagging behind with a piece of it.

Well well below the cost of capital these operations so.

Speaker 7: I basically wanted to understand what is the bank strategy for these subdiaries? I mean, what is the plan to foster these operations for the next few years?

Basically wanted to understand what is the bank strategy for <unk>, Yeah. I mean, what is the plan to foster these operations for the last few years or even the case of an M&A I don't know it seems.

Speaker 7: or even the case of an MLA, I don't know if these are the case, but is in the bank's pipeline a potential assessment? Thank you.

Okay.

He is in the bank's pipeline of potential divestment.

Very much.

Speaker 4: Sorry, this is John Franco, would you get the first part of your statement last question? Could you repeat that one because at least IP and get it?

Or sorry. This is gianfranco, we didn't get the first part of your of your statement Slash question could you repeat that one because.

At least I didn't get it.

Speaker 4: Yes, no problem. I just wanted to know to have some more callers about the expectations of yours.

Yes, no problem I just wanted to know.

To add some more color.

<unk>.

Patients of yours for the next two years about the subsidiaries of the group like many people he's got a peaceful Kitty hawk because they are delivering a profitability well below the cost of capital of these operations. So I wanted to hear from you.

Speaker 2: for the next years about the city of the area of the group, like BCP Bolivia, Pasif, Ocreti Park, because they are delivering a profitability well below the cost of capital of these operations. So I wanted to hear from you what is basically a short plan for the next year.

What is the actual plan for the next few years a.

Speaker 7: to show the tension rebound of these operations. Or I don't know if this is the case.

Show potentially about all of these operations.

I don't know if this is the case, but if he is in the bank pipeline applications like that drove this operation I don't know if you understood.

Speaker 7: But if you use the bank's pipeline, I'll put it back in for this operation.

Speaker 4: I don't know if you're purely a student here, I prefer feeding. Yeah, it's not.

Yes.

Speaker 4: Yes, thank you, those clear. I'll take that one up.

Yes, Thank you very clear I'll I'll take that one.

Speaker 4: Actually what we foresee is that all of our subsidiaries will be above cost of capital by year and this year with the exception of obviously the digital ventures and Bolivia. Bolivia has seen, I don't know how much, I worry you are about the Bolivia, but...

Actually what we foresee is that all of our subsidiaries will it be a bos cost cost of capital.

By year end this year with you.

The exception of August neither the digital ventures, and Bolivia, Bolivia.

A few.

How much my where you're about I believe you're about.

Speaker 4: Bolivia the business environment is quite complicated and the banking environment specifically is quite complicated I would say much more complicated but the business

I believe that the business environment is quite complicated and the banking environment, specifically is quite complicated.

They are much more complicated than that but.

But the business.

Speaker 4: environment in general. So having said that, we've been in Bolivia for the last, over the last 25 years, we do believe that we have a strong franchise there, but we're doing is trying to become much more efficient and hoping to

Environment in general.

So having said that.

We've been involved we definitely lost over the last 25 years. We believe we do believe that we have a strong franchise. There what we're doing is trying to become much more efficient.

Open to.

Speaker 4: better, better friends to look at it to Bolivia and obviously

We're better friends, who have gotten into Bolivia.

Obviously.

Speaker 4: that unfriend the environment is quite complicated to do a transaction, a merger and acquisition or sell the subsidiary because of the environment. So that's what we stand today.

Unfriendly environment is quite complicated to do.

Sean.

On acquisition or sell the subsidiary.

Sure.

However, environmental but that's what that's where we stand today.

Speaker 7: Okay, very, very clear. And all of us, if you find me on the postmaster's questions, it's very quick. It's about the PIOH for the year. So given the profitability balance in the last year's expectations and why the guidance for the year, what could we expect about the distribution for the year?

Located is very very clear.

Hello, If you pardon me.

Just a question sort of a quick it's above.

The payout ratio for the year.

So given the profitability of rebalancing the last year.

Patients.

Why is the guidance for this year.

Or what could we expect.

<unk>.

<unk> for this year.

Okay.

Speaker 4: DDR, sorry about that description.

Yeah.

Our dividend sorry about the connection was quiet.

What's that.

Speaker 7: Yes, sorry, it could be from my side. Just local, I think that's very, very, it's about the duration for this year. Yeah, you show them. Yeah, great. Me, Max, you go. I mean, okay. Yeah, now I go.

Yes, sorry, it could be from my side Joe.

Deal flow.

They're very very weak.

Rachel.

Yeah, Yeah sure alright.

Okay.

Yeah, No I got I got it thank you.

Speaker 4: We cannot provide a pay-out ratio as of today. What we've told the market always, and the position we have is that what we do is, we base on the budget of growth specifically on the banks. We set up the capital requirements or sustain it that growth. After that, the excess profits we get from the subsidiaries, the subsidiaries, eternal...

So we cannot provide a payout ratio.

As of today, what what we what we've told the market all the way from the.

Is that what we do is we based on the budget of growth specifically of the banks, we set up the capital requirements are.

Stating that that growth.

After that the excess.

The excess profit we get from the subsidiaries.

There are no.

Speaker 4: an important M&I transaction inside what we do is pay dividend. The dividend and announced announcement should be stated by the board. I bring it on to remember if it's February or June , so that you can head in with that.

Yes.

My name is unfortunately.

What do we do these pay dividend.

The dividend announced announcement should be stated by the board.

I agree with the numbers you'd February or neutral.

Okay.

Yes.

Hey, Brian .

Speaker 4: April , so in April and then we will make public. But I would think that what is important is that philosophy and the policy we have around division and ad ratios.

Hey, Bill.

We'll.

We will make it public.

What I would think that what is important is that the philosophy or the public policy.

We have around our dividend payout.

Catherine.

Okay. Thank.

Thank you very much ofer <unk> very clear.

Speaker 1: Thank you and the next question will be from Andre's Soto with Fentander. Please go ahead.

Thank you and the next question will be from Andres Soto Santander. Please go ahead.

Speaker 4: Good morning to all and thank you for your opportunity to ask questions. Maybe I follow up on that last response, I don't think, or you say you dividend.

Good morning to all and thank you for the opportunity to ask questions. Maybe I'll follow up on that last response, either in France or would you say your dividend.

Speaker 4: Payout will depend on the capital levels at the subsidiary levels and you will have time to distribute any excess of that. What are the two minimum thresholds that you have said for your subsidiaries for the borders of these three individuals to a parent company and from the parent company to shareholders?

Payout will depend on the capital levels.

Eddie levels, and you are planning to distribute any excess above those.

Those minimums minimum thresholds that you have said for your subsidiaries.

For the full dividend.

The purpose of.

This would indeed be there.

Parent company out from the parent company tuition holders.

Yes.

Sure.

Yes.

Yes.

Speaker 2: I think the main restriction comes from the banks. In the case of BCP, it's a core equity tier one of our wound, 11%. At the minimum point, that is the declaration of the dividend. In the case of Nivanco, Peru and Nivanco, Colombia, is 15% under the same rules.

I think the main restrictions came from the bank in the case of BCP have core equity tier one or a round 11 per screen.

The minimum point that is the declaration of the dividend in the case of the runkel.

The Peru, and Ivanka, Colombia is 15% under the same rules.

Speaker 2: And for this year, we are maintaining the profit and some vehicles in particular like Pacifico who has endured some losses.

And for this year, we are maintaining.

Maintaining the broker.

Some vehicles in particular like Pacifico to Husky and do some some losses.

Speaker 2: That's the basic rules and according to what we have here, the information.

And that's the basic rules and according to Levy on Franklin Nation.

Speaker 2: We reserve funds for M&A expectations, the CREALO project.

We started funds for M&A expectations that Korea little projects and the rest is going to be paid.

Speaker 2: And the rest is going to be paid dividends. And our expectation is to have an sustainable and increased dividends declared at the beginning.

We intend on what expectation as to how sustainable.

With an increased dividend.

Clear at the beginning of the year.

Yes.

Speaker 2: Thank you, sir. And can you remind us what is the price of that fund, but you have said that's a rainy day fund or also for many purposes? How much is that? In the part it used to be 8. And it's a free travel. At this point, we have a in liquid funds fund.

Thank you.

Can you remind us what is the size of the fund, but just have to say that's a rainy day fund and also for modeling purposes, how much of that can be used to be.

That level, yes.

Yes at this point, we have in liquid funds funds.

Speaker 2: All the amount that we raised from the bond issue during the crisis, this is the $500 million and above that we are going to maintain some additional excess liquidity, but I will say and a relatively small amount not in the vicinity of the two billion solids that we had in 2019.

All the amount that we raised from the bond issue.

And the crisis. This is the $500 million and above that we are going to maintain some additional excess liquidity, but.

I will say.

Relatively small amount not in the CBD of the 2 billion saw is that we had in 2019.

Speaker 2: If you see our balance sheet, you are going to see a lot of cash, but we also have the bond and we have all the positions of our reserve. And that when we are considering from liability management operations down the road.

If you see our balance sheet, you are going to see a lot of cash but.

We also have the bonds and we have all the positioning that's how we set up on that one we are considering some liability management operation down the road.

Perfect. Thank you so much.

Speaker 1: Thank you. The next question will be from George Friedman from City. Please go ahead.

Thank you. The next question will be from George Friedman from Citi. Please go ahead.

Speaker 2: Thank you very much for taking my question. I have two questions. The first one related to the prospect for your credit growth is here. You are highlighting in the presentation that you expect long growth in the structural portfolio to be at about 8% to 10%. But with a real GDP of only 2.5%.

Thank you very much for taking my question have.

I have two questions. The first one related to the prospects for your credit growth. This year you.

You were highlighting in the presentation that you expect.

Loan growth in district for a purchase price to be at about 8% to 10%.

But with a real GDP off only two 5%.

Speaker 2: Last year, GDP grew 13% and of course, you departed from higher bases, but you know the portfolio grew only 3% is likely below that. So how do you believe you can achieve these levels of growth in light of the dissolution in the economy and what would be the drivers for that and whether I know competition might get more intense or not.

Last year GDP grew 13% and of course, you departed from a higher basis, but you know the portfolio grew only three.

3% is slightly below that so.

How do you believe you can achieve these levels of growth in light of the deceleration in the economy and what would be the drivers for that.

And whether I know competition might get more intense or not thank you.

Yeah.

Yes.

Speaker 7: The video, you can just take that one on the DCP and complement the bank. Yes, yes, for sure. Actually, we have to separate the loan portfolio when you include the reactive government and? ????? ?//aps. YA?

Every deal we don't think that one of the shipyard complementary uncle.

Yes, yes for sure.

Yeah.

We'd have to separate the loan portfolio.

When you include the <unk>.

Yes.

Government backed portfolio.

Speaker 2: We expect that that portfolio, including reactiva, is not going to grow that much. And the opportunity is to substitute those kind, those.

We expect that that portfolio, including Rec dealer is not going to grow that much and the opportunities to substitute those guidance those.

Speaker 2: those roles that are going to be repaid this year. So we see a great opportunity in the PIMA segment, especially.

Those loans that are going to be repaid this year.

So we see a great opportunity in the Bemis segment, especially.

Speaker 2: that portfolio is going to be amortized and we are going to substitute cars a relevant part of that portfolio with higher margins.

But that portfolio is going to be amortized and we we are going to slip seafood.

A relevant part of that portfolio with higher margins.

Speaker 2: And also we expect that consult, consultate also we expect a significant strong demand in the mortgages and in a

And also we expect it.

Okay.

So consider it.

Also we expect significantly.

A strong demand in mortgages.

And in.

Speaker 2: in the consumer section because we are looking, we are working, but what we are seeing is that the levels are getting up to three COVID, three COVID.

In the consumer segment, because we are looking like we are.

Seeing is that the levels are.

Getting up to three copies.

Speaker 2: pre-COVID levels, in terms of the size of portfolio. So most of the growth comes from recovery to pre-COVID levels, but a relevant part comes from substituting the reactive...

Please let us know in terms of the size of portfolio.

So most of the growth comes from.

Recovery too.

Or is that a relevant part comes from substitute in the diary.

You are portfolio.

Speaker 4: Just to complement video's comment, or at NIVAN, at NIVAN, was mentioned before, in last quarter, no, this is a personality at NIVAN, but last quarter was a record quarter.

Just to complement your last comment.

I think the vertical as I mentioned before in last quarter.

Alright.

I'm not going to happen with ankle.

Yeah.

Last quarter was a record quarter.

Speaker 4: Sorry, buddy, we need one more. We only expect the micro-file and SNE to keep the volume just as the type, those were the segments that were hit the most along the copied crisis. We are seeing.

And started converting remove owner.

We expect.

Microphone <unk>.

This is Matt.

Hum.

Following Dr Dwight protect.

Those segments are working but most are longer coffee prices, we are seeing them.

Speaker 4: a lot of activities there. So that will complement also what Geo Jeff.

Lot of activity there so that will complement also what.

Just mentioned.

Speaker 2: Perfect. And there's some of a lot there. How much do you think MiBunk could represent in terms of total loans? It represents approximately 10% of the total portfolio nowadays, not sure if you have an ambition of having a bigger participation of MiBunk.

Perfect and just a follow up there how much do you think.

The bank or could represent in terms of how long is it represents approximately 10% of the total portfolio Nowadays not choice you'll have an ambition.

Having a bigger participation of bunkering in the future.

Well the answer is yes, but it's in the long run.

Speaker 4: The average yes, but using the long run.

Speaker 4: We strongly believe that one of the main avenues for growth at the gray code is growing in microfinance, not necessarily only in Peru, but also in Colombia where we are operating today. Still a tiny operation, but we're very happy with the results of that operation. So we may be quite active in other countries in Latin in the upcoming year.

We strongly believe that one of the main avenues for growth.

<unk> is growing in micro finance.

This is Harley oddly in Peru.

But also in Colombia, where we are operating today still a tiny operation, but we're very very happy.

Happy with the results of that operation. So we may be quite active in.

All of our countries in Latam in the upcoming years.

Speaker 2: perfect. And my second question very quickly is on the effective text rate we had symbolability of effective text rates during the past quarters. So just wondering to come up with your guidance what you are envisioning for the effective influence of effective text rates in 1222.

Perfect and my second question very quickly is on the effective tax rate we had some volatility.

Our effective tax rate during the first quarters. So just wondering to come up with your guidance. What you are envisioning for the effective tax rate in 2022. Thank you.

Uh huh.

Speaker 2: Yes, as you mentioned, we have had a lot of volatility during last year, at some point we reached four points for $14, so it's per dollar. As year end, we were around four now. With all the volatility we are in 384, we think that we are going to be around these figures that are below, that was going to was our expectation only a couple of months ago. But I think at this moment, we are to have two controversies.elve,

Yes.

As you mentioned, we have had a lot of volatility with them last year at some point, we reach four point 14 solely stockholder at year end, we were around four now with all the volatility. We are intrigued 84, we think that we are going to be around these figures that that'd be load that's going to last.

Our expectation only a couple of months ago, but I think at this moment, we are to have to counter forces.

Speaker 2: political risk with upward pressure and a significant balance surplus in the commercial front as opposed to the pressure. The combination of both suggests that we are going to be around.

Political risks with the upward pressure on that significant.

The balance is solid.

Plus in the commercial front.

A couple of C diff and downward pressure the combination of a book she gets house that we are going to be around these levels.

Speaker 2: Sorry, which levels I need that part? Oh, we are now at 3A depot.

I'm, sorry, which levels I missed that part.

We have now a 384.

Okay.

Okay perfect. Thank you.

Speaker 1: Thank you. The next question will come from Alonso Garcia with Credit Twist. Please go ahead.

Thank you. The next question will come from Alonso Garcia with Credit Suisse. Please go ahead.

Speaker 8: Hi, good morning, everyone. I'm thinking for taking my question. It's actually a follow-up on the margin side. First, I mean, just wanted to, if you could remind us of your sensitivity to every 100 basis points increase in the Peruvian interest rate.

Hi, good morning, everyone.

And for taking my question.

Actually a follow up on the margin side.

First I mean, just wanted to if you could remind us of your sensitivity.

For every 100 basis points increase in the interest rate.

Speaker 8: And second, I mean, you mentioned the puzzle is that you see some pricing pressure in the quarter affecting especially the wholesale portfolio. So just wanted to hear from you, you continue to see that pressure on pricing for 2022 in the wholesale segment. And if you see, and if you are starting to see this kind of pressure also in other segments of the portfolio. Thank you.

So I mean, you mentioned in the press release that you some you'll see some pricing pressure in the quarter.

Affecting especially the wholesale portfolio. So I just wanted to hear from you. If you continue to see.

That pressure on pricing for 2022 in the wholesale segment.

You see and if you are starting to see.

Just kind of pressure also in other segments of the portfolio. Thank you.

Speaker 7: Maybe I can take that to the other one. Yes, yes, it's top. We are not here.

So maybe I can take that one.

Yes he is.

We don't know.

So that's one thing.

Yeah.

Sorry.

Speaker 2: So, can you say that one on the information? Yes, I can say that one on the information. From edition, yes, ideas and after that, the Okan complement me. Yes, we have an sensitivity of the portfolio that implies around saber basis points in mean. Let's say if we increase the rates in a parallel movement, it's a little bit below 200 million solids at this point, assuming a parallel move in the cure.

Okay perfect guys, it's pretty good.

One on <unk>.

Good ideas and thoughts of that Eagle can complement me.

On the <unk> of the portfolio that implies around say basis points I mean, let's say if we increase the rates in a parallel movement is a little bit below 200 million choice at this point.

Assuming a parallel move in the cubes.

Speaker 2: And as you imagine, this is an accumulative effect over the years. That's the sensitivity of our portfolio. We are seeing...

As you imagine thesis on a cumulative effect over the years that sort of sensitivity to our portfolio. We are seeing a gradual translational aimed at this rate in the wholesale portfolio with ratios, but we have seen the translational how your interest rate and we foresee some delay in the translational and the high.

Speaker 2: a gravel translation into this rate in the whole cell portfolio with pressures, but we are seeing the translation how you interest rates.

Speaker 2: And we foresee some delay in the translation on the higher rates of the consumer portfolio and the voltage lines that is going to happen.

Rates of the consumer portfolios that have all the lines that she was going to happen, but with some delay that's a what traditionally happens with our portfolio. The decrease is a with some delay of decrease is also with some delays in the higher rates and revolving lines. So through the year, we are going to be.

Speaker 2: but with some delay that what traditional happens with our portfolio.

Speaker 2: The decrease is with some delay and the increase is also with some delays in the higher rate and revolving lines.

Speaker 2: Through the year, we are going to be the gravel translation of the increase in the rate that we are seeing right now.

The railroad translation of the increased each of the three that we are seeing right now.

Speaker 8: and this is the subject to clarify, send back his points plus send back his points for every 100 like his points in quiz correct.

Understood. So just to clarify seven basis points.

Plus seven basis points for every 100 basis points and course correct.

Indeed.

Speaker 8: Yes, the facilities mean and mean. Yes, basis points mean. Yes, positive for every 100 basis points increase.

Yes, the sensibilities.

Basis points, yes.

Positive for every 100 basis points increase.

Yes parallel movement.

Okay.

Yes.

Yes.

Speaker 1: Thank you. And the next question will be from Yuri Fernandez with JP Morgan. Please go ahead.

Thank you and the next question will be from Yuri Fernandes with JP Morgan. Please go ahead.

Hello, Good morning.

Speaker 1: Hello, good morning and take care and thank you for the questions of asking questions. I haven't followed up on margins on these with pricing topic. If you can provide some caller on hack TV lines for the guys that are expiring, are you ready? inspire me. Give them all the senifily.

So for the purchase of asking the questions I have a follow up on margins.

These with pricing topic.

If you can provide some color on heck Teva lines.

Part of guys that are expiring are your weight, which you.

Speaker 2: move the price to the normal average, like to the store called pre-COVID levels, or are you facing some kind of resistance from clients to move prices up again? And I get my point here, is to try to understand the early new expansion, right? Because you are guiding for 20.

To move the price to the normal average historical pre COVID-19 levels or are you facing some kind of resistance from from clients to move prices up again and I guess my point here is to try to understand your garden expansion right because you're guiding for 20 to 50 bps.

Speaker 2: in the expansion this year. And basically my question is regarding 2023, right? So if you wish to expect your needs to keep evolving to any 250 beep every year, so maybe by 2023, 2024, we may see margins back again for those five, five and a half percent levels. And I guess we're priced here on HACTIVA is important to understand that space, right? If you're, you'll be able to...

Based on this year and basically my my My My My question is regarding your 2023 right. So should we should expect your needs to keep evolving Duane each or 50 Bip every year. So maybe by 2023 2024, we may see margins are back again to those five 5.5% levels and I guess with pricing here.

It is important to understand that speaks right before you'll be able to.

Speaker 8: to reach that faster or it will take some more time. And I can ask another question later. Thank you.

To reach that faster or it will take some more time and I can ask another question later.

Speaker 4: Sure, I'll take that one. You're a great question because it helps us in the follow-up on what we mentioned in the last call. We've already seen...

Sure.

I'll take that one.

Great question because.

Helps us and really a follow up on the ones we mentioned in the last call.

We've already seen.

But which is close to 45% of what the disbursement.

Okay.

We paid.

Bob.

Speaker 4: That's one important piece of information. The other one is that the FUTT key, especially at the bank, or the distance in rate of the FUT rate has compared to the traditional loan rate that's important with LARGE. We've seen already a lot of activity, as I mentioned, the last quarter. And we haven't seen any negative impact in terms of the willingness of those clients to...

That's one piece.

Piece of information.

Strategically, especially at the bank or the difference in rates.

You know rates as compared to the traditional low rate as well.

Importantly, large we've seen already a lot of activity as I mentioned the last quarter.

We haven't seen any negative impact in terms of their willingness of those clients too.

Speaker 4: get the new loans at market condition. So we really do not expect any noise going forward. And obviously, as...

Get.

New their new loans at market conditions. So we do not expect any.

Going forward.

Obviously.

Speaker 4: The further we move in the year, the more of the reactive loans will be repaid and we should be back into normal by year end. And maybe I don't know, everything between 20 and 25% of the total reactive loans have been refinanced and that will trickle down as we look forward.

The further we move through the year the more of the recipe of our loans will be repaid.

It should be back to normal by Iran, and maybe I don't know, there's anything between 25% to 35% of the total reactive alone heartbeat have been refined out from Dutch hub that will trickle down as we move forward.

Speaker 4: We, the second part of the question, we do expect...

We.

The second part of your question, we do expect rates to go back to normal because of them yourselves.

Speaker 4: to go back to normal because of the injury.

Speaker 4: I'll be a little bit more specific in my kind of remarks.

As I mentioned before.

Listen I think more specific or.

No.

No seriously.

Yeah.

Speaker 2: Yes, sorry to compliment what the French coalition is is happy what he says. The only thing that I want to remember you is that the cumulative effect of the increase is rates over time because you reprise the portfolio of Radualyshaw. We will see an increase in top line interest rates for a couple of years very clearly.

Yes, certainly.

To complement what.

Frankly, it's exactly what he said the only thing that I want to remember you is that the cumulative effect of the increase in rates over time, because you reprice the portfolio gradually so we will see an increase in top line interest rates for a couple of years.

It very clearly.

I know that's fully repriced.

Speaker 2: That's pretty clear, Sather and Juan Franco. Super clear. Can I just ask him fees with cost expenses and I.I. margins, but fees are missing. So my question is, should the expect fees to grow more or less regarding like, similar to our long growth? Just checking the pace of the growth, because Gizera, as you said, was a normalization for volumes and he's the real 20%. But I'm not sure how fast can fees grow each 2020. Thank you.

That's very clear.

Cool.

Super clear can I, just ask him she's we discuss expenses NII margins, but our fees. Our RBC. So my question is should we expect fees to grow more or less regarding like senior to our loan growth.

Just checking the case a few growth because this year as you said wasn't normalization for volumes and she's grill.

80%, but I'm I'm not sure how how fast can seeds grow which doesn't venture. Thank you.

Okay.

Go ahead Sir.

Yes.

Speaker 2: Yes, I would like to remember that during 2020 we have a almost 114 team on something based of February restricted legal activity in the country. So the transactional volume dropped significant.

I would like to remember that during 2020, we have a almost 114 when something base or severely restrict the level of activity in the country. So the transactional volumes dropped significantly.

Speaker 2: In this regard, the figures that you see in 2021 are a reflection of the recovery of these volumes of activity and transactional couple with increased capabilities, distribution capability that is hard to develop. So we are not going to see this kind of additional rebounds down the road, but we see

In this regard the figures that you see in 2021 .

Reflection of the recovery of these volumes.

VT on transactional Copel, we'd increase a capabilities distribution capability develop so.

We are not going to see these kind of additional rebounds down the road, but we see that the Pete income probably are going to roll a little bit faster than before the pandemic, which were very low and very low single digits.

Speaker 2: that the P-incom probably are going to roll a little bit faster than before the pandemic in which were very low at very low single digits.

Speaker 2: a propel that our increased transnational capabilities, but not a repetition of the 2021 that is rebound from a exceptionally low levels at the beginning of 2020.

Propelled by our increased transaction a couple of days, but not a repetition of the 2021 that is a rebound from that.

Naturally low levels at the beginning of 'twenty two.

Perfect. Thank you very much.

Speaker 1: Thank you and the next question will come from Carlos Gomez, which with HSBC New York, please go ahead.

Thank you and the next question will come from Carlos Gomez with HSBC New York. Please go ahead.

Hello. Good morning, Thank you for taking my question.

Two the.

Reduction in fees from asset management, because of outflows from mutual funds in Peru, and the fact that some of this money has gone to offshore.

Offshore accounts.

Can you quantify that and think you tell us if that has continued and when I say quantified can you tell us how much of the funds could be charging in bedroom and how much they will be touching.

In your offshore capability.

Speaker 6: And I know it's only one question, but I noticed that we are getting to the end and nobody has asked you about politics and you don't have a government. What do you expect from the public sector? And again, in the past, we have talked about macro stability and mother in control and a jeszcze de ripe scenario for the next three days.

And I know, it's only one question, but I noticed that we are getting to the end and nobody has asked you about politics and then you don't have the government.

What do you expect from the public sector and.

Again in the past you have talked about macro stability and modeling tools is like a speedier scenario for the next few years. Thank you so much.

Speaker 4: Good morning, Carlos. I'll start with the second part of the other, your second question. And actually, I'm surprised you're making that question because we're in a very stable, political and macroeconomic country. I'm sorry.

We brought in kind of a I'll start with the second part of your.

Second question.

As for me I'm surprised youre, making tough question because we're in a very stable.

Political and macroeconomic country.

Hum.

Uh huh.

Actually the level of uncertainty.

Speaker 4: very high. We have, as far as I'm talking, we don't have a prime minister as we speak today. There's a lot of noise. There's no clarity whatsoever on the next kind of...

Very high.

We have.

In fact, we don't have a price.

I'll, probably maintenance or.

We speak today.

Sure.

A lot of noise.

There is no flurry D whatsoever on the.

The next what's the next cutting that sprung up.

Speaker 4: and therefore, the roadmap of this government going forward is going to be. Would you say PD, because as a country and the macro side does say, the government should not at the beginning of their presentation.

And therefore, what.

The roadmap of the slow government going forward it has gone up quite a bit.

Which is a PD because our country on the macro on the macro side those transformational or at the beginning of the presentation.

Speaker 4: We are having clear wins. The level of commodity prices specifically copper is...

We are having a tailwind.

The level of commodity prices, particularly copper.

Speaker 4: As record levels, we have record level of production. Therefore, both the fiscal debt, the commercial balance and so on, have been very positive last year. We could be growing instead of 2.5% this year at maybe double that number. And what is more important, I believe.

Basically at record levels.

We are at record levels of production.

Airports are commercial.

Fiscal doctors use the commercial balance and so on.

Hudson has been very positive last year.

So we could be growing instead of two 5% this year.

Maybe double that number.

Well I guess more importantly, I believe.

Made this comment before or Portland is about two points of GDP growth the level of poverty.

With you.

At 5% or more a little forward to easily do their part the social.

Speaker 4: impact of that road is much more relevant. I don't know if I got the second part of your question. Sorry, it will not be the most sensitive, but that's what we stand to be. Maybe, maybe, since when you cannot say the first one, first part, sorry. Yeah.

In fact, the festival is much much more relevant.

I don't know if I got the second part of your question sorry.

Sorry for not being more specific buybacks, where we stand today, maybe maybe I shouldn't have you can you tell US is the first one first part sorry, yes.

Speaker 2: Yes, as you mentioned Carlos, we have a very impact during the...

Yes.

It.

As you mentioned Carlos we have not severely impacted during the.

Speaker 2: election period and we lost almost 50% of the mutual funds in Peru. This is more than two billion dollars equivalent of funds that where we draw. And we have a significant part of this.

Election period, and we lost almost 50% of big mutual funds in Peru D C more than $2 billion equivalent of fun, that's where we drill and we have had two significant capital. Please.

Speaker 2: in our international platforms, but we have to exchange a 100 basis point C.

Our international platforms, but with this change all one 100 basis points fee pool.

For a quarter of that in our non proprietary and distribution fees that we can call. It in international So we have an impact in this regard and I will answer also to highlight that at the beginning of the process. The P&L impact was muted because we charge it.

Early withdrawal fees or loan fees, but down the road, we have less profitable base.

Speaker 2: But down the road, we have a less profitable base that we need to rebuild. But the impact has...

But we need to rebuild.

But the impact has been relevant.

Speaker 2: And has the outflow continued into this year? No. No, we monitor carefully the outflow from different funds, the transfer from different people to outside. And in the last month and a half, I say, the fields have really small or even positive in specific ways.

And because the outflow continued into this year no no.

We monitor carefully the alto from different funds transfer Franklin from different vehicles to outside and the last month and a half.

Say the figures please.

Please be a small or even policy DS English specific weeks.

Speaker 2: And if I can follow up on the politics, do you, again, do you expect, you know, this administration to continue for the next three years and do you expect any legislative changes I could affect the bank or do you just want to? Unfortunately, I do not have a crystal ball.

Thank you and then if I can follow up on the politics do you again do you expect.

These are the things attrition to continue for the next.

Yes, and do you expect any legislative changes that could have left the bank.

Yeah.

Yeah.

Unfortunately, I had to look at how about Crystal ball.

Okay.

Thank you so much.

Speaker 1: The next question will be from Spurgy Dubin with Harding Lobner. Please go ahead.

The next question will be from Burgee Dubin with Harding Londoner. Please go ahead.

Speaker 6: Yeah, good morning. Thanks for the call. I have a question and just confirm some facts. So the first fact I want to confirm is, what is the percentage of reactive loans as a percentage of your total loans today?

Yes. Good morning, Thanks for the call I have a question on and just confirms on fact.

So the first factor I want to confirm is what is the percentage.

Reactive of loans as a percentage of total loans today.

Speaker 4: Is that the other? Yes. It's about 13%, 13%.

Okay.

Cause that forever.

Yes, Sir.

13%.

Okay.

Speaker 6: Okay, so it's 13% in module. Yeah, you expect that to decline to roughly what level by the end of 2022.

Okay. So it is 13%.

Yes.

That too.

To decline to roughly what level by the end of 2022.

Yeah.

Speaker 4: That should be around maybe eight, this is our number. I don't know, says if you have the exact number, the expectations. That should be, yes, maybe to eight percent. Which would have to be calculated? We don't have specific program, we should have a reduction around half. Only a small precision, 13% is new, and four in BCPS is likely higher.

That should be around maybe eight this is a rough number I don't know if there's any if you have the idea of truck number.

For patients that should be maybe too.

We were truly impact if we don't have.

Specific program, we should have a radio shack.

<unk> only had small precision 13%. This mi band four in BCP is slightly higher between 14, and 18% depending of retail or wholesale that I'm talking about the consolidated level right now so roughly speaking from 13 to eight correct.

Speaker 2: I'm talking about the consolidated level right now. So roughly speaking from 13 to 8 correct.

Speaker 6: Yes, roughly. Yes. OK. OK. OK. So that's to be very, just to be very, sorry, just to be very specific. I know, share for change in the official first time in the government. I hope today that's your expectation. OK. OK. OK. So given that, and given all that you talked about with respect to.

Yes, roughly yes, okay.

Okay.

Okay.

Thus we must.

You have to be sort of just to be very strategic on.

Sure George.

You definitely shows.

Our thoughts today, that's the expectation.

Okay, Yeah, Okay got it so given that and given all that you talked about with respect to.

Speaker 6: the rates are ready. So if I look at the charts on page five that you showed, right? So you show that the rates went from even from September 21.

The rates are already so if I look at the chart on page five that you showed right. So you showed that the rates went from even from September 21.

Speaker 6: to January 22, they went from 1% to 3%. So that's an increase of 200 dips. And you said there's potential for another 100 dips increase.

Two January 'twenty, two that went from 1% to 3%. So that's an increase of 200 bps and you said that.

Potential for another 100 bps increase.

Speaker 6: This year, so cumulative you're looking at 300 basis points of cumulative increase over the course of Call it 18 months or so. So health men to stand

This year so cumulative.

Looking at 300 basis points of cumulative increase over the course of them call. It 18 months or so so help me understand you.

Speaker 6: You know, I know you talked about the sensitivity of seven bips of nim expansion to your 200 bips and rates, but qualitatively, I'm not sure I understand why it's so low because you have

You know I know you talked about the sensitivity of seven bps of NIM expansion to your 200 bps in rates, but.

Qualitatively I'm not sure I understand why is it so low because you have.

Speaker 6: 50% of your deposits is basically low cost, what I would call cash in deposits, right? And a big chunk of your loan book is corporate loans, we should reprise fairly quickly. So why don't you have higher interest rate sensitivity and why don't you have higher near-extension?

50%, 60% of your deposits is basically low cost what I would call catheter deposits right and a big chunk of your loan book is corporate loans, but should reprice fairly quickly. So why don't you have higher interest rate sensitivity and why don't you have a higher NIM expansion.

Speaker 2: Okay, probably I can take that. I think two different stories. In the case of live uncle.

Okay perfect.

I think two different stories in the case of Banco <unk>.

Speaker 2: Most of the funding of Mibanko is a whole self-funding and the part that is retail funding has also relatively high sensitivity. So the expansion in Mibanko is more rate and this is part of the answer. In the case of TCP, we have...

Most of the funding or the Banco ease of wholesale funding and the part that needs to be seen.

Retail funding has also a relatively high sensitivity. So the expansion we need uncle is morally right and this is what I thought the answer in the case of BCP we have.

Speaker 2: two portfolios. The dollar portfolio has going to happen in Greece but much more needed and we have a significant part of the portfolio and dollars at BCP as you can remember around 40%. The other part is in solid and in the solid portfolio will have a duration of 2.2 years so we are going to see the full impact in 2023.

<unk> two portfolio at all our portfolio.

Hey, how's it going to happen in Greece, but much more muted.

We have a significant part of the portfolio at BCP.

You can remember a around 40% bullet practicing shortly I mean, the solid portfolio duration of 2.2 years. So we are going to see.

The full impact.

In 2023.

Speaker 2: I don't know if you're higher clear. You have, MiVANCO has less sensitivity due to the pandemic structure. In the case of the system, you have lower portfolio that is not going to have 200 to 100 basis points in green and you have the solar portfolio. And the solar portfolio has a duration of 2.2%.

I don't know if I am clear you have.

The Vancouver.

And TV sensibility due to the funding of trucks in the case of discipline.

For you that it's not going to have 200 200 basis points increase and you have the solar portfolio in the solar portfolio.

It has a duration of two 2%.

Speaker 2: So, gradually we are going to pass through this interest rate and it's going to be a last in the high rates and the volume portfolio in which you don't have the rates gradually but in chunks, the quarter by quarter and gradually over time.

Gradually we are going to pass through these interest rate and is going to be a lot.

A high rate and avoiding portfolio, which you don't pass the rates gradually but in chunks.

Quarter by quarter and gradually over time I don't know if that helps.

Speaker 6: Yeah, that's actually a very good insight and I wish you articulated that up front because I don't think it was very clear but not now it is clear. Just one follow-up question. So when you talked about dollar portfolio and BCP, first of all, what's the duration of that dollar portfolio? And second,

That's actually a very good insight and I wish you articulated that upfront because I don't think it was very clear, but now it is clear.

Just one follow up question. So when you talked about dollar portfolio in BCP.

Uh huh.

First of all what's the duration of that portfolio and second.

Speaker 6: Basically that portfolio is repricing not with solar rates, but with US, what is it like, what kind of a benchmark is that the LIBOR, what is it tied to and how does it repriced? Thanks.

Basically that portfolio is repricing not with solar as rates rise.

With U S a.

What is it like what kind of a benchmark is that LIBOR, but what is it tied to and how does it with price.

<unk>.

Speaker 2: Okay, the duration of the dollar portfolio is shorter. Most of the rates are fixed, but are fixed at the beginning base on a lack of reference that is going to be going to suffer as we speak. So it's time.

Okay and.

The duration of the portfolio is shorter.

Most of the rates are fixed but our seats at the beginning based on lack of reference that is going to be Greenfield soccer.

As we speak.

So it is tied to LIBOR right and its shorter duration.

Yes.

Speaker 6: Okay, understand. Okay, that's very clear now. Thank you.

Okay.

Understand okay. That's that's very clear now.

Sure.

Yeah.

Speaker 1: Thank you and the next question will be from Alonzo, Aaron Buru with BTG. Please go ahead.

Thank you and the next question will be from Alonso Aramburu with BTG. Please go ahead.

Speaker 8: Yes, hi, good morning. Thank you for the call. I wanted to follow up on expenses. It seems like the guidance and efficiency implies somewhere around double-digit growth of expenses. You had mentioned last year some initiatives like going to hybrid labor force, with reduction of office space, and reduction of the physical network as well. I mean, where do you stand in those initiatives? You can't go on those to have on the efficiencies.

Yes, hi, good morning. Thank you for the call I wanted to follow up on expenses and it seems like the.

The guidance on efficiency he flies.

Fleiss.

We're around double digit growth of expenses, you had mentioned last year, some initiatives like going to a hybrid labor force reduction.

Reduction of office space.

I mean that kind of a speech got network, because that's what I mean, where you stand where do you stand in dose and dose initiatives I know you've come from those two.

To help on the efficiency side. These here.

Speaker 4: So didn't, or dey, you know whatever.

Sure.

Oh, Dear Oh, I don't know.

Sure.

Yes.

Well that's it.

Okay.

Speaker 2: As we mentioned previously, we are working in the reduction of the footprint.

Yeah.

As we mentioned previously we are working and the redemption of the food bring back when we reduce that footprint as we mentioned before we have at least three basic components. One is the strictly linked to the basic infrastructure and D. C is already take out differently.

Speaker 2: But when we reduce the tool print as we mentioned before, we have at least three basic components. One is...

Speaker 2: This frequently linked to the basic infrastructure and these is already takeout.

Speaker 2: The citizens of central streaming as well

Do you ever see another approximately came from.

A central services that goes with the client and at the beginning what we are doing is bearing very careful not to reducing selling capabilities. So we redistribute in the surrounding areas with a lot of more ammonia tour that we don't lose a distribution on top of it so.

Speaker 2: And at the beginning, what we are doing is very, very careful to reduce and selling capabilities. So we redistribute in the surrounding areas with a lot of models and monitor that we don't lose distribution capabilities. So this is a factor.

This is a factor.

Speaker 2: And as we mentioned before, the traditional expenses are growing slowly.

As we mentioned before a tradition of expenses are growing slowly.

Speaker 2: but in line with trans-ructional activity, we are expanding more, significantly more, and the other part of that, John Franco also explained the...

But in line with transactional activity, where are they spending more ignite significantly more.

You talked about the young from coal so spring.

Speaker 2: Clearly was the transformational ones that we need to see in another

Clearly wassa transport makes them are ones that we'd need to see them another product.

Yeah.

Speaker 8: Okay, so the net benefit from these relations of office space and fiscal footprint if not anything and then in at least a short term.

Okay. So sorry, the net benefit from these reductions of all office space and treats a couple of things.

It's not significant.

At least in the short term.

Okay.

Is that fair.

Yes, Thats correct.

Yes and no.

Speaker 8: Okay, can I ask a question about YAPA. A ability to be planning on offering micro loans can you comment on where you stand in that plan?

Okay can I ask a second question about <unk> I believe you were planning on upping micro loans can you comment on where you stand.

Ryan.

Yeah.

Okay.

Sure.

Yeah.

Speaker 6: Sorry, can you repeat the question on micro loans? Yes.

Sorry can you repeat the question on micro loans.

Yes, yes.

Right.

Speaker 6: Okay, so what we're planning to do for the couple next two quarters using DCT's analytical models and use YAPE as a distribution channel.

Okay. So what we're planning to do for the couple next two quarters.

And you've seen leasing teams analytical models.

And use it as a distribution channel.

Speaker 6: to understand the type of loan, the amount of loan, the duration of the loan, the type of customer that will preserve this type of channel and to begin to understand the business model around Yapya Sadiq's YouTube channel.

Understand the type of loan the amount of loan the duration of the loan the type of customer that we were prepared to these types of panel and to begin to understand the business model around.

I said assumes in front of them.

Okay. Thank you.

Speaker 1: Ladies and gentlemen, this concludes our question and answer session. I would now like to turn the conference back over to Mr. Gianfranco Ferrari, Chief Executive Officer for closing remarks.

Ladies and gentlemen, this concludes our question and answer session I would now like to turn the conference back over to Mr. Gianfranco Ferrari Chief Executive Officer for closing remarks.

Thank you that's pervasive in previous meetings on gold at the end of 2020 , one we consolidated our return to pre pandemic profitability levels. After two years.

Speaker 4: Thank you. As predicted, if you're just meeting some calls at the end of 2021, we can finally return to PIP and AMIC's Hospital Legal Levels after two years of aggression and challenge.

Certain challenges.

Speaker 4: When the process of closing this chapter is a fundamental lift that we have adequately managed with and fine-tune our capacities to cease professional growth and profitability in all five days.

We're in the process of closing the chauffeur is a food beliefs adequately manage risk and fine tune, our capacities to suit potential growth and profitability in all of our businesses.

Speaker 4: and convenes that by following our partners and the affirming of strategy is a clear focus on visual transformation and sustainability, which have effectively steered our business through chopping work.

Following their purpose.

Women are surface with a clear focus on digital transformation of sustainability.

We have lifted our business pretty choppy waters.

Speaker 4: clicks and certainty will continue on the sanitary macroeconomic and voluptional

Moving toward Kirker will continue on the current macroeconomic and political trends.

Speaker 4: Some of his MPs were not speaking in that particular republic but dueling out of all our doubts.

We continue to manage each.

As we heard from the parent.

Speaker 4: We've said there's one point that we mustn't lose title. Those fundamentals remain strong.

There's one point that.

Hurt them.

Demand remains firm.

Speaker 4: As you can see, our guide is in 2022, as a transition year, in which cost of risk in willing loan in comparison to pre-covid levels, but will be back to normal by 2030. During this transition, we expect in the record of several of these.

As you have seen your data.

'twenty two is a transitional year, which cost of risk remained low in comparison to pre COVID-19 levels.

You are back to normal.

See you.

During this transition we are supposed to do.

Recovery for several reasons.

Speaker 4: First, I'll increase the inversions rate in line with central bank friends V1.

First an increase in Brooklyn is right in line with the Central Bank friends worldwide.

Speaker 4: also a reduction in government funds for the long.

Also a reduction in government sponsored loans.

Speaker 4: Finally an increase in meo and local cal.

Finally, an increase in.

In local currency loans.

Speaker 4: In the middle of the government level shown in the last couple of 2021, we expect to maintain a sustained ROE in the high-clin in the long run.

Nope, we have dozens of innocent level shown over the last two quarters and then one.

But the main thing that's sustained early in the high school in the long run.

Speaker 4: to make this possible, we will continue investing in digitalizing our traditional differences and in disrupting them.

Disposable.

We invest in digital life in our traditional businesses Army disrupting ventures.

Speaker 4: that create code with CPD John original context. It also sets our sites on the global meta-sense for consumer behavior and new technologies that offer and parallel opportunities in the medium term to provide better power to society first more efficiently. And more importantly, good life financial inclusion in our underserved.

That's great.

<unk> original content.

Also set a recurrence of the global Mega trends.

For consumer behavior.

The offer unparalleled opportunities in the region.

Long term to provide better products and services more efficiently.

Goodbye for initial inclusion in our underserved market.

Speaker 4: At the outset of the pandemic, we were quick to confirm our digital strategy and accelerated our investment on the soil. Over the past year, we have closely examined CREATOPS innovation model and reviewed the governance, expressing our capacity to develop the strategic range.

At the onset of the pandemic we were.

Third our digital surfaces and accelerated our investments in front.

Although the Boston Misheard.

Those are the kind of illustrative purposes innovation model.

With government.

Our completion <unk> production.

Thanks.

If we combine the agility of technology of these ventures with the competitive advantages of our purpose.

Speaker 4: If we combine the agility and technology of these sensors with the comparabilities and advantages of our public interest, we will strengthen critical smooth.

We will strengthen critical solutions.

Speaker 4: In the sharpest journey and our new vision of innovation management, our industrial digital day, which will be hosting a metric thing in New York, I'm March 16th in London. I would like to invite you all to this again. It will really be a pleasure to see you all again.

Sure his journey.

Some of the innovation minus although reversal digital day, which we will be hosting on merchants to New York on March 15th none of them.

We'd like to invite you all to this event it will really be a pleasure to see you.

All of them.

Speaker 4: Finally, I would like to take the opportunity to share with you. And after 26 years...

Finally, I would like to take the opportunity to share with you.

26 years of publicity and the last for a CEO .

Speaker 4: And the last four are Fio. I am thrilled and motivated to assume the leadership of Fio and Gold, as I work hand in hand with our top notch.

Three of them are motivated to assume the leadership of pretty good. So we're counting on.

Notch team.

Speaker 4: Our passion for innovation, focus on climate and most of all, our commitment to the countries where we operate with the regular efforts to still our purpose.

Our passion for innovation focus on clients and most of all our commitment to the pontoons, where we operate with my original airports to fulfill our purpose to contribute to improving lives we accelerated the changes.

Speaker 4: to contribute to improving life by accelerating the changes that our countries need. Thank you very much.

Thank you very much.

Speaker 1: And thank you, sir. And thank you, ladies and gentlemen, this now concludes today's presentation. You may now disconnect. Take care.

And thank you Sir and thank you ladies and gentlemen. This now concludes today's presentation. You may now disconnect take care.

Yes.

Yeah.

Yes.

Okay.

[music].

Speaker 9: Three.

Speaker 9: In and we.

Speaker 9: The ST.

Yes.

[music].