Full Transcript: Credicorp Q2 2026 Earnings Call

Credicorp (NYSE: BAP ) held its second-quarter earnings conference call on Friday. Below is the complete transcript from the call. APIs provide real-time access to earnings call transcripts and financial data. Visit to learn more.

View the webcast at Summary Credicorp Ltd. 3% ROE, driven by solid performance across its diversified businesses and increased loan growth. The company is confident in Peru's medium-term economic outlook, citing improved business confidence, private investment, and favorable commodity prices as key drivers. Strategic initiatives include a focus on innovation, digital capabilities, and financial inclusion, with Yape contributing significantly to risk-adjusted revenues.

The medium-term ROE guidance has been raised to approximately 22%, supported by structural business improvements and a favorable operating environment. Management is actively monitoring the potential impact of El Niño, incorporating provisions into their outlook, but remains confident in maintaining sustainable growth. Full Transcript OPERATOR Good morning everyone. I would like to welcome you to the Credicorp Ltd.

second quarter 2026 conference call. A slide presentation will accompany today's webcast, which is available in the Investors section of Credicorp's website. Today's conference call is being recorded. As a reminder, all participants will be in listen-only mode.

There will be an opportunity for you to ask questions at the end of today's presentation. If you would like to ask a question, please signal by pressing 1 on your telephone keypad. If you have connected to the call using the HD Webphone on your computer, please use the keypad on your computer screen. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment.

Now it is my pleasure to turn the conference over to Credicorp's IRO, Bill Viragos Sequenas. You may begin. Bill Viragos Sequenas, Investor Relations Officer Thank you and good morning everyone. Speaking on today's call will be Gianfranco Ferrari, our Chief Executive Officer, and Alejandro Perez-Reyes, our Chief Financial Officer.

Participating in the Q and A session will also be Francesca Rajo, Chief Innovation Officer, Cesar Rios, Chief Risk Officer, Diego Cabeiro, Head of Universal Banking, Eduardo Montero, Head of Insurance and Pensions, and Rocio Benavidez, CFO at Mibanco. Before we proceed, I would like to make the following safe harbor statement. Today's call will contain forward-looking statements, which are based on management's current expectations and beliefs and are subject to a number of risks and uncertainties, and I refer you to the forward-looking statements section in our earnings release and recent filings with the SEC.

We assume no obligation to update or revise any forward-looking statements to reflect new or changed events or circumstances. Gianfranco Ferrari will begin the call with remarks on the current operating environment, Credicorp, strategic priorities, and the key drivers underpinning our confidence in achieving a medium-term ROE of around 22%. He will also highlight our strong performance this quarter. Alejandro Perez-Reyes will then review our financial performance in greater detail and discuss our outlook for 2026.

Gianfranco, please go ahead. Gianfranco Ferrari, CEO Thank you. Good morning everyone and thank you for joining us today. Before reviewing our quarterly performance, I would like to begin by sharing why we have greater confidence in Peru's medium-term outlook and what this means for Credicorp.

We believe Peru is entering a more favorable environment for growth. This confidence is grounded first in the continuous improvement of the country's underlying economic fundamentals. Private investment, domestic demand, favorable commodity prices, and business confidence were already gaining momentum before the recent elections. The political transition could help reinforce this momentum.

Greater visibility around the policy agenda, a less fragmented Congress, and continued commitment to a sound macroeconomic framework and private investment would further support confidence. Early signals of policy continuity and discipline, including the formation of a new and solid technical team at the Ministry of Economy and Finance and continuity at the Central Bank, are encouraging and consistent with a more predictable economic environment. Data support this view. Business confidence has recovered to its highest level in years.

Private investment is growing by approximately 13% year over year and domestic demand by more than 5%. Peru also continues to benefit from exceptionally favorable commodity prices, with gold prices having roughly doubled since 2023 and copper prices increasing nearly 60%. Together, these factors are strengthening investment, credit demand, and economic activity, providing a solid foundation for stronger medium-term growth. The principal near-term risk to this outlook is El Nino.

While we recognize its potential impact on families, communities, and small businesses, we continue to view it as a temporary and manageable shock rather than a structural change in Peru's growth trajectory. At Credicorp, we are prepared to support our clients and communities through this period, leveraging our ecosystem, distribution channels, and digital capabilities to help them anticipate and manage potential disruptions. Alejandro will provide more details on expected financial impact and how we are incorporating currently available information related to El Nino risk into our financial outlook.

Importantly, based on the information currently available, El Nino does not alter our broader confidence in Peru's medium-term outlook or Credicorp's ability to continue delivering sustainable growth across the region. The outlook remains mixed but constructive over the medium term. In Chile, while near-term activity has been softer than expected, the investment pipeline, elevated copper prices, and policies aimed at encouraging private investment support a better outlook.

In Colombia, despite ongoing challenges and the terrible impact of the recent earthquake, market sentiment has improved following recent political developments, reflected in a stronger currency and lower sovereign yields. Overall, the improving operating environment reinforces our confidence in Credicorp's long-term outcome. Against this backdrop, we delivered a strong second quarter with solid performance across our businesses and continued progress against our strategic priorities. Let me now walk you through the key results.

3% ROE, reflecting the strength of our diversified business model and solid performance across our core businesses. Operational momentum remained robust across the franchise. 9% of Credicorp's risk-adjusted revenues, keeping us firmly on track to our strategic objectives while demonstrating how the portfolio is becoming an increasingly meaningful contributor to our earnings profile. We're also seeing credit demand continue to strengthen.

Loan growth accelerated across our main lending businesses, supported by both retail and wholesale banking at BCP as well as Mibanco. Our profitability continues to benefit from disciplined execution. 5%, supported by our low-cost funding advantage, healthy portfolio mix, and disciplined pricing. Our strong capital position and disciplined risk management continue to provide resilience.

We're actively monitoring El Nino risk, reinforcing our ability to support clients while maintaining a sound risk profile. At the same time, we remain focused on building the business for the long term. 4%, while investments in innovation and digital capabilities continue to broaden our revenue base, deepen customer engagement, foster financial inclusion, and support more scalable growth. 5% had become increasingly conservative as our performance strengthened and the underlying economics of our business continued to improve.

With greater visibility across our key markets and earning drivers, we believe the time is right to update our medium-term ROE expectations. We now believe Credicorp has the capacity to deliver a medium-term return on equity of approximately 22%. This reflects a more favorable operating environment, but more importantly the structural transformation of our ecosystem. Over the past several years we've strengthened the drivers of our earnings, improving the quality of our loan portfolio, enhancing risk management capabilities, reinforcing our structural funding advantage, and diversifying our sources of revenue.

At the same time, we have invested consistently in technology, data, and talent, creating a more scalable and efficient business model. Innovation is an increasingly important part of that transformation. It is expanding financial inclusion and deepening customer relationships while becoming a more meaningful contributor to growth, earnings diversification, and long-term resilience. Together, these structural improvements position us to deliver stronger and more sustainable profitability across economic cycles.

We look forward to sharing more information about our innovation strategy, which is becoming an increasingly important driver of growth and value creation across Credicorp, at our virtual strategic update on November 17th. Now let me turn the call over to Alejandro. Alejandro Perez-Reyes Zarak, CFO Thank you, Gianfranco, and good morning, everyone. 3% ROE this quarter supported by strong operating performance, accelerated loan growth, and higher risk-adjusted revenues across our diversified business ecosystem.

As I discuss the quarter highlights, I will focus on the year-over-year operating trends. 1%. This uptick was driven primarily by BCP through both retail and wholesale banking and by Mibanco. 1% for the quarter, supported by better origination quality and enhanced collections capabilities.

9%, reflecting portfolio growth within our risk appetite and an impact of 27 basis points due to El Niño—related provisions. 3%, mainly driven by lower interest expenses supported by our local funding structure and by a higher-yielding loan mix. 6%. 7%.

9%, boosted by transactional activity at Yape and BCP. 8% through higher volumes at BCP, which rose in the context of higher volatility. In the context of higher volatility—I'm sorry. Lastly, the insurance underwriting results decreased, mainly reflecting a base effect from provision reversals recorded in the second quarter of last year.

In the Life business, our strong capital position and healthy asset quality put us in good stead to navigate potential El Niño impact as we continue to execute our strategic priorities. Next slide, please. Peru's economy remained resilient in the second quarter of the year, with GDP estimated to have grown by around 3% year over year. Robust domestic demand, supported by historically high terms of trade, employment gains, and ongoing business cycle momentum, helped offset a sharp contraction in primary activities.

Primary GDP is estimated to have fallen by nearly 5% year over year, marking its steepest decline since 2014, excluding the pandemic. El Niño—related disruptions weighed on fishing, agriculture, and primary manufacturing. Despite these headwinds, domestic demand is estimated to have expanded roughly 5% year over year, reporting the seventh consecutive quarter of strong growth. High-frequency indicators continue to signal broad-based and robust economic expansion, with several indicators posting double digits year over year.

Private investment expectations have rebounded sharply following the presidential election, reaching their highest level since the series began in 2013. President Keiko Fujimori has confirmed Julio Velarde's continuation as governor of the central bank and appointed Elmer Cuba, a respected macroeconomist and former central bank director, as Finance Minister, reinforcing expectations of solid and predictable macroeconomic policy under the new administration. Next slide, please. Under Chairman Kevin Warsh, the Federal Reserve has emphasized its commitment to price stability and signaled limited tolerance for persistent elevated inflation.

Economies remain divided between expectations of additional rate hikes and an extended pause in monetary policy. In Peru, annual inflation remained around 4% year over year between April and July, its highest level since late 2023, driven primarily by higher local transportation costs. Core inflation, excluding transportation, is still below 2%. 1% in June, marking the first moderation after four consecutive monthly increases.

Inflation remains elevated, however, partly reflecting the significant minimum wage increase implemented at the beginning of the year. The central bank has responded by raising its policy rate by 275 basis points in December. Investor sentiment, in turn, has improved following the election of President Aguilardo de la Espriela. S.

dollar since 2019. In Chile, higher oil prices and weaker-than-expected mining production have weighed on the economic outlook this year. 5%. In June 2026, Bolivia transitioned to a market-based FX framework, replacing its long-standing peg.

We do not anticipate a material impact on Credicorp, given that we incorporated market exchange rate dynamics in Bolivia in our reporting as of the first quarter of last year. 9 billion to support the country's economic reform program. Although uncertainty persists around oil prices, geopolitical developments in the Middle East, and the potential impact of El Niño during the remainder of the year, as Gianfranco mentioned, we believe that improvements in the regional operating environment support our confidence in a more favorable medium-term outlook. Next slide, please.

Before moving on, I would like to address El Niño risk in Peru, a key topic for investors assessing our earnings, asset quality, and capital generation. El Niño is a transitory event that periodically affects Peru. While it may create short-term volatility, it does not alter our long-term view of the Peruvian economy or its underlying strength. So far in 2026, El Niño Costero has mainly affected Peru's fishing, agriculture, and related activities in the north, while the broader economy has remained resilient.

The strongest impact would likely materialize in the first quarter of next year if the event intensifies or converges with a global El Niño scenario. From a macro perspective, we estimate 2027 GDP growth to remain resilient around 3% under a moderate to strong El Niño scenario, while an extraordinary event could lead to a more pronounced slowdown. Importantly, Peru is entering this period with stronger fundamentals and higher liquidity across the financial system than in prior El Niño episodes. For Credicorp, estimated direct exposure to potentially affected clients is approximately 9% of total loans.

While visibility should improve toward the last quarter of this year, we are already incorporating the currently available information related to El Niño risk, resulting in additional provisions starting in June. Under the scenarios currently assessed, we expect full-year 2026 cost of risk to remain within guidance. Looking towards 2027, a more severe event could moderate loan growth and fee income through downward pressures on activity. However, we are better prepared than in previous similar events, supported by lower direct exposure, early mitigation, stronger risk management and analytics, and healthier portfolio quality more broadly.

This is not a new risk for us. We have a robust governance framework and mitigation playbook supported by enhanced data and digital capabilities. This helps us identify vulnerable clients earlier, communicate at scale, and deploy targeted actions faster. In short, we are approaching this scenario from a position of strength.

Portfolio quality remains healthy, our balance sheet is strong, and we are confident in our ability to manage potential El Niño impact while supporting clients, communities, and the broader Peruvian economy and preserving profitability. Next slide, please. This quarter, BCP's profitability remains strong with a favorable economic backdrop. Loan growth continues to accelerate as underlying credit risk trends remain positive.

In parallel, currently available information related to El Niño risk has been incorporated into provisions. 2%. 5%. Retail loans led the expansion, bolstered by performance in the consumer and SME-Pyme segments.

Additionally, wholesale loans rose primarily on the back of long-term loans as the outlook for private investment continued to improve.