Credicorp Ltd Q4 FY2025 Earnings Call

Or less Gomez with HSBC. Please go ahead.

Hello, good morning and thank you for taking my question. I wanted to ask you about your exposure to Ruta del Lima, the corporate in Lima. Whether you see any potential for recoveries from that particular credit if you have exposure? And second, to what degree do you think that positive performance of the economy or business has been helped by the withdrawal from the pension fund? And could that be a break on activity when they finish this year or next? Thank you.

Maybe, Eduardo, I don't want to do Yes. Yes. I can represent less than 1% of our portfolio. It's a position that is currently provisioned at 80%. We're not accruing interest and are currently a couple of arbitration processes in the US that, if successful, we think will take a long time, but it will benefit the actual position that we have. We do expect in the near short term a payment that could be somewhere in the range of 5-10% of the bond. So we do not expect further deterioration in the position that we have right now. Marcelo, would you take your first? Sure. So, hi, Carlo. Going to the part of the question. The withdrawals on the pension plans, of course, have different types of impacts. The withdrawal has been of 25,000 million or PEN 25 billion in U.S. terms. We at BCP have captured a little north of 11 billion of those 25 billion. The payments are going to continue until March, actually. The last payment is in March. The effect on the economy depends on how much goes to consumption. But it certainly helps GDP. We have a calculation that, again, needs understanding that not necessarily everything is going to go into consumption, would be around 0.4% of the impact on GDP potentially if everything went to consumption. And if you think about the impact on our business, we expect for 2026 an impact of around 0.5% on loans—I'm sorry, on deposits and local funding that's a positive result. In the credit part, it could have a negative impact of around 0.4%. Those are our calculations thinking about 2026. I mean, all in all, the short term effects are positive, certainly not negative. I think the main issue is the long-term effect on pensions and the Peruvian economy. But in the short term, the impacts are not that material. And probably a small addition also reduction in the cost of risk in a specific segment, particularly mid and higher segment individuals.

Very clear. Thank you. Next question comes. Sorry, Carlo. Jafargo here. Just to clarify, Eduardo Monteiro from Bracitico took the question regarding Ruta Del Lima.

Because the only subsidiary of Credicorp Ltd. that has a position with Ruta del Lima, which is less than 1% of our portfolio, is Pacifico. BCP or any other subsidiary has a position in Ruta del Lima. Sorry. We were in the last quarter.

That was good underwriting. Thank you.

Our next question comes from Daniel Boss with Safra. Please go ahead.

Thank you, and hi, everyone. Congrats on the full-year results and also guidance. Thank you for the guidance on 2026. I'm looking at the loan growth compared to '25. You already grew 8.5% if you exclude the impacts on the FX and also Bolivia. And I'm seeing your 26% guidance also around 8.5%. I look at Peru's GDP around 3.5%, domestic consumption close to 5%. And also, if we take into consideration that you're accelerating in Mibanco, NPLs and multiyear lows BCP's consumer lending also growing above 10%. I mean, what are we missing here? What is currently holding overall credit below the double-digit level? I mean, what would need to change for you to accelerate more meaningfully? Maybe, I don't know, middle market corporate loans or other segments that are pushing you behind. And if I may have a second follow-up, are you planning to open Yape's P&L separate from BCP, so we can have a clear and cleaner vision on the efficiency ratio and etc.? Thank you.

Hi, Daniel. This is Alejandro. I'll take the first question and thanks for asking because it will give us an opportunity to clarify something. The guidance we've just given is for all of Credicorp. One particular book, which is the Bolivia book, where we expect a potentially big impact from exchange rates. So basically, we believe Bolivia is moving in the right direction, but in order to move forward, we're probably going to have to see some devaluation of the currency. If that were to happen, it would impact our book. And that is considered in the 8.5%. If you take BCP and Mibanco alone, we're expecting double-digit growth for this year in loans. At constant exchange rates, it's a little bit higher, around 11% for the year. So we expect and are seeing an acceleration in the market. We expect that to continue, and loan growth should be very strong this year. There is this particular headwind in Bolivia that will impact the whole of Credicorp when it materializes. Regarding Yape, the issue here is that Yape is within BCP. So, Yape, as an institution, does not exist. So, it's very hard to come up with a financial pure statement. But what we're working on is to provide you with more information while maintaining the transparency we've always provided to the market. So that's a work in progress and we may come up with something along those lines in the future.

All right. Thank you. Thank you, Alejandro. Thank you, everyone.

Thank you. Three months. Yeah.

Our next question comes from Andre Sodo with Santander. Please go ahead.

Good morning to all. Thank you for the presentation. My first question is regarding your loan guidance, but specifically connected to Yape.

Are you already including in this 8.5% something from Yape? How much can we expect Yape to contribute to the lending of Credicorp in 2026? And if you can elaborate on the ramp-up that you are seeing towards the multi-installment in the consumer loans and also the pilots that you are conducting in SMEs?

Yes, the numbers do include Yape. Let’s remember that Yape is included in BCP's book. So, when I was talking about this double-digit growth in BCP, I was already including the amount from Yape. As for the growth, we expect the book to grow fast in the coming years. The numbers we are expecting are not being guided precisely, but it should probably triple in the next couple of years. That indicates the speed at which it's growing. Having said that, it's still a small portfolio for Credicorp's whole book. It is growing fast and has a good margin, probably a bigger margin than other books, but will still be a smaller proportion of the whole book of the group in the coming years.

And in terms of expenses, cost of income is always tricky because there are multiple variables involved, but what are you anticipating in terms of total expense growth in 2026?

You're talking about Credicorp? Or Credicorp. Right? Well, yes and a half. Yes. Okay. So, we actually got a guide for cost to income, and as I mentioned, we're expecting cost to income to reduce in the coming year. If you look at the guidance we've just provided, the upper side of the guidance is below the result of this year. We're seeing a lot of acceleration on the income of some of these initiatives. Therefore, on the expense side, we are going to continue to invest in all of these—not only disruptive initiatives but also in ongoing businesses and improving our capabilities to better serve our clients.

Okay. And then finally, on capital, when I look at 14% core equity Tier one, Mibanco at 17%, how do you feel about those numbers considering the cycle in terms of improved asset quality but also faster loan growth? Where do you guys feel comfortable for what is coming ahead?

The way in which we usually work is we have internal limits of 11% for BCP and 13.5% for Mibanco. I'm sorry? 14.5%. Yes. 14.5% for Mibanco. We declare dividends in March and take the CET1 close to those levels. So the number you are seeing right now is pretty high because we've been building capital throughout the year. We will reduce it toward those levels in March, subject to approval by the board and the shareholders meeting. But that is the idea and so in that case, we will return to those levels. We do see increasing loan growth, but it's already in our numbers, and there shouldn't be any problems with capital going forward.

Perfect. And just to clarify, that money is going to the holding company. From the holding company, your intention is to distribute to shareholders?

Exactly. The way it works is we basically send all excess capital to the holding company. Usually, this happens in March, and then in April, the holding company will propose a dividend and declare it as an ordinary dividend. Our aim is an increasing ordinary dividend each year, and we are on track to be able to do that. Depending on how the year goes, we might provide a second extraordinary dividend, but that is dependent on the conditions of the year. I know this is subject to approval. Exact. Governance approval.

Perfect. Thank you very much and congratulations on the results.

Thank you.

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

As we look ahead to 2026, I'm very confident in our positioning. We're entering the year with a healthy pipeline across businesses, an improving trade environment, and a clear strategic focus. We expect loan growth of around 8.5% supported by retail momentum at BCP and continued expansion at Mibanco, alongside stable and healthy margins with NIM expected to remain in the mid- to high 6% range. Asset quality is improving, and we expect the cost of risk to remain within our target range, supporting risk-adjusted profitability. Our focus remains on three priorities: scale and monetize our digital ecosystem, expanding inclusion and accelerating new revenue streams, leverage synergies across businesses through data, talent, and shared platforms to unlock growth and efficiency, execute with discipline applying clear profitability thresholds and long-term value creation across core and disruptive initiatives. These are not new things; they reflect the strategy we've been executing on consistently, and they're paying off. We're seeing tangible results across our platforms, with fee income expected to grow at low double digits, continued progress in efficiency, and sustained investment in digital capabilities. Thank you for your trust in Credicorp Ltd. We look forward to speaking with you next quarter.

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