Credicorp's Q2 2025 Earnings Call: Unraveling Contradictions in Risk, Loans, and Dividends

Cost of Risk and Profitability Strategy, Loan Growth Expectations and Drivers, Dividend Outlook and Cash Flow Impact, Cost of Risk Trends, and Loan Growth Expectations are the key contradictions discussed in Credicorp's latest 2025Q2 earnings call.



Economic Conditions and Loan Growth:
- Peru's economy is experiencing a positive turn with GDP expected to grow 3.2% this year, supported by rising terms of trade and domestic demand growth of 4.5%.
- Creditorp's loan growth is expected to reach 6.5% year-over-year, particularly driven by retail banking at BCP and Mibanco.
- The improved macroeconomic conditions, increased investments in small and medium enterprises, and robust demand are the key factors driving this growth.

Financial Performance and Margin Improvement:
- Credicorp reported a ROE of 20.7% for the quarter, supported by strong contributions from core businesses and innovations like Yape.
- NIM increased to 5.4%, aided by improved asset quality, disciplined credit execution, and a low-cost funding structure.
- The increase in NIM is attributed to disciplined risk management and favorable macroeconomic factors.

Yape's Rapid Expansion and Monetization:
- Yape reached nearly 15 million monthly active users, accounting for 75% of Peru's economically active population.
- Revenue per monthly active user reached PEN 6.5, reflecting a strong monetization strategy.
- Growth in user engagement, transaction volumes, and strategic expansion into high-yielding loan products contribute to Yape's rapid revenue growth.

Capital Management and Dividend Strategy:
- Credicorp revised its long-term sustainable ROE target upwards to approximately 19.5%, considering the benefits of a diversified business model.
- The company will not issue extraordinary dividends this year due to the SUNAT payment impacting cash flow, but expects to resume dividends in the future.
- This strategy is influenced by the need to manage cash flow effects of regulatory demands and adhere to dividend policies.

Innovation and Digital Transformation:
- Credicorp's innovation portfolio accounted for 6.2% of risk-adjusted revenues, with a target to reach 10% by 2026.
- Investments in digital infrastructure and capabilities are projected to improve efficiency and generate positive ROE in the future.
- The focus on digital transformation is aimed at enhancing client engagement and scaling transactional services to drive long-term growth.