Q1 2024 Credicorp Ltd Earnings Call

Operator: Good morning, everyone. I would like to welcome all of you to the Credicorp Ltd. first quarter 2024 conference call. A slide presentation will accompany today's webcast, which is available in the Investor section of Credicorp's website. This conference call is being recorded. As a reminder, all participants will be in listen-only mode. 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 star 1 on your telephone keypad.

Good morning, everyone I would like to welcome all of you to the credit core limited first quarter 2024 conference call.

A slide presentation will accompany today's webcast, which is available in the investors section of credit Coors website.

Today's conference call is being recorded.

As a reminder, all participants will be in listen only mode.

There'll be an opportunity for you to ask questions at the end of todays presentation.

If you would like to ask a question. Please signal by pressing star one on your telephone keypad.

Operator: If you have connected to the call using the HD web phone on your computer, please use the keypad on your computer screen. 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 over to Credicorp's IRO, Milagros Ciguenas. You may begin.

If you have connected to the call using the H D web phone on your computer. Please use the key pad on your computer screen.

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

Speaker Change: Now it is my pleasure to turn the conference over to credit scores I R. O B lateral <unk> you may begin.

Unknown Shareholder: Thank you and good morning everyone. 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 Alejandro Perez Reyes, Chief Operating Officer, Francesca Raffo, Chief Innovation Officer, Reynaldo Llosa, Chief Risk Officer, Cesar Rivera, Head of Insurance and Pension, Carlos Sotelo, my Banco Chief Financial Officer, and Diego Cabrero, Head of Universal Bank. Before we proceed, I would like to make the following self-covered statements.

Thank you and good morning, everyone.

Santos: Speaking on today's call will be on Santos It Ryan <unk>, our Chief Executive Officer, and so somebody else, our Chief Financial Officer.

Speaker Change: Participating in the Q&A session, we'll also be.

Speaker Change: I'm going to ask me as Chief operating Officer, Francesca Raffo, Chief Innovation Officer, Chris <unk>, Chief Risk officer, So somebody data set up insurance and pension Catloaf. They love me banquet, Chief Financial Officer, Andy Oh, Garrido, a universal bank.

Speaker Change: Before we proceed I would like to make the following safe Harbor statement 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 risks and uncertainties and I refer you to the forward looking statements section of our earnings release and our recent.

Unknown Shareholder: 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 statements section of our earliest release and recent filings with the SEC. We assume no obligation to update or revise any forward-looking statements to reflect new or changed events or circumstances.

Speaker Change: Findings with the SEC.

Speaker Change: We assume no obligation to update or revise any forward looking statements to reflect new or changed events or circumstances.

Unknown Shareholder: Gianfranco Ferrari will start the call with opening remarks about our improved macro environment and brief comments on our strategic initiatives. He will be followed in more detail by Cesar Rios, who will present in more detail the evolution of key macrofigures, our financial performance, and our revised outlook for 2024. Gianfranco, please go ahead. Thank you.

Speaker Change: Yes, exactly right when I started with opening remarks about our improved macro environment and brief comments on our strategic initiatives.

Speaker Change: My face RVO.

Present in more detail at the evolution of scheme Mcafee use our financial performance, our revised outlook for 'twenty 'twenty four yeah Frankel. Please go ahead. Thank you good.

Gianfranco Piero Dario Ferrari de Las Casas: Thank you, Milagros. Good morning, everyone.

Frankel: Morning, everyone. Thank you for joining us despite our strong structural microeconomic figures the persistent fragility of the government.

Gianfranco Piero Dario Ferrari de Las Casas: Thank you for joining us. Despite our strong structural macroeconomic figures, the persistent fragility of the government and its limited capacity to implement timely policies aimed at stimulating investment and economic growth have prompted S&P to downgrade our sovereign credit rating to BBB-. This downgrade is expected to affect investor appetite for our content. In our view, however, we do not expect the economic growth agenda that has been put in place this year by the executive branch to change prior to the 2026 general election.

Capacity to implement timely policies aimed at stimulating investment and economic growth.

Frankel: S&P to downgrade, our sovereign credit rating to Triple B minus these.

Frankel: These downgrades is expected to affect the investor appetite for our country.

Frankel: In our view however, we do not expect the economic growth agenda that has been put in place. This year by the executive branch to change prior to the 2026 general elections.

Gianfranco Piero Dario Ferrari de Las Casas: The overall economic outlook remains positive, with expected GDP growth revised upward to 3% in March from the previous projection of 2.5% discussed in our last call. Beyond better weather conditions benefiting the fishing, agriculture, and textile sectors as El Nio has ended, several factors support a gradual recovery of economic activity during the upcoming quarter. Copper and gold prices have increased significantly and are expected to remain high; a lower inflation rate, which will benefit consumers; and lastly, the stimulative effect of counter-cyclical economic policies, such as a lower central bank policy rate and higher dynamism of public investment, which will start to feed into the economy. Despite its challenges, the Peruvian government has placed explicit focus on promoting investments to contribute to business confidence recovery. In the first quarter alone, awarded infrastructure investments reached $3.0 billion.

Frankel: The overall economic outlook remains positive with respect to GDP growth revised upward to 3% in March from the previous projection of two 5% commented in our last call.

Frankel: Beyond better weather conditions, benefiting the fishing agricultural and textile sectors.

Frankel: Offended several factors support our grubhub recovery of economic activity during the upcoming quarters.

Frankel: Copper and gold prices have increased significantly and I expect it to remain high.

A lower inflation rate, which will benefit consumers and lastly.

Frankel: And lastly, the cumulative effect of counter cyclical economic policies, such as a lower central bank policy rates and higher diesel emission of public investment, which will start to feed into the economy.

Frankel: Despite these challenges the Peruvian government has placed explicit focus on promoting the investments to contribute to business confidence recovery in the first quarter alone awarded infrastructure investments reached $3 billion. Additionally, the government's plan to establish a unified office.

Gianfranco Piero Dario Ferrari de Las Casas: Additionally, the government's plan to establish a unified office for infrastructure investments marks a significant step forward. Economic expectations indicators have trended upward since the end of last year. Anticipated long-term growth is on the horizon as private sector confidence strengthens. Additionally, inflation stands low compared to other Latin American countries, and formal sector wages have experienced recent growth. The Congress' recent approval of the 7th withdrawal of pension funds underscores again the need to reform the current private pension model in Colombia.

Frankel: For infrastructure investments marks a significant step forward.

Frankel: Economic expectations indicators have trended upwards since the end of last year anticipated loan growth is on the horizon.

Frankel: As private sector comprehends strengthens Additionally, inflation stand slow compared to other Latin American countries and formal sector wages have experienced recent growth.

Frankel: The Congress recent approval of the seventh withdrawal pension funds underscores again, they need to reform the current private banks on mall in Peru.

Gianfranco Piero Dario Ferrari de Las Casas: Turning to our first quarter results, we delivered a strong ROE of 18.2%, including the impact from the reversal of provisions at BCP and NIVAM. This was achieved in the context of weak, slow growth and an economy that is slowly starting to recover.

Turning to our first quarter results.

Frankel: We delivered a strong ROE of 18, 2%, including the impact from the reversal of provisions at BCP and Nevada.

Frankel: This was achieved in the context of weak loan growth and then the economy, an economy that is slowly starting to recover.

Gianfranco Piero Dario Ferrari de Las Casas: Risk-adjusted NIM remains resilient, reflecting our disciplined interest rate management strategy, further supported by lower provisions and our leading low-cost funding policy. Additionally, our strong solvency has allowed us to increase our dividend to $0.35 per share, while also contemplating our plans for continued sustainable growth. Our resolute focus on advancing innovation and strengthening our digital capabilities has fortified our competitive mode. This has not only elevated our relationships with current clients but has also contributed to expanding financial inclusion.

Risk adjusted NIM remained resilient, reflecting our disciplined interest rate management strategy further supported by lower provisions in our leading low cost funding position.

Frankel: Additionally, our strong solvency.

Frankel: Hold us to increase our dividend to <unk> 35 per share while also contemplated in our plans for continued sustainable growth.

Frankel: Our resolute focus on advancing innovation and strengthening our digital capabilities and fortify our competitive moat.

Frankel: This has not only of the elevated our relationships with current clients, but has also contributed to expanding expanding internationally and commission.

Gianfranco Piero Dario Ferrari de Las Casas: With respect to the macro backdrop, as I just mentioned, we anticipate sustained economic improvement during the year, and Cesar will discuss this in more detail shortly. Now, moving on to strategic development. We remain focused on strengthening our core businesses while also complementing them with disruptive initiatives. As one of the few banks to embrace self-disruption to remain ahead of the competition, anchored in allowing clients to decide where and how they bank, has been evident since Credicorp's inception.

Frankel: With respect to the macro backdrop as I just mentioned, we anticipate a sustained economic improvement improvement during the year and Fisher will discuss this in more detail shortly.

Now moving to our strategic development.

Frankel: We remain focused on strengthening our core businesses, while also complementing them with with disruptive initiatives.

Frankel: One of the few banks to embrace self disruption to remain ahead of the competition anchored in allowing clients to decide where and how they bank has been evident since credit cards inception, these strategic initiatives position Craig.

Gianfranco Piero Dario Ferrari de Las Casas: These strategic initiatives position Credicorp for continued digital advancement and customer-centric growth. Admiramco, which mainly provides financing to microbusiness, We are reaffirming our hybrid model strategy. This strategy leverages high-touch in-person visits from relationship managers and digital channels, including Centralized Research. After making significant adjustments in terms of pricing and origination guidelines over the past six months, we are observing improved payment performance in new VINs. Additionally, we are now selectively growing within the lower-ticket, higher-yielding segments that have relatively better drift points.

Frankel: Digital advancement and customer centric growth.

Frankel: At move ankle, which mainly provides financing to micro businesses, we are reaffirming our hybrid model strategy.

Frankel: This strategy Leverages high touch in person visits from relationship managers and digital tools.

Frankel: Including centralized risk assessment.

Frankel: After making significant adjustments in terms of pricing I know origination guidelines over the past six months.

Frankel: We're observing improved payment performance in new vintages.

Frankel: Additionally, we're no selectively growing within the lower ticket higher yielding segments that tough.

Frankel: Relatively better risk profile.

Gianfranco Piero Dario Ferrari de Las Casas: Our planned advancements are on track, and we expect a rebound in profitability at Mibanco DC. I want to take a moment to address a question we have been hearing from you on the road, related to the contingent overlap between Mibanco and Yapec Lines. YAPE prioritizes consumers as its lending business, and MiBanco provides financing mainly to micro-businesses. While we acknowledge that there is little distinction between the pocket of the individuals and the micro-entrepreneurs, the lending business at IAPE is at a very early stage, and we are a long way away from seeing an option. Now, I will turn the call over to Cesar, who will discuss in more detail the microenvironment and the operational and financial performance of our business. Thank you.

Frankel: Our planned advancements are on track and we expect a rebound in profit and profitability at <unk>. This year.

Speaker Change: I want to take a moment to address a question. We have been hearing from you on the road related to the potential overlap of me Banco <unk> clients.

Speaker Change: Prioritizes consumers at its lending business and the Vasco provide to finance financing mainly to micro businesses.

Speaker Change: While we acknowledge that there is little distinction between the bulk of those individuals and they make entrepreneurs. The lending business is a very early stage and we're a long way away from seeing another though.

Speaker Change: Now, let me turn the call over to <unk>, who will discuss in more detail the microenvironment and the operational and financial performance of our business units.

Cesar Rivera: Thank you, Gianfranco, and good morning everyone. As Gianfranco mentioned, we deliver strong overall operating and financial results. As I discuss the highlights of the quarter, I will focus on the year-over-year results, which are not impacted by seasonality. Our long-term shift toward retail, coupled with the repricing of our dollar book, allows us to deliver higher needs despite a reduction in interest rates in sales. Total loans dropped 3.1%, measuring average daily balances, driven primarily by lowered volumes in wholesale banking and amortization of government program loans.

Speaker Change: Thank you Yung Frankel and good morning, everyone I, John Franco mentioned, we delivered a strong overall operating and financial results.

Juan Ignacio Recalde: As I discuss the highlights of the quarter I will focus on the year over year results, which are not impacted by seasonality in our loan mix shift towards retail coupled with the repricing of our dollar group allow us to deliver higher NIM. Despite a reduction in interest rates and solid as total loans dropped.

Juan Ignacio Recalde: Three 1% measuring arbitrage daily balances driven primarily by lower volumes in wholesale banking, our amortization of Goldman program loans, they share of low cost they policy and seeing all of our funding base is stood at 53, Boeing 7% NII grew nine 4%.

Cesar Rivera: The share of low-cost deposits in our funding base stood at 53.7%, and NII grew 9.4%, boosted by the aforementioned dynamics. Other core income, which is the sum of e-income and gains in FX operations, also evolved favorably, boosted by BCP and to a lesser extent by Credicorp Capital. Core income at BCP benefited from monetization initiatives at IAPE and solid transactional activity through credit and debit cards. Lastly, insurance and writing results dropped 5.8%, which reflected a reduction in income from disability and survivorship products in the life business.

Juan Ignacio Recalde: By the automation dynamic all their core income, which is the sample of England, I'm gazing apex operations, all seaborne favorably boosted by BCB until they sort of spend like really cold cuts Korean Kona BCB benefited pro monetization munis, ERP and solid transaction activity.

Juan Ignacio Recalde: Through credit and debit cards, lastly, insurance underwriting results drove five 8%, which reflected a reduction in income from these abilities with Bible. She promos in the life business.

Cesar Rivera: The cost of risk increased to 2.3%, which incorporates a $250 million release in provisions associated with El Nio. Throughout this presentation, our analysis of provision expenses and cost of risk will isolate the impact of the El Nio provision, registered in the fourth quarter of 2023 and reversed in the first quarter of 2024. We will refer to this adjustment as isolating the impact of the El Nio provision.

Juan Ignacio Recalde: The cost of risk increased to two 3%, which incorporates a 250 million releasing provisions associated with El Nino.

Juan Ignacio Recalde: Throughout this presentation, our analysis of provisional expenses and cost of risk, we isolate the impact of El Nino provision registered in the fourth quarter of 'twenty, three and reversed in the first quarter of 'twenty four we will refer to these adjustments.

Juan Ignacio Recalde: Isolating the impact of El Nino provisions after adjustments cost of risk increased to 3%.

Cesar Rivera: After adjustments, the cost of risk increased to 3%. The evolution was driven by a deterioration in payment capacity in SME payment and credit cards and by a downturn in payment performance in consumer loans. The NPL ratio rose 77 basis points to 6.2% as delinquency increased across various segments and in older vintages in particular. As a result, NPL coverage stood at 93.5%.

Juan Ignacio Recalde: The evolution was driven by a deterioration in payment capacity against MEP me and greatest caught them by a downturn in payment performance in consumer loans.

Juan Ignacio Recalde: The NPL ratio rule 77 basis points to six 2% as delinquency increase across various segments and in all the <unk> in particular.

Juan Ignacio Recalde: Separately sold NPL Corbin actually stood at 93, 5%.

Cesar Rivera: All in all, we delivered strong results on the back of solid growth in our margin, an uptick in transactional activity, and disciplined cost control. In addition, we recently announced a $35 per share solid dividend payout as we push capital levels closer to target across our subsidiaries. The Peruvian economy is gradually recovering from a very challenging 2023. Economic activity grew 2.8% year-over-year in February, its best performance in almost two years. Furthermore, all the expectation indicators from the macro-central bank survey stood in the optimistic range for the first time in five years and remained in that range in April. Hence, even though we expect a slowdown in economic activity in March, a rebound should follow in April.

Juan Ignacio Recalde: All in all we delivered strong results on the back of solid growth in all of our money enough, peaking transactional activity and discipline in cost control you got national We recently announced a 35 saw its dividend per share payout as we push capital levels closer to target across our subsidiaries.

Juan Ignacio Recalde: Next slide please.

Juan Ignacio Recalde: The Peruvian economy is gradually recovering from a very challenging 2023.

Juan Ignacio Recalde: Activity grew two 8% year over year in February it's basic <unk> in almost two years. Furthermore, all the expectation indicators from the macro central banks RV astute in the optimistic range for the first time in five years and remain in that range in April even though we have.

Juan Ignacio Recalde: The slowdown in economic activity in March a rebound should follow in April.

Cesar Rivera: The global economic outlook has also improved. Recently, the IMF upgraded its 2024 world GDP forecast as positive indicators continue to point towards a soft landing. Importantly, commodity prices, particularly for copper and gold, which together represent around 50% of our exports, have risen significantly and are expected to remain high.

Juan Ignacio Recalde: The global economic outlook has also improved recently the IMF upgraded is 2020 for world GDP forecast I suppose it is indicators continue to point towards a soft landing importantly, commodity prices, particularly for copper and gold, which combined represent around 50% of our.

Juan Ignacio Recalde: Exports of raising significantly are not expected to remain high.

Cesar Rivera: Peru has accelerated public investments, which increased 40% year over year in real terms in the first quarter, representing the highest such increase reported in 14 years, excluding the pandemic. ProInversión announced that as of April 2024, the government has already advanced 48% of this 2024 goal to award $8 billion in public private investment projects. This goal is more than triple the amount awarded in 2022.

Juan Ignacio Recalde: They do have accelerated public investments, which increased 40% year over year in real terms in the fourth quarter represented the highest attach increase reported in 14 years, excluding the pandemic brought in their steel announced that as of April 2020 for the government Hustle radio.

Juan Ignacio Recalde: 148% both of these 2024 wall, while ward $8 billion in public private investment projects. These goals is more than triple the amount awarded in 2023.

Cesar Rivera: This positive backdrop has been clouded somewhat by a standard and poor downgrade of Peru's sovereign credit rating to the lowest rank to qualify as an investment-grade country. The agency indicated that this change was motivated by political uncertainty, the actions of a fragmented Congress, and a weak executive branch, which negatively impacted investment sentiment in the private sector and constitutes an opportunity cost to growth. In this context, Peru's capacity to rebuild fiscal space is challenged.

Juan Ignacio Recalde: This positive backdrop has been clouded somewhat by standard <unk> Poor's downgrade of the roof sovereign credit rating to the lowest rung to qualify as an investment grade country. The agency indicated that the change was motivated by political uncertainty the actions of a fragmented Congress and now we can say.

Juan Ignacio Recalde: It could be a branch, which negatively impacted investment sentiment in the private sector and constitute an opportunity cost to grow in this context, the loose capacity to reveal fiscally space is challenge.

Cesar Rivera: Given the aforementioned and despite political noise, we forecast Peru's GDP will grow around 3% after highly negative shocks last year due to poor weather conditions and heightened social turmoil. The United States' strong economy continues to surprise. In fact, due to better-than-expected economic data and high inflation readings, market participants have pushed back their Fed rate cut expectations once again. Hence, higher-for-longer dollar rates will continue to pose a dilemma for emerging markets.

Juan Ignacio Recalde: Given the aforementioned and despite political noise, we forecast the rule GDP will grow around 3% of the highly negative shocks last year due to poor weather conditions and heightened social terminally next slide please.

Juan Ignacio Recalde: The United States is strong economy continues to surprise in fact due to better than expected economic data on hot inflation readings market participants have pushed back the fed rate cut expectations. Once again, hence higher for longer that rates will continue to post a dilemma for emerging markets.

Cesar Rivera: In Peru, inflation has continued to slow and stand within the central bank's target range. Since September 2023, the country's central bank has cut its policy rate by 175 points. In Colombia, inflation remains among the highest of the region and stood at 7.2% as of April.

Juan Ignacio Recalde: In Peru inflation has continued to slow and they stand within the central bank's target range. Since September 2023, the country's central Bank has got his policy rate 175 points in Colombia inflation remains among the highest of the radio and a student at saving.

Juan Ignacio Recalde: <unk>, 2% as of April accordingly, the country's central bank has adopted a cautious stance on has lowered its policy rate by 100.

Cesar Rivera: Accordingly, the country's central bank has adopted a cautious stance and has lowered its policy rate. In Chile, inflation is gradually converging toward its target. In response, the central bank has cut its rate by 475 basis points since its peak. BCP delivered a strong result, which in part reflected a reversal of provisions set aside last quarter for anticipated El Nio losses. Analyzing key quarterly-over-quarter dynamics, total loans measured in average daily balances fell 1.4%, driven by a contraction in wholesale loans and repayments of government-programmed loans in SME PMSF.

Juan Ignacio Recalde: These people you see it in December finally in Chile inflation is gradually converging toward targeted in response to the Central Bank has good its rate by 475 basis points. So to speak it makes it slightly.

Juan Ignacio Recalde: BCP delivered a stronger sold which in part reflected a reversal of provisions set aside last quarter, therefore anticipated El Nino losses, analyzing key quarter over quarter and dynamic total loans measured in average daily balances fell one 4% driven by a contractionary in wholesale loans and repayments of Goldman.

Juan Ignacio Recalde: Program loans in SME segments.

Cesar Rivera: NII rose 1.5%. This evolution was led by a drop in funding costs after term deposits were renewed at lower rates. Interest income increased quarter over quarter as we profitably managed our liquidity balances in a context of lower loan growth. Provisions expenses, after isolating the impact of the El Nio provisions, increased mainly mortgages due to a base effect and SME payments due to weaker payment capacity of clients in a context of gradual economic recovery.

Juan Ignacio Recalde: Rose 151, 5%. This evolution was led by a drop in the funding cost after time deposits were renewed at lower rates interest income increase quarter over quarter as we profitable manner shall want liquidity balances in a context of lower loan growth.

The provisions expenses update isolating the impact of El Nino provisions increased mainly mortgages due to a base effect and the SME team in due to weaker payment capacity of clients in a context of gradual economic recovery.

Cesar Rivera: Other income grew 3.1% fueled mainly by a strong volume of credit card transactions to higher fee channels and secondarily by fee income at YAPE. On a year-over-year basis, NII grew 9.3% driven by long-mixed shifts towards retail and pricing improvements. Long-loss provisions, excluding the reversal of the El Nino provisions, increased 65.7% driven by deterioration in payment capacities in SME premium credit cards and a downturn in payment performance for consumer loans. Other income was up 10.5% under PIN due to solid growth in fee income through YAPI, as well as credit and debit card transactions. Operating expenses increased 8.1%, driven by an uptick in expenses for specialized IT personnel and disruptive initiatives. In this context, BCP's contribution to ROE. Next slide, please.

Juan Ignacio Recalde: Net income grew three 1% fueled mainly by a strong volume of graded card transactions to higher fee channels and secondarily by fee income at Yahoo.

Juan Ignacio Recalde: On a year over year basis, NII grew nine 3% driven by loan mix shift towards retail and pricing improvements.

Juan Ignacio Recalde: Loss provisions, excluding the reversal of El Nino provisions increased 65, 7% driven by deterioration in payment capacities in SME PMI and credit cards.

Juan Ignacio Recalde: You don't turn in payment performance for consumer loans.

Juan Ignacio Recalde: Other income was up 10, 5% underpinned by solid growth in the fee income onto yuppie as well as credit and debit card transactions operating expenses increased eight 1% driven by an uptick in expenses for our specialized personnel and disruptive initiatives in this context BCP.

Juan Ignacio Recalde: <unk> contribution to our ROE.

Juan Ignacio Recalde: They stood at 24, 7% next slide please.

Cesar Rivera: YAPE continues to grow and in March registered more than 11.5 million monthly active users, who conducted an average of 36 transactions per month. 75% of these active users already generate fees. Improvements in the lines of business and their functionalities result in growth in engagement, fee income, and NPS. At the end of March, Yaperos used an average of 2.2 functionalities a month.

Yes, it continues to grow and in March reduced their more than 111 5 million monthly active users who conducted an arbitrage of 36 transactions per month, 75% of these active users already generate fee.

Juan Ignacio Recalde: Improvements in the lines of business and their functionality. This is pure growth in engagement being gone and NPS at the end of March there was use an average of 2.2.

Juan Ignacio Recalde: So Natalie this month being can generate to ERP increased 24, 1% quarter over quarter and the NPS reached 78.

Cesar Rivera: Fee income generated through YAPE increased 24.1% quarter over quarter, and the NPS reached 78. As a result, YAPE obtained an income per active user of 3.7 soles, while expenses for active users dropped to 3.9 soles due to seasonal factors. YAPE is closest to reaching breakeven in the coming months. Next slide.

Juan Ignacio Recalde: Oversold yuppie obtained an income per active user or three seven solid while expenses for rapid users drop to three nice solid due to seasonal factors yup, he's closer to reaching breakeven in coming months makes it slightly.

Cesar Rivera: To reach breakeven, YAPE is accelerating income growth by diversifying its sources of revenue. To achieve this, it has been adding functionality to its three lines of business. IAPE Payments Business is the top revenue producer and has gone from offering P2P payments to possessing a portfolio of fee-generating functionality, where mobile top-up is the most mature and built payment, while payments with POS and checkout functionalities are gaining traction.

Juan Ignacio Recalde: To reach breakeven yuppies accelerating equal growth by diversifying its sources of revenue to achieve this he has been adding functionality to three lines of businesses you have a payments business.

Juan Ignacio Recalde: He is the top revenue producing and has gone from offering P to P payments to processing a portfolio of heat of fee generating functionality, where mobile top up is the most mature and bill payments payment with poise and checkout functionality are gaining traction.

Cesar Rivera: Within the financial business line, in addition to the margin received for floating base on deposit balances, we have two products that generate income, lending and insurance. Within lending, disbursements of single installments and multi-installments loans grew 2.2-fold year-over-year. In insurance, we currently provide statutory accident insurance for vehicles and plan to extend our offerings in the short term.

Juan Ignacio Recalde: Within the financial business line. In addition to the margin received for floating based on deposit balances. We have two programs that generate income lending and insurance.

Juan Ignacio Recalde: Within lending disbursements of seamless palm and some multi settlements loans grew to two point year over year.

Juan Ignacio Recalde: Shouldn't we currently provide to statutory accident insurance for vehicles and plan to extend our offerings in the short time.

Cesar Rivera: The financial business line is still in the early stage, but we are developing differentiated risk management capabilities based on the unique relationship and level of engagement that IAPE has built with its users. Finally, within the marketplace business, we have new features such as Yape Promos and Yape Tienda. Yape Promos offers Yaperos discounts for consumption at affiliated restaurants, cinemas, and other establishments. The gross merchant volume for Yape Promos grew threefold year over year. Yape Tienda was launched in September and offers appliances and electronics via e-commerce.

Juan Ignacio Recalde: The financial business line is still in the early stage, we are developing differentiated risk management capabilities based on the unique relationship and level of engagement that <unk> has built with its users.

Juan Ignacio Recalde: Finally, we view the marketplace business, we have new features such as Dr. Pepper almost on gap at the end of.

Juan Ignacio Recalde: Yet the promos offers you a barrel discount for Consumptions and affiliated with still runs see name untangle that establishment the growth merchant volume for yet they put almost grew three four year over year <unk> that was launched in September and offers appliances and electronics via E Commerce.

Juan Ignacio Recalde: Next slide please.

Cesar Rivera: Next slide. Moving on to Mi Banco. On a quarter-over-quarter basis, total loans measured in average daily balances fell 3.1% driven by stricter origination policies as we continue to fine-tune our risk models and processes. Additionally, we are selectively starting to grow our small-ticket higher-year loans. NII increased 1.4% mainly due to a drop in the cost of funding, which triggered a repricing of the funding base. In this context, NIM increased 7 basis points and stood at 13.4%.

Juan Ignacio Recalde: Moving onto me button went up quarter over quarter basis total loans measured in average daily balances fell three 1% driven by a stricter or origination policies as we continued to fine tune, our very small some processes.

Juan Ignacio Recalde: Additionally, we are selectively are starting to grow our small ticket higher yield loans NII increased one 4% mainly due to a drop in the cost of funding, which was triggered repricing of the funding base in this context NIM increased seven basis points and stood at 13, 4%.

Cesar Rivera: Provisions. Isolating the impact of El Nio, provisions increased 29.2% due to higher delinquency related to all beings. From a year-over-year perspective, NII was up 5.3% due to an uptick in interest income as active loan pricing management mitigated the impact of a loan contraction. However, the upswing in NII was offset by a rise in funding. Provisions, excluding reversas for El Nio provisions, fell 10.8% mainly due to a base effect given that in the first quarter of 2023, more provisions were required due to social and climate events.

Juan Ignacio Recalde: Provisions isolating the impact of El Nino provisions increased 29, 2% due to higher delinquency related to all the juice for year over year perspective, NII was up five 3% due to an uptick in tourist income effective loan pricing management mitigated the impact of a law.

Juan Ignacio Recalde: One contraction.

Juan Ignacio Recalde: The upswing in NII was offset by a rise in the funding cost provisions, excluding Roberto transforming Nino provisions fell 10, 8%, mainly due to a basis given that the first quarter of 'twenty three more provisions were required due to social and climate events.

Cesar Rivera: Operating expenses rose 2% over the same period and remain under control as we continue to invest in digital capabilities. In this context, efficiency stood at 53.3% year-over-year, with ROE reaching 13.2%. 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.

Juan Ignacio Recalde: <unk> expenses rose, 2% over the same period and remained under control as we continue to invest in digital capabilities in this context efficiency astute.

Juan Ignacio Recalde: 53, 3% year over year with ROE reached 13, 2%.

Juan Ignacio Recalde: Banco Columbia has been challenged by a deterioration in economic conditions and ongoing high inflation very high funding rates and a reduction in the interest rate ceiling, we have a profitable growth strategy, where we have slowed down the growth rate of the portfolio by emphasizing risk control and efficiency.

Cesar Rivera: We have a profitable growth strategy where we have slowed down the growth rate of the portfolio by emphasizing risk control and efficiency. We remain committed to the long-term potential of this business. Next slide, please.

Juan Ignacio Recalde: We remain committed to long term potential of this business.

Juan Ignacio Recalde: Next slide please.

Cesar Rivera: Profitability of Grupo Pacifico expanded this quarter with ROE standing at 28.9%. However, in quarter-over-quarter trends, insurance underwriting results remained relatively flat as favorable dynamics in the property and casualty business were offset by lower results in the life business. It is important to note that the disability and survivorship product continued to demonstrate sequential expansion as the anticipated decrease in revenue was offset by a reduction in claims. Despite flat and declining results, net income grew 60%, bolstered by a base effect as non-recurring expenses were reported last quarter and an increase in net financial income. From a year-over-year perspective, Grupo Pacfico's net income dropped 2%.

Juan Ignacio Recalde: Profitability of Grupo Pacific was expanded this quarter with arrow standing at 28, 9% in quarter over quarter trends insurance underwriting results remained relatively flat.

Juan Ignacio Recalde: Favorable dynamics in the property and casualty business were offset by lower results in the life business. It is important to note that the disability and survivorship, probably will continue to demonstrate sequential expansion.

Juan Ignacio Recalde: The anticipated decrease in revenue was offset by a reduction in claims.

Juan Ignacio Recalde: Despite flat underwriting results net income grew 60% bolstered by a base effect as nonrecurring expenses were reported last quarter and an increase in net financial gain.

Juan Ignacio Recalde: From a year over year perspective, Grupo Pacifico and the team can dropped 2%. This decline was primarily attributable to a drop in life insurance underwriting result, which was driven by individual life and group life problems improve performance in the property and casualty business, notably within property and casualty risk probe decoupled.

Cesar Rivera: This decline was primarily attributable to a drop in life insurance and the write-on result, which was driven by individual life and group life problems. However, improved performance in the property and casualty business, notably within property and casualty risk problems decoupled, with increased net financial income partially offset this dynamic. Next slide, please.

Juan Ignacio Recalde: With increased net financial income partially offset these dynamics next slide please.

Cesar Rivera: Profitability in the investment management and advisory line of business increased this quarter, with ROE remaining virtually flat at 14.1%. On a quarter-over-quarter basis, net income rose 9%. This evolution was driven primarily by a seasonal drop in operating expenses and growth in income from our wealth management business, where assets under management in US dollars were up 9%. The impact of these variations was partially offset by the elimination of corporate finance business units and less favorable treasurer results. It is important to note that despite the uptick in net income, ROE remained unchanged.

Juan Ignacio Recalde: Profitability in the investment management and advisory line of business increased this quarter with <unk> remaining virtually flat at 14, 1% on a quarter over quarter basis net income rose 9%. This evolution was driven primarily by a seasonal drop in operating expenses and growth in income from our water.

Juan Ignacio Recalde: Our wealth management business, where assets under management in U S dollars were up 9% the impact of these variations were partially offset by the elimination of corporate finance business unit and less favorable trading results. It is important to note that despite the uptick in net income Roe.

Juan Ignacio Recalde: Remained unchanged. This was attributable to the average net equity balance, which was boosted by the reevaluation of our available for sale securities as a S. R.

Cesar Rivera: This was attributable to the average net equity balance, which was boosted by the revaluation of available for sale securities as ASOs on a year-over-year basis. Net income increased 8%, bolstered by higher income from our capital market business, which registered an uptick in transactional activity among corporate and retail clients. Our wealth management business also contributed positively as assets under management rose 19% in U.S. dollars. Next slide Now we will look at Credicorp's consolidating dynamics.

Juan Ignacio Recalde: The year over year basis, net income increased 8% bolstered by higher in controlling our capital markets business, we've reduced it in an uptick in transactional activity among corporate and retail clients or wealth management business also contributed positively.

Juan Ignacio Recalde: Assets under management Rose, 19% in U S dollars makes it slightly.

Juan Ignacio Recalde: Now we will look at credit good consolidator in diagnostics.

Cesar Rivera: On a quarter-over-quarter basis, interest-earning assets posted a slight uptick as cash and due from banks offset the decline in loan balances, particularly for wholesale loans. The yield on inter-earning assets increased four basis points, mainly due to a re-rating of the loan portfolio. On the liability side, we maintain our funding advantage in low-cost deposits.

Juan Ignacio Recalde: On a quarter over quarter basis interest, earning assets posted a slight uptick as cash and due from banks offset the decline in loan balances, particularly for wholesale lungs.

Juan Ignacio Recalde: The Ealing immune to earning assets increased four basis points, mainly due to a re rating of the loan portfolio on the liability side, we maintain our funding advantage in low cost deposits. Our 10 deposit volume, which has rising but has been re priced down what drove it.

Cesar Rivera: Our trend deposit volume, which has risen but has been repriced downwards, drove five basis points, decreasing our cost of funds. Additionally, BCP issued a senior bond as part of a strategy to manage long-term debt. On a year-over-year basis, our interest-earning assets mix shifted, reflecting upticks in retail loans and investment balances as wholesale loans contracted somewhat in line with market dynamics. On the funding side, low-cost deposits continue to be the main source of funding.

Juan Ignacio Recalde: Basis points decreasing our cost of funds. Additionally, BCP issue, a senior bonds as part of our strategy to manage long term debt.

Juan Ignacio Recalde: On a year over year basis, our interest, earning assets mix shifted reflecting upticks in retail loans and investment balances as wholesale loans contracted somewhat in line with market dynamics on the funding side low cost deposits continued to be the main source of funding.

Cesar Rivera: A favorable funding structure and, to a certain extent, a steeping yield curve led the yield on our interest-earning assets to rise 73 basis points and outpace the increase of 37 basis points registered for our funding costs. Recent balance sheet and interest rate dynamics led NIM and NII to increase, boosting core income growth on a quarter-over-quarter basis. NIM increased 10 basis points and stood at 6.3%. Risk-adjusted NIM grew 75 basis points to 4.85%. If we isolate the effect of provisions for expected losses for El Nio, risk-adjusted NIM fell 16 basis points.

Juan Ignacio Recalde: A favorable funding structure and to a certain extent steeping yield cures led the yield in our interest earning assets to rise 73 basis points and outpaced the increase of 37 basis points with Easter for our funding cost next slide please.

Juan Ignacio Recalde: Recent balance sheet and interest rate dynamics slit NIM and NII to increase boosting core income growth on a quarter over quarter basis.

Juan Ignacio Recalde: <unk> increased 10 basis points and stood at six 3% risk adjusted NIM grew 75 basis points to 485%. If we isolate the effect of provisions for expected losses for El Nino risk adjusted NIM fell 16 basis points core income was boosted mainly.

Cesar Rivera: Core Income was boosted mainly by NII, which increased 2.3% quarter over quarter. When analyzing the result for fee income and FX transactions, it is important to note that both lines have been affected by our operations in Bolivia, BCP, which has adopted its fee structure for foreign transfers to offset the losses reported for FX sell-purchase transactions. Excluding BCP Bolivia's operations, other income grew 1.3% quarter over quarter, driven by an uptick of 3.1% in fee income at BCP, driven mainly by fees from credit card transactions, with registered growth through the e-commerce channels and by an increase in transactions to YAPI and PRIMA due to growth in the volume of payroll contributions.

Juan Ignacio Recalde: But NII, which increased two 3% quarter over quarter.

Juan Ignacio Recalde: When analyzing the resolve for fee income and FX transactions. It is important to note that both lines have been affected by our operations in Bolivia, BCP, which has adopted <unk> truckload portfolio transfers to offset the losses reported for ethics self purchase transactions.

Juan Ignacio Recalde: Excluding BCP, Bolivia operations or their income grew one 2% quarter over quarter, driven by an uptick of three 1% in fee income at BCP drilling mainly via fees from credit card transactions. We've released three grow through the e-commerce channels and by an increase in transactions to Yodlee and <unk>.

Juan Ignacio Recalde: Three months due to growth in the volume of payroll contributions on a year over year basis, NIM Rose 46 basis points on a risk adjusted NIM increased.

Juan Ignacio Recalde: In 31 basis points if.

Cesar Rivera: On a year-over-year basis, NIM rose 46 basis points, and risk-adjusted NIM increased 31 basis points. If we exclude BCP Bolivia's operations, core income increased 8.5% on the back of NII, which grew 9.2% driven mainly by BCP via an uptick in transactions to IAPE, Credit Cards, and Debit Cards. Next slide, please.

Juan Ignacio Recalde: If we exclude the BCP Bolivia operations core income increased eight 5% on the back of NII grew nine 2% driven mainly by BCP, Vietnam Tikkun transaction, we ought be credit cards, and debit cards and excess slightly.

Cesar Rivera: Let's look at the dynamics for non-performing loans. On a quarter-over-quarter basis, growing non-performing loans were led by BCP, followed by MiBank. Within BCP, NPL growth was driven by consumer, mortgages, and wholesale and partially offset by SMEP. In consumer lending, NPL growth was related to refinancing of vulnerable clients, while growth in mortgage NPL was fueled by clients that also registered delinquency and other problems. The NPL volume in wholesale was impacted by refinancing for a specific corporate decline.

Juan Ignacio Recalde: Let's look at the dynamics for nonperforming loans on a quarter over quarter basis grew in nonperforming loans was led by DCP followed by anybody.

Juan Ignacio Recalde: Within BCB MPL growth wasn't driven by consumer mortgages on wholesale and partially offset by SME.

Juan Ignacio Recalde: Yes.

Juan Ignacio Recalde: In consumer NPL grew was related to refinancing will network clients.

Juan Ignacio Recalde: While growth in mortgage NPL was fuelled by clients that also released three delinquency Inglewood approach.

Juan Ignacio Recalde: The NPL volume in wholesale was impacted by refinancing for any specific corporate clients. This evolution was partially offset by a contraction in mpls and SME, which reflected the impact of loan collateral onboarding process for government loans at the bank.

Cesar Rivera: This evolution was partially offset by a contraction in NPLs in SME PYME, which reflected the impact of a long collateral honoring process for government. At Vivanco, delinquency was concentrated in old vintages, where clients were affected by macroeconomic, social, and environmental impacts in 2020.

Delinquency was concentrated in all vintages, where clients were affected by macroeconomic social environmental impacts in 2023.

Cesar Rivera: On a year-over-year basis, NPLs increased mainly to BCP and MIBA. Within BCP, NPLs grew mainly to consumer, which experienced an uptick in refinance loans and delinquency among all BPs, and to mortgages after the payment performance of our indebted clients deteriorated and refinancing rolled. The drivers of NPL growth year over year were the same as those seen in the quarterly analysis. In this context, the NPL coverage ratio stood at 93.5%, while the NPL coverage ratio for government programs stood at 97.2%.

Juan Ignacio Recalde: On a year over year basis, Npl's increase mainly to BCP on Mi band.

Within BCP Npls grew mainly to consumer which experienced an uptick in refinance loans and delinquency among all beat onto mortgages. After the payment performance of ore in the client's deteriorated and refinancing rules you.

Juan Ignacio Recalde: Banco the drivers of NPL grew year over year to wait to see on those seen in the quarterly analysis in this context. The NPL coverage ratio stood at 93, 5%, while MPL coverage ratio isolate and government programs is stood at 97, 2%.

Juan Ignacio Recalde: Next slide please.

Cesar Rivera: Next slide. Moving on to provisions, the cost of risk stood at 2.3%. Isolating the effect of the El Nio provisions, the underlying cost of risk increased 45 basis points, quarter over quarter, to stand at 3%. Let's go through the dynamics of provision expenses, which isolate the aforementioned impact. Provisions grew 16% quarter over quarter, driven by a base effect in mortgage, which reflected a reversal for specific products last quarter, and in SME PIME, which reported higher write-offs and a deterioration in payment capacity in a context of gradual economic recovery.

Juan Ignacio Recalde: Moving onto provisions the cost of research stood at two 3% isolating the effect of El Nino provisions the underlying cost of risk increased 45 basis points quarter over quarter to stand at 3%, Let's go through the dynamics for provision expenses, which isolates the formation of an impact.

Juan Ignacio Recalde: Provisions grew 16% quarter over quarter, driven by a base effect mortgage with reflect the reversion fully specific proposals last quarter and in SME, <unk>, which reported higher write offs and a deterioration in payment capacity in a context of gradual economic recovery and growth.

Cesar Rivera: At Mibanco, growth in provisions was due to higher delinquency related to old loans. On a year-over-year basis, provisions rose 46.9%; growth was fueled by a deterioration in payment capacity in SME payment and credit cards, and a downturn in payment performance in consumer loans. The aforementioned was partially offset by a drop in provisions of Wholesale Banking and Unibank.

Juan Ignacio Recalde: Growth in provisions was due to higher delinquency related to all vintages on a year over year basis provisions Rose 46, 9% ROE was fueled by a deterioration in payment capacity in SME, PMI and credit cards and a downturn in payment performance in consumer loans, the aforementioned was partially offset by.

Juan Ignacio Recalde: Drop in provisions so wholesale banking on in Nevada.

Cesar Rivera: Next slide, please. We will review the evolution of efficiency on a year-over-year basis to isolate the impact of seasonal effects. Operating expenses grew 6.9% year-over-year, driven primarily by disruptive initiatives at the Credicorp level and within core businesses at BCP. Expenses for disruptive initiatives at the Credicorp level increased 31.8%. The most significant expenditures were in IAPE and Tempo, which together accounted for 60% of this quarter's disruptive expenses.

Speaker Change: Next slide please.

Speaker Change: Sure.

Speaker Change: Yeah.

Speaker Change: We will review the evolution of efficiency on a year over year basis to isolate the impact of seasonal effects operating expenses grew six 9% year over year, driven primarily by disruptive initiatives have the credit quarter level.

Speaker Change: And within core businesses have BCP expenses for disruptive initiatives upgraded code level increased 31, 8%. The most significant expenditures were in ERP and temple, which together accounted for 60% of this quarter. This group LIFO expense of BCP core businesses would fuel.

Cesar Rivera: At BCP, core businesses were fueled by growth in expenses through an uptick in IT expenses related to moves to attract more specialized digital talent and increased use of the cloud as clients become more digital and transactions levels increase. Operating leverage remains strong at BCP core businesses due to control expenses. At MiBanco, operating expenses remain under control, and operating income is starting to turn around. In this context, our efficiency ratio stood at 43.6% in the first quarter of 2024, down 70 basis points year-over-year, driven mainly by positive operating leverage at BCP. Next slide.

Speaker Change: Growth in expenses through an uptick in <unk> expenses related to move to a more specialized talent and increased use of the cloud as clients become more data and transactions level increase.

Speaker Change: Operating leverage remains strong at BCP core businesses due to control expenses and muon core operating expenses remained under control and operating including starting to turn around in this context, our efficiency ratio stood at 43, 6% in the first quarter of 2024 down seven.

Speaker Change: Basis points year over year, driven mainly by positive operating leverage at BCP.

Speaker Change: Next slide please.

Cesar Rivera: First quarter profitability was sustained by solid results in our universal banking and insurance businesses and by a recovery in our macrofinance business. In addition, we benefited from a considerable uptick in the performance of our investment portfolio at the holding level. In this context, ROE for the first quarter stood at 18.2%.

Speaker Change: First quarter profitability was sustained by solid results in our water universal banking and insurance businesses and by a recovery in our Microfinance business. In addition, we benefited from a considerable uptick in the performance of our investment portfolio at the holding level in this context, our ROE for the first quarter it stood at <unk>.

Speaker Change: 18, 2% now I will move on to our updated guidance.

Cesar Rivera: Now I will move on to our updated guide. As previously explained, our GDP growth guidance improved to around 3%. Regarding our profitability drivers, first, given the low demand in wholesale banking and still cautious origination volumes in retail banking at BCP and Mibanko, we expect long growth measured in average daily balances to be at the lower end of the guidance range. Second, we expect NIM costs of risk and efficiency to stand within our guidance range.

Speaker Change: As previously explained our GDP growth guidance improved to around 3% regarding our profitability drivers first given the low demand in wholesale banking honesty culture origination volumes in retail banking on BCD on Mueller co. We expect loan growth may showing evidence daily balances to be at the lower end of the guidance range.

Speaker Change: Second we expand NIM cost of risk and efficiency to stand within our guidance range. Finally, we are observing believed unexpected dynamics for fee income and insurance underwriting results, giving all of the afore mentioned, we maintain our guidance for 2024 around seven.

Cesar Rivera: Finally, we are observing better than expected dynamics for fee income and insurance underwriting results. Given all of the aforementioned, we maintain our ROE guidance for 2024 at around 17%. With this, we can turn to the Q&A. We will now begin.

Speaker Change: Percent.

Speaker Change: With this we can turn to the Q&A.

Operator: We will now begin the Q&A session. If you would like to ask a question, please signal by pressing star 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: We will now begin the Q&A session.

Speaker Change: You would like to ask a question. Please signal by pressing star one on your telephone keypad.

Speaker Change: If you have connected to the call using the HD web phone on your computer please.

Speaker Change: 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. 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 answered 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 is from Ernesto Gavilando with Bank of America. Please go ahead.

Speaker Change: If you're using a speaker phone. Please make sure. Your mute function is turned off 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 who will then be allowed.

Speaker Change: To ask as many follow ups as needed, but again. Please only ask one question at a time. Thank you.

Speaker Change: Okay.

Speaker Change: Our first question today is from Ernesto Gavin Lando with Bank of America. Please go ahead.

Speaker Change: Yeah.

Ernesto Mara Gabilondo Mrquez: Thank you. Good morning, Gianfranco and Cesar, and good morning to all your team. Thank you very much for your presentation and congratulations on your very unexpected net income and the ROE for the quarter at 18%. My first question will be on fees, so we saw a strong expansion in fees of 20% on a yearly basis. You mentioned that we are starting to see the benefits of YAPE in your revenues. So, just wondering if there is a target for how much YAPE could be contributing to your fee income revenues, and what can we expect for the growth of fees in the future?

Speaker Change: Thank you hi, good morning, gentlemen, Frankel.

Speaker Change: Good morning to all your team.

Thank you very much for your presentation.

Rats, you better than expected net income for.

Speaker Change: For the quarter at 18%.

Speaker Change: Right.

Speaker Change: My question My first question will be on fees.

Speaker Change: We saw a strong expansion in fees of 20% on a jewelry bases.

You mentioned that we were starting to see the benefits from GAAP revenues.

Speaker Change: Our revenues.

Speaker Change: So just wondering if there is a target on how much to Jeff baby.

Speaker Change: Contributing to you seeing some revenues.

Speaker Change: What can we expect for the crowd.

Speaker Change: Yes.

Speaker Change: 24.

Gianfranco Piero Dario Ferrari de Las Casas: Good morning, Ernesto. I'll take a more conceptual answer, and then I'll ask Cesar to go into the details. Regarding the impact on IAPE in terms of fees, it's a quite a complex question because what is happening with IAPE is that there is sort of a J-curve in terms of businesses and, therefore, income generation, so each target we set is exceeded. (Inaudible) What is paying off is the strategy we launched a few years ago, which we called the War on Cash. We've been heavily investing, mostly at BCP, in how to become the payment hub in Peru, and obviously, this is paying off. I'll ask Cesar to fill in the details.

Speaker Change: Yeah, Good morning, Ernesto Oh, Oh, I'll take that Mark.

Speaker Change: A more conceptual answer and then I'll ask her to go into the details.

Speaker Change: <unk>.

Speaker Change: Regarding the.

Speaker Change: The impact on <unk>.

Speaker Change: In terms of fees is a quite.

Speaker Change: Complex question, because what is happening with <unk>.

Speaker Change: There's less sort of a J curve in terms of of businesses and therefore income generation. So for each target we said is.

Speaker Change: We surpassed our target.

Speaker Change: Every month quarter or whatever.

Speaker Change: But we're very positive on what Yafei.

Speaker Change: It's got a positive.

Speaker Change: Positive impact in the long run in the medium long run on the other hand.

Speaker Change: In general I would argue that what.

Speaker Change: What is paying off is that the strategy, we launched a few years ago, which we called war on cash we've been heavily investing.

Speaker Change: Most mostly at BCP in how to become the payment hub in Peru, and obviously this is paying off so.

Speaker Change: So it's hard to complement me into a detail.

Cesar Rivera: Thank you, Gianfranco. As Gianfranco mentioned, the main structural drivers are long-term capabilities that we have been building. I would like to highlight that this 20.5% is slightly distortion by the situation in Bolivia. I would say that a more structural figure will be in the low teens. The situation in Bolivia is that we charge a higher fee, and we register a loss in the FX transactions. But if you take out this, we can be in the low teens, and it's driven by higher transactional activity, the expansion of different products that we are introducing and scaling very rapidly in YAPE.

Thank you Eric Frankel as Franco mentioned the main so a.

Eric Frankel: The structural drivers of long term capabilities that we are we have been building I would like to highlight that these 20, 20%, 25% is slightly distorted shown by this situation of Bolivia, I will say, though I'm more as truckload figure will be in the low <unk>.

Eric Frankel: <unk>.

Tuition with Bolivia is that we charge a higher fee and will reduce their loss in FX transactions, but if you take out. These we can be in the low teens.

Eric Frankel: Driven by higher transit kind of activity the expansion of different programs that we are introducing a new scaling very rapidly in <unk> and I will also highlight that all the subsidiaries of the group are they starting to increase.

Cesar Rivera: I will also highlight that other subsidiaries of the group are also starting to increase their income growth, which is very positive, and that implies that we are starting to have the capacity to, let's say, navigate with more than two engines at this point.

Eric Frankel: Fee income growth also that is very positive that implies that we are starting to have the capacity to let's say navigate with more than two engines at this point.

Gianfranco Piero Dario Ferrari de Las Casas: Thank you very much, and then my second question is in terms of regulation. We have recently seen some proposals in Congress, so can you elaborate on what could be the potential impacts on your business? I think there was something related to banking transfers and credit card payments, and also I don't know if there's been a recent update on pension resolves or pension reforms.

Speaker Change: Oh perfect. Thank you very much and then my second question is.

Speaker Change: Self regulation.

Speaker Change: We have recently seen some proposed cells at Congress.

Speaker Change: So can you elaborate on what could be the potential impacts to your business.

Speaker Change: I think there was something related to banking.

Speaker Change: I agree you've got pain Meds and also I don't know if there's like a last update on pension.

Speaker Change: Sure.

Gianfranco Piero Dario Ferrari de Las Casas: That's a more complex question than the first one actually. Congress in Peru is Congress in Peru. Having said that, I'll start with the last question. Unfortunately, all the efforts that have been done, both by regulators, regulators I mean, technical regulators, and actually by us, as Credicorp and so on, in reform proposals regarding the pension funds, have, At the end of the day, we are not going to be attacked for the last, or perforated for the last, I don't know, three, four years, therefore, unless we do have a structural reform, we are putting in danger the pension system, or the retirement plan for Peruvians in the next, I don't know, 10 to 15 years.

Speaker Change: <unk>.

Speaker Change: Oh, that's a more complex question that the first one actually.

Speaker Change: <unk>.

Speaker Change: Congress in Peru is Congress in Peru.

Speaker Change: Having said that.

Speaker Change: I will start for that.

Speaker Change: With the last question. Unfortunately, all the efforts that have been done both by by regulators regulators have been technical regulators and by that by actually by us as grade copper and so on.

Speaker Change: In reform proposals regarding the pension funds haven't.

Speaker Change: Haven't been approved.

Speaker Change: Approved are taken into account by Congress and unfortunately, they they've decided to.

Speaker Change: Prove our seventh withdrawal.

Speaker Change: As I've mentioned before.

Speaker Change: In our opinion the pension the pension system in Peru in general has been.

Speaker Change: That's for a lot of pay for it for the last I don't know three or four years. Therefore, unless we do have a structural reform we are.

Speaker Change: We are in danger that the pension system.

Speaker Change: The retirement plan for Peruvians in the next I don't know 10 to 15 years that doesn't pensions and I would say that the more the most structural reform.

Gianfranco Piero Dario Ferrari de Las Casas: That's in pensions, and I would say that's the most structural reform that is needed in Peru. Yes, it's on and off. If you go, I don't know, back five, 10 years in time, a lot of these have been taken out by Congress, trying to go through the technical regulators, trying to work on what's the rationality for charging those.

Speaker Change: Reform that is needed in Peru regarding specific regulation in terms of fees are.

Speaker Change: Yes.

Speaker Change: Hum.

Speaker Change: If you go back 510 years in time.

Speaker Change: A lot of these have been taken out by Congress.

Speaker Change:

Speaker Change: It is what it is we what we're doing this.

Speaker Change: <unk> to go through the technical regulators trying to work on whats the reasonable ability for charging those fees.

Gianfranco Piero Dario Ferrari de Las Casas: But is there any potential impact, any timeline for this to be approved or not?

Speaker Change: Are there any potential impact any timeline for this to be approved or not.

Gianfranco Piero Dario Ferrari de Las Casas: We really don't know. As you mentioned, specifically on the interbank fees. It was approved on the first voting scheme, there should have been a second one, and nothing has happened. That might be approved or not. We really don't know. It's really a question mark. That's why I said this question was more complex than the first one. I would say the level of populism at Congress has risen a lot over the last

Speaker Change: Okay.

Speaker Change: We really don't know as you mentioned specifically on the interbank.

Speaker Change: Interbank fish.

Speaker Change: It was approved at the first voting scheme, there should be a second one on nothing has happened that might be approved.

Speaker Change: Bruce or not really.

Speaker Change: No.

Speaker Change: Is.

Speaker Change: It is really the question Mark that's why I said it was.

Speaker Change: This question is more complex than the first one.

Speaker Change: Okay.

Speaker Change: It's very I would say the level of populism.

Speaker Change: Congress.

Speaker Change: Recently, a lot over the last.

Speaker Change: Joe years couple of years.

Gianfranco Piero Dario Ferrari de Las Casas: Okay, now, perfect. Honest, thank you very much. Thank you, Ernesto. The next question is from Reynaldo Maloney with Autonomo. Please go ahead. Hi, everyone. Thank you for the space to ask questions.

Speaker Change: Okay perfect understood. Thank you very much.

Speaker Change: Thank you Ernesto.

Operator: The next question is from Reynaldo Maloney with Autonomo. Please go ahead.

Speaker Change: The next question is from Reinado Maloney with auto Navajo. Please go ahead.

Reynaldo Llosa Benavides: Hi, everyone and thanks for your participation ask questions a minus on the guidance.

Reynaldo Llosa Benavides: I wanted your perspective on how you'll recall scion achieving the growth guidance that's been lagging.

Reynaldo Llosa Benavides: At the same time that you want to achieve the cost of risk guidance, particularly in light.

Reynaldo Llosa Benavides: The coverage ratio that you currently have thank you.

Cesar Rivera: Sure, I'll ask Cesar and Reynaldo to answer that question. Yes, and I think probably you are referring to... higher GDP expectations, similar loan growth, and cost of risk, all put together. And I think it's a matter of timing and mix.

Speaker Change: Sure I'll answer them right now.

Speaker Change: And I think probably you are referring to.

Speaker Change: Higher GDP expectations, similar loan growth and cost of risk all put together.

Speaker Change: <unk> is a matter of timing and mix.

Cesar Rivera: The GDP growth is actually, the perspective is improving, but our clients are already impacted. So we have corporate clients that are very worldwide, they are very creditworthy, but they are still very conservative in their demands. This implies that even in a higher expectation of GDP growth, the combined low portfolio is going to be in the similar range that we were expecting with a lower GDP growth. And in terms of cost of risk, and Reynaldo can complement and correct me.

Speaker Change: The GDP growth is actually the perspective is improving but our clients are already impacted so we have corporate clients that are very war why they are very crazy worthiness, but they are still very conservative in their demands and we are more internally being more conservative in the original.

Speaker Change: <unk> of the loan book and the retail loan portfolio.

Speaker Change: This implies that eating in a higher expectation of GDP growth.

Speaker Change: Combined loan portfolio is going to be in the similar range that we were expecting with a lower GDP growth and indeed in terms of cost of risk and right now doing in complement and correct me.

Cesar Rivera: We are also seeing significant improvement in the cost of risk of the new vintages, but the deterioration of the already-originated portfolio is still there, and we need to go through a process in which they go through the process of really deteriorating to the point of charge-off at a certain percentage, and after that, these old vintages are going to be extinguished, and relative volumes come down at the end of the year. Yeah,

Speaker Change: We are also.

Speaker Change: Seeing significantly improvement in the cost of resource the new vintages, but the deterioration of the already originate portfolio is still there and we need to go through a process in which they go through the process of really deteriorate into the point of Chartwell thing set up on a same fast enough to have that these.

Speaker Change: All vintages or go into a steep two BSD English and came down in relative volumes at the end of the year.

Speaker Change: Yes, it does.

Speaker Change: This is basically what those are as I mentioned, we expect to.

Speaker Change: As a result of the impact of the new vintages.

Speaker Change: On a better looking economic outlook.

Speaker Change: Specially on the cycles are measured over years. So that's why we decided to maintain our guidance in terms of cost of risk.

Speaker Change: Understood. Thanks, and then.

Speaker Change: In terms of loan growth do you expect the inflection point all sorts of happening second Q when you started accelerating growth.

Speaker Change: Yes, yes.

Cesar Rivera: Yes, because we do have two factors. One factor is the gradual effect of economic growth, the reduction in interest rates, but also a comparison base because last year we had a decrease in volumes throughout the year. So we need to go through this process, I would say like a sunrise, in which we gradually are starting to have less tougher comparisons through the year. I don't know if it is clear, but last year you had higher volumes at the beginning, lower volumes at the end, and we expect to have the reverse this year. So through the quarters, we are going to have less and less tougher comparisons as the year progresses.

Speaker Change: Yes, because we have to have two factors one factor is the gradual effect of the economic ROE the rate reduction on interest rates, but then also a comparison base, we hope because last year, we have a decrease in volumes through the year. So we need to go through these process like I will say like us.

Speaker Change: Rising, which we gradually are starting to pop.

Speaker Change: Less tougher comparisons through the year.

Speaker Change: It is clear last year, you are you have higher volumes at the beginning lower volumes at the end and we expect to have that reversed this year. So through the quarters, we are going to have less tougher comparisons as the year progresses.

Speaker Change: That's clear thank you.

Speaker Change: Yeah.

Operator: The next question is from Thiago Batista with UBF. Please go ahead.

Speaker Change: The next question is from Thiago Batista with UBS. Please go ahead.

Thiago Bovolenta Batista: Hi guys, thanks for the opportunity and congratulations on the results. I have a follow-up question for Ernesto and Juan about YAPI, and by the way, YAPI is presenting impressive numbers, but you have already achieved 11.5 million active clients, and this is probably half of the adult population in Peru. So how much more clients can YAPI add? And when you look, let's say, four or five years from now, how do you believe YAPI's revenues will be? Do you see any big change in the type of revenues that YAPI will generate or not?

Thiago Bovolenta Batista: Hi, guys. Thanks.

Thiago Bovolenta Batista: Thanks for the opportunity listen congratulation for the results.

Thiago Bovolenta Batista: I have a follow up question on that are nice to have one about TRP.

Thiago Bovolenta Batista: And by the way the yuppies presented impressive numbers, but you haven't really thought she went to $11 5 million. Our clients are active clients and did you probably half of the adult population.

Thiago Bovolenta Batista: So how much more clients can can can yaqui edge and when you look at let's say four five years from now.

Thiago Bovolenta Batista: How do you believe will be yuppies revenues do you see any big change.

Thiago Bovolenta Batista: Type of revenues that you hope you will generate or no.

Gianfranco Piero Dario Ferrari de Las Casas: Yes, a great question, Thiago. So, let me go back to...

Speaker Change: Yes, great great questions. So.

Speaker Change: So let me go back to.

Gianfranco Piero Dario Ferrari de Las Casas: The strategy regarding YAPE has evolved. When we launched YAPE, the main focus was to gain users, or Yaperos, what we call our users. When we got fractured in that sense, we then switched to usage, and as you can see, the level of usage has risen dramatically over the last few years. Nowadays, the focus is how to, on the one hand, monetize that usage and, on the other hand, keep releasing new features and new functionalities so as to improve the daily life of Peruvians.

The strategy regarding the upper house evolved when we launched <unk>.

Speaker Change: The main focus was to gain users.

Speaker Change: So what we call the operator.

Speaker Change: When we when we got budget that says we then switch to our usage as you can see.

Speaker Change: A lot of usage of <unk>.

<unk> dramatically over the last few years.

Speaker Change: Nowadays what the focus is how to online.

On one hand, and monetize that usage and on the other.

Speaker Change: Other hand keep.

Speaker Change: Releasing new features unusual functionality sought to solve the daily lives of Peruvians. So regarding your first question.

Gianfranco Piero Dario Ferrari de Las Casas: So, regarding your first question, the main target today is not to keep adding new users. Having said that, the number of users is increasing by roughly 300,000 users per month, but the main focus or the main strategy today is usage and monetization. Regarding your second question, I go back to the first question regarding fees, the one originally made by Ernesto Gavirondo, is again, there is a J curve in terms of the usage of IAPE, so going forward, we expect IAPE to have, We really don't know exactly today what those sources of income are.

Speaker Change: The main target today is not to keep adding new users. However, having said that the number of users is increasing by roughly 300000 users per month.

Speaker Change: But the main focus will remain strategic ladies usage and monetization.

Regarding your second question.

Speaker Change: Again I go back to the first question regarding fees.

Speaker Change: The one way.

Speaker Change: <unk> originated.

Speaker Change: Let's talk have you done though is again there is a J curve in terms of usage of Yahoo. So going forward, we expect <unk> to have.

Speaker Change: Different sources of income.

Speaker Change: We really don't know exactly today, what those sources of income are obviously the ones that are more mature are going to be more relevant now in the near future, having said that going forward there might be new sources of income and we're constantly looking for.

Gianfranco Piero Dario Ferrari de Las Casas: Obviously, the ones that are more mature are going to be more relevant in the near future. Having said that, going forward, there might be new sources of income, and we're constantly looking for alternatives and also looking for benchmarks and wallets that have been that are more developed in their countries that were YAPE-eased in Peru. If you allow me to complement,

Speaker Change: Alternative.

Speaker Change: Also looking for benchmarks on the.

Speaker Change: Wallets that have been.

Speaker Change: That are more developed in their countries that where <unk> is in Peru.

Speaker Change: If you allow me to complement.

Cesar Rivera: If you allow me to complement it, we have a page in the presentation that helps to understand this because in payment, that is the more mature business, we are starting to add new functionalities. And among these, the composition has changed, incorporating relative volumes of the new ones. In the second place is lending, that is starting to gain traction and relative volumes, and in the third place is the marketplace. So we expect to change the composition. We don't know exactly what is going to happen, but if you think of it as a combination of compounding businesses, the second ones are going to start to grow relative weight down the road.

We have.

Speaker Change: A page in the presentation that helps to understand this because in payments that is the more mature business, we have starting blood new functionalities and among these the composition has changed incorporating relative volumes of the new ones. In the second is lending that is starting to gain traction and relative volumes and in the third places marketplace. So.

Speaker Change: We expect to change the compensation, we don't know exactly what is going to happen, but as you see as a combination of compounding business. The second one sorry, starting to go into starting to grow relative weight down the road.

So thanks for the answers.

Operator: The next question is from Tito Labarta with Goldman Sachs. Please go ahead.

Speaker Change: The next question is from Tito <unk> with Goldman Sachs. Please go ahead.

Speaker Change: Yeah.

Tito: Hi, Good morning. Thank you for taking my question. So my question is on your margin. Good performance there continues to expand within the guidance range, but just thinking.

Tito Labarta: My question is on your margin, you know, good performance there, continues to expand within the guidance range, but just thinking from the evolution from here, do you see any room for the NIMS to continue to increase? I know you expect loan growth maybe to pick up in the second half of the year, but it's still been negative, right? [inaudible]

Tito: Evolution from here do you see any room.

Tito: The NIM to continue to.

Tito: Increase I know you expect the loan growth maybe to pick up second half of the year, but it's still been negative right Joe.

Tito: If it increases it increasing to the mid.

Tito: Single digit so given that relatively.

Tito: Muted loan growth.

As expected you can the margin increase further and can you also remind us the sensitivity of margin.

Tito: As rates continue to come down.

Tito: Yes.

Cesar Rivera: Yes, we think that we can and can't. Sorry, there is some noise there.

Speaker Change: Ah, Yes, we think that we can maintain.

Speaker Change: Sorry, some noise there.

Cesar Rivera: I think we can maintain these levels of net income, and I would like to remind you that these levels are more than 100 basis points higher than before the pandemic. These are significantly high levels of net income. And at the end of the day, what we actually manage and monitor is the risk-adjusted need. That is a combination of this and the cost of risk. Inside the dynamics, we have had the capacity to extend the duration of the portfolio, the SOLIS portfolio, and due to international rates, we expect to still have dollar rates in a high range for some time, which is going to allow us to converge this further decrease with the change of the portfolio towards a more retail base.

Speaker Change: We can maintain this level of net income and I would like to remind you that these levels are more than 100 basis points higher than previews to the pandemic. This has significantly high levels of net income and at the end of the day, what we actually manage and monitor.

Speaker Change: Is the risk adjusted NIM that is a combination of this and the cost of risk is hyper dynamics, we have had.

Speaker Change: Pass it to.

Speaker Change: To extend the duration of the portfolio the solid portfolio and.

Speaker Change: Due to the international rates, we expect we still have a dollar rates in the high range for some time that are going to allow us to converge. These further decrease with a change on the portfolio towards a more retail base. So I think is reasonable to expect.

Cesar Rivera: So I think it's reasonable to expect relatively stable NIMS and to try to improve the combination of NIMS and cost of risk, shifting the profile of the portfolio down the road. I think this is a reasonable assumption, and when this process converges, probably next year, we expect to have higher, more positive long-term growth that stimulates the total results for the further years.

Speaker Change: Relative stable nims.

Speaker Change: And trying to improve the combination of <unk> and cost of risk shifting the profile of the portfolio down the road.

Speaker Change: Yeah.

Speaker Change: I think this is a reasonable assumption and when this process can bearish probably next year.

We expect to have a higher more positive loan growth that's important.

Speaker Change: The total results for the for the years.

The following years.

Cesar Rivera: Okay, that's clear. Thank you.

Speaker Change: Okay. That's clear thank you.

Operator: The next question is from Yuri Fernandez of J.P. Morgan. Please go ahead.

Speaker Change: The next question is from Yuri Fernandes with JP Morgan. Please go ahead.

Yuri Rocha Fernandes: Hey guys, good morning, and thank you for the opportunity to ask questions. I have one on your operating expenses and overall efficiency ratio. You are tracking below the guidance, and still not changing. I understand FirstQ is seasonal, so maybe this is part of the explanation.

Yuri Rocha Fernandes: Hey, guys good morning, and thank you.

Of asking questions I had one on your operating expenses and overall efficiency ratio you are tricky.

Yuri Rocha Fernandes: Below the guidance, we are not changing our I understand for secured seasonal so maybe.

Yuri Rocha Fernandes: As part of the explanation, but when we look to your breakdown of disruption expenses.

Yuri Rocha Fernandes: But when we look at your breakdown of disruption expenses, we see that line, although still growing a lot, is even decelerating. It used to be growing 50-60% over a year, and now it's growing, I don't know, like 30% over a year. So my question to you is, how should we think about this?

Yuri Rocha Fernandes: See that line, although still growing a lot even also decelerating right. It used to be growing 50, 60% year over year and now is growing I don't know like 30, 30% year over year.

Yuri Rocha Fernandes: So my question to you is how should we think about these like can you be a little bit more efficient.

Gianfranco Piero Dario Ferrari de Las Casas: Can't you be a little bit more efficient? Thinking on the long term, I understand for this year it's 46-48% guidance for efficiency. But what is your goal in the long run? Can we see Credicorp running below 40%? Anything you can comment on? So my question is, is there a chance that this year you will surprise us on the long end of the guidance? And two, where should efficiency sit? Because now most of the new projects are getting more mature. We have the app, you have Tempo, which is getting bigger on a bigger scale. So just trying to understand if we could see a positive trend in your efficiency and operating expenses. Thank you.

<unk> on the long term I understand for these years 46, 48% guidance for efficiency, but what is your go lives in the longer run can be secretive corporate running below 40, <unk> like to any and if you can comment. So my question is.

Yuri Rocha Fernandes: Is there a chance that this year you surprised us on the low end of the guidance and chew like where should efficiency seat because now most of the new projects. We are getting more mature we had the off tempo getting bigger scale. So I'm just trying to understand if you we could see a positive trend on your efficiency integrating <unk>.

Speaker Change: Thank you.

Gianfranco Piero Dario Ferrari de Las Casas: Good morning, Yuri. If we were not investing in any new technology or innovation, I totally agree with you that the cost to income could go down. If you recall, maybe a couple of years ago, we said that by 2025, disruptive initiatives in terms of cash flow should be cash flow neutral. We have reaffirmed that position.

Speaker Change: Good morning, Julie.

Speaker Change: Yep.

Speaker Change: If we were not investing in any new technology I totally agree with you the technology or innovation I totally agree with you that the cost to income.

Speaker Change: Go down.

Speaker Change: If you recall, maybe a couple of years ago, we said that by 2025.

Speaker Change: Yeah.

Speaker Change: New disruptive initiatives in terms of cash flow should be.

Speaker Change: Neutral we are we have reaffirmed that position with.

Speaker Change: We don't expect.

Gianfranco Piero Dario Ferrari de Las Casas: Actually, it might be slightly better than what we stated a few years ago. Having said that, as we all know, there are a lot of new technologies coming up.

Speaker Change: Actually it might be a slightly better that what we stated a few years ago, having said that Oh I.

Speaker Change: We all know there are a lot of new technologies.

Speaker Change: Coming up.

Gianfranco Piero Dario Ferrari de Las Casas: Specifically, one that pops up in my mind is artificial intelligence, and in the short run, that might have a negative impact in terms of cost to income. Obviously, in the long run, it should improve cost to income. So I would divide the question in two; if we were not investing in any new technologies, the cost to income should go down. Having said that, as a matter of fact, we recently launched an overall corporate AI program, and we are going to invest in that program. And at the beginning, they mostly focused on cost reduction. However, that's not going to have a positive impact in the short run.

Speaker Change: <unk> one one that pops up in my mind is artificial intelligence.

Speaker Change: In the short run that might have a negative impact in terms of cost to income obviously in the long run it should be issued improved cost to income. So I would I would divide the question into if we were not investing in any new technologies.

Speaker Change: The cost to income should go down how having said that we are.

Speaker Change: As a matter of fact, we've recently launched an internal AI of overall corporate AI program that we are going to invest in that in that program.

Speaker Change: At the beginning mostly focused on cost reduction however.

Speaker Change: However, having however, that's not going to have a positive impact in the long run in the short run sorry.

Cesar Rivera: I would like to complement something; if you see our figures, year over year, our expenses have grown almost 7%, 6.9%. But I would like to highlight that this was achieved, including a 31, almost 32% increase in disruption.

Speaker Change: I would like to complement something.

Speaker Change: If you see our figures year over year or expenses that grew almost 7% six 9%.

Speaker Change: I would like to highlight that this was achieved including a 31 almost 32% increase in disruption, but this disruption is building business that are gradually more profitable and gaining escape. For example, these expenses were 9% of the total cost base, one year ago now with more than 11%.

Cesar Rivera: But this disruption is building businesses that are gradually more profitable and gaining scale. For example, these expenses were 9% of the total cost base one year ago; now it's more than 11%. So what we are going to see is an overall figure that probably doesn't change too much, but a significant change in composition following the strategy that Gianfranco mentioned, in which the more traditional businesses gain in efficiency, and the disruptive ones still maintain a relatively high cost to income and gain relative weight, while building new business and capabilities down the road. This is already very visible in our figures, with BCP growing 4.7% year-over-year, including almost 18% increase in IT-related costs.

Speaker Change: So what we are going to see is an overall figure that probably doesn't change too much but a significant change in the composition. Following the strategy that John Franco mentioned in which the more traditional business gain in efficiency and the disruptive ones.

Speaker Change: Still maintains relative.

Speaker Change: Relative high cost to income and gains relative weight, but building new business and capabilities on the road that is very visible now in our figures already.

Speaker Change: With our BCP growing four 7% year over year, including almost 18% increase in <unk> related costs.

Yuri Rocha Fernandes: Thank you, guys. I just had a hard time.

Speaker Change: Oh no. Thank you. Thank you guys I just have a hard time like your loan growth will accelerate.

Speaker Change: Margins.

Yuri Rocha Fernandes: Your growth will accelerate, your margins should be mostly stable from here, and the new initiatives are getting more mature. When you look at cost-to-serve and the RPAC of IAPT, they are almost crossing each other, so the break-even is real, and it's getting closer. I struggle to see the efficiency moving from 44 to 46.

Speaker Change: It should be mostly stable from here right.

Speaker Change: And the new initiatives Theyre getting more much youre right. When you look at your cost to serve and the arc back of Yahoo.

Speaker Change: They are almost across each other right. So the breakeven is real and it's getting closer so.

Speaker Change: I just feel like mutations moving from 44 to <unk> 48 that in your guidance.

Speaker Change: And I wish we could we could see some upside the year that was my my point, yes, it's very very clear.

Gianfranco Piero Dario Ferrari de Las Casas: You're right, your view is right, maybe the only caveat is that if there were new investments to make in either innovation or new technologies.

Speaker Change: Youre right.

Speaker Change: Your view is right.

Speaker Change: Mainly maybe the only caveat is that there were new investments to do.

Speaker Change: In either innovation or new technologies, we're going to do that and that may have a negative impact, but your views right.

Gianfranco Piero Dario Ferrari de Las Casas: Thank you very much Gianfranco and Cesar, and congratulations on the questions. Again, if you have a question, please press star then 1.

Speaker Change: Perfect. Thank you very much again for lung cancer.

Speaker Change: Congrats for the quarter.

Speaker Change: Thank you.

Speaker Change: Again, if you have a question. Please press Star then one.

Operator: The next question is from Carlos Gomez Lopez with HSBC. Please go ahead.

Speaker Change: The next question is from Carlos Gomez Lopez with HSBC. Please go ahead.

Speaker Change: Hello, Good morning, and thank you for the update and you've talked extensively about Japan could.

Speaker Change: Could you how should we start to the other initiatives.

Speaker Change: Temple in Chile and in Peru.

How are those advanced than so far thank you.

Carlos Gomez: I'll go with TEMPO and I'll ask Diego to talk about DIO or Francesca to talk about DIO. TEMPO is right on track; remember, though, that TEMPO is way below breakeven yet. Having said that, the leading indicators, the operating leading indicators, are on track, and some of them are outperforming our initial expectations. We have an application for a full banking license for Tempo in Chile, and that should be approved within anything between 18 to 24 months, but in a nutshell, Tempo is performing well.

Speaker Change: Yep.

Speaker Change: Although with temple and I'll ask or be able to talk about about the ore Francesca provoke along Hill temple is.

Speaker Change: It is right on track.

Speaker Change: <unk>.

Speaker Change: Remember, though that temple.

Speaker Change: It is way below breakeven, yet having said that the.

Speaker Change: The leading indicators of the operating leading indicators are on track and some of them are outperforming our initial the initial.

Speaker Change: Expectations are.

Speaker Change: We filed.

Speaker Change: Filed.

Speaker Change: An application for a full banking license for example in Chile.

Speaker Change: Uh huh.

Speaker Change: And that should be approved anything between 18 to 24 months, but it is.

Speaker Change: In a nutshell temporary is performing well.

Speaker Change: We do not expect to breakeven in the short run.

Carlos Gomez: We do not expect to break even in the short run, and maybe on the next call or in a couple of calls, we can be more specific on the Tempo figures. I don't know if Francesca or Diego want to go into specifics on them. Yes, let me compliment you on tempo a little bit and continue with you.

Maybe in the next call or in a couple of calls we can be more specific on the on the.

Speaker Change: On the Tempur figures I dunno, Francesco if you ever want to go into specifics.

Speaker Change: Yeah.

Diego Cavero Belaunde: Yes, let me add a little bit on TEMPO and continue on NEO. In addition to what Gianfranco said, I think there are two paths to TEMPO that are very promising. One is the transactional base on the prepaid and debit cards. And now, the credit card path is also around 40,000 customers already onboarded and using them with a healthy transaction base as well. So GPD is solid, and we're on track on those two main metrics. So that's very promising, and if you look at the brand landscape, whether it's credit card or debit card, EO is in the top 10 brands for Chile. So I think that shows a good position.

Francesco: Yes, let me complement a little bit on temple and continue on Neal and in addition to what type of pad two.

Francesco: Tampa, which I'm very promising one is near term functional data on the prepaid and debit card.

Francesco: It's still growing and now the credit card and plus it's all it's all around party polysilicon customers already on boarded and using with a healthy mhm transaction day as.

Francesco: Well when you Pee Dee, a need and we are on track.

Francesco: On March two two main countries well that that's very promising and if you look at the brand landscape, whether it's credit card or.

Francesco: Debit card.

Francesco: E. All in from the top 10 brands for Tuesday, I think that shows a good position.

Diego Cavero Belaunde: The other venture that you didn't mention is Kulki, the acquiring business. I think that's another very mature business that BCP is now embracing in its SME business to continue to grow because it complements the value proposition. And it's still growing in fee income, but GPV volumes are good, and the customer base continues to grow. On the EOS side, we're focusing more on the mass affluent segment in Peru with a new value proposition that is completely digital. Growth is still slow. We're growing because we have a value proposition that is still not complete. [inaudible] That is a poor machine as well.

Francesco: The other thing.

Thank you that you didn't mention at school getting in acquiring these new I think that's another very much of a b and.

Francesco: BCP is now embracing the maritime you'd be pleased to continue to grow.

Sean: Okay Sean.

Sean: People growing fee income the G. P. D. One games are good and I'm talking to the customer.

Sean: <unk> continues to grow on the <unk> side.

Sean: We're focusing more on the mass affluent segment in Peru, with a new value proposition that is completely digital growth.

Sean: No no were growing because we have a value proposition that is still not complete.

Sean: With a credit card that we've seen good transaction levels and good <unk>.

Sean: And good levels Hmm mm Hmm.

Sean: The views himself and stickiness in terms of the customers that we do acquire stay with you all on the past 12 months.

Sean:

Sean: Betty.

Sean: Hello.

Diego Cavero Belaunde: Sorry, if you're going to expand on EO, are you already at the general advertising level, or still at friends and family? No, we're at the general advertising level, and we still use a lot of digital marketing, more than TV or mass market advertising, but we are open to the public, using, at this point, only BCP's risk policy. So we're targeting, we're using BCP's risk modeling to target customers that are not currently, basically not currently BCP customers, no?

Sean: It sounds like you're going to spend on <unk> are you already in the general.

Sean: Advertising level or a ceiling with friends on public place.

Betty: No we're not.

Betty: 19 level.

Betty: We still use a lot of digital marketing.

Betty: More than M E R or not mass market 19 that we are we are open to the public using it at this point only BCP and risk policy.

Betty: So we're targeting we're using the BCP risk modeling.

Betty: To target customers that are not.

Betty: Currently basically knock on me.

Betty: Yeah.

Speaker Change: Oh God.

Speaker Change: Right.

Diego Cavero Belaunde: And can we have an idea of the order of quantity of customers that you have, either activated or registered? Again, not exact numbers, but how many are we talking about, 100,000, 10,000? No, no, no, we're still at the 10,000 number, still, yes, which is our early venture. Yes, yes.

Speaker Change: And I don't have an idea of the order of magnitude of customers that you have either activate either or but just not exact numbers, but.

Speaker Change: How many are we talking about 100000 10000 online doesn't know where the 10000 number.

Yeah.

Yes.

Speaker Change: Thank you so much.

Speaker Change: Thank you.

Operator: The next question is from Andres Soto with Santander. Please go ahead.

Speaker Change: The next question is from Andres Soto with Santander. Please go ahead.

Andres Soto: Good morning to all, and thank you for the presentation. My question is regarding dividends. You guys declared a dividend that implies a significant increase versus last year, 40%. And yet, when I look at the

Andres Soto: Good morning to all and thank you for the presentation. My question is regarding dividends.

Andres Soto: Declared a dividend implies a significant increase versus last year of 40%.

Andres Soto: And yet when I look at the.

Andres Soto: Capitalization level of your main subsidiaries.

Cesar Rivera: Capitalization levels of your main subsidiaries; they are still above what you say is the minimum that you expect, specifically when I look at BCP; BCP is currently at 12%, and you say that the target post-dividend is 11%, and MiBanko is at 16% versus 15% that you set as a target. So my question is, what prevented you from being more aggressive in terms of dividend distribution? And if you see any space for additional distribution, especially dividends throughout the year? Thank you for the question.

Andres Soto: Still above what you say is the minimum that you expect specifically when I when I look at the BCP V B.

It's currently at 12% I would just say that the target positive events. It's 11 pardon me bank inquiries up 16 versus 15.

Andres Soto: Surpass our target. So my question is what what prevented you from being more aggressive in terms of dividend distribution and if you see any space for additional distribution, especially all dividends throughout the year.

Cesar Rivera: Thank you for the question. First, I am probably going to address the capital levels of the operating units, and after that, the dividends at the Credicorp level. Actually, we set up a minimum of 11%, as you rightly mentioned, at BCP, and we usually put some kind of a small cushion. Particularly at the end of the quarter at BCP, we had a decrease in corporate loans that was beyond what we were expecting. For that reason, we have a core equity tier 1 above that which was going to be, I would say, an unexpected level.

Speaker Change: Thank you for the question first I am going to address probably capital levels of the operating units and after that the dividend at critical level.

Speaker Change: Actually.

Speaker Change: We set up a minimum of 11% as you rightly mentioned at BCP and we usually put some kind of a.

Speaker Change: A small cushion, particularly at the end of the quarter in BCP, we have a decrease in corporate loans that were.

Speaker Change: Beyond that we were expecting for that reason, we have on our core equity tier one are both that was going to be I will say to unexpected levels.

Speaker Change: Small points there.

Cesar Rivera: Some decimal points there. At Credicorp level, we expect to have a growing first dividend through the year. We feel that this is a significant increase over the last year, and we, based on the capital needs of the remaining part of the year, can evaluate further dividends.

Speaker Change: Credit card level, we expect to have a growing first dividend through the year. So we feel this was a significant increase over the last year and we based on the capital needs for the remaining part of the year can evaluate further dividends.

Operator: Perfect. Thank you, Cesar. The next question is from Alonso Aramburu with BTG Patchwall. Please go ahead. Yes, hi. Good morning, and thank you for the call.

Speaker Change: Perfect. Thank you.

Speaker Change: The next question is from Alonso Aramburu with BTG Pactual. Please go ahead.

Operator: The next question is from Alonso Aramburu with BTG Patchwall. Please go ahead. Yes, hi, good morning, and thank you for having me.

Yes, hi, good morning, and thank you for the call.

Alonso Aramburu: Wanted to ask also about yesterday.

Alonso Aramburu: The multi store minerals, we see you guys.

Alonso Aramburu: I mean on a quarterly basis.

Alonso Aramburu: Thank you.

Alonso Aramburu: Those loans.

Alonso Aramburu: <unk> loans.

Alonso Aramburu: Okay.

Alonso Aramburu: No.

Alonso Aramburu: And have you been able to develop a really small base.

Alonso Aramburu: How are you.

Alonso Aramburu: Okay.

Speaker Change: Thanks, you bet, we are garnering a lot of so I won't go into specifics.

Gianfranco Piero Dario Ferrari de Las Casas: That's good morning, and also, going to the specifics, in IAPE, we started with One installment loan, very, very short duration, less than 30 days; NPLs have been very, very low, surprisingly low, I would say, and that has been mostly targeted to or using BCP models. We've learned about it with those loans, and now we've launched multi-installment loans, which are longer in tenure and larger in tickets, and we're currently also using data and pilots so as to enhance the models at BCP that haven't worked solely with BCP data but also leveraging IAPES data. The performance of that business is very problematic.

Speaker Change: We started with.

Speaker Change: One is one installment loan very very very short duration.

Speaker Change: Less than 30 days.

Speaker Change: Npls have been very very very low so pricing lower trade and that has been mostly a.

Speaker Change: Targeted to.

Speaker Change: <unk> seen Bcp's model, we've learned about with those.

Speaker Change: Those laws and now we've launched multi installment loans, which are longer tenor and larger and tickets.

Speaker Change: We're currently.

Speaker Change:

Speaker Change: Also using the data and pilots so as to enhance.

Speaker Change: The.

Speaker Change: Models at BCP that Havent worked.

Speaker Change: Solely with BCP data I've also leveraging on yuppies data today as I mentioned in.

Speaker Change: In my initial words were a very early stages in the lending business and get back but so far.

Speaker Change: Performance of the business is very promising.

Speaker Change: Alright, thank you.

Operator: The next question is a follow-up from Yuri Fernandes with J.P. Morgan. Please go ahead.

Speaker Change: The next question is a follow up from Yuri Fernandes with Jpmorgan. Please go ahead.

Yuri Rocha Fernandes: Thank you guys for taking my question again. Just a follow-up on capital, two topics. Do you have excess capital at the holding? I remember in the past, Credicorp Holding had excess capital, so I'm just checking if there is any capital there. And two effects, I know the SOL has been mostly stable, but can you remind us whatever the SOL goals are, do you have any corrections to impact? Do effects impact your capital base because you have loans in dollars, and this can affect your RWA? Can you just refresh me on the effects of liquidity for you? Thank you.

Yuri Rocha Fernandes: Thank you guys for taking my question again, just a follow up on capital.

Yuri Rocha Fernandes: Two topics.

Yuri Rocha Fernandes: Do you have access kept towards the whole D. I remember some some sometimes in the past credit card holding excess capital. So just checking if there is any capital there and two effects I know the Sol has the mostly stable, but can you can you remind us.

Yuri Rocha Fernandes: Whatever it is so goes like do you have any any correction to what impact does FX effects impact your your capital base, because you have I don't know.

Yuri Rocha Fernandes: The dollars in these kind of ex yard re can you just refresh me here on FX volatility for you. Thank you.

Speaker Change: That's correct.

Gianfranco Piero Dario Ferrari de Las Casas: I'll take your first question and then ask Cesar for the second one. But we've explained it before that the policy we have is that we retain whatever is needed, from profits, I mean, whatever is needed at the subsidiary level to fund growth within the common equity tier 1 that we've decided to keep. For more information, visit www.ISGlobal.org and, obviously, at Pacifico regarding the solvency ratios we need to maintain. Beyond that, the policies that we pay, all of the subsidiaries pay dividends in full on the rest of what is needed to Credicorp.

Speaker Change: I'll take your first question and let us herself for a second one.

Speaker Change: We've explained it before the policy. We have is we retain whatever is needed from profit climb in whatever is needed in the subsidiaries level tool to find growth within the common equity tier one that we've decided to do.

Speaker Change: From that which basically are.

Speaker Change: And maybe I'll go in DCP and obviously it is difficult.

Speaker Change: Solvency ratios, we need to maintain beyond that the policies like we pay all of the subsidiaries paid dividends in full of what is the rest of what is needed to buy a car.

Gianfranco Piero Dario Ferrari de Las Casas: And as Cesar mentioned, the policy we're following at Credicorp is to raise the usual dividend on a yearly basis, and that's the reason we've increased the dividend. Depending on the performance of the economy, depending on the growth of businesses, and depending on, in the U.S., that's how we manage it. So going to the specific question, yes, the short answer is yes, we have excess capital, but the logic is what I just explained.

Speaker Change: Assess how to measure it.

Speaker Change: The policy whereby we're following Gregg is that there.

Speaker Change: Our usual dividend.

Speaker Change: Right.

Speaker Change: Year, but on a yearly basis and Thats a reasonable we've raised recently.

Speaker Change: During this current dividend.

Speaker Change: Depending on the performance of their economy, depending on different growth the growth of the of the businesses and depending of.

Speaker Change:

Speaker Change: Inorganic growth activity or opportunities that we may find we we do pay a extraordinary dividend in the last quarter last quarter or the second semester of the year.

Speaker Change: How we manage it so going to the specific question yes.

Speaker Change: Sure.

Speaker Change: The short answer is yes, we have excess capital, but the logic is what I've just explained.

Yes, Andrew.

Cesar Rivera: And regarding the second question, I would like to remind you that our functional currency is solid. And our books are, I would say, by policy, structurally balanced and neutral. So we try to maintain in all the subsidiaries within a very short range, outside of specific trading operations, a balanced book. So we are going to have some impact from the FX impacts in the P&L, but structurally, we are neutral in operating currency at subsidiary levels.

Speaker Change: And regarding the second question I would like to remind you that our functional currency is solid.

Speaker Change: Our books are I will say by policy.

Speaker Change: Structurally balance a neutral so we try to maintain in all the subsidiaries within a very short range outside of the specific trading operations a balanced book. So we are going to have some impact for the FX impact in the P&L, but structurally we are neutral.

Speaker Change: <unk> operating who received a subsidiary levels given say that we have operational outside of payroll that are conducting the business. Another wrinkle resist all areas of Colombian pesos or Chilean pesos in which case, we have on top of the volatility of the apex in the P&L and impact.

Cesar Rivera: Given that we have operations outside of Peru that are conducting the business in other currencies, dollars or Colombian pesos or Chilean pesos, in which case we have, on top of the volatility of the FX in the P&L, an impact of the relative exchange from this currency to solid in the balance sheet reflected as... non-realized losses or gains. At this point, these impacts are very moderate.

Speaker Change: The relative exchange from these currency solace in the balance sheet reflected us.

Speaker Change: No unrealized losses or gains at this point these impacts are very moderate.

Yuri Rocha Fernandes: No, thank you. Thank you very much, Cesar and Gianfranco. That's my final one. Thank you.

Speaker Change: No. Thank you. Thank you very much Sir and Jonathan Uncle, That's my final one.

Gianfranco Piero Dario Ferrari de Las Casas: It appears there are no further questions at this time. I will now turn the call back over to Mr. Gianfranco Ferrari, Chief Executive Officer, for closing remarks.

Speaker Change: It appears there are no further questions at this time I will now turn the call back over to Mr. Gianfranco Ferrari for Chief Executive Officer for closing remarks.

Gianfranco Piero Dario Ferrari de Las Casas: Thank you. Thank you all for your questions.

Gianfranco Piero Dario Ferrari de Las Casas: Thank you. Thank you all for your questions. Our first I've mentioned, we're optimistic about <unk> ability to realize our revised guidance for 2024 and reiterate our 2024 Roe guidance.

Gianfranco Piero Dario Ferrari de Las Casas: As Cesar mentioned, we are optimistic about Credicorp's ability to realize our revised guidance for 2024 and reiterate our 2024 ROE guidance. Furthermore, I'd like to reaffirm that we are confident in our ability to achieve the 18% sustainable ROE by 2025 based on the following drivers. A resilient NIM as we have managed the sensitivity of our margins to market interest rates on the back of our asset liability management and our ongoing shift towards retail loans.

Gianfranco Piero Dario Ferrari de Las Casas: Furthermore, I would like to reaffirm that we are confident in our ability to achieve the 18% sustainable Roe.

Gianfranco Piero Dario Ferrari de Las Casas: By 2025 based on the following drivers a resilient NIM as we have managed the central D V. D of our margins to market interest rates on the back of our asset liability management and our ongoing shift towards retail loans.

Gianfranco Piero Dario Ferrari de Las Casas: A reduced cost of risk as we leave the current through in the great cycle behind and enhanced efficiency through IAPE and other disruptive initiatives. Moreover, the political environment is now clearly more stable than the one a year ago, and we expect that the current administration will remain in office until 2026. This is, without a doubt, positive for business commerce. Having said that, the recent S&P downgrade should serve as a wake-up call for us.

Gianfranco Piero Dario Ferrari de Las Casas: Our reduced cost of risk will leave their current through.

Gianfranco Piero Dario Ferrari de Las Casas: Cycle behind.

Gianfranco Piero Dario Ferrari de Las Casas: And Hudson Sufficiency.

Gianfranco Piero Dario Ferrari de Las Casas: All disruptive initiatives mature.

Moreover, the political environment now is clearly more stable than the one a year ago.

Gianfranco Piero Dario Ferrari de Las Casas: The current administration will remaining office until 2026.

Gianfranco Piero Dario Ferrari de Las Casas: This is without a doubt positive two business confidence.

Speaker Change: <unk> said that the recent S&P downgrade shows set should serve as a wake up call for us merely having stable government is insufficient to capitalize their robust growth needed to alleviate poverty in Peru.

Gianfranco Piero Dario Ferrari de Las Casas: Merely having stable governments is insufficient to catalyze the robust growth needed to alleviate poverty in Brazil. We need our executive and legislative authorities to take bold steps forward in fostering growth and safeguarding democracy. This entails implementing structural reforms in education and health and eliminating the bureaucratic barriers that hinder the execution of our mining and infrastructure projects.

We need our executive and legislative authorities to take bold steps forward in fostering growth in safeguarding democracy.

Speaker Change: This entails implementing structural reforms in education, and health and eliminating the bureaucratic barriers that hinder the execution of our mining and infrastructure projects.

Gianfranco Piero Dario Ferrari de Las Casas: As leaders, it is our responsibility to advocate for policies that unlock our country's untapped potential and drive growth. And on that note, we recently published our 2023 Annual Sustainability Report, prompting me to take this opportunity to reaffirm our commitment to our purpose, to contribute to improving lives by driving the changes that our countries need. Lastly, I would be remiss if I did not mention that this mark, Cesar Rios' final presentation in our quarterly earnings calls.

Speaker Change: It is our responsibility to advocate for policies that unlock our country's untapped potential and drive brokerage.

Speaker Change: And on that note. We recently published our 2023 annual and sustainability report prompted me to take this opportunity to reaffirm our commitment to our purpose to contribute to improving lives by driving the changes that our country's nib.

Speaker Change: Lastly, I would be remiss, if I did not mention that this mark.

Speaker Change: So it's a real final presentation.

Speaker Change: Italy, earning goals I wish to express my gratitude for his invaluable contributions during his tenure.

Gianfranco Piero Dario Ferrari de Las Casas: I wish to express my gratitude for his invaluable contribution during his tenure as CFO. Starting July 1st, he will transition to the role of Chief Risk Officer at Credicorp and BCP, leading our risk management strategy into a new chapter as we continue to tap new segments and markets. Additionally, I look forward to working closely with Alejandro Pérez Reyes in his new position as CFO of Credicorp and VC. Our experienced leadership team has a long track record of successfully managing through both challenging economics and regulatory environments. We are focused on driving sustainable, profitable growth and building long-term value for our shareholders through proven capital and risk management. Thank you all for participating in today's event. Thank you, ladies and gentlemen. This concludes today's presentation.

Speaker Change: <unk> starting July one he will transition to a role of chief risk Officer, Greg <unk> and BCP needing our risk management strategy into a new chapter as we continued up new segments and markets.

Speaker Change: Additionally, I look forward to working closely with other handled purveyors in his new position as CFO of <unk>.

Speaker Change: Our experienced leadership team has a long track.

Speaker Change: Record of successfully managing through both challenging economics.

Speaker Change: Luckily environments, we're focused on driving sustainable profitable growth and building long term value for our shareholders through prudent capital and risk management. Thank you all for participating in today's call.

Operator: Thank you, ladies and gentlemen. This concludes today's presentation. You may now disconnect.

Speaker Change: Thank you ladies and gentlemen. This concludes today's presentation you may now disconnect.

Speaker Change: Yes.

Operator: BF-WATCH TV 2021

Speaker Change: Yeah.

Speaker Change: [noise].