Q4 2023 Credicorp Ltd Earnings Call
Operator: 23 conference call. A slide presentation will accompany today's webcast, which is available in the Investor section of Credicorp's website. Today's conference call is being recorded. As a reminder, all participants will be in a listen-only mode.
A slide presentation will accompany today's webcast, which is available in the investors section of credit Corp's website.
Today's conference call is being recorded as a reminder, all participants will be in a listen only mode.
Operator: There will be an opportunity for you to ask questions at the end of today's presentation. If you would like to ask a question, please signal by pressing the star and 1 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.
He will be an opportunity for you to ask questions at the end of todays presentation.
If you would like to ask a question. Please see now by pressing star and one on your telephone keypad.
If you have connected to the call using the H D web phone on your computer. Please use the keypad on your computer screen.
Operator: If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Now, it is my pleasure to turn the conference call over to Credicorp's IRO, Milagros Ciguanes. You may begin. Thank you, and good morning, everyone.
If you are using a speaker phone. Please make sure. Your mute function is turned off to allow your single to reach our equipment.
Now it is my pleasure to turn the conference call over to credit Corp's I R. O Malay gross she quaintance you may begin.
Malay Gross: Thank you and good morning, everyone.
Milagros Ciguanes: Speaking on today's call will be Gianfranco Ferrari, our Chief Executive Officer, and Cesar Rios, our Chief Financial Officer. Participating in the Q&A session will also be Francesca Raffo, Chief Innovation Officer, Reynaldo Llosa, Chief Risk Officer, Diego Cabrero, Head of Universal Banking, Cesar Rivera, Head of Insurance and Pensions, and Carlos Otelo, CFO at MiBank Before we proceed, I would like to make the following safe harbor statements. Today's call will contain forward-looking statements that are based on management's current expectations and beliefs and are subject to a number of risks and uncertainties. And I refer you to the forward-looking statement section of our earnings release and recent findings with the SEC. We assume no obligation to update or revise any forward-looking statements to reflect new or changed events or circumstances. Gianfranco Ferrari will start the call commenting on the highlights of our 2023 results and the milestones achieved by our main businesses, followed by Cesar Rios, who will comment on the macroenvironment, our financial performance, and provide our 2024 guidance. Mr. Ferrari, please go ahead.
Malay Gross: Speaking on today's call will be young Frankel said, Randy our Chief Executive Officer, and say somebody else, our Chief Financial Officer.
Speaker Change: Participating in the Q&A session. We'll also leaves I, just got Russell Chief Innovation Officer Chief.
Speaker Change: <unk> reached Aussie, Sir Yeah, Okay radio head of Universal banking, there's some debate I hate us insurance and pension and Carlos de La Seattle Neither.
Speaker Change: Before we proceed I would like to make the following safe Harbor statement.
Speaker Change: Today's call will contain forward looking statements, which are based on management's current expectations and beliefs and are subject to a number of recent uncertainties and I refer you to our forward looking statement section of our six of our earnings release and recent filings with U S E T.
Speaker Change: We assume no obligation to update or revise any forward looking statements to reflect new changes events, new or changed events. Okay.
Speaker Change: Oh I'm sorry.
Speaker Change: Yeah, and Franco said that he was started or commenting on the highlights of our 2022 result, and the milestones achieved by our many businesses followed by somebody else, who who will come in.
Speaker Change: On the microenvironment, Arthur Nice outperformance and provide plenty of time for that.
Speaker Change: Please go ahead. Thank you Peter good morning, everyone. Thank you for joining US we met market expert expectations for the fourth quarter and our chief resilient full year results in the face of one of the most challenging environments over the last 25 years, excluding the pandemic.
Gianfranco Piero Ferrari de las Casas: Thank you, Mirabal. Good morning, everyone. Thank you for joining us. We met market expectations for the fourth quarter and achieved resilient full-year results in the face of one of the most challenging environments of the last 25 years, excluding the pandemic. Despite the challenge facing 2023, Peru's current prospects stand considerably stronger than they did just 12 months ago. At the start of 2023, we were navigating disruptive protests and enduring political instability. The first quarter also had an inflation rate of 8% and a high reference rate of 75%. Additionally, the country faced Cyclone Yaku and braced for the projected impact of a severe El Nio phenomenon this summer.
Speaker Change: Despite this challenge facing 333 by roof current prospect stumped considerably stronger.
Speaker Change: They did just 12 months ago.
Speaker Change: I'd just start off pretty burning three we were navigating disruptive frozen and enduring political stability.
Speaker Change: The first quarter also had an inflation rate of 8% on a high retro rates of 775.
Speaker Change: Additionally, the country's pace the country phase II lung, Jackie and braced for the projected impact of a severe el Nino phenomenon for this summer. However, as the year ended Beirut demonstrated its inherent resilience by effective effectively managing inflation, maintaining low level of public debt.
Gianfranco Piero Ferrari de las Casas: However, as the year ended, Peru demonstrated its inherent resilience by effectively managing inflation, maintaining low levels of public debt, and sustaining high levels of international resolve. The current stable, yet fragile, political environment, improving macroeconomics with inflation down to 3.2% and the reference rate at 6.25%, as well as lower probabilities for a severe El Nio, starkly contrasts with the conditions at the beginning of 2023. At Credicorp, we have strategically built a diverse portfolio of businesses characterized by robust brand recognition and strong customer loyalty. Our strength is further bolstered by a solid capital base and a prudently managed loan portfolio. Our digital capabilities have been key to enhancing our transactional and funding advantages, enabling us to respond swiftly in volatile environments. As an example, at the beginning of the year, when we foresaw a challenging trade cycle in 2023, we quickly reassessed our risk appetite and adjusted the pricing of our portfolio accordingly. By providing payment facilities to our clients when they need them the most, we also fortify our client relations. Thank you.
Speaker Change: Sustaining high levels of international a reserve their current stable, yet fragile political environment, improving macro with inflation down to three 2% under the reference rate at 625, as well as lower probability for a severe as Nino.
Speaker Change: Currently gone through with the conditions at the beginning of 2023.
Speaker Change: That's great color, we have strategically built a diverse portfolio of businesses correct.
Speaker Change: Our robust brand recognition and strong customer loyalty our strength in Burger is further bolstered by a solid capital base.
Speaker Change: Ah prudently managed loan portfolio.
Speaker Change: These are capabilities have been key to enhancing our transactional and funding advantages, enabling us to respond swiftly in volatile environments.
Speaker Change: For example at the onset of the year when we first saw a challenging credit cycle and going during a three week quickly reassessed, our risk appetite and adjusted the pricing of our portfolio Accordingly.
Speaker Change: By providing payment facility for our clients when they needed. It. The most we also have 45 hour.
Speaker Change: Client relationships.
Speaker Change: We delivered a full year or are we a 15, 8% which includes a substantial charge in the fourth quarter I previewed it to expected losses linked to the El Nino phenomenon.
Gianfranco Piero Ferrari de las Casas: We delivered a full-year ROE of 15.8%, which included a substantial charge in the fourth quarter attributed to expected losses linked to the El Nio phenomenon. This result was underpinned by the strength of our increasing NII. We maintained a resilient risk-adjusted NIMS achieved through disciplined interest rate pass-throughs in the first half of the year. Additionally, we prepared our balance sheet for the declining interest rate cycle by reducing the duration of our liabilities and increasing that of our investment portfolio. Having strengthened our transactional value proposition, we secured the sustainability of our funding advantage. Finally, we leverage our cost-effective digital platforms to accelerate growth in the retail sector. We reinforce our prudent approach to risk management while maintaining a close connection to customers.
Speaker Change: This result was underpinned by the strength of our increasing NII.
Speaker Change: We maintain a resilient risk adjusted NIM achieved through disciplined interest rate rate pass throughs in the first half of the year a.
Speaker Change: Additionally, we prepared our balance sheet for the declining interest rate cycle by reducing the duration of our library of liabilities and increasing done of our investment portfolio.
Speaker Change: How do you strengthen our transactional value proposition, we secured the sustainability of our funding advantage finally, we leverage our golf effective diesel platforms to accelerate growth in the retail segment.
Speaker Change: We reinforced our diligent approach approach to risk management, while maintaining a close connection to customers restart.
Gianfranco Piero Ferrari de las Casas: This strategic move not only allowed us to sustain adequate capital levels but also equipped us to anticipate and minimize headwinds in loan quality throughout the year. We remain committed to advancing innovation and our digital capabilities, which strengthen our competitive position. This approach not only enhanced our existing client relationships but also paved the way for greater financial inclusion. For 2024, we anticipate an improvement in macroeconomic conditions. Our GDP outlook is now 2.5% with a potential upside considering the lower risk of a strong El Nio. Moreover, the Central Bank's reduction of the reference rate lays the foundation for a gradual recovery in domestic demand and consumption.
Speaker Change: These strategic moves not only allowed us to sustain either adequate capital levels, but also with us to anticipate a minimized headwinds in loan quality throughout the year.
Speaker Change: We remain committed to advancing innovation our did you talk about.
Speaker Change: We strengthened our competitive position this approach not only in our existing client relationships, but also paved the way for greater financial inclusion.
Speaker Change: For 'twenty 'twenty four we anticipate an improvement in microeconomic conditions. Our GDP outlook is now two 5% with a potential upside considering the lower risk of a stroke dominion.
Speaker Change: Moreover, the central bank's reduction of the original rate laser from the foundation for a gradual recovery in domestic demand and consumption.
Gianfranco Piero Ferrari de las Casas: Additionally, we anticipate proactive government initiatives to facilitate the unlocking of macro-projects in both the public and private sectors, particularly in mining and infrastructure. A well-balanced and diversified business portfolio reinforces our results. In Universal Banking, BGP solidified local market leadership by expanding transactional levels and offering a seamless multichannel experience. Mobile Banking NPS improved with a growing digital client base. Enhanced IT and digital capabilities have supported a low cost of funds, risk management, and digital. These factors collectively contributed to optimizing efficiency. In microfinance, Mi Banco Peru has been negatively influenced by the challenging macro I have already described. While we adjusted our risk appetite and implemented stricter origination guidelines in mid-2022, we acknowledged that these efforts were not sufficient. It took us time to fully grasp the impact of this concurrent event on our clients.
Speaker Change: Additionally, we anticipate proactive government initiative to facilitate facility got lucky enough micro projects in both the public and private sector, particularly in mining and infrastructure next slide please.
Speaker Change: Ah well balanced and diversified business portfolio reinforced our reforms.
Speaker Change: And Universal banking BCP solified local market leadership by expanding for a fraction of all levels and offering a seamless multichannel experience.
Speaker Change: Mobile banking M. P is improved with our growing digital client base.
Speaker Change: And hence I D and <unk> capabilities supported a low cost of funds.
Speaker Change: Management and digital tier.
Speaker Change: These factors collectively contributed to optimizing efficiency.
Speaker Change: In micro finance Bianco, Peru has been negatively influenced by the challenging macro I already described when we adjusted our risk appetite and implemented stricter or origination guidelines mid 20th learning tool. We acknowledge that these efforts were not sufficient.
Speaker Change: It took us time to fully grasp the impact of this concurrent event on our clients.
Gianfranco Piero Ferrari de las Casas: But we have now made heightened adjustments. The legacy portfolio continues to impact our performance, yet our most recent vintages demonstrate improvement. We continue to assess our risk management capabilities, confident in our tools for further refinement.
Speaker Change: But we have no may heighten adjustments.
Speaker Change: The legacy portfolio continues to impact.
Speaker Change: Afirma yet our most recent vintages demonstrate improvement.
Speaker Change: We continue to assess our risk management capabilities gunflint in our booth for further refinement.
Gianfranco Piero Ferrari de las Casas: In the medium term, we aim to diversify our business through increased transactional and fee-based activities. Given the structural challenges in Colombia, we are re-evaluating the business there and will adjust our strategy to mitigate short-term risks while maintaining focus on its long-term potential. In insurance, an accelerated digital strategy has led to an improved client NPS, increased sales of digital policies, and self-service customer transactions. We optimize distribution channels, notably in retail segments, resulting in the best year in its history. We leverage Bank Assurance and YAPI to strengthen our presence and expect to deliver a long-term sustainable ROE of 20 plus percent. In Wealth Management Advisory, we've completed the first phase of the restructuring plan.
Speaker Change: In the medium term, we aim to diversify our business through increased on sectional on fee based activities.
Speaker Change: Given the structural changes challenges in Colombia, we are reevaluating their business, there and we'll adjust our strategy to mitigate short term risks, while maintaining focus on its long term potential.
Speaker Change: In insurance and accident.
Speaker Change: Or is it digital strategy has led to an improved client N. P is the increased sales of diesel policies and self service customer contractions.
Speaker Change: We are optimizing distributional channels, notably in retail segments, resulting in the best year in its history, we leveraged bancassurance and yep it to strengthen our presence and expect to deliver a long term sustainable.
Speaker Change: Of 20 plus per share.
Speaker Change: In wealth management and advisory with complete completed the first phase of the restructuring plan.
Gianfranco Piero Ferrari de las Casas: Strengthening the business and meeting our 2023 targets. We're on track to achieving our objective of a sustainable ROE in the high teens. At Credicorp, sustainability is integrated into our strategy, driving us to act as catalysts for positive change in the operating context.
Speaker Change: Strengthening the business and meeting our 'twenty to 'twenty three targets, we are on track to achieving our objective of a sustainable ROE in the high teens.
Speaker Change: That's great Corp, sustainability integrated strategy.
Speaker Change: Five enough to act as catalyst for positive change in the operating countries.
Gianfranco Piero Ferrari de las Casas: In addition to our achievement in financial inclusion in 2023, we launched our new corporate environmental strategy, Communicating It, in our first TCFD report in December. We're investing in our innovation portfolio to complement our lines of business, aiming for disruptive initiatives to contribute 10% of Credicorp's risk-adjusted income by 2025. Now, let's have a look at how we are progressing with our most mature initiative. Next slide, please
Speaker Change: Addition to all of our achievement and financial inclusion and break during Q3, we launched our new corporate environmental strategy communicated.
In our first DCF D report in December.
Speaker Change: We're investing in our innovation portfolio to complement or lines of business aiming for disruptive initiatives to contribute 10% of Greg or risk adjusted income by 2025.
Speaker Change: Now, let's have a look at how we're progressing in our most mature initiatives next slide please.
Gianfranco Piero Ferrari de las Casas: Our approach to disruptive initiatives involves a nuanced perspective, an early stage plus VC view that guides informed graduation decisions within our portfolio. A mature example is Tempo in Chile, which is entering the scaling stage this year with a dedicated focus on revenue growth and monetization. Additionally, IAPE intensifies its focus on revenue growth and is on track to break even towards 2024. Cesar will provide a more detailed update on IAPE, but I would like to shift our attention to the rapidly growing temple. We started with a prepaid payment business, achieving exponential growth in monthly active users and engagement. Currently, we are in the second stage, leveraging our recently obtained license to issue credit cards. Positioning Tempo as the first fully digital credit card issuer in Chile, we've also filed for a full banking license. With early indicators from Stage 1 and Stage 2 surpassing our expectations, we are optimistic about the strong potential of this new initiative. As we look ahead, our innovation approach will increasingly encompass the area of Cognitive AI, where we are already making progress.
Speaker Change: Our approach to disruptive initiatives in both our newest perspective.
Speaker Change: And early stage, plus VC view that our guidance informed gradation decisions within our portfolio.
Speaker Change: Mature example is temple and Chile, which enter into scaling stage. This year with a dedicated focus on revenue growth and monetization.
Speaker Change: Additionally, yup intensify focus on revenue growth I need some trucks to breakeven towards towards in 2024.
Speaker Change: <unk> will provide a more detailed update on <unk>, what I would like to shift our attention to the rapidly growing temple.
Speaker Change: We started with a prepaid payment business achieving explanation growth in monthly active users and engagement.
Speaker Change: Currently we're in the second stage leveraging our recently obtained a license to issue grade Guards positioning temple is at first fully digital credit card issuer in June it.
Speaker Change: We've also filed for a full bike banking license with early indicators from stage one stage two for buffering or expectations, we're optimistic about a strong potential potential of these new initiatives.
Speaker Change: As we look ahead, our innovation approach will increasingly I'm gone past the area of cognitive AI, where we are already making progress we're targeting high impact for information, a gross internal processes and external engagement and most notably in customer skews through.
Gianfranco Piero Ferrari de las Casas: We are targeting high-impact transformations across internal processes, external engagement, and, most notably, in customer experience through unique, tailored interactions. Focusing first on productivity and customer experience, we're implementing short-term value generation opportunities throughout a specific use case. We are also initiating the development of transformative use cases, envisioning innovation that propels us into sustained progress and evolution. This holistic approach is supported by a comprehensive framework that ensures the responsible and secure implementation of AI. Cesar, please go ahead.
Speaker Change: Unique tailored interactions.
Speaker Change: Focusing first on productivity and Ghansham experience, we're implementing short term value generation opportunities throughout.
Speaker Change: <unk> use cases.
Speaker Change: We're also initiating the development of transformative use cases, envisioning innovation that propels us into sustained progress and evolution.
Speaker Change: This holistic approach is supported by a comprehensive framework, which ensures their responsible unsecured implementation of AI.
Speaker Change: Please go ahead.
Cesar Rios: Thank you, Gianfranco, and good morning, everyone. In addition to the usual seasonality and expenses, this fourth quarter was impacted by provisions set aside for El Nio based on the best information available at the closing of the books and by a goodwill impairment for Mi Banco Colombia Mexico. I will share now the key financial highlights for the quarter, focusing primarily on quarter-over-quarter evolution. Favorable balance sheet dynamics allowed us to deliver an increasing mean despite sequential reference rate reductions over the last four months of the year. Structurally, loans grew 0.4% measuring average daily balances driven by retail banking at BCP. In addition, the share of low-cost deposits in our funding base rose to 54.5%, which represents an increase of 360 basis points versus the figure at the end of September.
Speaker Change: Thank you Ian Frankel and good morning, everyone. In addition to the usual seasonality in expenses. This quarter that was impacted by provision set aside for El Nino based on the best information available at the closing of the books.
Speaker Change: A goodwill impairment for me Bancolombia, mainly I will share now the key financial highlights for the quarter, focusing primarily on quarter over in Washington, evolutions favorable balance sheet dynamics allow us to deliver an increasing need despite sequential reference rate reductions over the last four months of the year is structurally loans grew.
Speaker Change: 0.4% measuring avatars daily balances driven by retail banking at BCP. In addition, the share of low cost deposits in all of our funding base rose to 54, 5%, which represents an increase of 360 basis points better so as the field at the end of September.
Speaker Change: Although our ankle also favorable as well.
Cesar Rios: Other core income also evolved favorably as BCP took advantage of an uptick in demand for foreign exchange operations at the end of the year. Credicorp capital registered solid increases in fee income. In contrast, insurance underwriting results dropped 13.2%, reflecting higher claims expenses in our P&C on life insurance business, which affected profitability this quarter. It is worth noting that we reported unusually high insurance underwriting results through the year.
Speaker Change: <unk> took advantage of an uptick in demand for foreign exchange operations at the end of the year critical capital released a solid increase in sea vehicle. In contrast insurance underwriting results dropped 13, 2%, reflecting higher claims expenses in our P&C and life insurance businesses, which affect.
Speaker Change: Profitability this quarter. It is worth noting that we report that you knew surely high insurance underwriting result for the year.
Cesar Rios: On the credit risk front, we significantly increased provisions by including an expense of approximately 250 million solids to cover year-end expectations for El Nino. In this context, the cost of risk increased 71 basis points to 3.2%, while our structural MPA ratio rose 7 basis points to stand at 5.6%. Finally, structural MPL coverage increased 101 basis points to stand at 102%.
Speaker Change: The greatest risk front, we significantly increased provisions by including an expense of approximately 250 million soldiers to call that a union expectations for a leader in this context, the cost of risk increased 71 basis points to three 2%, while our structurally NPA ratio.
Speaker Change: Rose seven basis points to stand at five 6% finally, instruct our NPL coverage increased 101 basis points, which stands at 102% all in all we delivered resilient results in a context marked by a larger than expected contraction in GDP and we Hoffman.
Cesar Rios: All in all, we delivered resilient results in a context marked by a large and unexpected contraction in GDP, and we have maintained sound capital levels in our Peruvian banking business as a matter of prudence. Now, as the risk of a severe El Nio has faded, it is our intention, subject to board approval, to deliver a higher dividend payout through the year to move towards our long-term target level. Next slide.
Speaker Change: <unk> gained sound capital later this half hour Peruvian banking businesses.
Speaker Change: Now as the reasonable possibility Nino has faded it is our intention subject to board approval to de lever at a higher dividend held through the year to move towards our long term target levels next slide please.
Speaker Change: For the year 'twenty 'twenty four the Alden for emerging markets look more positive bolstered by expectations of lower policy rates and high commodity prices in the United States. The slowdown inflation will enable market I've ever Lansing led financial markets to Spain face of rate cuts in the second quarter.
Cesar Rios: For the year 2024, the outlook for emerging markets looks more positive, bolstered by expectations of lower policy rates and high commodity prices. In the United States, the slowdown in inflation and labor market rebalancing led financial markets to expect Fed rate cuts in the second quarter. The price of copper is expected to remain at a high level, supported by the global transition toward green technology and despite a moderation of China's economic growth.
Speaker Change: The price of copper is expected to remain at high levels supported by the global transition towards Green technology, and despite some moderation of China economic growth.
Cesar Rios: Peru's GDP is expected to grow around 2.5% this year, with risk tilted to the upside. This estimate assumes El Nio continues to dissipate non-new negative shocks from Europe, a less restrictive monetary policy is in place, and progress is made on key infrastructure and mining projects. The country's central bank has cut the policy rate by 150 basis points since its peak in response to a sustained dip in inflation and lower inflation expectations
Speaker Change: GDP is expected to grow around two 5% this year with risk people to the opposite this estimate assumes El Nino continues to dissipate no new negative shocks will fuel a less restrictive monetary policies in place and progress is made on key infrastructure and mining projects.
Speaker Change: The country's central bank cut the policy rates by 150 basis points since its peak in response to a sustained deepening inflation and lower inflation expectations. Additionally, we expect the government to accelerate advances on key infrastructure projects, such as Charlie multi third and in mining.
Cesar Rios: Additionally, we expect the government to accelerate advances on key infrastructure projects, such as Chavimotec III, and on the mining front, progress is expected on the Safranal Copper Project, and the government is likely to approve an extension to Antamina's life of mines. Regarding Colombia, we believe that GDP growth will accelerate slightly to 1.7% in 2024. Inflation, in turn, continues to be persistent and stood at 8.4% as usual. Consequently, the country's central bank delivered its first interest rate cut in December.
Speaker Change: Wrong Proteus is expected on the southern Alberta project and the government is likely to approve an extension to one time in his life of mine.
Speaker Change: I think Colombia, we believe that GDP growth will accelerated slightly to one 7% in 2020 full inflation return continues to be persisting and it stood at eight 4% as of January the country's central bank delivered its first interest rate cut in December a movement is repeated in January.
Cesar Rios: This movement is repeated in January. Finally, in Chile, GDP is expected to reduce its 2.1 percent growth in 2024 after stagnating in 2023. Meanwhile, inflation is equated at 3.8 percent as of January. In this context, the country's central bank has reduced its policy rate by 400 basis points since its peak. Next slide. The probability of a strong El Nio over the summer has faded to the background over the last weeks. En CENG, the multisectoral committee that studies the El Nio phenomenon in Peru, has made downward revisions to the probability assigned to this event.
Speaker Change: Finally in Chile, GDP is expected to reduce up to 1% growth in 2024. After they started <unk> in 2023. Meanwhile, inflation situated at three 8% as of January in this context, the country's central bank reduced its policy rate by 400 basis points seem to speak.
Next slide please.
Speaker Change: The probability of a strong el Nino over the summit has faded to the background over the last weeks insane. The multi sector a community that the study said Nino phenomenon in Peru has made downward revisions to the probability assigned to this debate currently a weakened tenancy is expected in February.
Cesar Rios: Currently, a weak intensity is expected in February, and from March onwards, En CENG assigns a higher probability to a non-incident. This is undoubtedly a favorable development and contrasts significantly with the scenario in play for our last call, when the expectations of a moderate to strong magnitude El Nio were above 90%. We continue to monitor the probabilities assigned to El Nio, given its high volatility. In the current scenario, the economy is expected to edge up gradually. Next slide.
Speaker Change: March onwards, and saying our science, our highest probability to have no need.
Speaker Change: This is undoubtedly a favorable development in contrast significantly with his inaugural inflate for our last call when the space station of a modern age with strong magnitude El Nino Wassa, both 90% we continue to monitor the probabilities assigned to Nino, giving the high volatility in the accordingly.
Speaker Change: Now the economic is suspected to edge up gradually.
Next slide please.
Dcp's 2020 results were solid despite unfavorable advanced easier analyzing deepwater Auburn, Washington dynamics, the five 1% increase in NII was driven primarily by an improvement in the funding nice demand and saving deposits grew more than 6%.
Cesar Rios: BCP's 2023 results were solid despite unfavorable events this year. The 5.1% increase in NII was driven primarily by the improvement in funding. Demand and savings deposits grew more than 6%, which allowed us to optimize the funding base. Additionally, SME premium and SME business disbursement rose, which changed the portfolio mix. This quarter, 1.8% growth in BCP's other core income was mainly fueled by 11.6% at peak and FX transfer. In line with our previous explanation, provisions at BCP increased 28.9% mainly due to a specific provision for El Nio-related expected losses for approximately 200 million solids. We exclude this effect.
Speaker Change: Which allow us to optimize the funding base. Additionally, SME female SME business. The sportsman's roles, we change the portfolio mix this quarter at one 8% growth in Dcp's. All recording Booth was mainly fueled by 11, 6% of our sheet FX transactions in line with.
Speaker Change: Our previous explanation provisions at BCP increased 28, 9%, mainly due to any specific provision for El Nino related expected losses for approximately 200 million soldiers. We exclude these effects provisions remained at high levels and decreased slightly by 1%.
Cesar Rios: Provisions remained at high levels and decreased slightly by 1%. The marginal increase in wholesale banking provisions was attributable to a base effect, while growth in SME payment provisions was triggered by a negative payment performance. Both of the aforementioned increases were offset by reversals of specific mortgage subproducts. In this context, the cost of risk stood at 2.91%, while provisions for El Nio accounted for approximately 68 basis points of this
Speaker Change: Finally, increasing wholesale banking provision was attributable to a base effect why grow the SME PMA provisions what triggered by a negative payment performance both of them automation increases were offset by a reversal for specific mortgage sub problems in this context the cost of risk stood at 291.
Speaker Change: One per se.
Speaker Change: Provisions for El Nino accounted for approximately 68 basis points of D. C U.
Cesar Rios: On a full year basis, NII was bolstered by high interest rates and by a 3.8% increase in structural loans measured in average daily value. This growth was led by SME teams' working capital loans and mortgages, which grew 13.7% and 5.9% respectively. Despite the elimination of inter-city fees, fee income remained stable this year.
Speaker Change: On a full year basis, NII was bolstered by high interest rate and by a three 8% increasing a structurally loans measured in average daily balances. This rule was laid by SME working capital loans and mortgages, which grew 13 759, respectively.
Speaker Change: Despite the elimination of inter city fees fee income remained stable. This year loan loss provisions increased 115, 3% in 2023 drilling mainly by a deterioration in the payment performance of clients that were negatively impacted by concurrent macro climate and social.
Cesar Rios: Loan loss provisions increased 113.3% in 2023, driven mainly by a deterioration in the payment performance of clients that were negatively impacted by concurrent macro-climate and social events. Operating expenses grew 10% driven by business IT expenses to support a strong growing transactions and the development of digital capabilities and investment in disruptive initiatives. Growth in operating income outpaced the expansion in expenses this quarter, which led BCP's Efficiency Ratio to contract 190 basis points and stand at 38.8%. In this context, BCP's full-year ROE contribution stood at 20.6%. Next slide, please. As Gianfranco commented, YAPE continues to scale. Its pace of revenue generation is steadily climbing, and it is on track to hit break-even this year. At the close of the fourth quarter, YAPE had almost 11 million monthly active users who conducted an average of 35 transactions per month, up 20% quarter over quarter.
All events.
Speaker Change: Operating expenses grew 10% driven by core business expenses to support a strong growing transactions and the development of digital capabilities.
Speaker Change: Investments in disruptive initiatives growth in operating income outpaced expansion in expenses this quarter, which led BCP efficiency ratio to contract 190 basis points and extent of 38, 8% in this context Bcp's full year ROE contribution Institute.
Speaker Change: At 26%.
Speaker Change: Next slide please John Franco Command Yahtzee continues to escape is base of revenue generation is steadily climbing and on track to hit breakeven. This year at the close of the poor quarterly Yafei has almost 11 million monthly active users who can do it at an average of 30 <unk>.
Speaker Change: Five transactions per month up 20% quarter over quarter, nearly 74% of these active users already generate fee income for the more MTS increased nine basis points.
Cesar Rios: Nearly 74% of these active users already generate fee income. Furthermore, MPS increased nine basis points, percentage point, sorry, year-over-year, to stand at 80%. Growth in engagement, fee income, and MPS was attributable to new user-friendly features in YAPE's three business lines. At the end of the fourth quarter, YAPE had 12 functionalities.
Speaker Change: Vantage points already year over year to stand at 80% growth in engagement equal 90, NPS was attributable to new user friendly features CERP three business lines at the end of the fourth quarter you have behalf 12 functionalities that.
Cesar Rios: The payment business features the most used and mature, where top apps and bill payments were the highest contributors to growth in finance; monthly revenue generated in the payment business more than doubled year over year. In the financial services business, two features, one for insurance and another for multi-installment loans, were added to the initial offering of mono-installment products. Monthly revenue generated by financial services grew more than fourfold year-over-year. Finally, we see high potential in the marketplace, where two new functionalities have been added to our discount and ticketing features, gaming, and electronic sales. YAP increased its income per active user 35% quarter over quarter, and it's on track to reach a breakeven despite a seasonal increase in expenses for monthly average users, which was attributable to an uptick in transactions, the development of IT capabilities, and expenses triggered after achieving a specific mileage. Next slide. In 2023, MiBanco's results were negatively impacted by macro conditions, social conflicts, and climate anomalies.
Speaker Change: The payment business feature at the most used and mature we're still perhaps on bill payments, where the highest contributors to growth in fee income monthly revenue generated in the payment business more than doubled year over year.
Speaker Change: Financial service business two features one insurance and another for installment loans were added to the initial offering of mono installment products multiyear revenue generated by financial services grew more than four fold year over year.
Speaker Change: Finally, we see high potential in the marketplace with two new functionality has been added to our these come and ticketing features gaining annually 20 cells yup inquiries it seen compare active user 35% quarter over quarter and it's on track to reach a breakeven despite a seasonal increase.
Speaker Change: And the expenses for monthly average users, which was a three well do them to an antique and transactions they are development.
Speaker Change: Abilities and expenses triggered after achieving a specific milestones next slide please.
Speaker Change: Yeah.
In 2023, <unk> results were negatively impacted by macro conditions, social conflicts and timing anomalies, we generated higher than expected impacts on our implied adjunct branco commended new portfolio beta using Australia improvement, we continue to assess our risk management.
Cesar Rios: We generated higher-than-expected impacts on our clients. As Gianfranco commented, new portfolio vintages demonstrate improvement, and we continue to assess our risk management capabilities. We are very confident that we possess the tools needed to improve and resume growth. NII fell 3.9%, which was primarily attributable to a drop in loan balances after we further adjusted our appetite in riskier segments to focus on lending to better risk profiles.
Speaker Change: We are very confident that we process the tools needed to improve kind of assume growth.
Speaker Change: On a quarter over quarter basis, NII fell three 9%, which was primarily attributable to a drop in loan balances that we further adjust our appetite in riskier segments to focus on lending to better risk profiles. In this context, NIE decreased 30 basis points and a suite of 30.
Cesar Rios: In this context, NIM decreased 30 basis points and ended at 13.35%. Provisions were already elevated for this quarter, after registering a provision of approximately 50 million soles for expected losses due to El Nio. If we exclude this effect, prohibitions fail due to long-term contact.
Speaker Change: <unk>, 35%.
Speaker Change: Provision, we were already elevated gross pool there this quarter.
As a reduced hitting a provision of approximately 50 million solid for expected losses for El Nino phenomenon.
Speaker Change: If we exclude this effect provisional sales due to long contract.
Speaker Change: From a full year perspective, NII increased 1% in 2023.
Cesar Rios: From a full-year perspective, NII increased 1% in 2023. This growth, albeit slight, reflects the fact that the impact of high interest rates on loans successfully offset the effect of rapidly rising funding. Our disciplined interest rate management was key to maintaining NII in 2020. Provision expense increased significantly this year.
Speaker Change: This growth, albeit this slide reflects the fact that impact of high interest rates on loans successfully offset the effects of rapidly rising funding cost our disciplined interest rate management west key to maintain NII in 2023 probing.
Speaker Change: Provision expense increased significantly this year operating expenses increased four 3% in 2023 and remain under control. Nonetheless, EMEA flat evolution of operating income less the efficiency ratio to rise to 52, 7% in 2023.
Cesar Rios: Operating expenses increased 4.3% in 2023 and remained under control. Nonetheless, a near-flat evolution in operating income led the efficiency ratio to rise to 52.7% in 2020. Mi Banco Colombia has been challenged by deterioration in economic conditions, ongoing high inflation, very high funding rates, and a reduction in the interest rate ceiling. Due to this context and the consequent deterioration in business performance, we are recognizing a contraction in this company's value and have registered a goodwill impairment of $64 million at the Credicorp level. Additionally, as Gianfranco mentioned, we are currently reassessing the business and redefining our strategy to better adapt to current market conditions. We remain committed to the long-term potential of this business. Next slide.
Speaker Change: Me Banco Columbia has been challenged by a deterioration in economic conditions.
Speaker Change: Ongoing high inflation very high even funding rates.
Speaker Change: A reduction in the interest rates due to these conflicts and the consequent deterioration in business performance. We are recognizing a construction in this company's value and have reduced it a goodwill impairment of 64 million solid credit quality level. Additionally, John Franco mentioned, we are.
Speaker Change: <unk> entry reassessing the business on redefining our strategy to better adapt to current market conditions, we remain committed to the long term potential of this space.
Speaker Change: Next slide please.
Cesar Rios: Profitability at Grupo Pacifico contracted this quarter with ROE standing at 17.9%. On quarter over quarter terms, net income decreased 45%, impacted by a 23% drop in insurance underwriting results and by non-recurring IT. The contraction in insurance and the variety of results was primarily driven by higher claims expenses in PNC and like. From a full-year perspective, Grupo Pacifico's net income rose 74%, primarily driven by positive dynamics in insurance and the right-of-results in the live business, mainly in disability and survivorship profitability. In disability and survivorship, the product was boosted by favorable pricing and volume terms secured under the 6.6 option. Other live products, such as Credit Life and Good Life, also reported higher insurance and the right-of-results, driven by higher income and an important reduction in claims in comparison to 2020. They are still affected by COVID-19.
Speaker Change: Profitability of Grupo Pacifico contracted this quarter with Arrow is standing at 17, 9%.
Speaker Change: Quarter over quarter trends net income decreased 45% impacted by a 23% drop in insurance underwriting result, and by nonrecurring items. The construction in the insurance underwriting result was primarily driven by higher claims expenses in P&C and life businesses.
Speaker Change: From a full year perspective, Grupo <unk> net income rose, 74%, primarily driven by positive dynamics in insurance underwriting results in the life business.
Mainly in disability and survivorship profitability in disability and survivorship product was boosted by favorable pricing on volume terms secured under the Cisco six ocean all of life problems, such as credit life and good life also reported higher insurance underwriting results driven.
Speaker Change: By higher inbound and an important reduction in claims in comparison to 2022 is still affected by COVID-19, finally, net financial income posted a 14% increase driven by both our investment optimization with strategy and increasing interest rates through the year.
Cesar Rios: Finally, Net Financial Income posted a 14% increase driven by both our investment optimization strategy and an increasing interest rate through the year. All in all, these extraordinary results were driven by both the disciplined development of internal capabilities and transitory types. Next slide.
Speaker Change: All in all this extra and audited results were driven by both the disciplined development of internal capabilities and transitory type lease next slide please.
Cesar Rios: Are we, for the investment management advisory line of business, increasing this quarter an astute 14% driven by quarter-over-quarter income growth in our more volatile period? In particular, robust capital markets performance at year-end boosted our capital markets business and our treasury results by 26.9% QOQ, respectively? In addition, income from our asset management business edged up 8% and assets under management rose 6% in USD on a full-year basis. Net income rose 53% as we benefited from market performance, favorable business dynamics in our wealth management business, and a rigorous cost control program. Notably, treasury results reversed 2022 losses, and wealth management income increased 11% as we took advantage of the rate environment to improve our intermediation margin. We managed to increase assets under management measuring U.S. dollars by 9% and 11% in wealth and asset management, respectively. Next slide.
Speaker Change: For the investment management and advisory lineup.
Speaker Change: Increased this quarter and stood at 14% driven by quarter over quarter income growth, our more volatile businesses in particular, our robust capital markets performance at yearend boosted our capital markets business and our treasury results by <unk>, 26% to 19% quarter over quarter, respectively.
Speaker Change: Additional income from our asset management business, each up 8% and assets under management Rose, 6% U S dollars on a full year basis net income rose, 53% as we benefited from market performance.
Speaker Change: But our business dynamics in our wealth management business and our rigorous cost control program, notably Treasury results for various 'twenty to 'twenty to 'twenty two losses in wealth management income increased 11% as we took advantage of the rate environment to improve our intermediation in March with <unk>.
Speaker Change: One is to increase assets under managed measuring U S dollar by 9% and 11% and wealth and asset management, respectively next slide please.
Cesar Rios: Now, we will look at Credicorp's consolidated dynamics. On a quarter-over-quarter basis, our interest-earning assets mix shifted, marking an uptick in retail loans and investment portfolio and a contraction in wholesale loans. In the funding mix, there was an uptick in low-cost deposits and a contraction in more expensive funding sources, such as term deposits. Thank you very much, on a year-over-year basis. Interest-earning assets follow the same mixed dynamics.
Speaker Change: Now we will look at creating Corp.
Speaker Change: Consolidated dynamics on a quarter over quarter basis, our interest, earning asset mix shifted marking an uptick in retail loans and the investment portfolio and our contractually and wholesale loans in the funding mix. There was an uptick in low cost deposits and are contractually more expensive funding sources such as term deposit.
Speaker Change: Yes.
Speaker Change: These dynamics, which unfolded in a context modern by decreasing interest rates allow the yield on interest earning assets to remain flat, while the funding costs decreased 12 basis points on a year over year basis interest, earning assets follow the same mix dynamics on the funding side the increase in terms of <unk>.
Cesar Rios: On the funding side, the increase in term deposits and, to a lesser extent, in due-to-banks was driven by a construction in low-cost deposits and, secondarily, by a reduction in... This dynamic, coupled with the re-rating of our asset portfolio, led to an increase of 99 basis points in the yield of inter-earning assets, compared to 68 basis points in the funding. Going forward, we expect our balance sheet structure to support resilient margins in a decreasing interest rate environment. On the asset side, we increased the duration of our investment portfolio, which will take longer to re-rate. Additionally, our loan book is growing at a faster pace in retail loans, which offer higher yields and are less sensitive to interest rate movements. These dynamics will provide stability to our asset portfolio. On the funding side, the recent uptick in low-cost deposits will help sustain our funding strength. In addition, the balance of term deposits, which are more concentrated in wholesale clients, will quickly reprice downward, which will help lower our funding costs. Next slide.
Speaker Change: And to a lesser extent in Youtube and was driven by a construction in low cost deposits and secondarily by a reduction in bonds. These dynamics coupled with the re rating of our asset portfolio led to an increase of 99 basis points in the yield of inter amnion assets compared to 68.
Speaker Change: Basis points increase in the funding costs going forward, we expect our balance sheet is structured to support a resilient margin in a decreasing interest rate environment.
Speaker Change: Asset side, we increased the duration of our investment portfolio, we will take longer to re rate. Additionally, our loan book is growing at a faster pace and repaid loans, which offer higher yields Annapolis sensitive to interest rate movements. These dynamics will provide stability to our asset yields.
Speaker Change: On the funding side, the recent uptick in low cost deposits with help sustain our funding is trend. In addition, the balance of term deposits, which are more concentrated in wholesale clients. We've quickly repriced downward, which will help lower our funding costs next slide please.
Speaker Change: Recent balance sheet and interest rate rate dynamic slit NIM and NII to increase quarter over quarter, and a full year basis boosted core income growth.
Cesar Rios: Recent balance sheet and interest rate dynamics led NIM and NII to increase quarter over quarter and on a full year basis, boosting core income growth. On a quarterly basis, NIM increased 10 basis points and stood at 6.21%. Resuggested NIM fell 35 basis points to 4.10%. Provisions for the El Nio phenomenon generated a negative impact of 45 basis points.
Speaker Change: Water over quarter base, NIM increased 10 basis points and is that a 621% risk adjusted NIM for 35 basis points to four <unk> percent prohibition of Florida, El Nino phenomenon generated a negative impact of 45 basis points or equal was boosted mainly.
Cesar Rios: Core Income was boosted mainly by NII, which increased 2.9% quarter over quarter. When analyzing the results for fee income and FX transactions, it is important to know that both lines have been affected by our operation in BCP Bolivia, where we charge fees to FX clients to offset losses in buy-sell FX transactions. Excluding BCP Bolivia operations, other core income groups 2.1% QOQ is driven by an uptick in FX volumes where BCP leverages higher end volumes and higher fee income at Credicorp on a full year basis. NIM registered a 92 basis points in AFT and stands at 6.01%. This improvement more than offsets the impact of higher provisioning this year. In this context, risk-adjusted NIM rose 9 basis points to stand at 4.38%. Our income increased 11.4% on the back of NII, which grew 16.6%. Next slide.
Speaker Change: Bye.
Speaker Change: Increased from 49% quarter over quarter.
Speaker Change: And as I said the results for fee income and interest transactions. It is important to note that all lines have been affected by our operation in BCP, Bolivia, where we charged feast, where fixed clients to offset losses in buy sell at fixed transactions, excluding BCP, Bolivia operations or their core income grew to 41.
Speaker Change: For same quarter over quarter, driven by an uptick in fixed volumes, where BCP level is higher and volumes and higher fee income and credit card companies.
Speaker Change: On a fully year basis, NIM reduced stayed at 92 basis points, a nasty and stand at 6.0% to 1% this improvement more than offset the impact of higher provisioning. This year. In this context, we suggested Meade rose 90 basis points to is that a 438 person.
Speaker Change: Core income increased 11, 4% on the back of NII, which grew 16, 6% next slide please.
Cesar Rios: Let's look at the dynamic of a structural non-performing law. Adverse events in 2023 and weak economic performance continue to impact client payment performance, albeit to a lesser extent than in previous quarters. On a quarter-over-quarter basis, growth in BCP-structured non-performing loans was driven by SME payment, consumer, and credit cards. For SME payment, delinquency was concentrated in all vintages, while early delinquency indicators of new vintages showed improvement.
Speaker Change: Let's look at the dynamic of construct our nonperforming loans at <unk> in 2023, and a weak economic performance continued to impact client payment performance, albeit to a lesser extent than in previous quarter on a quarter over quarter basis grow in BCP is structural in nonperforming loans was driven by SMB goes.
Speaker Change: Humour on credit cards, and SME PMA delinquency was concentrated in all of these studies when early delinquency indicators of <unk> that you show improvement in consumer credit costs decreasing NPL volume was concentrated in loans overdue more than 120 days me bank of delinquency.
Cesar Rios: In consumer credit cards, the increase in NPL volumes was concentrated in loans overdue for more than 120 days. MiBanco's delinquency was concentrated in higher-ticket loans, where we have recently implemented tougher credit. This increase was partially offset by a payment of an overdue loan and an additional loan recovery, both associated with a specific corporate..., on a year-over-year basis. Structural and non-performing loan volumes increased mainly through SME, PIME, Consumer, Credit Cards, and the Bank, driven by the same factors as those seen border over border. Wholesale banking and P.L. was impacted by an uptick in overdue loans, to a lesser extent, refinanced loans from tourism and real estate. In context, the structural coverage ratio stood at 102%. Next slide. Moving on to provisions, the cost of risk has risen and stood at 3.2% for the quarter and 2.5% for the full year. The structural cost of research stood at 3.3% for the fourth quarter and 2.5% for the full year.
Speaker Change: It was concentrated in higher ticket loans, where we have recently implemented tougher credit policies.
Speaker Change: This increase was partially offset by a payment of an overdue loan and additional long recovery both associated with the specific corporate clients on a year over year basis structurally nonperforming loan volumes increase mainly SME female consumer related costs driven.
Speaker Change: Driven by the same factors are those seen quarter over quarter wholesale banking npls was impacted by an uptick in logo new loans into a lesser extent in refinance loans from the tourism real estate sectors. In this context, the strong coverage ratio stood at 102%.
Speaker Change: Next slide please.
Speaker Change: Moving onto provisions the cost of risk has rising and stood at three 2% for the fourth quarter and two 5% for the full year.
Speaker Change: The structural cost of risk stood at three 3% for the fourth quarter and two 5% for the full year.
Cesar Rios: The quarterly figures reflect the fact that we included a specific provision of approximately $250 million for the El Nio phenomenon based on the best information available at the closing of the books. Let me go through the quarter-over-quarter dynamics for provision expenses, excluding the charge related to expectations for El Nio. Provisions grew 3% driven by a base effect in wholesale banking and by a drop in client payment performance in SME payments due to adverse macroeconomic factors. This situation. On a full year basis, provisions rose 105%, driven by retail banking at BCP, which rose across consumer, credit cards, and SME payments due to an uptick in deterioration of older business. Provisions and Mi Banco were also up, driven by a downturn in the payment performance of clients. However, the aforementioned was partially offset by reversals in wholesale banking through the year.
Speaker Change: The quarterly figures reflect the fact that we included in this specific provision of approximately 215 million solid for the Nino phenomenon based on the best information available at the closing.
Speaker Change: Let me go through quarter over quarter dynamic for provisional expenses, excluding the charges related to expectation for the Nino impact provisions grew 3% driven by a basic facing wholesale banking about you're dropping client payment performance in SME <unk> due to adverse macro conditions. These movements were partially off.
Speaker Change: Sit by reversals for the specific suite products and mortgages and that'd be Banco due to a contraction in loans on.
Speaker Change: A full year basis provisions rose, 105% driven by retail banking at BCP, which rose across consumer credit card and SME <unk> due to an uptick in deterioration of older Bmws.
Speaker Change: Provisions in the bank were also up driven by enough inventory and the payment performance of clients.
Speaker Change: The import nation was partially offset by reversals in wholesale banking through the year.
Speaker Change: Slide please.
Cesar Rios: We will review the evolution of efficiency on an accumulated basis to isolate the impact of seasonal effects. Expenses for disruptive initiatives at the Credicorp level increased 60.6%, where the most relevant initiatives were IAPE and TEMPO, which accounted for approximately two-thirds of this year. Operating expenses grew 9.8% in 2023, driven primarily by disruptive initiatives at the Credicorp level and within core businesses at BCP. At BCP, core businesses fueled growth in expectation through an uptick in IT expenses related to increased use of the cloud as clients become more digital and transactional levels increase, investments to enhance digital capabilities and improve cybersecurity, and moves to attract more specialized digital talent. Marketing expenses were mainly driven by advertising to boost deposits and digital sales. Operating leverage remains strong at BCP. At MiBanco, operating expenses remain under control, but operating income is still challenged.
Speaker Change: We will review the evolution of efficiency and accumulated basis Lysol Lady backup seasonal effects expenses for disruptive initiative I think record levels increased 66% what are the most relevant initiative, where the European theme, which accounted for approximately two thirds of these <unk>.
Speaker Change: Operating expenses grew nine 8% in 2023, driven primarily by disruptive initiatives created correlate with and within core businesses at DCP at BCP core business is fuel growth in our spaces through an uptick in <unk> expenses related to.
Increased use of the cloud as clients become more digital and trunk session of Liberals increase investments to enhance these capabilities and improved cyber security.
Speaker Change: <unk> moved to attract more specialized digital China started.
Speaker Change: Marketing expenses, mainly driven by the idea of pacing to boost deposits and digital sales.
Speaker Change: Operating leverage remains strong at BCP, and Nevada cooperating expenses remain under control, but operating income is still a challenge in this context, our efficiency ratio stood at 46, 1% in 2023 down 142 basis points year over year.
Cesar Rios: In this context, our efficiency ratio stood at 46.1% in 2023, down 142 basis points year-over-year driven by positive operating levels. Next slide. Credicorp's full-year profitability was sustained by solid results at our universal banking and insurance businesses, which mitigated weak performance at our macrofinance business.
Speaker Change: Driven by positive operating leverage makes it slightly.
Speaker Change: And any quarters full year profitability was sustained by a solid was sold at our when you sell banking and insurance businesses, which mitigated weak performance at our micro finance yield on top of the recruiting dynamics. It is important to note that created course results were influenced by the goodwill impairment related.
Cesar Rios: On top of the recurring dynamics, it is important to note that Credicorp's results were influenced by the goodwill impairment related to Mi Banco Colombia and by an increase in the withholding tax provisions and the holding level, which were set aside to cover the impact of an expected increase in these. In this context, ROE for the full year stood at 15.8%. Credicorp's net equity in 2023 was bolstered by an uptick of $730.6 million in other comprehensive income, which was mainly a tribute to a reduction in unrealized losses for the available-for-sale portfolio. Now, I will move on to the outcome. As previously mentioned, we expect Peru's GDP to grow around 2.5% in 2024.
Speaker Change: To me Banco Columbia.
Speaker Change: The increase in the withholding tax provisions in the whole day level, which were set aside to cover the impact of unexpected increase in dividends in this context, our ROE for the full year is stood at 15, 8% credit quarters Nitpick would be in 2023 was bolstered by an uptick of savings.
Speaker Change: Hundreds of $30 6 million English comprehensive ankle, which was mainly attributable to a reduction in unrealized losses for the available for sale portfolio now I will move on to the outlook.
Speaker Change: As previously mentioned, we expect Peru, GDP to grow around two 5% in 2024.
Cesar Rios: Regarding loan growth, we are changing our guidance indicator as REACTIVA no longer constitutes a significant share of our portfolio. We expect our total loan book, measured in average daily balances, to grow between 3% and 5%, driven mainly by retail banking at BCP and a slight drag-down by REACTIVA amortization. Thank you very much. The cost of risk guidance is between 2% and 2.5%. This range reflects the shift of our long portfolio mix toward retail and a partial reversal of El Nino-related provisions. In 2024, we will continue to invest significantly in digital transformation and disruptive initiatives to bolster our long-term competitive position. Thus, we expect the efficiency ratio to be between 46% and 48% and will reflect an increase in the weight of expenses for disruptive initiatives.
Speaker Change: Regarding loan growth, we are changing our guidance indicates the recipe as you are no longer constitute a significant share of our portfolio. We expect our total loan book measured in average daily balances to grow between 3% or 5% driven mainly by retail banking at BCP and a slight drag.
Speaker Change: It is down by three FTE level decisions.
Speaker Change: Two ongoing shift from our loan book towards higher yielding nice coupled with favorable dynamics in our funding structure should positively impact mean, accordingly, we expect NIM to expand between six to six 4%.
Speaker Change: Cost of risk guidance is between 2% and two 5%.
This range reflects the shift of our loan portfolio mix towards retail and a partial reversal or el Nino related provisions in 2024, we will continue to invest significantly in digital transformation and disruptive initiatives to bolster our long term competitive position booth, we expect there.
Speaker Change: <unk> ratio to situate between 46 and 48%.
Speaker Change: Reflect an increase in the weight of expenses for this room. These initiatives at this point, we can see that it is appropriate to provide you with some qualitative guidance on two key income streams net fees and insurance underwriting basalts regarding the floor, but we expect to see growth to pick up towards high.
Cesar Rios: At this point, we consider it appropriate to provide you with some qualitative guidance on two key income streams. Net Fees and Insurance at the Right Temperature. Regarding the format, we expect free growth to pick up towards high single digits in 2024 as activity accelerates and our efforts to further increase our transaction capabilities gain traction. Additionally, insurance and writing results will contract after reaching unusually high levels in 2023 as profitability in the life insurance business converges to very good sustainable levels. Given the aforementioned dynamics, we expect our ROE to stand at around 17% for the full year.
Speaker Change: Single digits in 2024 as activity accelerates our efforts to further increase our transactional capabilities gained traction. Additionally, insurance underwriting result will contract after reaching new surely high levels in 2023 as profitability in the life insurance business.
Speaker Change: Converges to very good sustainable levels.
Speaker Change: Given their formulation dynamics, we expect our row, which stands at 117% for the full year with these comments I would like to start the Q&A session.
Operator: With these comments, I would like to start the question and answer session. Ladies and gentlemen, we will now begin the question and answer session. If you would like to ask a question, please signal by pressing the star and 1 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 Change: Ladies and gentlemen, we will now begin the question and answer session. If you would like to ask a question. Please signal by pressing star and one on your telephone keypads.
Speaker Change: If you have connected to the call using the HD web phone on your computer. Please use the keypad on your computer screen.
Operator: If you are using a speakerphone, please make sure to unmute your phones to allow your signal to reach our equipment. We will pause for just a moment to allow everyone the opportunity to ask questions. We also ask that you please only ask one question at a time. After each question has been addressed by our speakers, you will then be allowed to ask as many follow-ups as needed, but again, please only ask one question at a time. Thank you. Our first question today comes from Ernesto Gabilondo from Bank of America. Please go ahead.
Speaker Change: If you are using a speaker phone please make sure to mute your phones to allow your signal to reach our equipment.
We will pause for just a moment to allow everyone. The opportunity for questions. We also ask that you. Please only ask one question at a time. After each question has been addressed by our speakers.
Speaker Change: Be allowed to ask as many follow ups as needed but again please.
Speaker Change: Please only ask one question at a time thank you.
Speaker Change: Our first question today comes from Ernesto <unk> from Bank of America. Please go ahead.