Credicorp Ltd. · NYSE:BAP
Credicorp — Q3 2023 Earnings Presentation
34 slides from Credicorp's earnings presentation, Oct 3, 2023
Slide 1: Earnings Conference Call
Earnings Conference Call November 2023
Slide 2: Safe Harbor
Earnings Conference Call Safe Harbor This material includes “forward-looking statements” within the meaning of Section 27A of the U.S. Securities Act of 1933 and Section 21E of the U.S. Securities Exchange Act of 1934. All statements other than statements of historical fact are forward-looking and m
Slide 3: Resilient 3Q23 Performance Amid a Very Challenging Environment
Earnings Conference Call Resilient 3Q23 Performance Amid a Very Challenging Environment Driven by a Diversified and Prudently Managed Loan Portfolio, our Funding Advantage and Sustained Progress with our Decoupling Strategy Other Core Income Financial Performance Complemented ROE 1 by Diverse Non-In
Slide 4: Well-Positioned to Deliver Sustainable ROE Leveraging Synergies Among Diverse Businesses
Earnings Conference Call Well-Positioned to Deliver Sustainable ROE Leveraging Synergies Among Diverse Businesses while Building our Own Disruptors Regularly Reviewing and Optimizing Our Business Portfolio With a Self Disruptive Mindset, and Taking into Account Both Current and Future Market Needs C
Slide 5: Yape Has the Strongest Ecosystem of Highly Engaged Users in Peru
Earnings Conference Call Yape Has the Strongest Ecosystem of Highly Engaged Users in Peru More than 9MM of MAU Conduct an Average of 29 Transactions Yape Has Positioned Itself as the Main Payment per Month Network in Peru (User in Millions) (Monthly transactions in millions) 286 246 MAU Monthly 184
Slide 6: New Features Driving Increased Engagement, Revenue Growth and Yape's Flywheel Effect
Earnings Conference Call New Features are Driving Increased Engagement, Revenue Growth and Yape´s Flywheel Effect Yape's Payments Ecosystem Continues Growing as Users Monthly Revenue Grows as New Features Engage with New Features are Added to Yape (% of MAU) (Average Monthly Growth of last 3 months)
Slide 7: Yape is Getting Closer to Break Even
Earnings Conference Call Yape is Getting Closer to Break Even Revenue/MAU Getting Closer to Cash Cost/MAU Q4 Will Be Key in Yape’s Evolution Towards a SuperApp, with Multiple Product Launches Revenue/MAU Cash-cost/MAU Payments FX transactions and Remittances Collection services for CPG companies 6.1
Slide 8: 3Q23 Key Financial Highlights
Earnings Conference Call 3Q23 Key Financial Highlights 1 2 3 4 Resilient Volume Dynamics Strong and Diverse Prudent Risk Management Diversified Portfolio Income Streams amid Asset Quality Headwinds and Solid Capital Base Earnings Contribution3 Structural Loans1 NII CoR 75.0% Universal Banking +1.0%
Slide 9: Latam Central Banks Poised to Continue Lowering Rates amid Receding Inflation
Earnings Conference Call Latam Central Banks Poised to Continue Lowering Rates amid Receding Inflation and Weak Economic Growth Expected Economic Growth in 2023 U.S. 2.1 Colombia 1.3 Peru 0.0 Chile -0.3 (YoY % change)1 Inflation CPI Rates Central Bank Policy Rates (% YoY as of Oct 23)2 (%, as of Oct
Slide 10: The Magnitude of the El Niño Costero has intensified throughout the year
Earnings Conference Call The Magnitude of the “El Niño Costero” has intensified throughout the year Sea Surface temperature anomaly in the north-coast of Peru Economic Indicators2 (change. ºC, as of Oct 23)1 Worst 1996-1998 2022-2024 2015-2017 Period Sector (# of years) 5 Jan-Oct Anchovy Capture 25
Slide 11: Universal Banking: Navigating a Challenging Landscape with Higher Provisions
Earnings Conference Call Universal Banking: Navigating a Challenging Landscape with Higher Provisions Impacting Earnings Earnings Contribution BCP Stand-alone 75.7% BCP’s drivers BCP Bolivia 1.4% (% change) QoQ YoY ROE1 Structural (%, Annualized) +1.0% +1.2% Loans2 NII +1.5% +16.0% 24.3% 23.1% 20.0%
Slide 12: Microfinance: Results Impacted by the Difficult Macro Environment and Credit Risk
Earnings Conference Call Microfinance: Results Impacted by the Difficult Macro Environment and Credit Risk Earnings Contribution Mibanco 4.2% Mibanco Peru Drivers Mibanco Colombia -0.9% (% change) QoQ YoY ROE1 Structural (%, Annualized) -0.6% +6.7% Loans2 22.1% 16.4% NII +3.2% +1.9% 13.9% 8.3% Loan
Slide 13: Insurance: Capitalizing on Transitory Tailwinds in the Life Business
Earnings Conference Call In Insurance, We Continued to Capitalize on Transitory Tailwinds in the Life Business On Top of Strong Underlying Performance Earnings Contribution Grupo Pacifico 19.7% Grupo Pacifico's drivers (% change) QoQ YoY Grupo Pacifico’s Insurance Service Results Insurance (S/ milli
Slide 14: IB & WM: Market Volatility Impacted Capital Markets and Asset Management
Earnings Conference Call IB & WM: Market Volatility Impacted our Capital Markets and Asset Management Businesses Earnings Contribution ASB & IB & WM drivers Credicorp Capital 2.1% (in US$ millions) Jun 23 Sep 23 Variation ROE1 and Income by Business2 (%, S/ millions) WM 16,192 16,030 -1.0% AUMs2,4 O
Slide 15: Positive Loan Portfolio Mix Dynamics and Deceleration in Time Deposits Growth
Earnings Conference Call Positive Loan Portfolio Mix Dynamics and Deceleration in the Pace of Growth for Time Deposits QoQ Structural Loan Growth Driven Primarily by Retail Banking Deposits Resume QoQ Growth, while the Shifts in Low-Cost at BCP, Partially Offset by a Drop in Wholesale Banking Deposi
Slide 16: Core Income Grows and Risk-Adjusted NIM Remains Resilient
Earnings Conference Call Core Income Grows and Risk-Adjusted NIM Remains Resilient Core Income QoQ Growth Driven by NII and Fee Income Resilient Risk-adjusted NIM Reflecting Mix Dynamics and Funding Strength, which Mitigate the Impact of a Higher Cost of Risk Core Income NIM and Risk Adjusted NIM (S
Slide 17: Structural NPL Portfolio Volumes Increased Amid Sluggish Internal Demand
Earnings Conference Call Structural NPL Portfolio Volumes Increased Amid Sluggish Internal Demand, High Inflation and High Interest Rates NPL Volumes Increased Across Business Segments Key Drivers of QoQ NPL Volumes Dynamics Structural NPLs123 Wholesale: Downturn in payment behavior of (S/ millions)
Slide 18: Provisions Remain High as Macroeconomic Downturn Continues
Earnings Conference Call Provisions Remain High as Macroeconomic Downturn Continues to Take a Toll on Payment Behavior Higher Provisions in 3Q23 Across Retail Banking and Mibanco 3Q23 High Levels of Provision Expenses Explained By: Structural Provisions1 (S/ millions) +12.4% Consumer & Credit Cards:
Slide 19: Efficiency Improvement Driven by Positive Operating Leverage
Earnings Conference Call Efficiency Improvement Driven by Positive Operating Leverage Accumulated Opex Increased Mainly Driven by Expenses at BCP BCP Registered Positive Operating Leverage while Mibanco is and Disruptive Initiatives Impacted by Decelerating Income Income and Expenses Annual Growth (
Slide 20: Resilient Profitability, Mainly Supported by BCP and Pacifico
Earnings Conference Call Resilient Profitability, Mainly Supported by BCP and Pacifico Net income and ROE (S/ millions, %) IFRS17 Full Year Results (figures in IFRS4) ROE 2022: Accumulated Results (Figures in IFRS 17) 16.8% 16.7% 17.0% 13.9% 18.0% 17.8% 1.4% Net Income ROE 2019 2020 2021 2022 9M22 9
Slide 21: Outlook for El Niño in the Summer 2024 and Credicorp Exposure
Earnings Conference Call Outlook for El Niño in the Summer 2024 and Credicorp Exposure Probabilities of El Niño for the Summer 2024 Have Materially Credicorp Exposure to El Niño Concentrated Changed Since Last Conference Call in Retail Banking at BCP and Mibanco Probabilities of Magnitudes for El Ni
Slide 22: 2023 Guidance Update
Earnings Conference Call 2023 Guidance Update 9M23 Results Previous 2023 Guidance Updated 2023 Guidance Real GDP Growth1 -0.5% around 1.0% around 0% Structural Loan Portfolio Growth2 1.2% 1.0% - 4.0% 1.0% - 4.0% Net Interest Margin 6.0% 5.8% - 6.2% 5.8% - 6.2% Cost of Risk 2.1% 2.1% - 2.5% 2.6% - 2.
Slide 23: 3Q23 Key Takeaways
Earnings Conference Call 3 1 The strength Continued of our balance sheet demonstrating distinctive and leading franchises resilience in the face of weak providesa solid footing to economic performance and weather this challenging inflationary environment context while in Peru delivering results 2 4
Slide 24: Earnings Conference Call
Earnings Conference Call November 2023
Slide 25: Appendix
Earnings Conference Call Appendix 1. 2. Analyzing Coverage Implementation Ratio Evolution: of IFRS17 - Restatement Example Wholesale of Figures and Ratios vs. Consumer Segments for FY2022. 25
Slide 26: Analyzing Coverage Ratio Evolution: Example Wholesale vs. Consumer Segments
Earnings Conference Call 1. Analyzing Coverage Ratio Evolution: Example Wholesale vs. Consumer Segments Wholesale NPL Portfolio is 86% 1 Collateralized and Explains the Evolution of the Structural NPL Coverage Ratio High level of Wholesale NPL volumes driven by Refi- Structural NPL Composition by Pr
Slide 27: Introduction to the new standard IFRS17
Earnings Conference Call 2. Implementation of IFRS17 – Restatement of figures and ratios for 2022 2.1. Introduction to the new standards IFRS17 IFRS 17 was published in May 2017 as a replacement to IFRS4 “Insurance Contracts.” The aim of this change is to ensure that consistent measurement criteria
Slide 28: Recognition of Profit and Loss
Earnings Conference Call 2. Implementation of IFRS17 – Restatement of figures and ratios for 2022 2.3. Recognition of Profit and Loss The P & L under IFRS17 shows the difference between a company’s expected cash flows (valued in liabilities) and real flows that occur. Anticipated flows must be based
Slide 29: Valuation Methods and Impact on Equity Under IFRS17
Earnings Conference Call 2. Implementation of IFRS17 – Restatement of figures and ratios for 2022 2.4. Valuation Methods IFRS17 introduces different approaches to valuate underwriting provisions based on the product’s characteristics (contract duration, cash flow). General Method (GM) or Building Bl
Slide 30: Reformulation of Profit and Loss Statement at Grupo Pacifico for 2022
Earnings Conference Call 2. Implementation of IFRS17 – Restatement of figures and ratios for 2022 2.6. Reformulation of Profit and Loss Statement at Grupo Pacifico for the year 2022 Restatement of the Profit and Loss Statement (IFRS4 to IFRS17) Pacifico Grupo Asegurador (Figures for 2022) P & L Stat
Slide 31: Reformulation of Profit and Loss Statement at Credicorp for 2022
Earnings Conference Call 2. Implementation of IFRS17 – Restatement of figures and ratios for 2022 2.7. Reformulation of Profit and Loss Statement at Credicorp for the year 2022 Restatement of the Profit and Loss Statement (IFRS4 to IFRS17) Credicorp Ltd. (Figures for the 2022) P & L Statement - IFRS
Slide 32: Changes in Methodology: Net Interest Margin
Earnings Conference Call 2. Implementation of IFRS17 – Restatement of figures and ratios for 2022 2.8. Changes in the Methodology to Calculate Financial Indicators and their Reformulation for the year 2022 - Net Interest Margin Under IFRS17, we need to adjust the formula because Interest Expenses no
Slide 33: Changes in Methodology: Cost of Funding
Earnings Conference Call 2. Implementation of IFRS17 – Restatement of figures and ratios for 2022 2.8. Changes in the Methodology to Calculate Financial Indicators and their Reformulation for the year 2022 - Cost of Funding We are adjusting the formula given that, under IFRS17, Interest Expenses now
Slide 34: Changes in Methodology: Efficiency Ratio
Earnings Conference Call 2. Implementation of IFRS17 – Restatement of figures and ratios for 2022 2.8. Changes in the Methodology to Calculate Financial Indicators and their Reformulation for the year 2022 - Efficiency Ratio We are adjusting the formula for the efficiency ratio given that two compon