Credicorp Ltd. · NYSE:BAP
Credicorp — Q1 2023 Earnings Presentation
31 slides from Credicorp's earnings presentation, May 8, 2023
Slide 1: 1Q23 Earnings Conference Call
1Q23 Earnings Conference Call May 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: Significant Progress in Our Sustainability Journey Since 2020
Earnings Conference Call Significant Progress in Our Sustainability Journey Since 2020 5/9 Independent Directors Enhanced Diversity 1/3 Women and Capabilities at the Board Strengthened Digital and Fintech Investing Knowledge Formulated Corporate Environmental Strategy Defined Environmental Develop c
Slide 4: Resilient Financial Performance Despite Social Unrest and Climate Events
Earnings Conference Call Resilient Financial Performance Despite Social Unrest and Climate Events Net Income ROE 1 Resilient 1Q23 Financial Results1 +18.1% 18.7% vs 1Q22 30-D LCR BCP2 Strong Balance Sheet and Prudent CET1 BCP 2 Asset Liability Management 11.9% 154.1% PEN 203.7% USD Structural NPL Ma
Slide 5: 1Q23 Key Financial Highlights
Earnings Conference Call 1Q23 Key Financial Highlights 1 2 3 4 Loan Dynamics and Low-Cost Managing Asset Quality Managing Efficency Strong Balance Sheet and Funding Drive NII Expansion Prudent ALM: BCP Metrics2 NII CoR Expenses Ex-Disruption 30D LCR: Regulatory / Internal3 +28.8% 2.0% +13.5% PEN: 15
Slide 6: Resilient Conditions in Emerging Markets in 1Q23
Earnings Conference Call Resilient Conditions in Emerging Markets in 1Q23 FED Rate Market Expectations Copper Price Latam Exchange Rates (%, As of May 5th) (USD/lb, As of May 5th) (Index Dec21=100, local currency per USD, as of May 5th) Dec 30, 2022 Feb 28, 2023 May 5th, 2023 PEN COP CLP Mar 22: 4.8
Slide 7: Slowdown in Economic Growth; Central Banks Focused on Fighting Inflation
Earnings Conference Call Slowdown in Economic Growth; Central Banks Focused on Fighting Inflation Expected Economic Growth in 2023 U.S. 1.6 Colombia 1.0 Peru 1.8 Chile 0.0 (YoY % change)1 Inflation Rates Central Bank Policy Rates (% YoY as of May 5th)2 (%, as of May 5th)2, 3 13.25 11.25 12.8 Peru 11
Slide 8: Higher Profitability at BCP Driven By NII, Loan Provisions Remain High
Earnings Conference Call In Universal Banking, Higher Profitability at BCP is Driven By NII, While Loan Provisions Remain High Earnings Contribution BCP Stand-alone 78.0% BCP’s drivers BCP Bolivia 1.3% (% change) QoQ YoY ROE1 Structural (%, Annualized) -1.0% +9.7% Loans2 25.2% NII +0.9% +40.1% 23.5%
Slide 9: Yape Continues on its Path to Monetization
Earnings Conference Call With More than 12MM Registered Clients, Yape Continues on its Path to Monetization and is Leveraging New Opportunities Monthly Active 5.1 6.0 7.0 8.3 8.8 Users (MAU)1 Active Users 0.9 1.4 2.4 3.4 4.1 Generating Fee Income1 Income per MAU (S/) 1.7 1.8 1.4 1 0.8 Mar 22 Jun 22
Slide 10: Mibanco Peru's 1Q23 Results Impacted by High Levels of Provisions
Earnings Conference Call Mibanco Peru’s 1Q23 Results Impacted by High Levels of Provisions Reflecting Social and Climate Events in Peru Earnings Contribution Mibanco 1.5% Mibanco Peru Drivers Mibanco Colombia -0.2% (% change) QoQ YoY ROE1 Structural (%, Annualized) +1.6% +16.9% Loans2 19.4% 17.1% NI
Slide 11: Insurance: Boost in Profitability Driven by Life Business
Earnings Conference Call In Insurance1, Boost in Profitability was Driven by the Life Business2 as Insurance Services Income Rose Earnings Contribution Grupo Pacifico 14.1% Grupo Pacifico's drivers (% change) YoY Pacifico Stand-alone’s Insurance Service Expenses (as a % of Insurance Service Income)
Slide 12: IB & WM Continues to Be Challenged; Adjusting the Strategy
Earnings Conference Call IB & WM Delivered Continues to Be Challenged; Implementing Significant Adjustments to the Strategy Earnings Contribution ASB & 3.2% IB & WM drivers Credicorp Capital (in US$ millions) Mar 22 Mar 23 YoY ROE1 and Income by Business2 (%, S/ millions) WM 16,725 15,497 -7.3% AUMs
Slide 13: Core Income Expanded 18.9% YoY
Earnings Conference Call Core Income Expanded 18.9% YoY, Reflecting Structural Loan Growth and High-Rate Environment Structural Loan YoY Growth Driven Primarily by Retail Banking Core Income YoY Growth Mainly Driven by NII Expansion of at BCP and Mibanco 28.8%, Partially Offset by FX Volumes and Fee
Slide 14: Structural NPL Portfolio Volumes Increased QoQ
Earnings Conference Call Structural NPL Portfolio Volumes Increased QoQ Driven by Wholesale Banking and Mibanco QoQ NPL Volume Dynamics: Uptick in New Entries Partially Key Drivers of QoQ Non-Performing Loans Dynamics Offset by Judicial Loan Portfolio Sale and Write-offs Structural NPLs1 2 Whole Ban
Slide 15: Higher Provisions in 1Q23 Due to Deterioration in Specific Portfolios
Earnings Conference Call Higher Provisions in 1Q23 Due to Deterioration in Specific Portfolios and Less Favorable Macroeconomic Outlook Portfolio Composition at BCP Drives Higher Provision, while Key Drivers of QoQ Loan Loss Provision Dynamics Short-term External Events Impact Provisions at Mibanco
Slide 16: Efficiency Improvement Driven by Higher Operating Income in BCP and Pacifico
Earnings Conference Call Efficiency Improvement Driven by Higher Operating Income in BCP and Pacifico Opex Increased YoY Mainly Driven by Expenses at BCP BCP Registered Positive Operating Leverage while Mibanco and Disruptive Initiatives is Impacted by Decelerated Income Operating Expenses Income an
Slide 17: Strong Balance Sheet and Prudent Asset Liability Management
Earnings Conference Call Strong Balance Sheet and Prudent Asset Liability Management Risk Management Framework Credicorp Indicators 1Q23 Structured Governance and Risk Appetite Investments 5% 15% Annual stress testing to overcome adverse scenario % of IEA HTM AFS Capital Basel III CET1 at banks Dail
Slide 18: Delivered Resilient Profitability, Mainly driven by BCP and Pacifico
Earnings Conference Call Delivered Resilient Profitability, Mainly driven by BCP and Pacifico Net Income and ROE (S/ millions, %) Full Year Results (figures in IFRS4) IFRS17 Quarterly Results (Figures in IFRS17) ROE 2022: 16.8% 17.0% 16.7% 13.9% 18.7% 17.0% 1.4% 2019 2020 2021 2022 1Q22 1Q23 Net Inc
Slide 19: Our 2023 Guidance
Earnings Conference Call Our 2023 Guidance 2023 Guidance Restated 2023 Guidance 1Q23 Results to Reflect IFRS17 under IFRS4 Real GDP Growth1 -0.4% 1.8% - 2.2% Structural Loan Portfolio Growth2 9.7% 6% - 10% Net Interest Margin 5.8% 5.8% - 6.2% Cost of Risk 2.0% 1.5% - 2.0% Efficiency Ratio 44.3% 47.0
Slide 20: Solid Position and Agile Management to Navigate Near-Term Dynamics
Earnings Conference Call Solid Position and Agile Management to Navigate Near-Term Dynamics and Leverage Longer Term Opportunities Proactively supporting clients in times of need Unwavering Client BCP: ~4,130 clients Commitment Mibanco: ~54,600 clients Strong underlying fundamentals in Peru Solid Lo
Slide 21: Appendix
Earnings Conference Call Appendix Implementation of IFRS17 Analyzing Coverage Ratio Evolution: – Restatement of Figures Example Wholesale and Ratios for FY2022 vs. Consumer Segments 21
Slide 22: Introduction to the new standards IFRS17
Earnings Conference Call 1. Implementation of IFRS17 – Restatement of figures and ratios for 2022 1.1. 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 23: Recognition of Profit and Loss
Earnings Conference Call 1. Implementation of IFRS17 – Restatement of figures and ratios for 2022 1.3. 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 24: Valuation Methods and Impact on Equity Under IFRS17
Earnings Conference Call 1. Implementation of IFRS17 – Restatement of figures and ratios for 2022 1.4. 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 25: Reformulation of Profit and Loss Statement at Grupo Pacifico for 2022
Earnings Conference Call 1. Implementation of IFRS17 – Restatement of figures and ratios for 2022 1.6. 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 26: Reformulation of Profit and Loss Statement at Credicorp for 2022
Earnings Conference Call 1. Implementation of IFRS17 – Restatement of figures and ratios for 2022 1.7. 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 27: Changes in Methodology: Net Interest Margin
Earnings Conference Call 1. Implementation of IFRS17 – Restatement of figures and ratios for 2022 1.8. 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 28: Changes in Methodology: Cost of Funding
Earnings Conference Call 1. Implementation of IFRS17 – Restatement of figures and ratios for 2022 1.8. 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 29: Changes in Methodology: Efficiency Ratio
Earnings Conference Call 1. Implementation of IFRS17 – Restatement of figures and ratios for 2022 1.8. 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
Slide 30: Analyzing Coverage Ratio Evolution: Wholesale vs. Consumer Segments
Earnings Conference Call 2. Analyzing Coverage Ratio Evolution: Example Wholesale vs. Consumer Segments Wholesale NPL Portfolio - 83%1 Collateralized - Impacted Evolution of the Structural NPL Higher Wholesale NPL volumes driven by Refinanced Loans, which represent 13% of Credicorp NPL volumes Cover
Slide 31: 1Q23 Earnings Conference Call
1Q23 Earnings Conference Call May 2023