Q1 2025 Credicorp Ltd Earnings Call
Thanks for watching and don't forget to like and subscribe!
Speaker Change: Good morning everyone. I would like to welcome you to the Credicorp Ltd. 1st quarter 2025 conference call.
Today's conference call is being recorded.
As a reminder, all participants will be in listen only mode.
Speaker Change: There will be an opportunity for you to ask questions at the end of today's presentation. Thank you very much.
Speaker Change: If you would like to ask a question, please signal by pressing star 1 on your telephone keypad.
Speaker Change: If you have connected to the call using the HD web phone on your computer, please use the keypad on your computer screen. If you are using a speaker phone, please make sure your mute function is turned off to allow your signal to reach our equipment. Thank you very much.
Speaker Change: Now, it is my pleasure to turn the conference over to Credicorp's IRO, Milagros Cigeuinas, you may begin. Thank you very much.
Speaker Change: Thank you and good morning everyone. Speaking of today's call will be Gianfranco Ferrari or Chief Executive Officer and Alejandro Perez Reyes or Chief Financial Officer.
Speaker Change: Participating in the Q&A session will also be Francesca Raffles, Chief Innovation Officer, Cesar Rio, Chief Risk Officer, Cesar Rivera, Head of Insurance Prevention, and Carlos Otello-Mibanko, Chief Financial Officer.
Speaker Change: Before we proceed, I would like to make the following statement. Today's call…
Speaker Change: We'll contain forward-looking statements which are based on management, current expectations and beliefs and are subject to a number of risks and uncertainties.
Speaker Change: We assume no obligation to update or revise any forward-looking statements to reflect new, or change events, or circumstances. Thank you very much.
Speaker Change: Gianfranco Ferrari will begin the call with remarks on the include macro environment, a brief overview of our quarterly results, and on how Peruvian's position amid global uncertainty. [inaudible]
Speaker Change: Followed by Alejandro Perez, who will provide a more detailed analysis of key macroeconomic indicators or financial performance and are also for 2025. Gianfranco, please go ahead.
Gianfranco Ferrari: Thank you, Milagros. Good morning, everyone, and thank you for joining us today. I want to begin by saying that I'm confident in Peru's macroeconomic fundamentals and create curves potential to lead and generate value within it.
Gianfranco Ferrari: The economy is rebounding faster than expected, with momentum across sectors from construction to retail and from agriculture to services.
Gianfranco Ferrari: This is translating into higher private investment expectations and formal employment recovery.
Peru's first quarter, 3.9% GDP growth, confirmed this trend. Andres Soto, Cesar Briceno,
Gianfranco Ferrari: supported by private spending, lower inflation and terms of trade at record levels.
Gianfranco Ferrari: Declining interest rates on the business cycle recovery, a stimulating trade demand and unlocking growth in the private sector.
Gianfranco Ferrari: Despite lingering political uncertainty, Peru's macroeconomic policy has remained broadly responsible. Andres Soto, Cesar Briceno, Alonso Arambur,
Speaker Change: Even Modus, Political Stabilization, Cudanlog, Minimful Upside, and at Cray Corp, we are well positioned to capture it.
Speaker Change: We continue to monitor global development, including present-trams announcement of a 10% tariff on US imports from all its trading partners.
Speaker Change: while the direct impact of this choice on the Peru's GDP is expected to be limited. It's expected to be limited.
Speaker Change: The broader concern is how these developments may affect global growth and commodity prices given our position as a small and open economy where up to 60% of GDP volatility originates from external factors. [inaudible]
Speaker Change: This issue is particularly relevant as China and the US are Peru's main trading partners.
And China is a key destination for Peru's Copper exports.
Speaker Change: Giving the rapidly evolving environment, it remains too early to fully assess the potential effects. [inaudible]
Speaker Change: Nevertheless, we are closely monitoring developments and are prepared to act as necessary.
Speaker Change: Against this backdrop, Cricorp delivered a solid first quarter. We saw resumed loan growth, especially in wholesale banking and individuals, while maintaining a prudent risk approach.
Risk Adjusted Name, improved year-over-year, driven by lower provisioning.
Speaker Change: Profitability remains strong underpinned by operating dynamics and our ability to leverage peruse like the technical rebound.
For more information visit www.FEMA.gov
Speaker Change: These outcomes result not only from favorable macro conditions, but also from intentional strategic investments. With modernized core systems, expanding digital capabilities are really signed key client journeys across universal banking, microfinals, insurance and wealth management.
Turning now to the first quarter results.
Speaker Change: We reported a high ROE of 20.3% as strong operating results were further boosted by extraordinary gains related to the closing of the acquisition of the remaining 50% stake in the joint venture with Empress Azban America.
Speaker Change: Excluding this non-recurring gain, ROE would have been 18.4%, which still exceeded expectations and reflect solid fundamentals across our core businesses.
Speaker Change: Operational performance was strong across universal banking and insurance and pensions.
Speaker Change: Performance in Profit Microfinals alongside continued growth in non-interest income, particularly from fee-based and transactional volumes.
Speaker Change: We achieved 5.4% of research adjusted revenues from new businesses this quarter, advancing toward our 10% target by 2026.
Speaker Change: We're seeing a reactivation of great demand across our main landing segments.
Speaker Change: In Cuban, Lone Growth was particularly robust in wholesale banking in short term loans, and to a lesser extent, individuals and Milagros.
Speaker Change: We expect retail segments and microfinance to accelerate in the coming quarters.
Speaker Change: Riscadjusted NIMS, strengthen sequentially, boosted by enhanced acid quality and a resilient underlying NIMS, even as interest rates declined, cautioned by our increasing low-cost funding base.
Speaker Change: On the funding site, deposit growth remains strong, driven by system liquidity and increased
Speaker Change: Our sustained investments in service and digital platforms have deepened client relationships and we've gained market sharing in low cost deposits, reaching 41.3%.
Speaker Change: The improving asset quality reflects proactive measures we've taken since 2020-23, tightening origination standards, repression risk, strengthening low riskettling and investing in our aesthetics alongside a favorable macro-environment.
Speaker Change: We also continue to enhance our risk management capabilities as our risk transformation project progresses and is expected to deliver more material impacts starting in 2026.
Speaker Change: Additionally, our strong solvency has enabled us to increase our defense to 40 solace per share while also supporting our plans for sustained long-term growth.
Speaker Change: Our efficiency ratio is at 45.7% within our guidance range, as strategic investments in innovation and digital capabilities continue to drive diversified income streams and scalable growth through deeper market penetration.
Speaker Change: We continue to embed sustainability deeply into our strategy, given that we've used sustainability as tied directly to business performance.
Speaker Change: From inclusive finals, financial education and green loans to environmental risk management at development of social impact metrics, our initiatives are aligned with long-term value creation.
Speaker Change: We recently published our updated sustainability framework from 2025 to 2030 on our website.
Speaker Change: Amour Fuggest Action-oriented framework reflects our commitment to inclusive, sustainable growth.
Speaker Change: We invite investors to review the full strategy and welcome feedback as we continue to strengthen our sustainability approach.
Speaker Change: This quarter also included a P&L one-off gain of approximately 236 million solid, related to the revaluation of our previously held 50% stake in passifical health business under IFRS accounting.
Speaker Change: Moreover, there was a non-cache equity adjustment of around 257 million solids.
Stem in from the evaluation of Bolivia's assets.
Speaker Change: Bolivia remains part of a regional footprint where we continue to take a discipline approach to managing our exposure.
Speaker Change: These results underscore the strength of our corporations and our long-term commitment to building a more agile client-centric and resilient financial platform.
Andres Soto,
Speaker Change: Looking ahead, Perus Economiki, the economy is on track to grow around 3% in 2025, assuming global recession
Speaker Change: The momentum from Q1 is expected to extend into Q2, supported by high terms of trade, recovering real wages, and resilient private consumption.
Speaker Change: Or Tailwinds include significant profit distributions to employees, the delay impact of monetary increase in and strong investment expectations.
Speaker Change: While global uncertainty and the 2026 elections could affect sentiment later this year, the outlook remains encouraging.
Speaker Change: Let me now take a step back and explore what the evolving global environment means for Peru and the potential challenges and opportunities ahead.
Speaker Change: There's no doubt that perusing a strong economic position characterized by a positive macroeconomic
Rabaz, Domestic Demand, and Solid Performance in the first quarter.
Speaker Change: However, we are operating in a globally uncertain environment, marked by evolving pretensions, global recession risk, and geopolitical factors.
Speaker Change: While the direct impact of current rights measures on Peru remain limited, there's broader concern about how slower, global growth may affect external demand, commodity prices and overall market sentiment. [inaudible]
Speaker Change: Recent progress in trade negotiations between the U.S. and its partners is an encouraging sign that could help mitigate potential risk to global growth.
Speaker Change: However, we remain vigilant as our certainty continues to weigh on the outlook.
Speaker Change: Beyond Peru, the implications of trade tensions are moving similarly across the region. In Chile, while the direct effects of tariffs appear limited, the indirect impacts, such as the slowdown of key trading partners, declining copper prices and deteriorating business confidence, pose additional downside risks.
Speaker Change: In Colombia, the short decline in all prices, if sustained, could put pressure on fiscal revenues and investment.
Speaker Change: Peru, Colombia, and Chile's economies may benefit for over time from a realignment in global trade close with shifting global sourcing patterns.
Speaker Change: For Cray Corp, this dynamics reinforce our ability to adopt across different economic cycles.
Speaker Change: As a result, we are focused not just on managing near-term volatility, but on positioning great corporate to benefit from long-term shifts in regional trade and production patterns.
Alejandro: Now I'd like to turn the call over to Alejandro to go into further detail on our operating and financial results.
Thank you, Yafranco, and good morning everyone. Thank you very much.
Alejandro: As Gianfranco mentioned, our 20.3% ROED's quarter includes extraordinary income related to the acquisition of the remaining 50% state in the joint venture within President Mezita.
Alejandro: Italating this effect, operating ROE, Wasarubas, 18.4%, positioning us for a strong 2025.
Alejandro: An unrequering adjustment affected our balance sheet this quarter. In March, we re-evalued Bolivia's balance sheet using a more market-reflective exchange rate, which generated an accounting contraction of 2% in credit course total assets. [inaudible]
Alejandro: As I discuss the quarter highlights, I will focus on the year-over-year operating trends and isolate one of the techs.
Alejandro: Lones expanded 1.5% measured in average daily balances, driven primarily by short-term loans in wholesale banking.
Alejandro: As a quality has improved materially year-over-year. MPLs contracted the retail banking at DCP and at Mibanko, and Credicorp's MPL ratio stood at 5.1% this quarter.
Alejandro: Cost of risk fell to a low of 1.6% during baramoid, more dynamic portfolio management and supported by improvements in payment performance and in the Peruvian economic backdrop.
Alejandro: Net Inter's income increased 4.3%, expert by a contraction in interest expenses at their interest rates failed, and locals deposits expanded and registered at 59% share of the funding base.
In this context, [inaudible]
Alejandro: Name remained resilient at 6.2% despite a year over year contraction in acid yields.
Diversified sources of income reported double-digit growth year-over-year.
Alejandro: The income increased 16%, boosted by transactional activity at Japan BCP. Gains on FX transactions increased 12.6% through higher volumes at BCP.
Alejandro: Lastly, the insurance on the writing resolved rose 17.9% reflecting a stronger insurance result in the PNC business.
Alejandro: We delivered robust operating results to strengthen asset quality and diversified income sources, showcasing the success of recovery strategy and of our investment in detailed capabilities.
Alejandro: Finally, we recently announced a dividend payout of $40 per share as we move capital levels closer to target across our subsidiaries. [inaudible]
Let's light the light.
Alejandro: Eru, GDP, Group of 3.9% year over year in the first quarter of 2025, marking the third consecutive quarter of growth at this pace. [inaudible]
Alejandro: This positive momentum, which reflects the transition to the mid-cycle phase of the business cycle, is expected to continue supporting growth in the second quarter.
Alejandro: High-frequency economic indicators such as car sales and imports are growing rapidly, while employment are real wages continue to recover.
Alejandro: According to the Central Bank Survey, Business Investment Expectations hit a historical peak reaffirming that private investment is poised to improve.
Alejandro: Inpatient remained within the central bank started range at 1.7% year-over-year in April . This figure is among the lowest reported in both advanced and emerging economies, further supporting the recovery in private consumption.
Alejandro: Moreover, the quota for the first anchovy fishing season announced in April was 20% higher than last year's and marked a seven-year high and will benefit the fishing and primary manufacture sectors in the second quarter of this year.
Alejandro: Record high terms of trade are also bolstering economic growth. In 2024, gold constituted nearly 20% of our exports, and its price has surged to historical highs. [inaudible]
Alejandro: Go shipments this year could be twice that of 2023 and approach the level of copper, our main export process, which represents 31% of total exports.
Alejandro: If a global recession is kept at bay, the priority at Peru will grow above 3% this year remains high, even the favorable domestic environment.
Alejandro: Even though the heightened uncertainty imposes downsides risks to growth, markets are more optimistic after the recent trade deals between the US and UK and the US and China. Hence, the impact of tariffs is expected to be mild. Next slide please.
Thank you.
Alejandro: The federal reserve has been in a holding pattern this year and Chairman Powell has said that it is in no hurry to adjust its policy stance as they wait for more economic data.
Alejandro: Fed futures have shifted and now they are pricing two rate cuts by year end.
Alejandro: The unpredictability of President Trump's announcement continues to drive market volatility and this tendency is likely to persist.
Alejandro: In Peru, the Central Bank lowered its policy rate 25 basis points to 4.5% in May's medium.
Alejandro: The Central Bank will remain cautious and prudent until the global outlook can be determined with greater certainty, especially as its rate stands close to neutral levels.
Alejandro: In Colombia, inflation had accelerated to 5.2% year-over-year in April , although it remains above the upper
Alejandro: Consequently, the Central Bank decided to cut its policy rate by 25 basis points to 9.25 percent.
Alejandro: Maintaining a cautious approach due to a fiscal challenges and uncertainties on external
Alejandro: Finally, in Chile, the Central Bank also opted to give the rates stable throughout 2025, as inflation has remained pressured upwards and stood at 4.5% year-over-year in April .
Alejandro: The latest monetary policy report suggests that only one rate cut will be made over the year.
Next slide please.
Alejandro: BCP posted strong performance mainly on the lack of improvements in asset quality and diversified sources of revenue which continue to represent a key strength.
Alejandro: On a quarterly basis, ROE stood up to 27.1%, driven by the following dynamics.
Alejandro: Total loans measured in Aberdele balances rose 1%. Mainly fueled by wholesale banking and secondarily by consumer loans both at BCP and GABE.
Alejandro: Name remained resilient at 5.8%, despite decreasing interest rates, cushioned by a lower cost funding structure.
Alejandro: MPL volumes fell 4.7%, mainly driven by wholesale banking and SMEB. [inaudible]
The cost of risk stood at 1.3% [inaudible]
Alejandro: Recent improvement in cost of risk are due to cumulative impact of enhancements in underwriting and risk management.
Alejandro: A relatively strong Peruvian economy, and a few one-time events, including consumer and credit card risk model revelations, pension fund withdrawals in the second half of last year, and increased cost of my loan restructuring to clients in hardship.
Alejandro: On a quarter of a quarter of 20s, provisions contracted, treated by the one-time events previously mentioned, and by an improvement in payment performance. [inaudible]
Alejandro: Additionally, in wholesale, provisions drop due to higher reversals after repayments by corporate clients.
In this context, BCP's risk adjusted means 2.5%. In this context, BCP's risk adjusted means 2.5%.
Alejandro: From a year over year perspective, I would like to highlight the following dynamics.
Alejandro: Lones grew to 9% in average daily balances driven primarily by wholesale loans and secondarily by retail loans and mortgages in particular.
Alejandro: Nimri Vain, Resilient, Impacted by the Send Dynamics in Quarter Over Quarter. Other core income, rose 17.8%, driven mainly by the income, which increased on the back of rise in transactional levels.
Alejandro: Games on FX transactions were fueled by higher volumes amid market volatility.
Alejandro: The cost of risk Velagros' retail banking segments, a statement performance improved in a strengthening economic battle. [inaudible]
Alejandro: The efficiency ratio stood at 37.7% this quarter. Growth in operating expenses was spurred by an uptick in provisions for variable compensation, which rose on the back of stronger business performance and by investments in innovative innovation initiatives.
Alejandro: It is not worth it that the ratio for other core income to assets has been rising since the second half of last year, which attest to the positive impact of initiative to diversify BCP's income strength. [inaudible]
Next slide please.
Thank you for watching.
Speaker Change: YAPE continues to demonstrate strong user growth, adding over half a million new active users per quarter to surpass the 40 million mark in the first quarter of this year. [inaudible]
Speaker Change: The app's popularity is reflected in its solid engagement results. We're at TV Appedals on Doug Morden, 52
Speaker Change: Regarding monetization, Japanese revenue generation remains strong and represented 4.8% of Credicorp risk-adjusted revenues.
Speaker Change: Notably, the gap between revenues and expenses per Mao is gradually increasing every quarter.
For more information, visit www.FEMA.gov
Speaker Change: Our payments business continues to be the key driver of revenue growth, representing 56% of the
Speaker Change: The septic was mainly driven by Bill, pure coat and checkout payments. [inaudible]
Speaker Change: Moreover, the financial business expanded due to improvements in the effectiveness of lead. Multi-installment loans, which have better asset quality profiles than single-standard loans, have accelerated and now represent 50% of loan balances, compared to 25% at the beginning of 2024. The financial business expanded due to improvements in the efficiency of lead. The financial business expanded due to improvements in the efficiency of lead.
Speaker Change: By the end of the first quarter of this year, Lending Revenue represented 13% of Japanese revenues, and we are halfway to achieving our aspiration of having 5,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000. [inaudible]
Speaker Change: Finally, we are improving the value proposition of current features while maintaining the highest standards of security and stability to provide the best possible for Peruvians.
Next slide please.
Thank you for watching!
Speaker Change: This quarter, Mibanko Peruz sustained profitability in the mid-teens, Assassin's Quality Metfish Strengthened, and Long Growth Resumed. In the mid-teens, the mid-teens, the mid-teens, the mid-teens,
I would like to highlight the quarter of our quarter dynamics.
Speaker Change: Ivancos Lones, measured in adverse daily balances, grew 0.7% following anaptic in disbursements that was particularly strong in March, which reflects improvements incorporated in our models to better assess risk profiles and subsequently expand loan offering.
This growth was mainly concentrated in small ticket higher yield loans.
Speaker Change: The NPR ratio fell for a third consecutive quarter to stand at 6.4% in line with pre-pandemic levels.
Speaker Change: This reflects the positive impact of ongoing adjustments to origination guidelines that relieve facilities and improvements in their collection processes.
Speaker Change: Mim contracted due to a less favorable acid mix and stood at a strong 13.9%. The cost of risk rose to 5.1% due to a base effect, even that rifles were low last quarter. In this context, risk adjusted mims to a 10.1%.
Speaker Change: From a year-over-year perspective, I would like to highlight the resilience of Mivanco's name.
Speaker Change: A reactive loan pricing management, coupled with a decrease in the cost of funding, helps sustain it. The cost of risk rose 53 basis points, which reflects one time reverse of meeting the first quarter of last year.
Speaker Change: If we exclude this effect, the cost of risk decreased to 104 basis points.
Speaker Change: Reflecting an improvement in underlying risk and lower risk vintage game traction in the portfolio.
Speaker Change: Operating expenses remained under control, and efficiency is 2.9%. In this context, Milagros first quarter contribution to RLE was 14.7%.
Speaker Change: Bivanco Colombia results in proof significantly despite a challenge in business environment, thanks to its focus on efficiency as well as disciplined risk processes.
Speaker Change: and Controls. In this context, Loner Relation Resumed Growth and New Vintages presents Lower Reef.
Next slide, please.
Thank you for watching!
Speaker Change: Adolfo Pacífico, Insurance and the right in results remain strong this quarter, supported by solid commercial dynamics in both the PNC and live businesses.
Speaker Change: Nonetheless, profitability was impacted by credit downwards in the investment portfolio, and stood at 19.3%.
Speaker Change: These 14 years also reflect the full consolidation of impressive and medical operations, effective in March, since March, with no material impact on the results in this period.
Speaker Change: On a quarterly basis, net income rose 8%, primarily driven by a drop in operating expenses due to seasonality.
Speaker Change: This was partially upset by lower insurance and the right to results in the life business, mainly related to the disability and survivorship product, given that Pacífico was not awarded a trudge of Cisco 8 for this year, as opposed to having won a trudge under Cisco 7 last year. [inaudible]
Speaker Change: And low results from our corporate health business due to higher claims.
Speaker Change: On a year-over-year basis, net income drops 16% primarily impacted by an increase in the net loss in securities, which continued to be impacted by a create downward in the investment portfolio last quarter.
Speaker Change: The impact of this variation was nonetheless partially observed by higher insurance and the right to results in both the PNC and live businesses. [inaudible]
Please write this.
Speaker Change: Operating dynamics were strong this quarter for the investment management and advisory business, which reaffirms that our strategic approach is on target and puts us in good state for 2025.
Speaker Change: Arreay for the line of business according to internal managerial figures, came in out of expectations and stood at 18.4%, which is impacted by a one-off charge for equity related to last year's business.
Speaker Change: If we exclude this effect, ROE is to that 16.9% driven by the following operating trends.
Speaker Change: On a quarter or a quarter basis, net income growth is 47%, fuel primary by a seasonal drop in operating expenses, and growth in income from our asset management business. We're a U.M. in U.S. dollars, we're up 12%. [inaudible]
Speaker Change: The impact of these variations was partially observed by lowering income from a wealth management business and less favor of treasure resources. [inaudible]
On a year-over-year basis, net income increased 10%.
Speaker Change: Fueled primarily by lower operating expenses and higher income from our asset management business, where AUMs in US dollars were up 20% and are capital markets business, which raised her benaptic intersectionality among corporate clients.
Speaker Change: The impact of these variations was partially offset by lower income from wealth management, due to a decreasing net interest income, from time deposits and current accounts in a context of declining interest rates. Andres Soto, Alonso Arambur, Alonso Arambur,
Let's like this.
Now, let's review Credicorp's non-solidated evolution. Now, let's review Credicorp's non-solid evolution.
Speaker Change: As we mentioned earlier, we re-valued Bolivia's balance sheet by increasing the exchange rate, which led Credicorp's balance sheet to contract.
I will now focus on explaining under Lying Quarter or Quarter Dynamics.
Speaker Change: The 23 basis points dropped in the yield on intercerning assets was fueled by the intercerning assets mix, which reported a shift toward assets with lower rates by a decline in market rates.
Speaker Change: On the liability side, lower market interest rates, and on going growth in low cost deposits share of total family, less the cost of family to drop 14 basis points. [inaudible]
Speaker Change: On a year-over-year basis, similar balance sheet dynamics drove a contraction of around 50 basis points, both in yield and assets and fanpinkos. [inaudible]
Speaker Change: Going forward, improving economic conditions and growth in retail loans should help us sustain
Next slide please.
Moving on to long-for-follow quality.
Speaker Change: As a quality has clearly turned the corner and MPL volumes continue to contract across segments. Falling to levels below the reported two years ago, prior to its release.
Speaker Change: Provisions dropped over the past nine months due to an improvement in payment performance.
Speaker Change: Successful risk management measures at both PCP and Ivanko, and the one-time events mentioned previously. Consequently, the cost of risk dropped to 1.6%. [inaudible]
Speaker Change: In this context, the MPO Correa's ratio rose and stood at 107.4% In this context, the MPO Correa's ratio rose
Speaker Change: Going forward, we take some of the impacts of one-time events to gradually dissipate.
Speaker Change: We will resume more balanced re-nation as a result, cost of risk is expected to increase and remain under control at the lower end of our guidance. [inaudible]
Next slide please.
Speaker Change: Let's move on to an analysis of our year-over-year income and the evolution of expenses.
Speaker Change: Corincom rolls 7% driven by other Corincom, which increased 15% on the back of our recovery strategy.
Speaker Change: We expect our diverse sources of fissioneration and fortified effects de edo capabilities to sustain growth down the line.
Speaker Change: Regarding margins, we set new heights for our risk-adjusted name, which has risen 39 basis points to 5.24% on the back of resilient name and a significant increase in the cost of risk.
Speaker Change: The efficiency ratio stood within guidance of 45.7%. Operating expenses grew 15.6% during primarily by the core business of BCP and by investments in your innovation portfolio.
Speaker Change: At the core business of BCP, expenses growth was mainly related to increased provisioning for vital compensation and IT expenses. Next like this.
Speaker Change: I wrote it for the quarter as to that 20.3% after we benefited from extraordinary gains related to the finalization of our acquisition of the remaining 50% stake from the joint venture we had with Impressors on Medic.
Speaker Change: If we exclude this non-recording gain, ROE stood at 18.4%, fueled by strong operating results at a beautiful banking and insurers' business.
Speaker Change: It is important to highlight that recurring consolidated net income discord represented a record high for the company as we leverage the decrease in the cost of risk and harness the power of diversified sources of income.
Speaker Change: Now I will move on to our items. Next slide please.
Speaker Change: As Pedro mentioned, as human there is no global recession, we maintain our expectation for potential GDP to grow around 3% in 2025.
Speaker Change: We expect Longbook year-over-year growth of around 3-4-5% measured in average daily balances, or around 6% measured in quarter-end balances, in both cases, excluding the impact of Bolivia's balance sheet evaluation. [inaudible]
Speaker Change: Amitamor dynamic economic backdrop, we expect growth to accelerate over the remainder of the year, driven mainly by retail banking at BCP and by Mi Banco.
Speaker Change: The loan acceleration anticipated and the shift in the Mixtowers video should support NIME or interest rates trend downward. Accordingly, we expect NIME to stand between 6.2% to 6.5%. We expect NIME to stand between 6.5% to 6.5% to 6.5%.
Speaker Change: Disquarters cost of risk was below expectations as we anticipated. We waited.
Speaker Change: As we anticipate the effects of one-time events to gradually fade, and retail origination to increase, the cost of risk is expected to approach the lower end of our guidance range. [inaudible]
Speaker Change: Even the current global economic uncertainty, we are maintaining our guidance for both costs of risk and risk adjusted name.
Speaker Change: On the efficiency front, we maintain our guidance range for 2025. Thank you very much.
Speaker Change: The income is expected to grow in the low-double these these years, supported by an acceleration in economic activity, and don't go with the diversification of our income sources. Additionally, insurance and the right-to-results are expected to remain solid and relatively stable compared to 2024.
Speaker Change: While the robust ROE in the first quarter of 2025 places us in a favorable position with potential upside, global assertiveness have led us to maintain our guidance for ROE at around 17.5% for this year. Andres Soto, Alonso Arambur,
Speaker Change: With his comments, I would like to start a Q&A session. [inaudible]
Speaker Change: We will now begin the question and answer session. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you have connected to the call using the HD web phone on your computer, please use the keypad on your computer screen.
Speaker Change: If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Thank you very much.
Speaker Change: We will pause for just a moment to allow everyone the opportunity for questions.
Speaker Change: We also ask that you please only ask one question at a time. After each question has been addressed by our speakers, you will then be allowed to ask as many follow-ups as you needed. But again, please only ask one question at a time. Thank you.
Speaker Change: Our first question today comes from Brian Flores with Citibank. Please go ahead.
Speaker Change: Thank you for the opportunity to ask questions, congrats on the results.
I wanted to ask you on the guidance.
Speaker Change: As you mentioned, there is a very improving environment, right? And as you mentioned, of course, the first clarity with or without one off is...
Speaker Change: Perhaps ahead of the midpoint of the guidance. So just wanted to ask you, of course, to mention the heightened uncertainty.
Speaker Change: And just if things go as they are apparently going by the second quarter, would it be possible to think of a revision by the second quarter? And then just a quick follow-up because you also mentioned last quarter that the sustainable arrow yield of Credicorp would be around 18%. Thank you very much.
Speaker Change: Is it reasonable because you're already achieving it to start dreaming of, let's say, higher levels of sustainable ROE above 18%. Thank you.
Alejandro, can you take care?
Sure. Thanks for the question. So...
Speaker Change: Yes, I think you are right in the sense that from what we're seeing today, we would expect to be probably above of the current guidance of around 17.5%.
but
Speaker Change: Any changes to our views, we think Peru is going to have a strong year, and the political events are probably going to be felt more in the beginning of 2026 and 2025. The main issue is related to Taris. [inaudible]
Speaker Change: or this trade war, and not from a direct effect. So the direct effects that we expect for Peru are very, very mild.
Gianfranco Ferrari: But the issue is that if you have a world recession where China starts growing less, the US starts growing less, the Afranco mentioned where it's more open economy, that certainly has an impact. Price of copper has an impact.
Gianfranco Ferrari: In that scenario, we could envision a number closer to the guidance we gave. It's not our base scenario, especially since what we've seen in the last couple of weeks, in the sense of potential agreements. Thank you very much.
Gianfranco Ferrari: Happening. And certainly, as soon as we have more clarity, we intend to give.
Gianfranco Ferrari: We are in a process of revising that we've had the conversation and I think there are...
Gianfranco Ferrari: The backdrop and all the things that we've been doing as Credicorp makes us feel that we might be able to increase that number. But we need to have a thorough review. We want to give that number to be really...
Gianfranco Ferrari: Stable going forward, so we will review it and come back to you.
In a few months...
Speaker Change: Pardon me, this is the conference operator. We seem to have a connection issue with the speakers, giving one moment.
I think we're okay now.
Thank you for watching!
Speaker Change: The next question is from Renato, excuse me, Renato Meloni with Autonomous Research. Please go ahead.
Andres Soto,
Speaker Change: A revision in the models, similar to what happened in 4Q, but within different different segments.
Speaker Change: And if you expect these to continue going forward, so you still can revise models for different segments, and if the conditions improve, we can actually have cost of risk much lower than the guidance that's here. Thank you.
That's all? Okay.
Speaker Change: Yes, thank you Renato for the question. I would like to emphasize that there are several factors behind this reduction in the cutoff risk. Of course, the macroeconomic environment is more positive. Thank you very much.
We have had some particular events.
Speaker Change: That has impacted the current situation, but also the accumulative effect of several measures taking in the origination process since the second part of 2023.
Speaker Change: Through 2024, that has aligned our great policy, a streamlined process. Part of these processes are just in the models, and now our models are recognizing lower-respected losses in specific segments. [inaudible]
Speaker Change: The cost of risk, but coupled with significantly improved emergence in this specific sector. So the net effect in risk adjustment should be net positive. The next question is from Tito Labarta with Golden Sacks. Please go ahead. Hi, good morning. Thanks for the call and taking my question. Thank you very much.
Tito Labarta: I guess my question a little bit of follow up on the potential upside bridge.
Tito Labarta: The guidance, because it does look like it's primarily coming on the cost of risk, and the math and quality trends were good, you know, good performance there.
Tito Labarta: But, you know, Nim was down a little bit. Long growth still remains fairly muted. I understand that you should go up. I mean, it's hardly growing given how strong the economy is growing. The economy is growing.
Tito Labarta: And if the cost of risk had been closer to the guidance of 2%, you know, as to make the ROE and taking up on America, ROE would be closer to 17%. So just to understand that with the outside risk come from just primarily a lower cost of risk.
Tito Labarta: And you have to really get what you're going to take for long growth to accelerate from here, because the economy is doing well, as the quality is doing well, but we still haven't really seen that pick up in long growth, just to understand, you know, where the outside could come from. Thank you.
Speaker Change: Thank you, Tito. Sorry, go ahead. Go ahead and have a look. I'll compliment you.
Speaker Change: Yes. I was just going to mention on the long growth part of the question. So.
Speaker Change: Usually when these cycles, like the one we had in 2020, 320, and if it happened, there's a lag on the recovery of loans.
Long-sale, Adolfo,
Speaker Change: Especially in the last couple of months, we've seen very, very good numbers. But again, it takes a little bit to build up the portfolio. But still, we are confident that we are going to be able to be in the guidance of...
Macias, and
Speaker Change: Related to the great cause of risk, going forward as it was mentioned before, we feel very comfortable that the long growth is going to be there.
Yuri Fernandez: The next question is from Yuri Fernandes with JP Morgan. Please go ahead.
Yuri Fernandez: Thank you guys and congrats on another good set of results. 18% are we, even if they want office, it's pretty good. I had a question regarding long growth and I understood what is the revolution took a hit. I see you are keeping your your average long growth guide of sub three and a half and change it.
Yuri Fernandez: And sure, it's too comfortable with you because given this is an average of cool, right? This is your average book, not your end of here in the book. It gets tougher, right? As there, I would say, a more soft growth in the first few. So if you can explain a little bit the longer of dynamics, I would appreciate it. Thank you.
Speaker Change: Sure, thank you, Yuri. Yeah, I get the point. Still, as I was mentioning, we've already seen a couple of months that are very strong actually the numbers from the last month are...
Speaker Change: Very high in historical terms in the sense of lone sales.
Speaker Change: As a result of our risk capability, we are going to be more comfortable with them. So,
I will say this second with his next six months.
Speaker Change: And the important thing to mention is that in March specifically we had some prepayments in the wholesale sites.
Speaker Change: That also decreased the number and showed a lower number that we've had before. So again, we are confident that it's going to pick up and it's what we're seeing actually right now. Again, we are seeing more activity on the land side right now.
Speaker Change: Again, if you have a question, please press star then one. The next question is from Carlos Gomez Lopez with HSBC. Please go ahead.
Speaker Change: Hello, good morning and congratulations on the very good results. I have a question on the sensitivity to rates. You continue to post a very good margin, because rates in the US and in...
Speaker Change: More, mostly in the US, have the men relatively high. Can you remind us what your sensitivity is to each hundred basis points declines in rates both locally and internationally? Thank you very much.
I would say I'm surprised you're so positive about...
Speaker Change: The politics aren't, you just lost the prime minister, you have elections next year, but you seem more confident than in previous cycles that things will be okay. Is that, is that way interpreted correctly? Thank you.
Speaker Change: Carlos, Alejandro, let me take the second question first. Yeah, and the short answer to your second question Carlos is yes, but it's an unfortunate situation. We were...
We've been under Alonso Arambur.
Willy Medioca, government for the last.
For years.
Speaker Change: Performance of not only Gregor, but Peru in the following quarter is going to be quite strong.
Speaker Change: Okay, I'll take the other question. We've actually just revised the analysis, so...
Speaker Change: For 2025, if there were to be a parallel shift of 100 basis points, we would be talking about 17 basis points effect on the meme, which by basically 92% of it, like almost 16 basis points, comes from our dollar portfolio.
Okay, uh, the, the, the, the, the...
It's a very theoretical exercise.
Speaker Change: The next question is from Andres Soto, with Santander. Please go ahead.
Thank you. Thank you.
Andres Soto: We have seen positive results this quarter. Congratulations on JAPA already contributing to profits. My question is specifically on lending.
Andres Soto: This person is made through yachting and based on that, what are your expectations for the ramp up of lending and which areas of lending are you see opportunities for lending are you seeing there. Thank you very much.
Speaker Change: It's going to be individual landing, or are you also considering SME landing to be a driver in the short term?
Francesca, Can you answer that?
Yeah.
Speaker Change: Design Product, offering and to fine tune the sales process, the collection process, and so forth. But our ambition is of course to go into SME lending.
Speaker Change: We have a big portion of our customers are in SME business, no small businesses, and we think a lot of data to be able to create something there.
Speaker Change: But we have started with individuals today. I would say that still Monocota represents. Andres Soto, Cesar Wilson, Cesar Wilson,
The biggest chunk of the investment.
Speaker Change: But end of balances, of course, you see multi-quota beginning to be more relevant because they stay for more than for more than a month. Our idea is to move more towards multi-quota, but we're doing it on a low and grow type of view.
Speaker Change: And therefore, we do believe that the balance by the end of the year is going to be mainly the attending balances. It's going to be mainly a multi-quata. It's going to be a multi-quata.
Speaker Change: It appears there are no further questions at this time. I will not turn the call back over to Mr. Gianfranco Ferrari for Chief Executive Officer for closing remarks. Thank you. The first quarter of 2025 marked a strong start for the year and reaffirmed the strengths and adaptability of gay groups businesses.
Speaker Change: With an ROE of 20.3% and 18.4% ex-duing the extraordinary gain from America, we exceeded expectations while remaining focused on quality, sustainability and execution.
Speaker Change: These results reflect more than favorable macro conditions. They are the product of consistent, strategic decisions, deepening client relationships, strengthening risk management and investing in the capabilities that will define financial services in the years ahead.
Speaker Change: Despite an evolving rate of an environment, margins remained resilient. Our deposit-based grew and efficiency was in line with our expectations as we accelerated investment in disruptive growth.
Speaker Change: We're particularly encouraged by the progress of disruptive initiative strategies, which reached 5.4% of risk adjusted revenues this quarter. Evidence that our innovation is scaling with impact.
Speaker Change: As these new models mature, we are confident in our ability to meet our structural ROE ambition of 18% by 2026, while expanding access and generating shareholder value.
Speaker Change: At the same time, were embedding sustainability deeper into our business.
Speaker Change: Our updated 2025-2030 Sustainability Framework reflects this commitment, linking long-term value creation with financial inclusion, access to quality healthcare and health insurance, sustainability, finance, resilience and trust.
Speaker Change: With our six million Peruvians newly integrated into the financial system since 2020, this is more than a strategy. It is our purpose in action.
We're also monitoring the external environment carefully.
Speaker Change: The recent U.S. tariff announcements are expected to have limited direct impact on Peru. However, we are mindful of second-order effects on global trade and commodity flows, particularly given China's importance to Peru's export base.
Speaker Change: The recent 90-day-time reprieve between the U.S. and China, along with progress on the U.K. U.S. trade deal, are positive developments. [inaudible]
Speaker Change: That said, we remain attentive to evolving dynamics in the external environment. As always, we are prepared to respond with agility and discipline.
Speaker Change: Looking ahead, we see a supportive backdrop. Peru's recovery is gaining momentum. Private investment is strengthening, and confidence is returning. [inaudible]
Speaker Change: Criicorp is exceptionally well positioned to capture this cycle and lead through it with our device diversified portfolio, strong capital base and a clear sense of strategic decision.
Thank you all for your questions.
Speaker Change: We look forward to speaking with you again in this quarter, and to welcome many of you in person at our upcoming investor day in New York City on October 9th.
2025 as we celebrate Cricorp's 30-year IPO anniversary.
Speaker Change: We'll share update strategic priorities and progress on our innovation agenda.
Speaker Change: More details will be shared in due course. Thank you very much.
Speaker Change: Thank you, ladies and gentlemen. This concludes today's presentation. You may now disconnect.
Thursday, June 6, 1975 The Hurricane