Credicorp Ltd (BAP) Q1 2025 Earnings Call Highlights: Strong ROE and Digital Growth Amid ...
Return on Equity (ROE): 20.3% including extraordinary gains; 18.4% excluding non-recurring gains.
Loan Growth: 1.5% increase in average daily balances, driven by short-term loans in wholesale banking.
Net Interest Margin (NIM): Resilient at 6.2% despite a contraction in asset yields.
Non-Performing Loan (NPL) Ratio: 5.1% for Credicorp; 6.4% for Mibanco.
Cost of Risk: 1.6%, reflecting improved portfolio management and payment performance.
Efficiency Ratio: 45.7%, within guidance range.
Dividend Payout: PEN40 per share.
Fee Income Growth: 16% increase, driven by transactional activity at Yape and BCP.
Insurance Underwriting Result: 17.9% increase, reflecting a stronger reinsurance result in the P&C business.
Asset Quality: Improved with NPL volumes contracting and a coverage ratio of 107.4%.
Yape User Growth: Over 0.5 million new active users, surpassing 14 million total users.
Mibanco NIM: 13.9%, with a risk-adjusted NIM of 10.1%.
Grupo Pacifico Profitability: Impacted by credit downgrades, standing at 19.3%.
Warning! GuruFocus has detected 7 Warning Signs with SOBO.
Release Date: May 16, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Credicorp Ltd (NYSE:BAP) reported a high ROE of 20.3% for the first quarter of 2025, exceeding expectations.
The Peruvian economy is rebounding faster than expected, with a GDP growth of 3.9% in Q1 2025, supporting Credicorp's growth.
Loan growth resumed, particularly in wholesale banking and short-term loans, with expectations for retail segments and microfinance to accelerate in the coming quarters.
Credicorp's risk-adjusted NIM improved year over year, driven by lower provisioning and enhanced asset quality.
The company has made strategic investments in digital capabilities and modernized core systems, contributing to diversified income streams and scalable growth.
Global uncertainty, including trade tensions and potential recession risks, poses challenges to Peru's economic outlook and Credicorp's performance.
The revaluation of Bolivia's balance sheet led to a contraction of 2% in Credicorp's total assets.
Despite strong economic growth, loan growth remains relatively muted, with a lag in recovery following previous economic cycles.
Interest rates are declining, which could impact net interest margins if not offset by other factors.
Political uncertainty in Peru, including upcoming elections, could affect market sentiment and economic stability.
Q: Given the improving environment and strong first quarter ROE, what is preventing Credicorp from updating its guidance? Is it due to political uncertainty or risks of lower commodity prices? Could there be a revision by the second quarter? A: Alejandro Perez-Reyes, CFO: While we expect to be above the current guidance of around 17.5% ROE, global uncertainties, particularly trade tensions and potential impacts on global growth, keep us cautious. We are not expecting changes in our views for Peru this year, but we will consider revising guidance if stability continues and clarity improves.
Q: The cost of risk was subdued this quarter. What are the drivers behind this, and do you expect it to continue? A: Unidentified Company Representative: The reduction in the cost of risk is due to a positive macroeconomic environment, specific events, and cumulative measures in the origination process since 2023. While we expect to originate higher volumes in riskier segments, the net effect on risk-adjusted NIM should be positive.
Q: Loan growth remains muted despite a strong economy. What will drive acceleration in loan growth? A: Alejandro Perez-Reyes, CFO: Loan growth typically lags in recovery cycles. High liquidity has led to prepayments, but recent months have shown strong loan sales. We expect to meet our guidance of 3.5% growth in average daily balances and over 6% year-over-year growth as the portfolio builds up.
Q: What is Credicorp's sensitivity to interest rate changes, and why is there confidence in the political environment despite recent changes? A: Alejandro Perez-Reyes, CFO: A 100 basis point shift would affect NIM by 17 basis points, mainly from the dollar portfolio. Gianfranco Ferrari, CEO: Despite political noise, Peru's macro figures are solid, and we expect strong performance in the coming quarters.
Q: Regarding Yape, what are the expectations for lending growth, and which areas are you focusing on? A: Francesca Raffo, Chief Innovation Officer: Our focus is currently on individual lending, with plans to expand into SME lending. Multi-installment loans are becoming more relevant, and we expect outstanding balances to be mainly multi-installment by year-end.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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