Credicorp .(BAP) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported record profitability of $5.5 billion and an ROE of 16.5%, which adjusted to 17.2% when excluding one-off charges related to the Sartorius case [7][11] - The cost of risk fell to 2.1%, with provisions decreasing by 14.4% due to improved payment performance [33][76] - The net interest margin (NIM) decreased by nine basis points to 6.3% [34][78] Business Line Data and Key Metrics Changes - Universal banking and insurance business lines drove strong results, with significant growth in transactional volumes, particularly in FX and diesel transactions [12][26] - BCP's ROE reached 20.1%, supported by resilient margins and a shift towards retail loans [44][51] - MiBanco's NPL ratio improved, falling for three consecutive quarters, while NIM rose to 14.2% [61][62] Market Data and Key Metrics Changes - The Peruvian economy grew around 4% year-over-year in Q4 2024, recovering from a contraction in 2023 [36][39] - Inflation in Peru was controlled at 2%, one of the lowest figures among both advanced and developing economies [37][42] - The banking industry is expected to grow around 5.5%, with the company anticipating growth above this market rate [95][150] Company Strategy and Development Direction - The company aims to achieve 10% of risk-adjusted revenues from new businesses by 2026, focusing on digital transformation and sustainability [20][176] - Strategic priorities include attracting top talent, enhancing digital capabilities, and integrating sustainability into the core business strategy [15][176] - The company is committed to a robust risk management framework to support growth across all subsidiaries [178] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the macroeconomic recovery and its positive impact on loan growth, expecting the Peruvian economy to grow around 3% in 2025 [10][39] - The company anticipates a resilient NIM despite potential policy rate reductions, supported by a shift towards higher-yielding loans [83][84] - Management highlighted the importance of political stability and responsible fiscal policies for long-term sustainable growth [10][11] Other Important Information - The company has allocated over$ 1.5 billion in sustainable financing across various sectors, emphasizing its commitment to financial inclusion and education [19][20] - Yape, the company's payments platform, reached profitability in 2024 with nearly 14 million active users, becoming Peru's fifth-largest e-commerce player [27][54] Q&A Session Summary Question: Political landscape and its impact on the industry - Management noted the uncertainty with many candidates for the upcoming elections but expects minimal impact on the industry until late in the year [92][94] Question: Sustainable ROE and operational expenses - Management expects to achieve an ROE of around 18% by 2026, with disruptive initiatives contributing positively to ROE [97][98] Question: Asset quality and loan origination - Management expressed confidence in restarting loan origination due to improved macro conditions and better performance of new vintages [104][106] Question: Provisioning related to Sartorius - A provision of 259 million soles was made, and management believes this should cover potential losses without needing additional provisions [111][155] Question: Efficiency ratio guidance - Management indicated that while Yape is profitable, its higher cost-to-income ratio may lead to a stable or slightly weaker efficiency ratio in the near term [120][125] Question: Capital distribution and dividends - The company aims to pay out excess capital as dividends, with a goal of growing dividends in March [136][137] Question: Loan growth expectations - The company expects to grow above the market rate, with average daily balances projected to increase by 3.5% [150][151]