Financial Data and Key Metrics Changes - The company closed the quarter with a 16.9% ROE and 19% for the full year, reflecting record high net income and diversification of revenue sources across various segments [16][45] - Net interest income increased by 4.2%, driven by loan portfolio growth and a contraction in interest expenses, resulting in a NIM of 6.6% [20][43] - The NPL ratio stood at 4.5%, indicating improved asset quality, while the cost of risk was 1.8% [19][42] Business Line Data and Key Metrics Changes - In Universal Banking, BCP reinforced its leadership in Peru, serving over 3.2 million loan clients and achieving a full-year ROE of 24.7% [9][25] - Microfinance, through Mibanco, delivered double-digit loan growth and improved profitability, with a NIM of 15.2% [10][34] - The insurance and pensions business, Grupo Pacífico, achieved a solid ROE of 21.4%, with net income rising 13% [36][37] Market Data and Key Metrics Changes - Peru's GDP grew around 3.5% in 2025, supported by strong domestic demand and high commodity prices [6][22] - In Colombia, GDP growth was around 2.7%, while inflation accelerated to 4.51% [8][24] - Chile's GDP also expanded around 2.7%, driven by investment, with inflation slightly above target [8] Company Strategy and Development Direction - The company aims to expand financial inclusion, deepen risk and capital discipline, scale AI and digital platforms, and build trust through operational excellence [13] - A strategic acquisition of Helm Bank for $180 million aims to enhance cross-border capabilities and strengthen the U.S. offering [14][15] - The company plans to continue investing in data transformation and disruptive initiatives to bolster long-term competitive positioning [47] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about Peru's economic stability and growth potential, expecting GDP growth around 3.5% in 2026 [22][46] - The company anticipates total loan growth of approximately 8.5% in 2026, driven primarily by retail banking [46] - Despite local political uncertainties, management believes the fundamentals are in place to support profitability levels [49] Other Important Information - Yape, the company's digital wallet, closed the year with nearly 16 million monthly active users, significantly contributing to revenue growth [12][31] - The company expects non-interest income growth to pick up in the low double digits in 2026, driven by increased activity and diversification efforts [47] Q&A Session Summary Question: Update on political outlook and upcoming elections - Management noted that López Aliaga is leading the polls with 12%, while Keiko Fujimori follows at 8%, with a significant portion of undecided voters [51][53] - The elections for Congress members will occur on April 12, 2026, which is expected to provide more political stability [56][57] Question: Expectations for operating expenses growth - Management indicated that operating expenses are expected to moderate compared to 2025, with a focus on achieving operational leverage from ongoing investments [60][62] Question: Yape's revenue contribution and cost of risk - Yape's lending now represents over 20% of revenue, with a shift towards multi-installment loans expected to maintain controlled provisioning levels [69][71]

Financial Data and Key Metrics Changes - The company closed the quarter with a 16.9% ROE and 19% for the full year, reflecting record high net income and diversification of revenue sources across various segments [18][46] - Net interest income increased by 4.2%, driven by loan portfolio growth and a contraction in interest expenses, resulting in a NIM of 6.6% [21][44] - The NPL ratio stood at 4.5%, indicating improved asset quality, while the cost of risk was 1.8% [21][43] Business Line Data and Key Metrics Changes - In Universal Banking, BCP reinforced its leadership in Peru, serving over 3.2 million loan clients and achieving a full-year ROE of 24.7% [10][27] - Microfinance, through Mibanco, delivered double-digit loan growth and improved profitability, with a NPA ratio of 5.3% [11][35] - Grupo Pacífico in Insurance and Pensions achieved a solid ROE of 21.4%, with net income rising 13% due to the full consolidation of the Banmédica transaction [38][40] Market Data and Key Metrics Changes - Peru's GDP grew around 3.5% in 2025, supported by strong domestic demand and high commodity prices [6][24] - Inflation in Peru closed at 1.5%, the lowest in seven years, while Colombia's inflation accelerated to 4.51% [25][26] - The mining investment pipeline for 2025 was estimated at $64 billion, up 17% from 2024, indicating a favorable investment climate [8] Company Strategy and Development Direction - The company aims to expand financial inclusion, deepen risk and capital discipline, scale AI and digital platforms, and build trust through operational excellence [15] - A strategic acquisition of Helm Bank for $180 million was announced to enhance cross-border capabilities and strengthen the U.S. offering [16][17] - The company expects to continue investing in data transformation and disruptive initiatives to bolster long-term competitive positioning [48] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in Peru's economic stability and growth potential, despite political uncertainties, with expectations for GDP growth around 3.5% in 2026 [24][50] - The company anticipates loan growth of approximately 8.5% in 2026, driven primarily by retail banking and Mibanco [47] - Management highlighted the importance of maintaining sound capital levels and improving operational efficiency, with an expected efficiency ratio between 45% and 46.5% in 2026 [48] Other Important Information - The company reported a risk-adjusted NIM of 5.28%, reflecting improved pricing and risk management capabilities [45] - Yape, the digital wallet initiative, closed the year with nearly 16 million monthly active users, significantly contributing to revenue growth [13][32] Q&A Session Summary Question: Update on political outlook and upcoming elections - Management noted that López Aliaga is leading the polls with 12%, while Keiko Fujimori follows at 8%, with a significant portion of undecided voters [54][55] Question: Expectations for operating expenses growth - Management expects operating expenses to moderate compared to 2025, with continued investments in innovation and core business [61][62] Question: Insights on Yape's lending and cost of risk - Management confirmed that Yape is shifting towards longer-duration loans, which should keep the cost of risk controlled while enhancing revenue [70][73] Question: Growth expectations amid election year - Management indicated that economic activity is performing well, with consumer confidence at its highest since early 2020, suggesting potential upside risks for growth [75][76]

Financial Data and Key Metrics Changes - The company closed the quarter with a 16.9% ROE and 19% for the full year, reflecting record high net income and diversification of revenue sources across various segments [17][21] - Net interest income increased by 4.2%, driven by loan portfolio growth and a contraction in interest expenses, resulting in a NIM of 6.6% [20][44] - The NPL ratio stood at 4.5%, indicating improved asset quality, while the cost of risk was 1.8% [19][43] Business Line Data and Key Metrics Changes - In Universal Banking, BCP reinforced its leadership with over 3.2 million loan clients and strong retail lending growth [9] - Microfinance saw double-digit loan growth and increased profitability, with Mibanco achieving a 20% profitability rate this quarter [10][34] - Grupo Pacífico's ROE was 21.4%, supported by strong commercial dynamics, although net income dropped 1% due to decreased insurance underwriting results [37][38] Market Data and Key Metrics Changes - Peru's GDP grew around 3.5% in 2025, with domestic demand expanding close to 6%, supported by strong commodity prices and investment flows [5][23] - In Colombia, GDP growth was around 2.7%, while inflation accelerated to 4.51% following a minimum wage increase [7][25] - Chile's GDP also expanded around 2.7%, driven by investment, while Bolivia faced a contraction in GDP [7][8] Company Strategy and Development Direction - The company aims to expand financial inclusion, deepen risk and capital discipline, scale AI and digital platforms, and build trust through operational excellence [13] - The acquisition of Helm Bank for $180 million aligns with the strategy to enhance cross-border capabilities and serve affluent clients in the U.S. [14][16] - The company plans to continue investing in data transformation and disruptive initiatives to bolster long-term competitive positioning [48] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in entering 2026 from a stronger position, with expectations of continued economic growth and improved governance [6][23] - The outlook for Peru's GDP growth in 2026 is revised to around 3.5%, with total loan book growth expected to be around 8.5% [46][47] - Despite local political uncertainties, the fundamentals are in place to support profitability levels around 19.5% ROE in 2026 [49] Other Important Information - Yape closed the year with nearly 16 million monthly active users, significantly contributing to the company's risk-adjusted revenue [12][33] - The efficiency ratio for the year stood at 46.6%, with operating expenses growing 12% due to investments in innovation and core businesses [45] Q&A Session Summary Question: Update on political outlook and upcoming elections - Management noted that López Aliaga is leading the polls with 12%, and there is a high level of undecided voters at around 42% [54][56] - The elections are scheduled for April 12, with expectations of a more stable political environment due to the return to a dual chamber system [56][57] Question: Expectations for OpEx growth and digital initiatives - Management expects OpEx growth to moderate compared to 2025, with a target of 42% in cost to income over the mid-term [61] - Non-credit-related revenues are anticipated to grow in the double digits, driven by digital initiatives [64] Question: Yape's lending and cost of risk - The shift towards multi-installment loans is expected to maintain a controlled cost of risk, with risk-adjusted NIM remaining comparable [72] - Management confirmed that digital initiatives are expected to become accretive to ROE starting this year [80]

Investment Rating - The report does not explicitly provide an investment rating for the industry or jurisdiction being analyzed [5]. Core Insights - The report evaluates Benin's compliance with the standard of transparency and exchange of information on request, indicating that while the legal framework is in place, improvements are necessary in several areas, particularly regarding the availability and access to information [37][54]. - Benin has signed and ratified the Multilateral Convention on Mutual Administrative Assistance in Tax Matters and is working towards compliance with international standards [40]. - The report highlights that the legal framework for identifying beneficial owners is inadequate, and there are significant gaps in the availability and updating of information related to beneficial ownership and accounting records [46][49]. Summary by Sections Overview of Benin - Benin is located in West Africa with a population of approximately 14.7 million as of 2024, and its economy is primarily based on agriculture and raw material exports [65][66]. - The country is a member of the Economic Community of West African States (ECOWAS) and the West African Economic and Monetary Union (UEMOA) [65]. Availability of Information - The report identifies that improvements are needed in the availability of information regarding identity and ownership, accounting data, and banking information [38]. - Legal provisions require companies to maintain information on their beneficial owners, but the implementation is lacking [44][49]. Access to Information - The legal framework allows the tax administration to access documents held by entities, but there are limitations in accessing information from other obligated entities under anti-money laundering laws [53]. - The report notes that Benin has a limited practice of exchanging information, having received only four requests for information in the past three years [52]. Exchange of Information - Benin's network for exchanging information covers 156 partners, but the practical implementation of this exchange is yet to be evaluated [51][52]. - The report emphasizes the need for Benin to enhance its legal framework to ensure effective communication and access to information for tax purposes [53]. Recommendations - The report recommends that Benin strengthen its legal and operational framework to ensure the identification of beneficial owners and the availability of accounting records [46][50]. - It also suggests that the country should ensure the timely updating of information related to beneficial ownership and banking records [49].

Investment Rating - The overall rating for Benin's compliance with the Exchange of Information on Request (EOIR) standard is not applicable at this stage, as the assessment focuses on the legal and regulatory framework only [38][53]. Core Insights - Benin has joined the Global Forum on Transparency and Exchange of Information for Tax Purposes in 2019 and has made efforts to strengthen its legal framework for tax transparency and information exchange [39]. - The report assesses the legal and regulatory framework in place as of November 4, 2025, indicating that while it is in place, it requires significant improvements in the availability and access to information [36][37]. - The assessment will be followed by a Phase 2 review to evaluate the practical implementation of the framework, scheduled to begin no later than November 2028 [37]. Summary by Sections Availability of Information - Element A.1 (Availability of ownership and identity information): Needs improvement [38]. - Element A.2 (Availability of accounting information): Needs improvement [38]. - Element A.3 (Availability of banking information): Needs improvement [38]. Access to Information - Element B.1 (Competent authority's ability to obtain and provide information): Needs improvement [38]. - Element B.2 (Notification requirements, rights and safeguards): In place [38]. Exchange of Information - Element C.1 (Exchange of information mechanisms): In place [38]. - Element C.2 (Exchange of information mechanisms with all relevant partners): In place [38]. - Element C.3 (Confidentiality): In place [38]. - Element C.4 (Rights and safeguards of taxpayers and third parties): In place [38]. - Element C.5 (Request and provision of information in an effective manner): Not applicable [38].

Core Viewpoint - The registered capital of Shenzhen Caifutong Network Financial Microloan Co., Ltd. has increased from approximately 10.53 billion to 15 billion yuan, indicating a significant expansion in its financial capacity [1]. Company Summary - Shenzhen Caifutong Network Financial Microloan Co., Ltd. was established in October 2013 and specializes in microloan services [1]. - The company operates under the approval of relevant authorities to conduct internet microloan business [1]. - The ownership of the company is shared between Shenzhen Tencent Network Computing Company and Shenzhen Tencent Computer System Company [1].

Core Insights - The microfinance sector in India is facing significant stress, with many non-banking finance company-microfinance institutions (NBFC-MFIs) requiring urgent funding from banks and larger lenders to survive [1][13] - A notable contraction in India's micro-loan market has occurred, with a 17% year-on-year drop, leading to a decrease in active loans by nearly 20% [7][14] - Several microfinance firms, including VFS Capital, Navachetana Microfin Services, and Arth Finance, have defaulted on bank loans, indicating a broader liquidity crisis in the sector [2][12][14] Industry Overview - The microfinance sector began experiencing stress in April of the previous year, following a brief recovery from pandemic-related challenges [6][14] - As of the end of the September quarter, the ratio of portfolios at risk for over 180 days surged to 15.32%, reflecting a 9.71% increase year-on-year and a 2.89% increase sequentially [6][14] - The total micro-loan market size is now ₹3.46 lakh crore, with the number of active loans dropping to 132 million [7][14] Company-Specific Issues - VFS Capital has a cumulative exposure of ₹143 crore to five lenders and has failed to meet repayment commitments, with an overdue amount of ₹82 crore [8][14] - Navachetana Microfin Services has delayed debt servicing since April, with some loans already classified as non-performing assets (NPAs) [8][14] - Forensic audits have been suggested for restructuring bank accounts of these entities, which is mandatory for establishing the cause of defaults [10][14] Ratings and Financial Health - Acuite Ratings & Research downgraded Arth Finance's long-term rating to the default category, while Infomerics Ratings downgraded Inditrade Microfinance to junk status [11][14] - The financial health of mainstream lenders, including Bandhan Bank and IndusInd Bank, has also been impacted due to higher credit costs associated with microfinance portfolios [14] Recommendations and Future Outlook - Industry leaders suggest that financial institutions should adopt a more lenient approach to lending to smaller microfinance entities [12][14] - There is a proposal for a government guarantee program to facilitate lending to struggling microfinance institutions [12][14] - Janashree Microfin in Kerala has sought an extension to meet the minimum net-owned fund requirement, highlighting ongoing challenges in the sector [12][14]

Financial Data and Key Metrics Changes - The company reported a return on equity (ROE) of 19.6%, reflecting strong performance across core businesses and contributions from the innovation portfolio [11][15][35] - Net interest income increased by 2.7%, supported by a contraction in interest expenses and an increase in low-cost deposits, leading to a net interest margin (NIM) of 6.6% [16][31] - The cost of risk fell to 1.7%, indicating improved asset quality and risk management [15][16][32] Business Line Data and Key Metrics Changes - Universal Banking and Insurance and Pensions delivered strong results, while Microfinance progressed towards its profitability target [11][15] - Fee-based and transactional income grew, with Yape contributing significantly to the overall revenue [11][24] - Mibanco's profitability rose to 18.8%, supported by increased loan disbursements and improved credit risk management [26] Market Data and Key Metrics Changes - Peru's GDP growth for 2025 is projected at 3.4%, driven by higher export prices and increased domestic consumption [9][18] - Inflation in Peru remains low, forecasted at 1.8% for 2025, which is within the central bank's target range [10][19] - The macroeconomic environment in the region shows signs of recovery, with positive indicators in Chile and Colombia [10][19] Company Strategy and Development Direction - The company is focused on three key pillars: scaling its digital ecosystem, unlocking growth through business synergies, and maintaining discipline in profitability and capital allocation [5][6][7] - The medium-term targets include an ROE of 19.5% and an efficiency ratio around 42% over the next three to four years [7][11] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the economic resilience of Peru despite political changes, emphasizing the company's diversified strategy and strong capital position [8][9] - The outlook for 2026 anticipates continued GDP growth, supported by favorable terms of trade and increased private consumption [9][18] Other Important Information - The company aims to expand its digital engagement strategy, with Yape targeting 18 million users by 2028 [24] - The insurance underwriting results showed a year-over-year increase of 23%, driven by improved performance in the life business [29] Q&A Session Summary Question: Regarding asset quality and cost of risk - Analyst inquired about the better-than-expected performance in asset quality and whether the guidance for cost of risk is too conservative [41][42] - Management acknowledged the positive results and indicated that the cost of risk is expected to be around the lower end of the guidance [45][46] Question: On operating expenses growth - Analyst asked about the growth of operating expenses and its breakdown between core business and innovation initiatives [47] - Management confirmed that operating expenses growth is within guidance and will likely slow in the core business while remaining stable in innovation [48] Question: Impact of political uncertainty on growth - Analyst questioned the potential deceleration in growth due to upcoming elections [53] - Management noted historical trends of minimal impact on long-term growth but acknowledged a possible slowdown in the first quarter [55][56] Question: Loan growth guidance - Analyst sought clarification on the loan growth guidance and whether it considers FX adjustments [70] - Management confirmed that the guidance is nominal and includes adjustments for Bolivia's restatement [72] Question: Future contributions from Yape - Analyst inquired about the potential for Yape's contribution to reach double digits by 2026 [64] - Management expressed confidence in achieving this target [65] Question: Outlook for Bolivia post-political shift - Analyst asked about the potential positive impacts of the new government in Bolivia [80] - Management indicated optimism regarding the new government's pro-market stance and its potential benefits for operations in Bolivia [82]

Core Insights - The microfinance sector is slowly recovering from two years of stress, with improvements in bad loans and collections, but profitability remains challenging and growth is slow due to uneven recovery across states and lenders [15] Company-Specific Insights - Bandhan Bank is experiencing steady improvement in its microfinance portfolio, with a 30-day-plus delinquency ratio of 3.8%, below the industry average of 5.1%, and 90-day-plus delinquencies improved to 2.04% compared to 3% for the sector [2] - Bandhan Bank is cautious in expanding its microfinance portfolio, focusing on reducing concentration risk and increasing secured loans, with its emerging entrepreneurs business portfolio contracting 13% annually to ₹51,730 crore [2][3] - The secured loan book at Bandhan Bank currently makes up about 55% of total advances, expected to rise to 57-58% over the next 18 months [3] - IDFC First Bank anticipates stabilization of stress in its microfinance portfolio within the next six months, with gross slippages in the MFI book falling 9% sequentially in the September quarter [4] - IDFC First Bank's MFI business declined 42% annually to ₹7,306 crore, impacting income, but is expected to stabilize in the second half of the year [5] Industry Trends - The microfinance sector has seen most large players shrink their books by 25-50% over the past two years, primarily through write-offs, which has been termed cautious deleveraging [7] - CreditAccess Grameen reported accelerated write-offs of ₹554 crore related to overdue loans, indicating a need to clean up legacy stress [6] - Policy reforms have capped the number of lenders per borrower and restricted total indebtedness, which has reduced over-leverage but also slowed fresh lending [8][9] - Analysts expect collection efficiency to improve as disbursements rise, but near-term pressure is expected to persist due to erratic monsoon patterns affecting rural borrowers [10] - The upcoming state elections in Bihar raise concerns over potential political interference and debt waivers, although Bandhan Bank does not foresee a repeat of past disruptions [12][13] - Overall, analysts predict that larger banks and MFIs will recover first, with a slow and gradual journey towards normalcy expected for the sector [14]

Lending Trends - Banks in India have slowed lending to non-banks due to rising risk [1] - Non-banks provide nearly 40% of microloans in India [1] Financial Impact - Listed lenders have been hit hard [1]