Q2 2025 Credicorp Ltd Earnings Call

Speaker #2: Good morning, everyone. I would like to welcome you to the CREDICORP LTD second quarter 2025 conference call. A slide presentation will accompany today's webcast, which is available in the investor section of CREDICORP's website.

Speaker #2: Today's 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.

Speaker #2: 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 #2: 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 CIRO, Milagros Cigeas.

Milagros Cigeas: If you are using a speaker phone, 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 Milagros Cigeas. You may begin.

Speaker #2: You may begin.

Speaker #3: Good morning. Thank you, and good morning, everyone. Speaking on today's call will be Gianfranco Ferrari, our Chief Executive Officer, and Alejandro Perez Reyes, our Chief Financial Officer.

Gianfranco Ferrari: Good morning. Thank you, and good morning, everyone. Speaking on today's call will be Gianfranco Ferrari, our Chief Executive Officer, and Alejandro Perez-Reyes, our Chief Financial Officer. Participating in the Q&A session will also be Francesca Raffo, Chief Innovation Officer; Cesar Ríos, Chief Risk Officer; Diego Caberos, Head of Universal Banking; Piero Travesan, CFO of Insurance and Pensions; and Rocío Benavidez, Mibanco Chief Financial Officer. 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. I refer you to the forward-looking statement section of our earnings 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 #3: Participating in the Q&A session will also be Francesca Rafo, Chief Innovation Officer; Cesar Rio, Chief Risk Officer; Diego Cabrera, Head of Universal Banking; Piero Travesan, CFO of Insurance and Pensions; and Rocío Benavides, Mi Banco Chief Financial Officer.

Speaker #3: 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.

Speaker #3: And I refer you to the forward-looking statement section of our earnings release and recent filings with the SEC. We assume no obligation to update or revise any forward-looking statement to reflect new or changed events or circumstances.

Speaker #3: Gianfranco Ferrari will begin the call with remarks on the improved macro environment, a brief overview of our quarterly results, and an update on our strategy to build a more agile, balanced, and forward-looking platform.

Gianfranco Ferrari: Gianfranco Ferrari will begin the call with remarks on the improved macro-economic environment, a brief overview of our quarterly results, and an update on our strategy to build a more agile, balanced, and forward-looking platform, followed by Alejandro Perez-Reyes, who will provide a more detailed analysis of key macro-economic indicators, our financial performance, and our outlook for 2025. Gianfranco, please go ahead.

Speaker #3: Followed by Alejandro Pérez Reyes, who will provide a more detailed analysis of key macroeconomic indicators, our financial performance, and our outlook for 2025. Gianfranco, please go ahead.

Speaker #4: Thank you, Milagros. Good morning, everyone, and thank you for joining us. Let me begin with a reflection on Peru's evolving macro environment and why CREDICORP is uniquely positioned to benefit from what's ahead.

Alejandro Perez-Reyes: Thank you, Milagros. Good morning, everyone, and thank you for joining us. Let me begin with reflections on Peru's evolving macro-economic environment and why CREDICORP is uniquely positioned to benefit from what's ahead. Momentum is building. Terms of trade remain historically high, driven by strong gold, silver, and copper prices. Also, Peru maintains a solid trade surplus. Inflation is below 2%, real wages are recovering, and formal employment is expanding. GDP growth is expected to grow 3.2% this year, with domestic demand growing around 4.5%. These tailwinds are creating a more constructive backdrop. The data tells one story. The renewed activity on the ground is even more promising. While large infrastructure projects have yet to ramp up, small and mid-sized businesses are investing again, modernizing, adding capacity, and meeting stronger demand. Investments are increasingly spread across regions, laying a healthier foundation for sustained growth.

Speaker #4: Momentum is building. Terms of trade remain historically high, driven by strong gold, silver, and copper prices. Additionally, Peru maintains a solid trade surplus. Inflation is below 2%, real wages are recovering, and formal employment is expanding.

Speaker #4: GDP is expected to grow three point two percent this year, with domestic demand growing around four point five percent. This tailwinds are creating a more constructive backdrop.

Speaker #4: The data tells one story: the renewed activity on the ground is even more promising. While large infrastructure projects have yet to ramp up, small and mid-sized businesses are investing again.

Speaker #4: Modernizing incapacity and meeting stronger demand. Investments are increasingly spread across regions, laying a healthier foundation for sustained growth. In this environment, Credicorp is ready not just to participate in the recovery but to lead it.

Alejandro Perez-Reyes: In this environment, CREDICORP is ready not just to participate in the recovery, but to lead it. We've built a resilient, diversified business anchored in digital infrastructure, deep client engagement, and scalable fee-generating platforms. This enables us to perform through difficult cycles, increasingly decoupling from the macro. With improving tailwinds, we're even better positioned to capture the upside efficiently and profitably. Our Q2 results reflect that momentum, stronger fundamentals, improving trade dynamics, and disciplined trade execution. We now expect ROE for the year to reach approximately 19%, including a 50 basis points boost from extraordinary income in the first half, with a longer-term outlook of around 19.5%. This underscores solid performance, structural resilience, and the accelerating impact of disruptive platforms like Yape. While our efficiency ratio reflects upfront investments to scale these capabilities, we remain focused on unlocking operating leverage through disciplined execution in digital data and risk.

Speaker #4: We've built a resilient, diversified business anchored in digital infrastructure, deep client engagement, and scalable fee-generating platforms. This enables us to perform through difficult cycles, increasingly decoupling from the macro.

Speaker #4: With improving tailwinds, we're even better positioned to capture the upside efficiently and profitably. Our Q2 results reflect that momentum; stronger fundamentals, improving trade dynamics, and disciplined execution.

Speaker #4: We now expect ROE for the year to reach approximately 19%, including a 50 basis points boost from extraordinary income in the first half.

Speaker #4: With a longer-term outlook of around 19.5%, this underscores solid performance, structural resilience, and the accelerating impact of disruptive platforms like YAPE.

Speaker #4: While our efficiency ratio reflects upfront investments to scale these capabilities, we remain focused on unlocking operational leverage through disciplined execution in digital, data, and risk.

Speaker #4: A healthier micro-level recovery further reinforces our long-term view and strengthens our confidence in delivering sustained shareholder value. Alejandro will detail the results and updated outlook, but before that, let me comment briefly on our situation with SUNAT.

Alejandro Perez-Reyes: A healthier micro-level recovery further reinforces our long-term view and strengthens our confidence in delivering sustained shareholder value. Alejandro Perez-Reyes will detail the results and updated outlook. Before that, let me comment briefly on our situation with Sunat. As previously announced, Sunat has required us to pay approximately 1.6 billion soles in alleged unpaid income tax and associated interest, which was done this week. This development does not alter our legal position or our confidence in a favorable resolution. We continue to believe that our case has strong legal and technical grounds. We are prepared to defend our position through the appropriate channels, whether at the tax court, where proceedings may take one to three years, or if necessary, through the judiciary, which could extend the process by an additional five years.

Speaker #4: As previously announced, SUNAT has required us to approach to pay approximately S/1.6 billion in alleged unpaid income tax and associated interests, which was done this week.

Speaker #4: This development does not alter our legal position or our confidence in a favorable resolution. We continue to believe that our case has strong local legal and technical grounds.

Speaker #4: We are prepared to defend our position through the appropriate channels, whether at the tax court, where proceedings may take one to three years, or if necessary, through the judiciary, which could extend the process by an additional five years.

Speaker #4: We will continue to operate with discipline and transparency, defending our rights while building a stronger, more agile CREDICORP. Let's now turn to our Q2 performance.

Alejandro Perez-Reyes: We will continue to operate with discipline and transparency, defending our rights while building a stronger, more agile CREDICORP. Let's now turn to our Q2 performance. We delivered another solid quarter with strong contributions across core businesses and continued execution on strategic priorities. These results translated into an ROE of 20.7%, supported by solid operating performance and disciplined risk management. Universal banking and insurance and pensions posted very strong results, while microfinance continued to recover. T-based and transactional income also grew, reinforcing our diversified platform. Our innovation portfolio contributed 6.2% of risk-adjusted revenues, keeping us on track toward our 10% target for 2026. Trade dynamics improved, and FX neutral loan growth accelerated across all segments. Origination pipelines remain healthy, particularly in retail banking and microfinance, and we expect sustained engagement in the second half of the year.

Speaker #4: We delivered another solid quarter, with strong contributions, across core businesses, and continued execution on strategic priorities. These results translated into translated into an ROE of twenty point seven percent, supported by solid operating performance and disciplined risk management.

Speaker #4: Universal banking, insurance, and pensions posted very strong results. While microfinance continued to recover, fee-based and transactional income also grew, reinforcing our diversified platform.

Speaker #4: Our innovation portfolio contributed six point two percent of risk-adjusted revenues, keeping us on track toward our ten percent target for 2026. Trade dynamics improved, and FX neutral, loan growth accelerated across all segments.

Speaker #4: Obligation pipelines remain healthy, particularly in retail banking and microfinance, and we expect sustained engagement in the second half of the year. Risk-adjusted NIM hit a record 5.4%, aided by improved asset quality and our low-cost funding structure.

Alejandro Perez-Reyes: Risk-adjusted NIM hit a record 5.4%, aided by improved asset quality and our low-cost funding structure. On deposits, we increased our share of demand and saving accounts to 40.6%, reflecting our digital strategy and the trust we've built with clients. Asset quality trends remain favorable, thanks to tighter origination standards, refined risk pricing, and strengthened collections. Our efficiency ratio came in at 44.2%, within our expected range, highlighting the scalability of our digital investments and our disciplined approach to cost control. Capital levels remain solid across all businesses. Our performance this quarter reflects more than improved macro conditions. It's the result of a deliberate multi-year strategy to build a more agile, balanced, and forward-looking platform. In recent years, we've modernized systems, built end-to-end digital capabilities, and reimagined client engagement across each of our businesses. These investments continue to pay off in performance, resilience, and adaptability.

Speaker #4: On deposits, we increased our share of demand and saving accounts to 40.6%, reflecting our digital strategy and the trust we've built with clients.

Speaker #4: Asset quality trends remain favorable. Thanks to tighter origination standards, refined risk pricing, and strengthened collections. Our efficiency ratio came in a came in at forty-four point two percent, within our expected range.

Speaker #4: Highlighting the scalability of our digital investments and our disciplined approach to cost control. Capital levels remain solid across all businesses. Our performance this quarter reflects more than improved macro conditions.

Speaker #4: It's the result of a deliberate multi-year strategy to build a more agile, balanced, and forward-looking platform. In recent years, we've modernized systems, built end-to-end digital capabilities, and reimagined client engagement across each of our businesses.

Speaker #4: These investments continue to pay off in performance, resilience, and adaptability. We're encouraged by the strong traction of our disruptive innovation portfolio, a key pillar of our long-term strategy.

Alejandro Perez-Reyes: We're encouraged by the strong traction of our disruptive innovation portfolio, a key pillar of our long-term strategy. CREDICORP is no longer just a credit growth story. We're structurally shifting to a more balanced model, where fee generation, client engagement, and scalable innovation are just as critical as lending. This transformation strengthens our resilience and positions us for more consistent, higher-quality growth. It's the foundation for the finance of the future: more inclusive, more digital, and more sustainable. Yape continues to scale in both reach and relevance, now serving nearly 15 million monthly active users, equivalent to 75% of Peru's economically active population. Its monetization strategy is advancing, making it one of the top five contributors to fee income in the Peruvian financial system. Transaction volumes and engagement remain high, and we're expanding services and deepening client interactions.

Speaker #4: CREDICORP is no longer just a credit growth story. We're structurally shifting to a more balanced model where fee generation, client engagement, and scalable innovation are just as critical as lending.

Speaker #4: This transformation strengthens our resilience and positions us for more consistent, higher-quality growth. It's the foundation for the finances of the future—more inclusive, more digital, and more sustainable.

Speaker #4: YAPE continues to scale in both reach and relevance, now serving nearly 15 million monthly active users, equivalent to 75% of Peru's economically active population.

Speaker #4: Its monetization strategy is advancing, making it one of the top five contributors to fee income in the Peruvian financial system. Transaction volumes and engagement remain high, and we're expanding services and deepening client interactions.

Speaker #4: With platforms like YAPE and promising ones like TEMPO, our soon-to-be digital bank, we're scaling high-impact services that grow revenues and deepen relationships, transaction by transaction.

Alejandro Perez-Reyes: With platforms like Yape and promising ones like Tenpo Bank Chile, our soon-to-be digital bank, we're scaling high-impact services that grow revenues and deepen relationships, transaction by transaction, not just loan by loan. As part of our long-term vision, we're building the next-generation capabilities to future-proof our businesses and redefine value creation for clients, employees, and shareholders. This includes advancing digital onboarding, behavioral scoring, embedded finance, and ecosystem-based distributions. These are not just pilots; they're core building blocks for lasting differentiation. We're embedding AI and data management across our operations to generate value in tangible, scalable ways. Let me highlight three key areas. First, we're elevating the customer experience through hyper-personalization, advanced chatbots, and voice bots, making every interaction faster, smarter, and more intuitive. Second, we're enhancing operational efficiency by equipping our teams with AI copilots and productivity tools.

Speaker #4: Not just loan by loan. As part of our long-term vision, we're building the next generation capabilities to future-proof our businesses and redefine value creation for clients, employees, and shareholders.

Speaker #4: This includes advancing digital onboarding, behavioral scoring, embedded finance, and ecosystem-based distribution. These are not just pilots; they're core building blocks for lasting differentiation. We're embedding AI and data management across our operations to generate value in tangible, scalable ways.

Speaker #4: Let me highlight three key areas: first, we're elevating the customer experience through hyper-personalization and advanced chatbots and voice bots, making every interaction faster, smarter, and more intuitive.

Speaker #4: Second, we're enhancing operational efficiency by equipping our teams with AI copilots and productivity tools. These are already driving productivity gains of over 30% in code generation and simplifying daily workflows for commercial teams and analysts.

Alejandro Perez-Reyes: These are already driving productivity gains of over 30% in code generation and simplifying daily workflows for commercial teams and analysts. Third, we're strengthening strategic decision-making by harnessing data insights to identify new market opportunities, optimize our offerings, and increase earnings through solutions such as ALM optimization, smart customer prioritization, and strengthened risk management frameworks. By embedding AI deeply into how we operate, we are not just innovating; we are building a future where both our clients and our people benefit from smarter, faster, and more effective solutions. This commitment positions us at the forefront of our industry's transformation. Our goal is to shape the future of finance in our region, not only through technology, but through a model that is inclusive, efficient, and highly engaging. Looking ahead, we remain focused on execution, innovation, and long-term value creation.

Speaker #4: Third, we’re strengthening strategic decision-making by harnessing data insights to identify new market opportunities. We aim to optimize our offerings and increase earnings through solutions such as ALM optimization, smart customer prioritization, and strengthened risk management frameworks.

Speaker #4: By embedding AI deeply into how we operate, we're not just innovating; we're building a future where both our clients and our people benefit from smarter, faster, and more effective solutions.

Speaker #4: This commitment positions us at the forefront of our industry's transformation. Our goal is to shape the future of finance in our region, not only through technology but through a model that is inclusive, efficient, and highly engaging.

Speaker #4: Looking ahead, we remain focused on execution, innovation, and long-term value creation. I invite you to join us in New York on October 9th for our Investor Day, marking the thirtieth anniversary of our IPO.

Alejandro Perez-Reyes: I invite you to join us in New York on October 9 for our Investor Day, marking the 30th anniversary of our IPO. Together, with our business leaders, I will share how we are transforming finance to improve life and positioning our platform to lead in a changing region. We will outline our financial services model of the future, anchored in innovation, inclusion, and data-driven client engagement, while scaling distribution and unlocking synergies across our ecosystem. We will also show how AI, advanced risk and data capabilities, and disciplined execution are future-proofing our business for sustainable growth. Having said that, let me pass the presentation to Alejandro.

Speaker #4: Together, we're with our business leaders. I'll share how we're transforming finance to improve lives and positioning our platform to lead in a changing region.

Speaker #4: We'll outline our financial services model of the future, anchored in innovation, inclusion, and data-driven client engagement, while scaling distribution and unlocking synergies across our ecosystem.

Speaker #4: We'll also show how AI, advanced risk and data capabilities, and disciplined execution are future-proofing our business for sustainable growth. Having said that, let me pass the presentation to Alejandro.

Speaker #5: Thank you, Gianfranco, and good morning, everyone. This quarter's 20.7% ROE reflects sustained momentum in our core businesses and the increasing contribution of our innovation portfolio.

Unidentified Executive (likely a supporting executive, possibly Piero Travesan or another member of the management team, but not enough information to assign a specific name): Thank you, Gianfranco, and good morning, everyone. This quarter's 20.7% ROE reflects sustained momentum in our core businesses and the increasing contribution of our innovation portfolio. These results include a positive 120 basis point impact related to a relevant gain in BCP's investment portfolio. Similar to what we communicated last quarter, we reevaluated Bolivia's balance sheet using a more market-reflective exchange rate, which generated an accounting contraction of 2.8% in CREDICORP's total assets this quarter. As I discussed the quarter's highlights, I will focus on the year-over-year operating trends. Loans measured in quarter-end balances dropped 4.1%, impacted by the reevaluation of Bolivia's balance sheet and a depreciation in BCP's dollar portfolio following an appreciation of the Peruvian soles. Excluding these effects, underlying loan growth for the quarter was 2.6%. This increase was driven primarily by BCP, particularly through mortgages and consumer loans in retail banking and by Mibanco.

Speaker #5: These results include a positive one hundred and twenty basis point impact related to our relevant gain in BCP's investment portfolio. Similar to what we communicated last quarter, we revalued Bolivia's balance sheet using a more market-reflective exchange rate, which generated an accounting contraction of two point eight percent in CREDICORP's total assets this quarter.

Speaker #5: As I discussed the quarter's highlights, I will focus on the year-over-year operating trends. Loans measured in quarter-end balances dropped 4.1%, impacted by the revaluation of Bolivia's balance sheet and a depreciation in BCP's dollar portfolio following an appreciation of the Peruvian sol.

Speaker #5: Excluding these effects, underlying loan growth for the quarter was 2.6%. This increase was driven primarily by BCP, particularly through mortgages and consumer loans in retail banking, and by Mi Banco.

Speaker #5: Asset quality has improved materially year over year. NPLs contracted across the board, and Credicorp's NPL ratios stood at 5% this quarter. The cost of risk fell to a low of 1.6% on the back of fortified risk management and was supported by improvements in payment performance and in the Peruvian economy.

Unidentified Executive (likely a supporting executive, possibly Piero Travesan or another member of the management team, but not enough information to assign a specific name): Asset quality has improved materially year over year. NPLs contracted across the board, and CREDICORP's NPL ratios stood at 5% this quarter. The cost of risk fell to a low of 1.6% on the back of fortified risk management and supported by improvements in payment performance and in the Peruvian economy. Net interest income increased 4.2%, spurred by a contraction in interest expenses after interest rates fell and low-cost deposits expanded, accounting for 57.2% of the funding base. In this context, NIM remained resilient at 6.4%. High single-digit growth was registered for other core income. Fee income increased 8.2%, boosted by transactional activity at Yape and BCP. Gains on FX transactions rose 7.9% through higher volumes at BCP. Lastly, the insurance underwriting results grew 11.2%, reflecting a stronger insurance service results in the live business. On the efficiency front, our cost-to-income ratio stood within guidance at 44.9%. Next slide, please.

Speaker #5: Net interest income increased four point two percent, spurred by a contraction in interest expenses after interest rates fell and low-cost deposits expanded accounting for seventy fifty-seven point two percent of the funding base.

Speaker #5: In this context, NIM remained resilient at six point four percent. High single-digit growth was registered for other core income. Fee income increased eight point two percent, boosted by transactional activity at YAPE and BCP.

Speaker #5: Gains on FX transactions rose seven point nine percent through higher volumes at BCP. Lastly, the insurance and the writing results grew eleven point two percent, reflecting a stronger insurance service results in the live business.

Speaker #5: On the efficiency front, our cost to income ratio stood within guidance at forty-four point nine percent. Next slide, please. Peru's GDP growth is to around three percent year over year in the second quarter, down from close to four percent in the first.

Unidentified Executive (likely a supporting executive, possibly Piero Travesan or another member of the management team, but not enough information to assign a specific name): Peru's GDP growth is to around 3% year over year in the second quarter, down from close to 4% in the first, due to a slowdown in primary sectors and a higher comparative base from the previous year. However, domestic demand remains strong, spending around 5% and outpacing overall GDP growth since mid-2024. This sustained momentum reflects the economy's current mid-cycle phase and ongoing support from elevated export prices. As a result, GDP expanded close to 4% over the last four quarters through the second quarter of this year, while domestic demand grew around 5%. High-frequency indicators continue to signal economic dynamism and are pinned by steady recovery in employment and real wages. More importantly, key proxies for private investments, such as heavy-duty vehicle sales, capital goods imports, and terms of trade, are expanding at double-digit base.

Speaker #5: Due to a slowdown in primary sectors and a higher comparative base from the previous year, domestic demand remains strong, spending around 5% and outpacing overall GDP growth since mid-2024.

Speaker #5: This sustained momentum reflects the economy's current mid-cycle phase and ongoing support from elevated export prices. As a result, GDP expanded close to 4% over the last four quarters through the second quarter of this year.

Speaker #5: While domestic demand grew around 5%. High-frequency indicators continue to signal economic dynamism and are pinned by steady recovery in employment and real wages.

Speaker #5: More importantly, key proxies for private investments, such as heavy-duty vehicle sales, capital goods imports, and terms of trade, are expanding at a double-digit pace. Notably, terms of trade have reached their highest level in seventy-five years, driven by elevated gold, silver, and copper prices, which together account for roughly half of Peru's exports.

Unidentified Executive (likely a supporting executive, possibly Piero Travesan or another member of the management team, but not enough information to assign a specific name): Notably, terms of trade have reached their highest level in 75 years, driven by elevated gold, silver, and copper prices, which together account for roughly half of Peru's exports. Supporting this trend, the Central Bank's Business Expectations Survey showed that investment sentiment reached a historical high in the second quarter, suggesting that private investment should strengthen. Furthermore, the favorable low-inflation environment continues to support recovery in private consumption. Hence, Peru's economy is expected to grow above 3% this year, with domestic demand rising around 4.5%, which would represent the higher growth rate in 12 years, excluding the post-pandemic rebound. On the external front, elevated global uncertainty persists. Regarding President Trump's announcement of copper tariffs, the direct impact on Peru is expected to be very limited, as copper input materials are not subject to the 50% tariffs. Next slide, please.

Speaker #5: Supporting this trend, the central bank's business expectations survey showed that investment sentiment reached a historical high in the second quarter, suggesting that private investment should strengthen.

Speaker #5: Furthermore, the favorable low inflation environment continues to support recovery in private consumption. Hence, Peru's economy is expected to grow above 3% this year, with domestic demand rising around 4.5%.

Speaker #5: Which would represent the higher growth rate in twelve years, excluding the post-pandemic rebound? On the external front, elevated global uncertainty persists. Regarding President Trump's announcement of corporate tariffs, the direct impact on Peru is expected to be very limited, as corporate input materials are not subject to the fifty percent tariffs.

Speaker #5: Next slide, please. The Federal Reserve has kept the policy rates stable throughout the year, with dovish signals emerging from a minority of its members.

Unidentified Executive (likely a supporting executive, possibly Piero Travesan or another member of the management team, but not enough information to assign a specific name): The Federal Reserve has kept the policy rate stable throughout the year, with dovish signals emerging from a minority of its members. Chairman Powell has continued to communicate a cautious approach toward lowering rates. Given the slowdown of the labor market, Fed futures are now pricing between two and three rate cuts this year. Persistent uncertainty surrounding President Trump's announcements continues to contribute to the unpredictability of the external environment. In Peru, annual inflation has remained below 2% for seven consecutive months, which constitutes one of the lowest trends for both advanced and emerging economies. The Central Bank has lowered the pace of rate cuts as it approaches its neutral level, making its last cut in May, when it dropped the rate 25 basis points to 4.5%.

Speaker #5: Chairman Powell has continued to communicate a cautious approach toward lowering rates. Even with the slowdown in the labor market, Fed futures are now pricing in between two and three rate cuts this year.

Speaker #5: President, sorry, persistent uncertainty surrounding President Trump's announcements continues to contribute to the unpredictability of the external environment. In Peru, annual inflation has remained below 2 percent for seven consecutive months.

Speaker #5: Which constitutes one of the lowest prints for both advanced and emerging economies. The central bank has lowered the pace of rate cuts as it approaches its neutral level, making its last cut in May, when it dropped the rate twenty-five basis points to 4.5%.

Speaker #5: In Colombia, inflation has lowered to 4.9% year over year in July, which remains above the upper bound of the target range of 4%.

Unidentified Executive (likely a supporting executive, possibly Piero Travesan or another member of the management team, but not enough information to assign a specific name): In Colombia, inflation has lowered to 4.9% year over year in July, which remains above the upper bound of the target range of 4%. Inflation concerns and fiscal challenges have led the Central Bank to maintain a cautious stance. In Chile, the Central Bank cut its rates to 4.75% during its last meeting, after holding its policy rate stable throughout 2025. The move came as inflation eased to 4.1% year over year in June, the lowest level since September of last year. A rate cut appears unlikely in the next meeting, given that inflation accelerated in July. Next slide, please. BCP registered a strong ROE of 30.9%, which reflects resilient margins, diversification of income, and a low level of cost of risk. This result includes a two percentage points impact of a significant gain realized on the investment portfolio.

Speaker #5: Inflation concerns and fiscal challenges have led the central bank to maintain a cautious stance. In Chile, the central bank cut its rates to 4.75% during its last meeting, after holding its policy rates stable throughout 2025.

Speaker #5: The move came as inflation eased to 4.1% year over year in June, the lowest level since September of last year. A rate cut appears unlikely in the next meeting, given that inflation accelerated in July.

Speaker #5: Next slide, please. BCP registered a strong ROE of 30.9%, which reflects resilient margins, diversification of income, and a low level of cost of risk.

Speaker #5: This result includes a two percentage points impact of a significant gain realized on the investment portfolio. On a quarter-over-quarter basis, total loans measured in quarter-end balances rose one point four percent, or two point five percent, in FX neutral terms.

Unidentified Executive (likely a supporting executive, possibly Piero Travesan or another member of the management team, but not enough information to assign a specific name): On a quarter-over-quarter basis, total loans measured in quarter-end balances rose 1.4% or 2.5% in FX neutral terms. Growth was mainly driven by retail banking, which grew 2%, driven by mortgages and consumer loans. The wholesale banking portfolio, which is volatile due to the nature of its short-term loans, increased 0.8%. The growth recorded in middle-market banking was almost completely offset by the contraction registered in corporate banking. NIM stood at 6% due to an improvement in the asset mix and a drop in the funding cost. NPL volumes fell 2.2%, mainly driven by wholesale banking. In retail banking, NPL volumes remained relatively stable both in individuals and SMEs. Provisions contracted 4.8%, driven mainly by an improvement in payment performance in wholesale banking. In retail banking, provisions in individuals dropped slightly due to risk model calibrations.

Speaker #5: Growth was mainly driven by retail banking, which grew 2%, supported by mortgages and consumer loans. The wholesale banking portfolio, which is volatile due to the nature of its short-term loans, increased 0.8%.

Speaker #5: The growth recorded in middle market banking was almost completely offset by the contraction registered in corporate banking. NIM stood at 6% due to an improvement in the asset mix and a drop in the funding cost.

Speaker #5: NPL volumes fell 2.2%, mainly driven by wholesale banking. In retail banking, NPL volumes remained relatively stable, both in individuals and SMEs.

Speaker #5: Provisions contracted 4.8%, driven mainly by an improvement in payment performance in wholesale banking. In retail banking, provisions for individuals dropped slightly due to risk model calibrations.

Speaker #5: This evolution was partially offset by growth in provisions in SME payments following an uptick in disbursement of lower ticket, higher yield loans. The cost of risk registered a low 1.2%, impacted by initiatives this year to shore up risk management and bolstered by favorable macro conditions in Peru.

Unidentified Executive (likely a supporting executive, possibly Piero Travesan or another member of the management team, but not enough information to assign a specific name): This evolution was partially offset by growth in provisions in SME PIME, following an uptick in disbursement of lower-ticket, higher-yield loans. The cost of risk registered a low 1.2%, impacted by initiatives this year to shore up risk management and bolstered by favorable macro conditions in Peru. In this context, BCP's risk-adjusted NIM stood at 5.2%. Other core income rose 16.4%, fueled primarily by gains on FX transactions, as volumes rose via adept pricing strategies and market volatility. Moreover, fee income rose on the tails of solid transactional levels. Other non-core income this quarter includes a relevant gain on securities of 106 million soles, driven by a sovereign bond exchange that extended the duration of the investment portfolio. From a year-over-year perspective, I would like to highlight the following dynamics.

Speaker #5: In this context, BCP's risk-adjusted NIM stood at five point two percent. Other core income rose sixteen point four percent, fueled primarily by gains on FX transactions as volumes rose via adept pricing strategies and market volatility.

Speaker #5: Moreover, fee income rose on the tails of solid transactional levels. Other non-core income this quarter includes a relevant gain on securities of one hundred and six and six million soles, driven by a sovereign bond exchange that extended the duration of the investment portfolio.

Speaker #5: From a year-over-year perspective, I would like to highlight the following dynamics. Loans in quarter-end balances remained relatively stable, given that a 2.1% growth in retail banking was offset by a 2.4% contraction in wholesale banking, which reflects depreciation in the dollar-denominated portfolio.

Unidentified Executive (likely a supporting executive, possibly Piero Travesan or another member of the management team, but not enough information to assign a specific name): Loans in quarter-end balances remained relatively stable, given that 2.1% growth in retail banking was offset by a 2.4% contraction in wholesale banking, which reflects depreciation in the dollar-denominated portfolio. In FX neutral terms, retail and wholesale banking drove average growth of 2.6% in BCP's portfolio. NPLs contracted across all BCP segments, primarily in wholesale and SME PIME. In the case of individuals, NPLs fell due to debt cancellations on the back of higher liquidity and due to an improvement in loan origination and debt collections management. NIM remained resilient, bolstered by a downward trend in the funding cost. The cost of risk fell across retail banking segments as payment performance improved due to a greater share of lower-risk betages within the loan portfolio, supported by a strengthening economic backdrop. The efficiency ratio stood at 38% for the first half of the year.

Speaker #5: In FX neutral terms, retail and wholesale banking drove average growth of 2.6% in BCP's portfolio. NPLs contracted across all BCP segments, primarily in wholesale and SME payments.

Speaker #5: In the case of individuals, NPLs fell due to debt cancellations on the back of higher liquidity and due to an improvement in non-origination and debt collections management.

Speaker #5: NIM remained resilient, bolstered by a downward trend in the funding cost. The cost of risk fell across retail banking segments as payment performance improved, due to a greater share of lower-risk vintages within the loan portfolio, supported by a strengthening economic backdrop.

Speaker #5: The efficiency ratio stood at 38% for the first half of the year. Growth in operating expenses was spurred by an uptick in provisions for variable compensation, which rose alongside stronger business performance, and initiatives to hire digital talent for a strategic project.

Unidentified Executive (likely a supporting executive, possibly Piero Travesan or another member of the management team, but not enough information to assign a specific name): Growth in operating expenses was spurred by an uptick in provisions for variable compensation, which rose alongside stronger business performance and initiatives to hire digital talent for strategic projects. The ratio for other core income to assets accelerated the upward trend, reflecting the positive impact of initiatives to diversify BCP's income streams. Strong fees and FX gains results contributed to this acceleration. Next slide, please. Yape continues to lead Peru's digital financial services landscape, with nearly 15 million monthly active users at the end of the second quarter. This figure is equivalent to 75% of the economically active population. With consistent quarterly growth over half a million users, Yape remains on track to meet its 2026 target of 16.5 million monthly active users. User engagement remains robust, with an average of 54.5 monthly transactions and 2.7 functionalities used per user, signaling deeper adoption of the app's ecosystem.

Speaker #5: The ratio of other core income to assets accelerated its upward trend, reflecting the positive impact of initiatives to diversify Credicorp's income streams. Strong fee and FX gains contributed to this acceleration.

Speaker #5: Next slide, please. YAPE continues to lead Peru's digital financial services landscape, with nearly 15 million monthly active users at the end of the second quarter.

Speaker #5: This figure is equivalent to seventy-five percent of the economically active population. With consistent quarterly growth of over half a million users, YAPE remains on track to meet its 2026 target of 16.5 million monthly active users.

Speaker #5: User engagement remains robust, with an average of 54.5 monthly transactions and 2.7 functionalities used per user, signaling deeper adoption of the app's ecosystem.

Speaker #5: Monetization and operating leverage continue to strengthen, where revenue per monthly active user reached six point five soles, while expenses per monthly active user stood at four point four soles, as an increasingly larger share of users contributed to revenue generation.

Unidentified Executive (likely a supporting executive, possibly Piero Travesan or another member of the management team, but not enough information to assign a specific name): Monetization and operating leverage continue to strengthen, where revenue per monthly active user reached 6.5 soles, while expenses per monthly active user stood at 4.4 soles, as an increasingly larger share of users contributed to revenue generation. Payments remain the primary revenue driver, fueled by growth in the average ticket in bill payments. However, lending has emerged as the fastest growing segment, now serving 3 million users and accounting for 18% of Yape's total revenue. This growth reflects an uptick in loan disbursements, driven by heightened effectiveness in lead conversion. The launch of SME loans in June marks a strategic move into higher-value long-term credit products. By the end of the second quarter, Yape's revenue had doubled year over year to represent 5.5% of CREDICORP's risk-adjusted revenue. Yape remains focused on deepening user engagement, scaling monetization, and enhancing its value proposition as it advances financial inclusion.

Speaker #5: Payments remain the primary revenue driver, fueled by growth in the average ticket in bill payments. However, lending has emerged as the fastest-growing segment, now serving three million users and accounting for eighteen percent of Yape's total revenue.

Speaker #5: This growth reflects an uptick in loan disbursements, driven by heightened effectiveness in lead conversion. The launch of SME loans in June marks a strategic move into higher-value, long-term credit products.

Speaker #5: By the end of the second quarter, YAPE's revenue had doubled year over year to represent five point five percent of CREDICORP's risk-adjusted revenue. YAPE remains focused on deepening user engagement, scaling monetization, and enhancing its value proposition as its advances financial inclusion.

Speaker #5: Notably, nearly thirty percent of YAPE loan recipients accessed their first loan in the formal financial system through the platform. Next slide, please. Ongoing economic recovery is positively impacting the microfinance sector in Peru.

Unidentified Executive (likely a supporting executive, possibly Piero Travesan or another member of the management team, but not enough information to assign a specific name): Notably, nearly 30% of Yape loan recipients access their first loan in the formal financial system through the platform. Next slide, please. The global economic recovery is positively impacting the microfinance sector in Peru. In this context, Mibanco's profitability continued to rise and stood at 16.3% this quarter, supported by a rebound in loan disbursements in recent quarters, a strength in credit risk management, and effective interest rate strategies. I would like to highlight key quarter-over-quarter dynamics. Loans grew 2.1% in quarter-end balances, mainly driven by a drop in write-offs after more stringent origination guidelines were instituted one year ago. The NPL ratio fell for the fourth consecutive quarter to stand at 6.1%, in line with pre-pandemic levels. NIM rose to a peak of 14.4%, its highest level since before the pandemic, boosted by a shift in the mix towards small-ticket, higher-yield loans.

Speaker #5: In this context, Mi Banco's profitability continued to rise and stood at 16.3% this quarter, supported by a rebound in loan disbursements in recent quarters, a strengthened credit risk management, and effective interest rate strategies.

Speaker #5: I would like to highlight key quarter-over-quarter dynamics. Loans grew 2.1% in quarter-end balances, mainly driven by a drop in write-offs after more stringent origination guidelines were instituted one year ago.

Speaker #5: The NPL ratio fell for the fourth consecutive quarter to stand at six point one percent, in line with pre-pandemic levels. NIM rose to a peak of fourteen point four percent, its highest level since before the pandemic, boosted by a shift in the mix towards more ticket, higher yield loans.

Speaker #5: In parallel, the cost of risk rose twenty-five basis points to stand at five point four percent. While risk-adjusted NIM situated at ten point three percent.

Unidentified Executive (likely a supporting executive, possibly Piero Travesan or another member of the management team, but not enough information to assign a specific name): In parallel, the cost of risk rose 25 basis points to stand at 5.4%, while risk-adjusted NIM situated at 10.3%. From a year-over-year perspective, the decrease in the cost of funding, coupled with proactive loan pricing management, helps sustain the strong NIM. The cost of risk fell 217 basis points, as lower-risk betages continued to gain traction and now account for 70% of total loans. Operating expenses remained under control, and efficiency stood at 52.4% for the first half of the year. In this context, Mibanco's first half contribution to ROE was 15.1%, transitioning towards our target for a sustainable ROE in the low 20s. Mibanco Colombia's result continued to tick up on the back of measures taken last year and also reflecting an improvement in the economic environment for the microfinance sector.

Speaker #5: From a year-over-year perspective, the decrease in the cost of funding, coupled with our active loan pricing management, helps sustain a strong NIM. The cost of risk fell 217 basis points as lower-risk vintages continued to gain traction and now account for 70% of total loans.

Speaker #5: Operating expenses remained under control and efficiency stood at fifty-two point four percent for the first half of the year. In this context, mi banco's first half contribution to ROE was fifteen point one percent, transitioning towards our target for a sustainable ROE in the low twenties.

Speaker #5: Mi Banco Colombia's results continue to tick up on the back of measures taken last year and also reflecting an improvement in the economic environment for the microfinance sector.

Speaker #5: Growth is currently steady, and risk is controlled. The operations reported 11.1% profitability at the quarter-end, compared to losses at the same point last year.

Unidentified Executive (likely a supporting executive, possibly Piero Travesan or another member of the management team, but not enough information to assign a specific name): Growth is currently steady and risk is controlled, and the operations reported 11.1% profitability at the quarter end versus losses at the same point last year. Next slide, please. As Grupo Pacífico, insurance and underwriting results remained strong this quarter, supported by solid operational dynamics in both the P&C and live businesses, with ROE standing at 21.1%. On a quarterly basis, net income rose 23%. Insurance and underwriting results rose 27% on the back of a decrease in insurance service expenses in the live business, which was driven by a drop in claims in credit life and disability and survivorship. The net loss on securities dropped in line with a lower impact of credit downgrades on a couple of assets in the investment portfolio this quarter. On a year-over-year basis, net income rose 16%, primarily due to the full consolidation of corporate health insurance and medical services operations.

Speaker #5: Next slide, please. As a group of Pacifico, insurance and the writing results remain strong this quarter, supported by solid operational dynamics in both the P&C and life businesses, with ROE standing at 21.1%.

Speaker #5: On a quarterly basis, net income rose 23%. Insurance and the writing results rose 27%, on the back of a decrease in insurance service expenses in the live business, which was driven by a drop in claims in credit life, disability, and survivorship.

Speaker #5: The net loss on securities dropped in line with a lower impact of credit downgrades on a couple of assets in the investment portfolio this quarter.

Speaker #5: On a year-over-year basis, net income rose 16%, primarily due to the full consolidation of corporate health insurance and medical services operations. Insurance and the underwriting results increased across both life and P&C businesses, particularly through lower claims in individual life and credit life in the former, and cars and personal lines in the latter.

Unidentified Executive (likely a supporting executive, possibly Piero Travesan or another member of the management team, but not enough information to assign a specific name): Insurance and underwriting results increased across both life and P&C businesses, particularly through lower claims in individual life and credit life in the former, and cars and personal life in the latter. These impacts were partially offset by an increase in the net loss on securities, which was impacted by credit downgrades on a couple of assets in the investment portfolio. Next slide, please. Profitability or investment management and advisory business remained resilient this quarter, with ROE standing at 15.5%. On a quarter-over-quarter basis, core income-generating businesses delivered strong results this quarter, reflecting favorable treasury performance, improved capital markets activity, particularly in the trading unit, and continued growth in wealth management, with AUMs in U.S. dollars up 6%. However, this solid business momentum was offset by a temporary increase in operating expenses due to a low base in the first quarter, resulting in a 6% decline in net income.

Speaker #5: This impact was partially offset by an increase in the net loss on securities, which was impacted by credit downgrades on a couple of assets in the investment portfolio.

Speaker #5: Next slide, please. Profitability or investment management and advisory business remained resilient this quarter, with ROE standing at fifteen point five percent. On a quarter-over-quarter basis, core income generating businesses delivered strong results this quarter, reflecting favorable treasury performance, improved capital markets activity, particularly in the trading unit, and continued growth in wealth management with AUMs in US dollars up six percent.

Speaker #5: However, this solid business momentum was offset by a temporary increase in operating expenses due to a low base in the first quarter, resulting in a 6% decline in net income.

Speaker #5: On a year-over-year basis, net income decreased by 20%, mainly due to the absence of last year's one-off income from a now discontinued corporate finance business.

Unidentified Executive (likely a supporting executive, possibly Piero Travesan or another member of the management team, but not enough information to assign a specific name): On a year-over-year basis, net income decreased by 20%, mainly due to the absence of last year's one-off income from a now discontinued corporate finance business. Nevertheless, stronger treasury performance and lower tax expenses helped partially offset the income. Next slide, please. Now, I would like to review CREDICORP's consolidated evolution. As we mentioned earlier, we reevaluated Bolivia's balance sheet once again this quarter, leading to a contraction in CREDICORP's balance sheet. I will now focus on explaining the underlying quarter-over-quarter dynamics. The yield on interest-earning assets increased 21 basis points due to a shift in the interest-earning asset mix. On the liability side, a more expensive deposit mix led the funding cost to increase two basis points. On a year-over-year basis, interest-earning asset yield fell 27 bps, driven by market interest rate dynamics and by a decrease in loans' share of the asset structure.

Speaker #5: Nevertheless, a stronger Treasury performance and lower tax expenses helped partially offset the impact. Next slide, please. Now, I would like to review Credicorp's consolidated evolution.

Speaker #5: As we mentioned earlier, we revalued Bolivia's balance sheet once again this quarter, leading to a contraction in CREDICORP's balance sheet. I will now focus on explaining the underlying quarter-over-quarter dynamics.

Speaker #5: The yield on interest-earning assets increased twenty-one basis points due to a shift in the interest-earning asset mix. On the liability side, a more expensive deposit mix led the funding costs to increase two basis points.

Speaker #5: On a year-over-year basis, interest-earning asset yield fell 27 basis points, driven by market interest rate dynamics and by a decrease in loans share of the asset structure.

Speaker #5: On the liability side, the drop in market interest rates and the lower-cost funding structure drove a forty-two basis point reduction in funding cost.

Unidentified Executive (likely a supporting executive, possibly Piero Travesan or another member of the management team, but not enough information to assign a specific name): On the liability side, the drop in market interest rates and the lower cost funding structure drove a 42 bps reduction in funding cost. In this context, NIM remained resilient and stood at 6.42%, increasing nine bps. Going forward, loan growth, particularly in retail segments, should help us sustain resilient NIM despite lower interest rates. Next slide, please. Moving on to loan portfolio quality. Asset quality showed slight further improvement this quarter as NPL volumes continued to contract across segments, falling to levels below those reported two years ago prior to the 2023 recession. Amid ongoing economic recovery, provisions have dropped over the past 12 months due to an improvement in payment performance and successful risk management measures at both BCP and Mibanco. The positive impact of these improvements exceeded expectations, which kept provisioning levels low once again this quarter.

Speaker #5: In this context, NIM remained resilient and stood at 6.42%, increasing 9 basis points. Going forward, loan growth, particularly in retail segments, should help us sustain resilient NIM despite lower interest rates.

Speaker #5: Next slide, please. Moving on to loan portfolio quality. Asset quality showed slight further improvement this quarter, as NPL volumes continued to contract across segments.

Speaker #5: Falling to levels below those reported two years ago prior to the 2023 recession. Amid an ongoing economic recovery, provisions have dropped over the past twelve months due to an improvement in payment performance and successful risk management measures at both BCP and Mi Banco.

Speaker #5: The positive impact of this improvement exceeded expectations, which kept provisioning levels low once again this quarter. In this context, the NPL coverage ratio rose and stood at one hundred and nine point five percent.

Unidentified Executive (likely a supporting executive, possibly Piero Travesan or another member of the management team, but not enough information to assign a specific name): In this context, the NPL coverage ratio rose and stood at 109.5%. Going forward, we will continue to accelerate retail origination and manage risk in parallel. We expect the cost of risk to rise, but remaining within our appetite. Next slide, please. Moving on to core income, we reported a 5.3% year-over-year increase. First, net interest income rose 4.2%, supported by lower interest expenses on an improved funding mix. Second, other core income grew 8.1%, fueled by fee income through Yape and core transactional activities and by gains on FX transactions. We continue to set new highs in our risk-adjusted NIM, reaching 5.44% this quarter, a 104 bps increase year over year, driven by resilient NIM and a lower cost of risk. The efficiency ratio for the first half of the year stood within guidance at 44.9%.

Speaker #5: Going forward, we will continue to accelerate retail origination and manage risk in parallel, with the expected cost of risk rising but remaining within our appetite.

Speaker #5: Next slide, please. Moving on to core income, we recorded a five point three percent year-over-year increase. First, net interest income rose four point two percent, supported by lower interest expenses on an improved funding mix.

Speaker #5: Second, other core income grew 8.1 percent, fueled by fee income through YAPE and core transaction activities, as well as by gains on FX transactions.

Speaker #5: We continue to set new highs in our risk-adjusted NIM, reaching five point forty-four percent this quarter, a one hundred and four basis points increase year over year, driven by resilient NIM and a lower cost of risk.

Speaker #5: The efficiency ratio for the first half of the year stood within guidance at forty-four point nine percent. Operating expenses grew eleven point four percent, fueled primarily by core businesses at BCP and by investments in our innovation portfolio.

Unidentified Executive (likely a supporting executive, possibly Piero Travesan or another member of the management team, but not enough information to assign a specific name): Operating expenses grew 11.4%, fueled primarily by core businesses at BCP and by investments in our innovation portfolio. Growth in core expenses at BCP was driven mainly by provisioning for variable compensation and higher IT expenses. Expenses for our innovation portfolio rose 15%, led by Yape, Tenpo Bank Chile, and CoolKit, which represented 83% of disruptive expenses in the first half of this year. Next slide, please. ROE for the quarter stood at 20.7%, driven by strong results across all our businesses. Meanwhile, ROE for the semester was 20.9%, supported by solid business performance and bolstered by an extraordinary gain from the Empresas Banmédica transaction last month. If we adjust for each transaction, recurring ROE is 20% for the semester. This quarter, the recurring net income reached a record high as we leveraged a differentiated funding structure and low cost of risk.

Speaker #5: Growth in core expenses at BCP was driven mainly by provisioning for variable compensation and higher IT expenses. Expenses for our innovation portfolio rose 15%, led by YAPE, TEMPO, and COOLKIT, which represented 83% of disruptive expenses in the first half of this year.

Speaker #5: Next slide, please. ROE for the quarter stood at twenty point seven percent, driven by strong results across all our businesses. Meanwhile, ROE for the semester was twenty point nine percent, supported by solid business performance and bolstered by an extraordinary gain from the VanMedica transaction last quarter.

Speaker #5: If we adjust for each transaction, recurring ROE is twenty percent for the semester. This quarter, the recurring net income reached a record high as we leveraged a differentiated funding structure and a low cost of risk.

Speaker #5: More importantly, we continue to strengthen revenue streams beyond lending while advancing our transition towards a more diversified and resilient business model. As we communicated earlier this week, the full amount specified in the SUNAT resolutions against the group of crédito announced on June 30th has been canceled.

Unidentified Executive (likely a supporting executive, possibly Piero Travesan or another member of the management team, but not enough information to assign a specific name): More importantly, we continue to strengthen revenue streams beyond lending while advancing our transition towards a more diversified and resilient business model. As we communicated earlier this week, the full amount specified in the Sunat resolutions against Grupo Credito announced on June 30 has been canceled. This payment totals almost 1.6 billion soles for alleged unpaid income tax and associated interest. This has not changed our stance in this case. We reaffirm our decision to exercise all legal rights available to challenge the resolutions as we consider them unfounded. We are confident in a favorable outcome and continue to assess the contingency as we move. Hence, no expense provisions have been deemed necessary. The payment does not affect the operations of our subsidiaries. However, it will impact cash flow at the critical level. Consequently, we do not anticipate issuing extraordinary dividends this year.

Speaker #5: This payment total and all totals amount to almost S/. 1.6 billion for alleged unpaid income tax and associated interest. This has not changed our stance in this case.

Speaker #5: We reaffirm our decision to exercise all legal rights available to challenge the resolutions, as we consider them unfounded. We are confident in a favorable outcome and continue to assess the contingency as we move; hence, no expense provisions have been deemed necessary.

Speaker #5: The payment does not affect the operations of our subsidiaries. However, it will impact cash flow at the CREDICORP level; consequently, we do not anticipate issuing extraordinary dividends this year.

Speaker #5: Now, I will move on to our guidance. Next slide, please. As previously stated, our GDP growth expectation remains unchanged at around 3%. We expect our loan book to grow around 6.5% year over year, measured in end-of-period balances.

Unidentified Executive (likely a supporting executive, possibly Piero Travesan or another member of the management team, but not enough information to assign a specific name): Now, I will move on to our guidance. Next slide, please. As previously stated, our GDP growth expectation remains unchanged at around 3%. We expect our loan book to grow around 6.5% year over year, measured in end-of-period balances. This is equivalent to around 3% measured in average daily balances. These figures do not consider the impact of the revaluation of Banco de Crédito de Bolivia's balance sheet, but they do consider the U.S. dollar devaluation against the Peruvian sole. Amid a more dynamic economic backdrop and strengthening origination levels in the first half of this year, we expect balances growth to accelerate over the second half, driven mainly by retail banking at Banco de Crédito del Perú and by Mibanco. The loan acceleration anticipated and the shift in the mix towards retail should support NIM while interest rates trend downward.

Speaker #5: This is equivalent to around three percent, measured in average daily balances. These figures do not consider the impact of the revaluation of BCP Bolivia's balance sheet, but they do consider the U.S. dollar devaluation against the Peruvian sol.

Speaker #5: Amid a more dynamic—sorry. Okay. Yeah. Sorry. Okay. Amid a more dynamic economic backdrop and strengthening origination levels in the first half of this year, we expect balances growth to accelerate over the second half, driven mainly by retail banking at BCP and by Mi Banco.

Speaker #5: The loan acceleration anticipated and the shift in the mix towards retail should support NIM while interest rates trend downward. Accordingly, we expect NIM to stand in the upper end of our guidance of between six point two to six point five percent.

Unidentified Executive (likely a supporting executive, possibly Piero Travesan or another member of the management team, but not enough information to assign a specific name): Accordingly, we expect NIM to stand in the upper end of our guidance of between 6.2% to 6.5%. Although we expect a slight increase in the cost of risk in the second half of this year due to stronger retail origination, our guidance has been updated to 1.8% to 2.2% to reflect lower than anticipated provisioning levels in the first half of 2025, as the positive impact of our risk management measures and improvements in macro-economic conditions exceed expectations. Accordingly, we are also adjusting our risk-adjusted NIM guidance upward to between 5% and 5.2%. On the efficiency front, we maintain our guidance range for 2025. Fee income is expected to grow in the low double digits this year, supported by an acceleration in economic activity and ongoing diversification of our income sources. Additionally, insurance and underwriting results are expected to remain solid and relatively stable compared to 2024.

Speaker #5: Although we expect a slight increase in the cost of risk in the second half of this year due to stronger retail origination, our guidance has been updated to one point eight percent to two point two percent, to reflect lower than anticipated provisioning levels in the first half of twenty twenty-five, as the positive impact of our risk management measures and improvements in macroeconomic conditions exceeded expectations.

Speaker #5: Accordingly, we are also adjusting our risk-adjusted NIM guidance upward to between 5 percent and 5.2 percent. On the efficiency front, we maintain our guidance range for 2025.

Speaker #5: Fee income is expected to grow in the low double digits this year, supported by an acceleration in economic activity and ongoing diversification of our income sources.

Speaker #5: Additionally, insurance and the writing results are expected to remain solid and relatively stable compared to 2024. We are increasing our four-year ROE guidance to around 19%. This new guidance already includes extraordinary gains from the VanMedica transaction, which we estimate will have an impact of 50 basis points by year-end.

Unidentified Executive (likely a supporting executive, possibly Piero Travesan or another member of the management team, but not enough information to assign a specific name): We are increasing our full-year ROE guidance to around 19%. This new guidance already includes extraordinary gains from the Empresas Banmédica transaction, which we estimate will have an impact of 50 basis points by year-end. This revision reflects both solid core performance and sustained discipline on the risk front. While global uncertainties remain, we believe the fundamentals are in place to support this higher level of profitability. Finally, as Gianfranco Ferrari mentioned, we are revising our long-term sustainable ROE range upwards, from 18% to around 19.5%. This adjustment is primarily driven by stronger expectations of loan growth dynamics, particularly through the penetration of new higher-yielding segments, which leads to a more favorable loan mix evolution and an improvement in risk-adjusted NIM. Moreover, we are seeing enhanced expectations for fee income and gains on foreign exchange operations, largely due to increased transactional activity across our diversified business lines.

Speaker #5: This revision reflects both solid core performance and sustained discipline on the risk front. While global uncertainties remain, we believe the fundamentals are in place to support this higher level of profitability.

Speaker #5: Finally, as Gianfranco mentioned, we are revisiting our long-term sustainable ROE range upwards, from eighteen percent to around nineteen point five percent. This adjustment is primarily driven by a stronger expectations of loan growth dynamics, particularly through the penetration of new higher-yielding segments, which leads to a more favorable loan mix evolution and an improvement in risk-adjusted NIM.

Speaker #5: Moreover, we are seeing enhanced expectations for fee income and gains on foreign exchange operations, largely due to increased transactional activity across our diversified business lines.

Speaker #5: These factors contribute to a more optimistic efficiency outlook compared to our previous estimates. With these comments, I would like to open the Q&A session.

Unidentified Executive (likely a supporting executive, possibly Piero Travesan or another member of the management team, but not enough information to assign a specific name): These factors contribute to a more optimistic efficiency outlook compared to our previous estimates. With these comments, I would like to open the Q&A session.

Speaker #2: We will now begin the question-and-answer session. If you would like to ask a question, please signal by pressing *1 on your telephone keypad.

Milagros Cigeas: 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. If you are 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, you will then be allowed to ask as many follow-ups as needed, but again, please only ask one question at a time. Thank you. Our first question comes from Brian Flores with Citibank. Please go ahead.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: After each question has been addressed by our speakers, you will then be allowed to ask as many follow-ups as needed. However, please only ask one question at a time.

Speaker #2: Thank you. Our first question comes from Brian Flores with Citibank. Please go ahead.

Speaker #3: Good morning. Congratulations on the results and the new guidance. I wanted to ask you about the cost of risk, because I think it's a relevant improvement in your guidance.

Analyst (various, e.g., Brian Flores, Fernando Meloni, Carlos Gomez, Alonso Aramburu, etc.): Hi, team. Good morning. Congratulations on the results and the new guidance. I wanted to ask you on cost of risk because I think it's a relevant improvement in your guidance. If you could elaborate a bit on what is driving this, you mentioned very recently that you are going to accelerate on retail, making the second half a bit, in these terms, a bit riskier. If you could elaborate on the long term, what is making you be a bit more constructive on a lower cost of risk, I think that would be very helpful. Thank you.

Speaker #3: And if you could elaborate a bit on what is driving this, and also you mentioned very recently that you're going to accelerate on retail, making the second half a bit riskier in these terms.

Speaker #3: But just if you could elaborate on the long-term, what is making you a bit more constructive on a lower cost of risk? I think that would be very helpful.

Speaker #3: Thank you.

Speaker #4: Okay. Good morning, Brian. I'll first have to agree and also answer your questions.

Cesar Rios: Okay. Good morning, Brian. I will ask Cesar Ríos to answer your questions.

Speaker #3: Hi, Brian. Thank you for the question. Yes, first, probably it's good to explain a little bit the results of the first half of the year.

Analyst (various, e.g., Brian Flores, Fernando Meloni, Carlos Gomez, Alonso Aramburu, etc.): Hi, Brian. Thank you for the question. First, probably it is good to explain a little bit the results of the first half of the year. Last year, we took several measures to assure that all our portfolios are under the risk appetite. In addition to improvement in capabilities, we restricted origination in certain segments. As a result of all of these effects, we have had, during the first part of this year, a very low cost of risk, actually below our initial expectations. With one minor exception, all our portfolios are under the risk appetite. Beginning more clearly in the second quarter of this year, we started to originate higher yielding, higher risk portfolios in a successful way. What we are anticipating in the second part of the year is to have the reflection of these improved origination and higher yielding risks that are going to change the mix.

Speaker #3: Last year, we were we take several measures to assure that all our portfolios are under the risk appetite. So in addition to improvement in capabilities, we restricted the origination in certain segments, as a result of all of these effects, we have had during the first part of this year a very low cost of risk, actually below our initial expectations.

Speaker #3: With one minor exception, all our portfolios are under the risk appetite, and beginning more clearly in the second quarter of this year, we started to originate higher-yielding, higher-risk portfolios.

Speaker #3: With very few disruptions, we are anticipating that in the second part of the year we will see the reflection of this improved origination in higher-yielding risk.

Speaker #3: That is going to change the mix, and this trend should continue in the following years.

Analyst (various, e.g., Brian Flores, Fernando Meloni, Carlos Gomez, Alonso Aramburu, etc.): This trend should continue in the following years.

Speaker #4: Yeah. I maybe Brian.

Cesar Rios: Yeah, and maybe, no, perfect. Brian, just to complement Cesar Ríos's answer, bear in mind that we do not manage our portfolio based on cost of risk, but on risk-adjusted NIM, which is very relevant.

Speaker #3: Just to complement Cesar's answer, bear in mind that we do not manage our portfolio based on cost of risk, but on risk-adjusted NIM, which is very relevant.

Speaker #4: Yes.

Analyst (various, e.g., Brian Flores, Fernando Meloni, Carlos Gomez, Alonso Aramburu, etc.): Yes.

Speaker #3: No, perfect. Super clear. And then a quick follow-up on the guidance too: you reiterated the efficiency ratio. I think you're very efficiently becoming increasingly digital. Just if you could share what is your long-term vision on the physical branch network? Are you planning to monetize any of your prime real estate holdings? If you could elaborate, do you see branches evolving to a more, I would say, transactional hub?

Cesar Rios: No, perfect. Super clear. A quick follow-up on the guidance too. You reiterated the efficiency ratio, and I think you're very efficiently becoming increasingly digital. If you could share, what is your long-term vision on the physical branch network? Are you planning to monetize any of your prime real estate holdings? If you could elaborate, if you see branches evolving to a more, I would say, transactional hub, just how are you thinking about this on the long term? Thank you. Actually, Brian, this is a strategy we've started to deploy maybe four or five years ago. At the peak, at BCP, we reached up to close to 450 branches. Today, we have 300. So there's been a reduction of about a third of the network.

Speaker #3: Just how are you thinking about this in the long term? Thank you.

Speaker #4: Actually, Brian, this is a strategy we've started to deploy maybe four or five years ago. At the peak, at BCP, we reached up to close to four hundred and fifty branches, today we have three hundred and six.

Speaker #4: Three hundred. So, there's been a reduction of about a third of the network. More importantly, I would say that the number of branches and the role of the branch has changed dramatically over the last few years, from a more transactional vision to a more educational and commercial vision.

Cesar Rios: More importantly, I would say that the number of branches, the role of the branch has changed dramatically over the last few years, from more transactional vision to more educational and commercial vision. That path will follow. I would say that the bulk of the reduction has already been done. We do not plan to be as aggressive going forward. However, the world is changing so fast that we'll see. No, perfect. Thank you.

Speaker #4: That path will follow. I would say that the bulk of the reduction has already been done. We do not plan to be as aggressive going forward.

Speaker #4: However, the world is changing so fast that we'll see.

Speaker #3: No, perfect. Thank you.

Speaker #2: The next question is from Lindsay Shema with Goldman Sachs. Please go ahead.

Milagros Cigeas: The next question is from Lindsay Shima with Goldman Sachs. Please go ahead.

Speaker #5: Hi. Thank you for taking my question. And congrats on the increased guidance. Quick follow-up on cost of risk. When you think about cost of risk long-term, where do you see the ratio trending and how long should it take to get there?

Francesca Raffo: Hi. Thank you for taking my question and congrats on the increased guidance. Quick follow-up on cost of risk. When you think about cost of risk long term, where do you see the ratio trending, and how long should it take to get there? Could it be structurally lower, or should it continue to accelerate to your long-term range? Thank you.

Speaker #5: Could it be structurally lower, or should it continue to kind of accelerate to your long-term range? Thank you.

Speaker #4: Thank you for the question. Once we reach, I will say, a more representative level at the end of this year, we expect for some years to increase the cost of risk based on the strategy that we are outlining.

Analyst (various, e.g., Brian Flores, Fernando Meloni, Carlos Gomez, Alonso Aramburu, etc.): Thank you for the question. Once we reach, I will say, a more representative level at the end of this year, we expect for some years to increase the cost of risk based on the strategy that we are outlining. I am going to give a very simple example. Our cost of risk now is going to be around, let's say, 2%. This is a combination of wholesale retail portfolios. If we are starting to originate in higher risk portfolios, for example, only 1 billion portfolio that has a cost of risk of 8% but brings a margin of 20% additionally, it's going to increase five basis points the overall cost of risk in the portfolio, but it's going to improve significantly, 2.5 times that the profitability of the business.

Speaker #4: I am going to give a very simple example. Our cost of risk now is going to be around, let's say, 2%. This is a combination of wholesale and retail portfolios.

Speaker #4: But if we are starting to originate in higher-risk portfolios, for example, only a $1 billion portfolio that has a cost of risk of 8 percent but brings a margin of 20 percent additionally, it's going to increase 5 basis points the overall cost of risk in the portfolio, but it's going to improve significantly 2.5 times the profitability of the business. That's the strategy that we are going to follow.

Analyst (various, e.g., Brian Flores, Fernando Meloni, Carlos Gomez, Alonso Aramburu, etc.): That's the strategy that we are going to follow once we have a stabilization of the portfolio that's already happening, and we are starting to build the portfolio with new tools. For some years, we increase these higher risk, higher yielding portfolios. The overall cost of risk should increase, but with increased profitability.

Speaker #4: Once we have established the portfolio that already happened and we are starting to build the portfolio with new tools. So for some years, we increase this higher risk, higher-leading portfolios, the overall cost of risk should increase.

Speaker #4: But with increased profitability.

Speaker #3: Yes.

Cesar Rios: Yes. Again, Lindsay, the whole strategy and growth strategy, actually, is based on risk-adjusted NIM, as Cesar Ríos mentioned, not only of cost of risk. As a matter of fact, we also include acquisition costs and so on. But regarding the risk-adjusted NIM, this is how we manage it.

Speaker #4: Again, Lindsay, the whole strategy and growth strategy is actually based on risk-adjusted NIM, as Cesar mentioned. Not only on the cost of risk. As a matter of fact, we also include acquisition costs and so on.

Speaker #4: But regarding the risk-adjusted NIM, it's how we manage it.

Speaker #5: Thank you. If I could elaborate on that a little bit. For loan growth this year, could you break down your expectations? And I know you switched from average balances to period-end.

Francesca Raffo: Thank you. If I could elaborate on that a little bit, for loan growth this year, could you break down your expectations? I know you switched from average balances to period end, but is the kind of better expectation mostly on retail? Please segment by segment. Thank you.

Speaker #5: But is the kind of better expectation mostly on retail, and then just segment by segment? Thank you.

Speaker #4: Alejandro?

Cesar Rios: Alejandro?

Speaker #3: Yes. Hi, Lindsay. Yes, we made that change after conversations with a lot of investors who preferred the end-of-year balance. But we still gave the equivalent.

Unidentified Executive (likely a supporting executive, possibly Piero Travesan or another member of the management team, but not enough information to assign a specific name): Yes. Hi, Lindsay. Yes, we made that change after a conversation with a lot of investors that preferred the end-of-year balance, but we still gave the equivalent. As we mentioned during the presentation, we are on the guidance. We are expecting growth end-to-end to be 6.5%, including the revaluation of the soles, which is stronger to the dollar than what we were expecting. It does come particularly from the more retail segment, both in Mibanco and then at Banco de Crédito del Perú with mortgages and consumer credit. We are expecting most areas to grow, but those areas should be the ones picking up more. We have already seen that pickup in the last few months, and we expect that to continue and become even a little bit stronger in the next part of the year.

Speaker #3: As we mentioned during the presentation, or along the guidance, we are expecting growth end-to-end to be 6.5%. This includes the revaluation of the sol, which is stronger against the dollar than we were expecting.

Speaker #3: And it does come particularly from the more retail segment, both in Mi Banco and then at BCP, with mortgages and consumer credit. So, I mean, we're expecting most areas to grow, but those areas should be the ones picking up more.

Speaker #3: We've already seen that pick up in the last few months, and we expect that to continue and become even a little bit stronger in the next part of the year.

Speaker #2: The next question is from Fernando Maloney with Autonomous Research. Please go ahead.

Milagros Cigeas: The next question is from Fernando Meloni with Autonomous Research. Please go ahead.

Speaker #6: Hi, everyone. Thanks for taking the question. It's Renato here. So just quickly on loan growth for this year, I'm wondering, just thinking of the guidance from the beginning of the year and what has materialized.

Analyst (various, e.g., Brian Flores, Fernando Meloni, Carlos Gomez, Alonso Aramburu, etc.): Hi, everyone. Thanks for taking the question. It's Renato here. Just quickly on loan growth for this year, I'm wondering, thinking of the guidance from the beginning of the year and what has materialized, if you could explain a bit on what diverged the most here and the adjustments you've made. On the long-term guidance, and congrats again for raising the guidance for this year and for the sustainable ROE, I just want to wonder if you could expand a little bit on the comments of the drivers for the higher guidance in the long term. Thank you.

Speaker #6: So if you could explain a bit on what diverged the most here and the adjustments you've made. And then on the long-term guidance, and congrats again for raising the guidance for this year.

Speaker #6: And for the sustainable ROE, I just want to wonder if you could expand a little bit on the comments regarding the drivers for the higher guidance in the long term.

Speaker #6: Thank you.

Speaker #3: Sure. I mean, as for loan growth, as I was just mentioning, and tying it up to the improvement in the economy that we've been mentioning, both Gianfranco and I really are seeing a very strong economy today and a much better situation for consumers.

Unidentified Executive (likely a supporting executive, possibly Piero Travesan or another member of the management team, but not enough information to assign a specific name): Sure. As for loan growth, as I was just mentioning, and tying it up to the improvement in the economy that we have been mentioning, both Gianfranco Ferrari and myself, we are seeing a very strong economy today and a much better situation for consumers. That is tied to what Cesar Ríos was mentioning about our risk capabilities and our origination capabilities. It is basically what we expect to translate into higher growth in lending, particularly, as I was saying, on the retail side and the consumer side and microfinance side. By the way, it has already been happening so far. In mortgages, FX neutral for the year, we have grown for a whole year, we have grown 6.5%. In consumer, almost 6%. We are seeing that actually pick up in the last couple of months. We expect that to continue.

Speaker #3: That tied to what Cesar was mentioning about our risk capabilities and our origination capabilities. It's basically what we expect to translate into higher growth in lending, particularly, as I was saying, on the retail side, the consumer side, and the microfinance side.

Speaker #3: And by the way, it's already been happening so far. I mean, in mortgages, we are FX neutral for the year. We've grown for a whole year; we've grown 6.5% in consumer, almost 6%.

Speaker #3: So, we’re seeing that actually pick up in the last couple of months. We expect that to continue. With these capabilities and our distribution capabilities, I am tying this to the longer-term ROE to continue to access more, let's say, riskier or more the consumer segment of retail, with a good risk-adjusted NIM.

Unidentified Executive (likely a supporting executive, possibly Piero Travesan or another member of the management team, but not enough information to assign a specific name): With these capabilities and our distribution capabilities, and I am tying this to the longer-term ROE, to continue to access more, let us say, riskier or more of the consumer segment of retail with a good risk-adjusted NIM. That is one of the main drivers for the sustainable ROE, that is the loan mix with a good cost of risk that translates into a better risk-adjusted NIM. Also, on the fee income, we have been building a lot of different businesses and lines around that, and driven by Yape, but there are other things that we are also developing that are basically important sources of growth in the coming years. When you put those together, that is what brings us to our expected 19.5% sustainable ROE.

Speaker #3: So that is one of the main drivers for the sustainable ROE: the loan mix, along with a good cost of risk, that translates into a better risk-adjusted NIM.

Speaker #3: And also on the fee income, we've been building a lot of different businesses and lines around that, driven by YAPE. But there are other things that we're also developing that are basically important sources of growth in the coming years.

Speaker #3: And when you put those together, that's what brings us to our expected 19.5% sustainable ROE.

Speaker #4: Yeah. Maybe Fernando, just an additional comment on what Alejandro just mentioned is if you remember a few years ago, we stated a couple of guardrails regarding how much we were going to invest in our disruptive initiatives.

Cesar Rios: Yeah. Maybe Fernando, just an additional comment on what Alejandro just mentioned is, if you remember, a few years ago, we stated like a couple of guardrails regarding how much we were going to invest in our disruptive initiatives. One of those guardrails was up to 150 basis points of ROE. This year, 2025, that impact is going to be close to zero. Going forward, as we see it, that should be a positive. That drag should be eliminated. Obviously, again, since the world is changing at the pace it is changing, we may have to invest or another Yape idea may come. Today, the vision we have is that the digital investments going forward from 2025 onwards will generate positive ROE rather than negative ROE.

Speaker #4: And one of those guardrails was up to one hundred and fifty basis points of ROE. This year, 2025, that impact is going to be close to zero.

Speaker #4: And going forward, as we see it, that should be a positive. So that drag should be eliminated. Obviously, again, since the world is changing at the pace it is changing, we may have to invest or another YAPE idea may come.

Speaker #4: But today, the vision we have is that the digital investments going forward from 2025 onwards will generate positive ROE rather than negative ROE. As we've mentioned before, since we've been very conservative, especially in how we register the investments we've made in the digital transformation initiatives, we have basically registered one hundred percent, or ninety percent, of those investments as expenses.

Cesar Rios: As we've mentioned before, since we've been very conservative, especially in how to register the investments we've been doing in the digital transformation initiatives, we basically 100% or 90% of those investments, we've registered them as expenses. The equity part of those initiatives, the digital investments, is close to zero. It's not zero, but it's really irrelevant to the income they will generate going forward.

Speaker #4: So the equity part of those digital investments is close to zero. It's not zero, but it's really irrelevant to the income they will generate going forward.

Speaker #2: That's very clear. Thanks very much. The next question is from Carlos Gomez with HSBC. Please go ahead.

Unidentified Executive (likely a supporting executive, possibly Piero Travesan or another member of the management team, but not enough information to assign a specific name): is very clear. Thanks very much.

Milagros Cigeas: The next question is from Carlos Gomez with HSBC. Please go ahead.

Speaker #6: Hello. Thank you, and congratulations on the results. And thank you for clarifying the bond exchange. It was an extraordinary gain. Can I ask you briefly, is that the after-tax or before-tax gain?

Analyst (various, e.g., Brian Flores, Fernando Meloni, Carlos Gomez, Alonso Aramburu, etc.): Hello. Thank you. Congratulations on the results. Thank you for clarifying that the bond exchange was an extraordinary gain. Can I ask you briefly, is that after tax or before tax gain?

Speaker #3: The gain is actually before tax, but government bonds don't have income tax. So, it ends up going all the way below the line.

Unidentified Executive (likely a supporting executive, possibly Piero Travesan or another member of the management team, but not enough information to assign a specific name): The gain, it is actually before tax, but government bonds do not have income tax. So it ends up going all the way below the line.

Speaker #6: Okay, that's very clear. Thank you. And so, I'm cheating here. My real question is about YAPE. When we look at the numbers that you published, I estimate that right now you are showing a net income contribution of around $25 million. I could be wrong about that.

Analyst (various, e.g., Brian Flores, Fernando Meloni, Carlos Gomez, Alonso Aramburu, etc.): Oh, okay. That's very clear. Thank you. I am sitting here. My real question is about Yape. We look at the numbers that you publish, and I estimate that right now you are showing a net income contribution of around $25 million. I could be wrong about that. How much do you think Yape can contribute this year, next year, and in the future? What is the number that you are considering internally and you are talking to investors about?

Speaker #6: How much do you think YAPE can contribute this year, next year, and in the future? Was the number that you are considering internally, and you are talking to investors about?

Speaker #3: Francesca, could you answer that?

Cesar Rios: Francesca, can you answer that?

Speaker #7: Yes, hi. The number you mentioned is correct, but we are expecting that as YAPE begins to increase its loan portfolio, its contribution will be much larger.

Francesca Raffo: Yes, hi. The number you mentioned is correct. What we are expecting is, as Yape begins to increase its loan portfolio, its contribution will be much larger. We are expecting for the next three to five years, the goal would be for Yape to be the second largest line of business that Credicorp has, primarily due to its lending business in retail and SME segments, and also its incursion in the newer segment, in the newer lines of business at marketplace and commerce.

Speaker #7: And we are expecting that, over the next three to five years, the goal would be for YAPE to be the second largest line of business that Credicorp has.

Speaker #7: Primarily due to its lending business in retail and SME segments, and also its incursion into newer lines of business such as marketplace and commerce.

Speaker #6: So there will be second to I guess second to BCP and therefore larger than Pacifico. Are we talking one hundred fifty to one hundred to one hundred fifty million dollars?

Analyst (various, e.g., Brian Flores, Fernando Meloni, Carlos Gomez, Alonso Aramburu, etc.): So that would be second to, I guess, second to BCP, and therefore larger than Pacífico. Are we talking $150, $200, $250 million?

Speaker #4: You have to do your math, Carlos. We don't disclose specific figures. You have the figure of BCP; you have the figure of Pacifico. Do the math.

Cesar Rios: You have to do your math, Carlos. We don't disclose specific figures. You have the figure of BCP. You have the figure of Pacífico. Do the math.

Speaker #6: You do that. Okay. I'll do that. Thank you.

Analyst (various, e.g., Brian Flores, Fernando Meloni, Carlos Gomez, Alonso Aramburu, etc.): You do the math. Okay. I will do that. Thank you.

Speaker #3: Thank you.

Francesca Raffo: Thank you.

Speaker #2: The next question is from Alonso Aramburu with BTG. Please go ahead.

Milagros Cigeas: The next question is from Alonso Aramburu with BTG. Please go ahead.

Speaker #8: Yes. Hi. Good morning. Thank you for the call. Just following up on YAPE, can you comment on your asset quality trends at YAPE? What's your cost of risk?

Analyst (various, e.g., Brian Flores, Fernando Meloni, Carlos Gomez, Alonso Aramburu, etc.): Yes. Hi. Good morning. Thank you for the call. Just following up on Yape, can you comment on your asset quality trends at Yape? What's your cost of risk? What's your level of NPL ratios? Also, some color on the lending. What kind of size of loans are you doing? The term of the loans, has that changed in the last few months? Do you have a target for how much lending should be as a percentage of revenues at Yape? Thank you.

Speaker #8: What's your developed NPLs? And also some color on the lending; what kind of size of loans are you doing, the term of the loans? Has that changed in the last few months?

Speaker #8: And do you have a target for how much lending should be as a percentage of revenues at YAPE? Thank you.

Speaker #4: Yes. Maybe I'll start, and then Francesca, you can complement me. So, Alonso, today the YAPE portfolio is still very small, even though we're disbursing over $1 million in loans per month.

Cesar Rios: Yes. Maybe I will start, and then Francesca, you can complement me. Alonso, today, still, the Yape portfolio is very small, even though we are disbursing over 1 million loans per month. The bulk of that is mono-installment. The duration is actually less than 30 days. What we are doing is basically, even though that business is profitable, the real target is to learn.

Speaker #4: The bulk of that is mono installment, so the duration is actually less than 30 days. What we're doing is, basically, even though that business is profitable, the real target is to lend to learn, sorry, to learn to lend to the best performance of those initial clients.

Milagros Cigeas: to learn the best performance of those initial clients. We're building up a multi-installment loan in the consumer finance business, which is growing rapidly, and we just started to do some testing in the SME market also. NPLs, I don't know, Francesca, if you have the...

Speaker #4: We're building up a multi-installment loan in the consumer finance business, which is growing rapidly. We just started some testing in the SME market also.

Speaker #4: NPLs, I don't know, Francesca, if you have the...

Speaker #3: Cost of risk.

Gianfranco Ferrari: Of course, I have those.

Speaker #4: Cost of loan.

Milagros Cigeas: low teens annualized.

Gianfranco Ferrari: The risk-adjusted NIM is very, very, very good, Alonso. We are quite positive on the impact of the lending business at the APE. We are not disclosing how much of the income or profits at the APE should be generated by lending, but obviously it is going to be the major contributor, which by the way, today it is not.

Milagros Cigeas: Yes, thank you for that. And just to follow up generally on the cost of risk guidance, is it correct that the expectation then for the second half of the year should be closer to 2% cost of risk for CREDICORP?

Gianfranco Ferrari: The expectation for the whole year is in the range that we have stated between 1.8 to 2.2. That implies, doing the math, that the second part of the year should be closer to 2 than closer to 1.6 for the reason that we have already stated.

Milagros Cigeas: Right, fantastic. Thank you very much.

Alejandro Perez-Reyes: The next question is from Yuri Fernandez with J.P. Morgan. Please go ahead.

Milagros Cigeas: Hi everyone, and also congrats on the quarter. I have just a question on your deposit franchise. We see the economy in Peru doing better, and your deposits are growing way above the loan, so don't get me wrong here. But when I go to your low-cost deposits, they are down a little bit quarter over quarter, some 5%. Just checking if this is seasonal. Year over year, they are still growing. You know, given you have so many different verticals, I think a 4% or 5% annual growth on deposits, it could be a little bit higher, right? Just trying to understand on deposits why the low cost was down. Then I have a second question regarding dividends. You are generating a lot of capital. OneGlobe has been a little bit like clusters. The quarterly question on dividends, how should we think about your extraordinary dividends for this year?

Milagros Cigeas: Thank you.

Gianfranco Ferrari: Yes, hi Yuri. It is seasonal. What you see is seasonal regarding low-cost deposits. If you take a look at year over year, growth has been quite important. I would like, because of your question, to share information that was shared by the Central Bank this week. The usage of cash in transactions in Peru has gone from 95% of total transactions done in cash in Peru in 2013 to 64%. That is over 30% reduction, 3,000 basis points reduction. The major driver for that decline has been the digital wallets. The major digital wallet in Peru is Yape. Therefore, we are quite confident that the low-cost deposit growth and market share will still be there because these are great news. If you see it, there is still two-thirds of the market doing transactions in cash. So there is a lot of room for growth there. That is regarding deposits.

Gianfranco Ferrari: Regarding dividends, the policy is exactly the same. We have not changed the policy. The issues that Alejandro Perez-Reyes mentioned during his speech, since we had to pay 1.6, 1.7 billion soles to Sunat, we do not have, even though that does not affect our P&L, it does affect our cash position. Therefore, we will not be paying this year an extraordinary dividend in the second half of the year.

Milagros Cigeas: Maybe just to complement what Gianfranco, that is exactly right. The main impact that we are having of this Sunat situation is actually a cash impact. We are using the money that we expected to pay out as an extraordinary dividend is the one that we are using to pay this claim by Sunat. What I just wanted to mention is that it does not change going forward our expectations for next year's ordinary dividend and ideally also extraordinary dividend. So it is just an impact on this year because it is the money that we were expecting to pay out as an extraordinary dividend.

Gianfranco Ferrari: Perfect. Thank you very much.

Alejandro Perez-Reyes: Again, if you have a question, please press star, then one. The next question is from Andres Soto with Santander. Please go ahead.

Unidentified Executive (likely a supporting executive, possibly Piero Travesan or another member of the management team, but not enough information to assign a specific name): Good morning to all. Thank you for the presentation and the opportunity to ask questions. My first question is regarding your digital initiatives and your targets for the short term. You have mentioned the objective of these initiatives to represent 10% of revenue by 2026. I would like to understand if this target refers to the whole year, or a specific quarter. You were already at 6% in the second quarter of the year, so it will be interesting to hear your thoughts on the ramp-up to get to this target.

Gianfranco Ferrari: Sure. Francesca?

Analyst (various, e.g., Brian Flores, Fernando Meloni, Carlos Gomez, Alonso Aramburu, etc.): Yes, thank you, Andres. Our goal was 2026, 10% for the whole year. We're very confident with what we're seeing with Yape's results. As you know, what we've shared before is that the idea around the innovation portfolio is to have all those initiatives graduate. The challenge for the innovation portfolio is to continue to generate a new set of initiatives around Tenpo, around Qwikly, around Dio. This is the way we're viewing it. We're very confident because we have a good venture around Yape, but the work is still there. It's on an annual basis.

Unidentified Executive (likely a supporting executive, possibly Piero Travesan or another member of the management team, but not enough information to assign a specific name): is clear. Thank you, Francesca. My second question is regarding the new medium-term ROE target of 19.5%. It was very helpful, your comment, Gianfranco, that this partially reflects the not considering the detraction that you are getting from digital initiatives, which already broke even. But it looks like it is still a conservative one, considering that as they start to ramp up, they will actually contribute to profitability and they will take your ROE to even higher levels. So what prevents you to get a more ambitious target for your sustainable ROE? That will be the point number one. Point number two, you mentioned that part of what we are seeing here is better risk-adjusted NIM, higher contribution leading to better efficiency. In the past, you used to have an efficiency target tied to this 18% medium-term ROE. What is your new efficiency target in this new objective?

Gianfranco Ferrari: Yeah, maybe let me take the efficiency question. Then I will pass it to Alejandro Perez-Reyes, and you may comment the impact on that on the E.

Milagros Cigeas: I was going to say that.

Gianfranco Ferrari: First of all, good morning, Andres. The efficiency ratio with these new ventures growing at a much faster pace than the incumbents is tricky. Yes, they start to become profitable, but their efficiency ratio is much higher than the efficiency ratio the incumbents have. The more Yape grows, the more inefficient we become. Obviously, at some point in time, Yape's efficiency ratio should be much lower than the Banco de Crédito del Perú's efficiency ratio. It is not the situation today. That happens with most of the new ventures we are deploying. That is the main reason for the efficiency ratio. Obviously, we keep investing in branding the business and also in the transformation, as I mentioned. As I mentioned before, the bulk of what we have done in terms of investments in the digital transformation, mostly in the new ventures, we have registered them as expenses.

Gianfranco Ferrari: That is how it is like we have been front-loading expenses. Going forward, there is a trade-off, right? As we are successful, digital initiatives will grow, but deteriorate the cost-to-income ratio. At the same time, since they become profitable, the ROE impact should not be negative, as I explained before. I do not know if I made it clear.

Running the business and also in in the transformation as I mentioned. And also, as I mentioned before, the bulk of what we've done in terms of of investments in the digital transformation, mostly in the the new Ventures, we've registered them as expenses. So, so that, that's how um, it's like we've been front loading expenses, uh, and going forward.

There's a trade-off, right? So as we are successful, digital initiatives will grow but deteriorate the.

The Roe impact shouldn't be negative. So, I explained before, I don't know.

if I made it clear,

Unidentified Executive (likely a supporting executive, possibly Piero Travesan or another member of the management team, but not enough information to assign a specific name): That was clear, Gianfranco. What I would like to get here is if the number that you are putting as a medium-term target is probably conservative considering this math that you described and to the point of the guardrails that you used to have. Are they still valid? Are you still operating under the assumption that the disruptive initiatives are going to take away 300 basis points of efficiency and 150 basis points of ROE? Or is this something that you are going to be adversely supporting?

That that, that was scary and Franco. But what I would like to get here is if, if the the number that you're putting us as me to Target is, is

Gianfranco Ferrari: Yes, again, 150 basis points impact. As a matter of fact, this year is going to be, let's say, zero. That's not a negative. It won't be a drag this year after starting from 2026 onwards should be positive. That's the ROE answer. The cost-to-income answer, the efficiency ratio, is another answer because, as I mentioned, concretely, Yape. Yape is profitable now, but the cost-to-income of Yape is not 40-something percent. It's much more. The larger Yape becomes, the more that quote-unquote "negative impact" on cost-to-income has. Going forward, that may change and end up Yape being much more efficient than, let's say, BCP. In that case, the cost-to-income ratio will decrease also.

Probably conservative considering this um uh math that you described. And and to the point of the, the Gargoyles that you used to have and they they still value that you still operating under the assumption that the this opportunity initiatives are going to take away uh, 300 basis points of efficiency and 150 base points of of Roi. Or this is something that we that you are going to be support.

Yes again 150 basis points uh impact as a matter of fact, this year is going to be let's say zero so that that's not a negative it just it won't be a drag this year after after, after starting from 2026 onwards should be positive. That's the, our answer, the cost to income answer. The efficiency ratio is another answer because as I mentioned it, the concretely, yap, yap is profitable now, but the cost to income of Yap is not for something percent. It's much more, the larger Gap. It becomes.

the more that quote unquote negative impact on our constant income has, uh, going forward and that

May.

Change, change, and end up yapping; more, much more efficient than, let's say, BCP. In that case, the cost to income ratio will decrease by.

Unidentified Executive (likely a supporting executive, possibly Piero Travesan or another member of the management team, but not enough information to assign a specific name): That is fundamentally a function of lending, I suppose.

Gianfranco Ferrari: Yes, yes. The major source of income growth for Yape, marginal income growth for Yape for the upcoming years, is what we expect the lending business is going to become. Yes.

And that is fundamentally a function of, uh, lending. I suppose,

Yes, yes, so the growth, the major source of income growth for Yappi marginal income growth for Yabi for upcoming years is what we expect. The lending business is going to become. Yes.

Unidentified Executive (likely a supporting executive, possibly Piero Travesan or another member of the management team, but not enough information to assign a specific name): Francesca probably mentioned this before, the three to five-year period for the ramp-up. Is this still a valid timeframe, or when are you expecting to accelerate the Yape lending when those testing loans are going to start to become multi-installment and larger loans?

Gianfranco Ferrari: are already multi-installment, but you know us very well, Andres, we are conservative. We are not going to bet the house going to grow dramatically that portfolio. We feel very comfortable with what we are doing, both regarding risk, cost of risk, I mean, and growth. The more comfortable we become, the faster we will deploy the whole strategy. We do not have a specific answer today on when we will achieve what we are looking for.

And and Franchesca probably mentioned this before the the 3 to 5 year period for the for the ramp up is is is this is still a valid time frame or when when are you expecting to to accelerate the Japan Landing Windows, uh, testing loans are going to start to become uh multi multi installment and and larger loans.

Milagros Cigeas: If you focus on the nature of this client, it is an exploratory business at the beginning. We deploy pilots. We monitor the pilots. When we discover a specific segment that performs particularly well, we scale that. In these cases, we can be scaling up certain parts of the portfolio rapidly, but subject to have discovered profitable segments. It is a discovery process. We have great expectations, but it is a discovery process.

They were very multi but you know us very well Andreas work on service so we're not going to bet the house uh uh going through to to grow dramatically the portfolio. We feel very comfortable with what we're doing. Both regarding risk. Uh, a cost of is coming uh and growth. Uh the more comfortable we we become uh and the the faster we will deploy, the whole study. We do not have an answer specific answer today on when when we will, uh, achieve what we're what we're looking for. And and if you focus on the nature of this client, it's an exploratory business. At the beginning, we deploy Pilots, we monitor the pilots when we discover a specific segment that perform particularly well we scale that in these cases we can be scaling up certain parts of the poly for your rapidly but sag to have discovered it profitable.

So, it's a discovery process, and we have great expectations, but it's a discovery process.

Unidentified Executive (likely a supporting executive, possibly Piero Travesan or another member of the management team, but not enough information to assign a specific name): Thank you, Cesar. What percentage of Yape borrowers are already in a multi-installment scheme?

Thank you, Susan. How much? What percentage of Yap borrowers are already in a multi-instrumentalist?

Gianfranco Ferrari: Do you have that figure?

Milagros Cigeas: 50-50.

Gianfranco Ferrari: 50-50. Today, they are 50-50.

Milagros Cigeas: The balance.

Gianfranco Ferrari: The balance is 50-50. Not the number, you are right. Not the number of plans, but the balance is half and half. Because again, since the mono-installment loans are mono-installment, the maturity, the duration is less than one month.

Do you have that period in 50/50? Today they are 50/50. The balance should be 50%, not the number. You're right, not the number of plans, but the balance is going to have.

Milagros Cigeas: is less than one month.

Gianfranco Ferrari: You have to work a lot to maintain the balance. That is going to shift dramatically in the upcoming years.

Because, again, address since since the mono installment loans are mono installment. The, the maturity, the sorry, the duration is less than 1 is less than 1 month. In 20 days, you have to, to work a lot to, to maintain the balance. That is going to shift dramatically in in the upcoming years.

Unidentified Executive (likely a supporting executive, possibly Piero Travesan or another member of the management team, but not enough information to assign a specific name): Perfect. Thank you. Thank you, guys, and congratulations on the results.

Perfect. Thank you. Thank you, guys, and congratulations on the results.

Milagros Cigeas: Thank you.

Gianfranco Ferrari: Thank you.

Alejandro Perez-Reyes: 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.

Thank you. Thank you.

Gianfranco Ferrari: Thank you, and thank you all for your questions. Q2 2025 was another quarter of solid execution at CREDICORP. Momentum in the economy, our business, and our innovation agenda give us confidence for the rest of the year and beyond. Fee income is scaling. Digital engagement is deepening. Great demand is returning. We are delivering value consistently, even amid regulatory uncertainty. As I noted earlier, we operate in a more supportive environment, but are not dependent on it. Our platform performs through volatility and is now better positioned to capture upside more effectively. In this context, we have revised our long-term sustainable ROE upward from around 18% to approximately 19.5%, reflecting the benefits of a more diversified, inclusive business model as we expand into new segments and broaden our addressable market.

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

Confidence for the rest of the year and beyond.

F income is scaling. These engagements are deepening.

Great demand is returning, and we are delivering value consistently even amid regulatory uncertainty.

As I noted earlier, we operate in a more supportive environment but are not dependent on it. Our platform performs through volatility and is now better positioned to capture upside more effectively.

Gianfranco Ferrari: Our strategy will drive higher risk-adjusted NIM through a more retail-oriented loan portfolio, while increasing transactional and non-interest income from our disruptive initiatives. These drivers will accelerate income growth, enhance efficiency, and strengthen our ability to deliver sustainable returns. Looking ahead, I invite you to join us on October 9 in New York for our Investor Day, where we will share how CREDICORP is positioning to lead the next chapter of Latin American finance. We look forward to seeing many of you there. Thank you for your continued trust.

In this context, we've revised our long-term sustainable AOE upward from around 18% to approximately 19.5%, reflecting the benefits of a mobile, diversified, inclusive business model. As we expand into new segments and broaden our addressable market,

Our strategy will drive a higher risk-adjusted return through a more retail-oriented loan portfolio while increasing transactional and non-interest income from our disruptive initiatives.

These drivers will accelerate income growth, enhance efficiency, and strengthen our ability to deliver sustainable returns.

Looking ahead, I invite you to join us on October 9th in New York for our Investor Day, where we'll share how great Credicorp is positioning to lead the next chapter of Latin American finance. We look forward to seeing many of you there. Thank you for your continued trust.

Alejandro Perez-Reyes: Thank you, ladies and gentlemen. This concludes today's presentation. You may now disconnect.

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