Credicorp .(US:BAP)2024-04-24 21:20Financial Performance - In 2023, Credicorp generated a net profit of S/4,865.5 million, with net basic earnings of S/61.0 per common share, compared to S/4,647.8 million and S/58.3 per share in 2022, reflecting a return on average assets (ROAA) of 2.01% and a return on average equity (ROAE) of 15.83%[433]. - Net interest income rose to S/12,938.0 million in 2023, a 16.6% increase from S/11,091.6 million in 2022, supported by growth in retail loans despite a decrease in wholesale banking loans[435]. - Other income reached S/5,655.8 million in 2023, an 11.6% increase from S/5,066.1 million in 2022, driven by net gains on securities and net fee income[436]. - The efficiency ratio improved to 46.1% in 2023, down 142 basis points from 47.5% in 2022, primarily due to increased income in net interest[438]. - In 2023, Credicorp recorded a net profit of S/4,865.4 million, a 4.7% increase from S/4,647.8 million in 2022, driven by higher net income in Universal Banking and Insurance and Pensions[487]. - Total provisions for credit losses on the loan portfolio increased by 83.3% to S/3,957.14 million in 2023, primarily due to the deterioration of BCP's consumer loan portfolio[494]. Loan and Deposit Trends - Total loans as of December 31, 2023, amounted to S/144,976.1 million, a decrease of 2.5% from S/148,626.4 million in 2022, attributed to amortizations of Reactiva loans and lower disbursements in Wholesale Banking[434]. - Total deposits without interest payable increased to S/146,275.4 million as of December 31, 2023, up S/317.4 million from S/145,957.9 million in 2022, driven by a 9.2% rise in Time Deposits[434]. - Total loans declined by 2.5% in year-end balances and 2.4% in average-daily balances, influenced by amortizations of Reactiva loans and reduced loan disbursements in Wholesale Banking[487]. - Total deposits increased by 0.5% from S/147.0 billion in 2022 to S/147.7 billion in 2023, driven by a 9.2% increase in Time Deposits[520]. Economic Environment - In 2023, Peru's GDP fell by 0.6%, marking its worst performance since 1990, excluding the pandemic[446]. - The political environment has led to significant cabinet reshuffles, with President Boluarte replacing four ministers in February 2024[445]. - The political turmoil has negatively impacted sectors such as tourism, hospitality, and mining due to social unrest and protests[443]. - The fiscal deficit rose to 2.8% of GDP in 2023, up from 1.6% in 2022, primarily due to a decline in fiscal revenues from 22.1% of GDP to 19.8%[454]. - Inflation in Peru fell from a peak of 8.8% in June 2022 to 3.2% in December 2023, returning to the BCRP target range of 1% - 3%[452]. Regulatory and Accounting Changes - The Group has adopted IFRS 17 for insurance activities, effective from January 1, 2023, impacting the accounting policy for insurance activities[469]. - Financial assets are classified under IFRS 9 based on the business model for managing them and the characteristics of their contractual cash flows[469]. - The Group applies a three-stage approach to measure the provision for credit loss based on expected credit losses as per IFRS 9[475]. Insurance and Investment Performance - Grupo Pacífico's insurance service income increased to S/3,407.9 million in 2023, a 10.6% rise from S/3,081.8 million in 2022, with an underwriting result of S/726.2 million[439]. - Total insurance underwriting results rose by 43.9% compared to 2022, mainly due to a 10.5% increase in income from insurance services[490]. - Total insurance service result increased to S/1,602,421 thousand in 2023 from S/1,302,347 thousand in 2022, reflecting a growth of 23.1%[504]. Capital and Liquidity Management - Total regulatory capital increased to S/33.454 billion in 2023 from S/31.755 billion in 2022[573]. - The liquidity coverage ratio (LCR) for soles-based transactions was 162.7% and for foreign exchange transactions was 172.8% as of December 2023, indicating a strong liquidity position[586]. - Cash and cash equivalents at the end of 2023 were S/39,293.5 million, up from S/34,120.9 million in 2022[583]. Future Outlook and Strategic Initiatives - Credicorp expects a GDP rebound of around 3.0% in 2024, driven by improved economic conditions and consumer purchasing power[595]. - The company is committed to integrating sustainability into its strategy and accelerating digital transformation[597]. - Credicorp is actively pursuing mergers and acquisitions, with recent acquisitions including Mibanco, which is expected to enhance its market share in microfinance[624].