• Record Profitability: PEN5.5 billion for the full year 2024.
• Return on Equity (ROE): 16.5%, adjusted to 17.2% excluding one-off charges.
• Loan Growth: 0.7% increase in average daily balances and 2.2% in quarter-end balances.
• Net Interest Margin (NIM): 6.3%, with a risk-adjusted NIM of 4.9% for BCP.
• Non-Performing Loan (NPL) Ratio: Decreased by 60 basis points to 5.3%.
• Cost of Risk: Reduced to 2.1%.
• Net Interest Income: Increased by 1.1%.
• Efficiency Ratio: 45.8% for the full year 2024.
• Yape Active Users: Nearly 14 million, with significant transaction volume growth.
• Grupo Pacifico ROE: 23.7% for the full year 2024.
• Guidance for 2025: Expected GDP growth of 3%, loan growth of 3.5% in average daily balances, and ROE around 17.5%.

• Warning! GuruFocus has detected 7 Warning Signs with UTL.

Release Date: February 11, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Credicorp Ltd (NYSE:BAP) delivered record profitability of PEN5.5 billion and an ROE of 16.5% for 2024, aligning with guidance when excluding one-off charges.
• The company experienced robust operational performance in Q4 2024, with improved cost of risk and increased lending at BCP and Mibanco.
• Credicorp Ltd (NYSE:BAP) benefited from Peru's economic recovery, with GDP expanding by over 3% in 2024 and inflation falling to 2.2%.
• The company achieved significant asset quality improvement, allowing for a more proactive lending approach, particularly in the Retail segment.
• Yape, Credicorp's digital payments platform, reached profitability in 2024 with nearly 14 million active users, doubling its transaction volume.

Negative Points

• Reported ROE was slightly below expectations due to prioritizing client relationships and mitigating risks related to the Sartor case.
• Private sector investment in Peru remains subdued, requiring political stability and structural improvements for long-term growth.
• The onset of the electoral campaign in Peru towards the end of 2025 may introduce uncertainty and affect economic conditions.
• The NIM fell 9 basis points to 6.3% in Q4 2024 due to a shift in the asset mix towards cash and equivalents and a drop in market interest rates.
• The Sartor case resulted in a PEN259 million one-off charge, impacting the company's financial performance.

Q & A Highlights

Q: What is the outlook for the Peruvian political landscape and its potential impact on loan growth? A: Gianfranco Ferrari De Las Casas, CEO, mentioned that it is too early to predict the political landscape with 30-40 potential candidates. The election's impact on loan growth is expected to be minimal until late in the year, with the industry projected to grow around 5.5%, and Credicorp aiming to exceed this with a growth of about 6%.

Q: What is Credicorp's sustainable ROE target, and when do you expect to normalize OpEx growth from disruptive initiatives? A: Gianfranco Ferrari De Las Casas, CEO, stated that Credicorp aims for a sustainable ROE of around 18% by 2026. This is expected as disruptive initiatives begin to positively impact ROE starting in 2025.

Q: How does Credicorp plan to maintain asset quality while increasing loan origination? A: Gianfranco Ferrari De Las Casas, CEO, explained that improved macroeconomic conditions and better-performing new loan vintages give Credicorp confidence in maintaining asset quality. Cesar Wilson, CEO of Pacifico, added that the cost of risk will be managed with a focus on higher yield, higher cost of risk loans within a controlled range.

Q: Can you provide more details on the Sartor case provisioning and its expected resolution? A: Alejandro Perez-Reyes, CFO, clarified that a PEN259 million provision was made, primarily at Atlantic Security Holding. The provision is expected to cover potential losses, but the resolution timeline is uncertain as it depends on the liquidator's actions.

Q: Why does the efficiency ratio guidance suggest stability or slight deterioration despite Yape's profitability? A: Alejandro Perez-Reyes, CFO, noted that ongoing investments in innovation and core business capabilities are necessary to maintain competitive advantages. Gianfranco Ferrari De Las Casas, CEO, added that Yape's cost-to-income ratio is higher than the overall target, impacting the efficiency ratio despite its profitability.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.