Credicorp Ltd. (BAP) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary indicates strong financial performance with a projected GDP growth of 3.4% for 2025, strong loan growth, and a high ROE of 19%. The Q&A section supports this with positive sentiment on digital initiatives and economic trends. Despite political uncertainties, consumer confidence and economic activity remain strong. The strategic focus on digital growth, particularly Yape, and plans for increased dividends are positive indicators. However, some uncertainties remain due to political factors and lack of specific future targets.
Key Financial Performance
GDP Growth in Peru Grew around 3.5% in 2025, supported by strong domestic demand, resilient consumption, and record high exports above $90 billion. This was further fueled by high commodity prices, particularly copper, silver, and gold.
Mining Investment Pipeline Estimated at $64 billion for 2025, up 17% from 2024, driven by increased commodity prices and investment flows.
Domestic Demand in Peru Grew around 6% in 2025, significantly exceeding GDP growth, supported by stronger confidence and access to credit.
Private Investment in Peru Expanded close to 10% in 2025, marking its strongest performance in 13 years, excluding the pandemic, driven by economic recovery and improved confidence.
Net Income Achieved record high levels in 2025, supported by diversified revenue sources across banking, transactional services, insurance, health, asset management, and digital platforms.
Return on Equity (ROE) 16.9% for Q4 2025 and 19% for the full year, reflecting strong financial performance and diversified revenue streams.
Risk-Adjusted Net Interest Margin (NIM) Stood at 5.5% for Q4 2025, supported by better asset quality and a low-cost funding base.
Efficiency Ratio Came in at 49% for Q4 2025, reflecting operational efficiency.
Loan Growth Increased 3.6% quarter-over-quarter, driven by BCP's retail and wholesale banking and Mibanco's performance.
Non-Performing Loan (NPL) Ratio Improved to 4.5% in Q4 2025, reflecting better asset quality and risk management.
Net Interest Income Increased 4.2% quarter-over-quarter, driven by loan portfolio growth and lower interest expenses.
Fee Income Grew 5.2% quarter-over-quarter, boosted by transactional activity at Yape and BCP.
Insurance Underwriting Result Fell 17.4% quarter-over-quarter, mainly due to normalization in the disability and survivorship line of the Life business.
Mibanco Loan Growth Grew 3.9% quarter-over-quarter and 11.2% year-over-year, supported by a shift towards small-ticket, higher-yield loans.
Grupo Pacifico ROE Achieved 21.4% for 2025, supported by robust commercial dynamics and bancassurance channel expansion.
Assets Under Management (AUM) Surpassed $20 billion in Wealth Management and increased nearly 35% in Asset Management in 2025.
Yape Monthly Active Users Reached nearly 16 million by year-end 2025, with users engaging an average of 66 times per month.
Yape Loan Disbursements Disbursed loans to 4.1 million clients, with nearly one-third being first-time borrowers.
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Operating Highlights
Yape: Closed the year with nearly 16 million monthly active users, engaging with the platform an average of 66 times per month. Lending activity scaled meaningfully with 4.1 million clients receiving loans, highlighting significant growth potential.
Tempo: Surpassed 2.5 million clients and became Chile's first neobank after receiving a banking license in January.
Monocera: Continued to scale efficiently, enabling modular low-cost insurance distribution across multiple channels.
Helm Bank Acquisition: Credicorp acquired 100% of First Helm Bank for $180 million, adding over $1 billion in assets and a solid presence in Florida. This acquisition enhances cross-border capabilities and complements the U.S. offering with daily banking, real estate financing, and credit cards.
Regional Expansion: Strengthened presence in Peru, Colombia, and Chile through digital platforms like Viva and Yape, and expanded financial inclusion across geographies.
Operational Efficiency: Efficiency ratio stood at 49% in Q4, reflecting strong operational management. Investments in digital transformation and AI capabilities enhanced productivity and client experience.
Loan Growth: Loans increased 3.6% quarter-over-quarter, driven by retail and wholesale banking at BCP and Mibanco. Asset quality improved with an NPL ratio of 4.5%.
Digital Transformation: Focused on scaling AI, data, and digital platforms to unlock productivity and optimize business decisions.
Strategic M&A: Acquired Helm Bank to strengthen cross-border capabilities and announced full ownership of a medical insurance business, aligning with long-term strategic goals.
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Risk or Challenges
Political Uncertainty in Peru: Despite a stable macro framework, there are lingering political concerns following President Boluarte's impeachment, which could impact policy predictability and private investment.
Economic Challenges in Bolivia: Bolivia's GDP contracted for a second consecutive year, and inflation doubled to around 20%, posing challenges for operations in the region.
Minimum Wage Increase in Colombia: The recent increase in Colombia's minimum wage has led to upward revisions in inflation forecasts and higher policy rates, which could affect profitability and cost structures.
Asset Quality Risks: While NPL ratios have improved, there are risks associated with indirect exposure to certain clients in the construction sector and SME segments, which could lead to higher provisioning.
Insurance Underwriting Challenges: The insurance underwriting results fell due to normalization in the disability and survivorship line, which could impact profitability in the insurance segment.
Funding Cost Pressures: Although funding costs have decreased, potential policy rate reductions in soles and dollars could impact net interest margins.
Operational Expense Growth: Operating expenses grew 12%, driven by investments in digital transformation and innovation, which could pressure efficiency ratios.
Regulatory and Market Risks in the U.S.: The acquisition of Helm Bank introduces exposure to U.S. regulatory and market risks, particularly in Florida's competitive banking environment.
Economic Volatility in Chile: While Chile's economy has shown growth, inflation remains slightly above target, and the currency's strength could introduce operational challenges.
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Guidance & Outlook
Peru's GDP Growth Outlook: Revised to around 3.5% in 2026, with domestic demand expected to expand above 4%. There is meaningful upside potential if commodity prices remain elevated and the post-election environment delivers greater policy predictability and improved governance.
Loan Book Growth: Total loan book is expected to grow around 8.5% in 2026, driven primarily by retail banking at BCP and Mibanco.
Net Interest Margin (NIM): Expected to stand between 6.4% to 6.7%, supported by loan growth and a shift in the mix towards retail.
Cost of Risk: Guidance is between 1.7% and 2.1%, reflecting improved asset quality indicators and a shift towards higher-yielding segments.
Risk-Adjusted NIM: Projected to stand between 5.3% and 5.6%.
Efficiency Ratio: Expected to be between 45% and 46.5% in 2026, with efficiencies from digital transformation beginning to materialize.
Fee Income Growth: Anticipated to grow in the low double digits in 2026 as activity accelerates and income diversification efforts gain traction.
Insurance Underwriting Results: Expected to drop by high single digits due to extraordinary reversals in 2025, but excluding the D&S business, the result will grow by high single digits.
Return on Equity (ROE): Projected to stand at around 19.5% in 2026, supported by solid core performance, disciplined risk management, and revenue diversification.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:Can you provide an update on the latest political polls and the upcoming election in Peru?
A:Lopez Aliaga is leading the polls with 12%, followed by Keiko Fujimori at 8%, and four other candidates tied at 4%. However, 42% of voters remain undecided, creating uncertainty. The elections, including the vote for the dual chamber (Senate and Congress), will take place on April 12. The new political structure is expected to provide more stability.
Q:Should we expect more moderate OpEx growth this year compared to 2025, and what are the targets for digital initiatives' revenue contribution?
A:Operating expenses are within guidance and tied to investments in innovation and core business. Management expects operational leverage to improve, with a cost-to-income ratio target of 42% in the midterm (2-3 years). Digital initiatives are on track to contribute 10% of adjusted revenues this year, but no specific targets for 2027-2028 have been provided yet.
Q:Will fee income growth from digital initiatives like Yape be in the double digits?
A:Yes, fee income growth is expected to be in the double-digit range.
Q:Is the shift in Yape's lending portfolio towards multi-installments affecting provisioning modeling for 2026?
A:The shift to multi-installments increases loan duration and amount while maintaining controlled cost of risk. Risk-adjusted NIM remains high due to better understanding of client behavior and scaling of loans.
Q:Could there be upside risks for growth during this election year?
A:Economic activity trends suggest no slowdown despite the election year. Consumer confidence is at its highest since February 2020, supported by real salary growth (3.7%) and formal employment growth (6%) last year.
Q:How do you view Yape's expenses and its impact on ROE?
A:Yape's revenue per MAU is growing faster than its cost per MAU. Yape is expected to achieve a cost-to-income ratio below BCP's current levels in the next couple of years, positively impacting ROE. Digital initiatives overall are expected to be ROE-positive starting this year.
Q:What is the midterm ROE guidance, and could it increase?
A:The midterm ROE guidance is 19.5%, but management may revise it to above 20% after the electoral cycle. The current guidance is conservative due to political uncertainties.
Q:What is the long-term cost-to-income ratio target?
A:The midterm target is 42%, but this could decrease over time depending on future investments.
Q:What is the exposure to Grupos de Lima, and is there potential for recovery?
A:The exposure is less than 1% of the portfolio, provisioned at 80%. A short-term payment of 5-10% of the bond value is expected, with potential long-term recovery through U.S. arbitration processes.
Q:What is the impact of pension fund withdrawals on the economy and Credicorp?
A:Pension fund withdrawals totaled $25 billion, with BCP capturing $11 billion. The withdrawals could add 0.4% to GDP and 0.5% to deposits in 2026, while reducing cost of risk in certain segments.
Q:What is the loan growth guidance for 2026, and what factors influence it?
A:Loan growth is guided at 8.5% for Credicorp, including headwinds from Bolivia. Excluding Bolivia, BCP and Mibanco are expected to achieve double-digit growth, driven by strong retail momentum and economic activity.
Q:Will Yape's P&L be separated from BCP for better transparency?
A:Yape is currently part of BCP, making it difficult to provide a separate P&L. Management is working on ways to provide more transparency in the future.
Q:What is the expected contribution of Yape to Credicorp's lending in 2026?
A:Yape's lending portfolio is expected to triple in the next couple of years, but it will remain a small proportion of Credicorp's overall book.
Q:What is the guidance for total expense growth in 2026?
A:Cost-to-income is expected to improve, with continued investments in digital and core business initiatives. Specific expense growth figures were not provided.
Q:What are the capital levels for BCP and Mibanco, and how will they be managed?
A:BCP's core equity Tier 1 is at 14%, and Mibanco's is at 17%. Excess capital will be distributed to the holding company in March, with plans for increasing ordinary dividends and potential extraordinary dividends.
Q:Review of Unclear Management Responses
A:Management avoided providing specific targets for digital initiatives' revenue contribution beyond 2026, as well as detailed expense growth figures for 2026. Additionally, they did not disclose a breakdown of Yape's ROE target or provide a separate P&L for Yape, citing structural challenges.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI capability
AI platform
Alejandro Perez
Alejandro detail
Florida
Head
NPS
Wealth
access service
banking service
capital allocation
challenge
clarity
client experience
commodity price
consumption
country
crisis
digit loan
discipline
distribution
engagement
estate
excellence
foundation
framework
loan profitability
microfinance
milestone
moment
move
offering
pension
presence
priority
productivity
record export
result Alejandro
strength
transition
trust
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Positive2-13
The earnings call summary indicates strong financial performance with a projected GDP growth of 3.4% for 2025, strong loan growth, and a high ROE of 19%. The Q&A section supports this with positive sentiment on digital initiatives and economic trends. Despite political uncertainties, consumer confidence and economic activity remain strong. The strategic focus on digital growth, particularly Yape, and plans for increased dividends are positive indicators. However, some uncertainties remain due to political factors and lack of specific future targets.
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The earnings call reflects strong financial performance, including record high net income and risk-adjusted NIM. While there are concerns about cost of risk and political uncertainties, optimistic guidance on loan growth, dividends, and strategic initiatives like Yape suggest positive momentum. The Q&A indicates analysts' confidence in management's ability to navigate challenges, supporting a positive stock price outlook.
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Positive8-15
The earnings call summary and Q&A highlight several positive factors: strong loan growth, optimistic guidance on NIM and ROE, and significant contributions expected from digital initiatives like Yape. While there are concerns about increased risk, the focus on risk-adjusted NIM and profitability is reassuring. No extraordinary dividend is a minor negative, but overall, the strategic focus and growth prospects suggest a positive sentiment for the stock.
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