Credicorp Aktie

Good morning, everyone. I would like to welcome you to the Credicorp Limited Second Quarter 2026 Conference Call. A slide presentation will accompany today's webcast, which is available in the Investors section of Credit Corp's website. Today's conference call is being recorded. [Operator Instructions]. Now it is my pleasure to turn the conference over to Credicorp's IRO, Milagros Cigüeñas. You may begin.

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&A session will also be Francesca Raffo, Chief Innovation Officer; Cesar Rios, Chief Risk Officer; Diego Cavero, Head of Universal Banking; Eduardo Montero, Head of Insurance and Pensions; and [indiscernible].

Before we proceed, I would like to make the following sort safe harbor statements. 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, credit of strategic priorities and the key drivers underpinning our confidence in achieving a medium-term ROE of around 2%. He will also highlight our strong performance this quarter. Alejandro Perez-Reyes will then review our financial performance in ready and discuss our outlook for Gianfranco, please go ahead.

Thank you, Milagros. Good morning, everyone, and thank you for joining us today. Before reviewing our quarterly performance, I would like to begin by showing why we have greater confidence in there'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 continued improvement of the country's underlying economic fundamentals.

Private investment, domestic demand, favorable commodity prices and business confidence, we're already gaining momentum before the recent election. The political transition could help reinforce this momentum. Greater visibility around the public agenda and less submitted congress and continued commitment to produce sound macroeconomic framework and private investments with further support contracts. Everything notes 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 supports 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 exceptional favorable commodity prices, with gold prices having roughly doubled since 2033 and copper prices increasing nearly 60%. Together, these factors are strengthening investment, trading demand and economic activity, providing a solid foundation for a stronger medium-term growth. The principal near-term risk to this outlook is [indiscernible].

While we recognize its potential impact on families, communities and small businesses, we continue to view it as a temporary and manageable shop rather than a structural cage in Peru's growth trajectory. At [ Tencor ], 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're incorporating currently available information related to a minor risk into our financial outlook.

Importantly, based on the information currently available, [indiscernible] does not alter our power confidence in Peru's medium-term outlook prorability to continue delivering sustainable growth. Across the region, the outlook remains mixed as consulting over the medium term. In Chile, while near-term activities have been softer than expected the investment type elevated copper prices and policies aimed at encouraging 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 development reflected in a stronger currency and lower sovereign yields.

Overall, the improving operating environment reinforces our confidence in Credicorp's long-term outlook. 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. We delivered another quarter of strong execution, reporting a 20.3% ROE, reflecting the strength of our diversified business model and solid performance across our core businesses.

Operational momentum remained robust across the franchise. Our innovation portfolio contributed 9.9% of credit cost risk-adjusted revenue, keeping us firmly on track to our strategic objectives while demonstrating that [indiscernible] is becoming an increasing in meaningful contributor to our earnings profile. We're also seeing fresh demand continue to strengthen. Loan growth accelerated across our main lending businesses, supported by both retail and Wholesale Banking and BCP as well as [indiscernible].

Our profitability continues to benefit from disciplined execution. Risk-adjusted NIM stood at 5.5%, supported by our low-cost funding advantage, healthy pool mix and digital life. Our strong capital position and disciplined risk management continue to provide resilience. We're actively monitoring nears 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.

Our efficiency ratio stood at 45.4%, while investments in innovation and digital capabilities continue to broaden our revenue base. deepened customer engagement, foster financial inclusion and support most scalable growth. As we have discussed in recent quarters, our premium medium-term ROE expectation of around 19.5% have become increasingly conservative as our performance strengthened and the underlying economics of our business continued to improve. We created across our key markets and earning drivers we believe the right -- 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 consistency in technology, data and talent, creating a more scalable and efficient business model. Innovation is an increasingly important part of the transformation. It is expanding financial inclusion and deepening customer relationships while becoming a more meaningful contributor to growth, any 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 is becoming an increasingly important driver of growth and value creation across Credicorp at our visual strategic update on November 17.

Now let me turn the call over to Alejandro.

Thank you, Gianfranco, and good morning, everyone. As Jan Franco mentioned, we delivered a 20.3% ROE this quarter supported by strong operating performance, accelerated loan growth and higher risk-adjusted revenues across our diversified business ecosystem. I discuss the quarter's highlights, I will focus on the year-over-year operating trends. Loans measured in quarter end balances increased 13.1%. This uptick was driven primarily by BCP through both retail and wholesale banking and by Miba. Asset quality improved further with credit cards NPL ratio declining to 4.1% for the quarter, supported by better origination quality and enhanced collections capabilities.

The cost of risk stood at 1.9% and reflecting portfolio growth within our risk appetite and an impact of 27 basis points due to near-related provisions based on currently available information. Net interest income increased 13.3% in mainly driven by lower interest expenses, supported by our low-cost funding structure and by a higher yield in loan mix. Against this backdrop, NIM stood at 6.6%. Other core income grew 19.7%. Fee income increased 15.9%, boosted by transactional activity at Japan BCP.

Gains on FX transactions rose 29.8% through higher volumes at BCP, which rose in context of a higher volatility in the comparative Lasting results decreased, mainly reflecting a base effect from provision reversals recorded in the second quarter of last year in the life business. Our diversified business portfolio strong capital position and healthy asset quality puts us in good stead to navigate potential El Nino impacts as we continue to execute our strategic priorities. Next slide, please.

[indiscernible] 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 activity. Primary GDP is estimated to have fallen by nearly 5% year-over-year, marking its sites decline since 2014, excluding the pandemic. As El Nino related disruptions weighted 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 sign our broad-based and robust economic expansion with several indicators posting double-digit year-over-year growth. Private investment expectations have rebounded sharply following the residential deletion, reaching their highest level since the series began in 2013. [indiscernible] has confirmed full elates continuation as governor of the Central Bank and appointed Elmer cola, a respected macroeconomist and former Central Bank Director, a finance minister, reinforcing expectations of solid and predictable macroeconomic policy under the new administration.

Next slide, please. Under Chairman [indiscernible], the Federal Reserve has emphasizes commitment to price stability and in limited tolerance for persistently elevated inflation. Economies remain divided between expectations of additional rate hikes and an extended cost 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%.

In Colombia, annual inflation is slightly to 6% year-over-year in July, down from 6.1% in June, marking the first moderation after 4 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 [indiscernible] elated. In this context, the peso has appreciated sharply, making its strongest showing against the U.S. dollar since 2019.

In Chile, higher oil prices and weaker than expected mining production have weighted on the economic outlook this year. Annual inflation is 3.5% year-over-year in July after reaching its highest level in 9 months in June. While the Central Bank has kept the policy rate unchanged at 4.5%. In June 2026, Bolivia transitioned to a market-based FX framework, replacing its long and intake. We do not anticipate a material impact on Credicorp given that we incorporated market exchange rate dynamics in Bolivia in our reporting of the first quarter of last year.

In parallel, the IMF and authorities reached a staff level agreement on a new program of about $1.9 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 aluminum during the remainder of the year, as Gianfranco mentioned, we believe that improvements in the regional operating environment supports our confidence in a more favorable medium-term outlook.

Next slide, please. Before moving on, I would like to address a El Nino risk in Peru, a key topic for investors, assessing our earnings, asset quality and capital generation resilience. El Nino is a transitory event that periodically affects. While it may create short-term volatility, it does not alter our long-term view of the trivia economy or its underlying strength. So far in 2026, El Nino [indiscernible] has mainly affected Peru 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 is the event intensified or converged with the global engineered scenario. From a macro perspective, we estimate 2027 GDP growth to remain resilient around 3% under a moderate strong line 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 is. For Credicorp, estimated direct exposure to potentially affected clients is approximately 9% of total loans. While visibility should improve towards the last quarter of this year, we are already incorporating the currently available information related to a linear risk, resulting in additional provisions starting in June. Under the scenario currently assessed, we expect full year 2026 cost of risk to remain within guidance.

Looking towards 2027, a more severe event put 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, a 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 burner our clients earlier, communicate at scale and deploy target deductions 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 revenue 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 batter Loan growth continues to accelerate as underlying credit risk trends remain positive. In parallel, currently available information related to a linear risk has been incorporated into provisions.

In this context, ROE stood at 29.2%. From a quarter-over-quarter perspective, total loans rose 4.7%. In FX-neutral terms, loan growth stood at 5.5%. The Retail loans led the expansion bolstered by performance in the consumer and SME PM segment. Additionally, wholesale loans rose primarily on the lack of long-term loans as the outlook for private investment continued to improve. NIM stood at 6.1% as the loan portfolio shifted to a higher yield mix, while funding costs remained stable. The NPL ratio fell to 3.9%. This result was driven by improvements across business segments where the NPL ratio fell on the back of 45% is management capabilities. The cost of risk rose to 1.4%, reflecting the normalization of underlying cost of risk and additional mine related provisions.

Underlying provisioning was mainly driven by portfolio growth in specific retail segments, particularly consumer and SME Tim, where higher yielding products continue to perform within our expectations. As a result, BCP's risk-adjusted NIM stood at 5.2%. On a year-over-year basis, total loans rose 10.9% and 12.2% in FX inflow terms, led by retail banking and secondarily by wholesale banking through the same factors mentioned in the quarter-over-quarter analysis. NIM rose 12 basis points, mainly driven by funding cost improvement alongside an increase in low-cost deposit share of total tau. The NPL ratio dropped 93 basis points, fueled mainly by the SME team and individual segments, mostly driven by better origination and enhanced collection capabilities.

Cost of risk rose 25 basis points, mainly as a result of higher loan volumes rather than a deceleration in underlying patents. [indiscernible] income rose 15.4% and driven mainly by fee income, strong transactional activity was channeled through [indiscernible] and BCP. Gains on FX transactions also contributed to this result, albeit to a lesser extent, transacted volumes rose significantly in a context marked by high volatility. As a result, the ratio of other core income to assets remain strong, supported by our diversified industries.

Finally, operating expenses, which are better explained on an accumulated basis, rose for 14.9% year-to-date due to an uptick in both administrative and personnel expenses. Administrative expenses rose on the back of growth in IT-related services and use of cloud infrastructure. Personnel expenses rose driven by the continued development of commercial technological capabilities and by an uptick in variable compensation. In this context, the efficiency ratio stood at 38.6% for the first half of the year.

Next slide, please. Yape continues to strengthen its position of Peru's leading digital ecosystem. The platform remains highly engaged with more than 15 million [indiscernible] users transacting 69 per month and maintaining an NPS of $78 million. Customer engagement remains exceptionally strong, and we continue to see that translate into stronger unit economics. Revenue per mile reached 11.1, outpacing growth in expenses per month, which stood at -- as a result, APE contribution to Credicorp's risk-adjusted revenues increased to 8.9%, reinforcing its growing relevance within the group.

At the same time, continues to expand its financial services footprint. Loans reached PLN 1.8 billion, up 4x year-over-year, while the number of clients receiving loan disbursements increased to $5.6 million. With loan penetration at around 1/3 of monthly active users, we continue to see significant opportunities to further expand lending adoption, increase customer lifetime value and deepen financial inclusion across Peru.

As Yape scales, the composition of Yape revenues continues to evolve. Lending further increases contribution to 28%, while payment contribution stood at 45%. Moreover, revenue-generating payment transactions grew 42% year-over-year, continuing to strengthen Gas' ability to generate data, enhance customer engagement and unlock cross-selling opportunities across CrediCorp as strong engagement, improving monetization and significant headroom for deeper product and service adoption position the platform to sustain scalable, profitable growth.

Next slide, please. EAA continues to strengthen its trace, combining healthy growth with disciplined risk management. At the same time, we continue fostering revenue diversification to enhance the resilience and quality of earnings. This strong execution translated into a quarterly ROE of 22.9%. On a quarter-over-quarter basis, loans measured in quarter end balances grew 4.4%. The supported by continued growth in low-ticket loans, the main driver of recent quarters and a greater focus on higher ticket segments where larger loan sizes accelerated volume growth.

In this context, the NPL ratio continued its downward trend, reaching a record low of 4.8%. The average yield on interest saving assets maintained an upward trend offsetting a slight uptick in the cost of filing. As a result, NIM rose 23 basis points to stand at 15.2%. The cost of risk rose 30 basis points and stood at 5.1%, reflecting higher underlying provisions and additional aluminum-related provisions. Provisioning for underlying credit risk growth driven primarily by portfolio growth within our risk appetite and to a lesser extent, a slight increase in rigs. Risk-adjusted NIM stood at 11.2%, down 5 basis points.

From a year-over-year perspective, loans rose 15%, supported by improved productivity amid a dynamic economy. In this context, our portfolio's margin increased despite a slight uptick in the cost of fund. As a result, NIM rose 78 basis points. The cost of risk fell 24 basis points on the back of lower risk vintages. Despite ongoing investments in the strategic initiatives to fuel digital transformation and modernize technology, the efficiency ratio for the first half of the year dropped 4 percentage points to stand at 4%. Mibanco Colombia continued to deliver strong results with double-digit loan growth, disciplined risk management and enhanced commercial productivity.

As a result, ROE reached 18.5% for the quarter. Next slide, please. Grupo Pacifico delivered solid results this quarter on the back of strong commercial execution across all businesses. In this context, ROE stood at 19.1% at quarter end. Net income remained relatively flat year-over-year. Pacifico continues to deliver solid profitability led by our Life business, the largest contributor to Medico. Our life business posted healthy organic growth this quarter driven by strong momentum in bancassurance and retail sales. Nevertheless, net income reported lower results due to a base effect associated with provision reversals in the disability and survivorship line in the second quarter of last year.

In the P&C business, net income fell driven primarily by lower underwriting results, which raised the higher claims. Our Corporate Health business posted higher net income for the quarter, supported by stronger premium production as the customer base expanded. Meanwhile, results in our medical services business remained relatively stable, supported by resilient commercial dynamics and disciplined cost management.

Next slide, please. Profitability in our investment management and advisory business strengthened significantly this quarter. Sustained growth in recurring businesses, coupled with an uptick in trading contribution due to temporary market volatility drove a strong ROE of 23.5%. From a year-over-year perspective, revenues increased, supported by solid performance across our recurring business. Asset Management and Wealth Management contributed positively with AUM up 44% and 30%, respectively.

The capital market line also contributed significantly to results where heightened market volatility and increased activity among corporate clients created favorable conditions to boost trading and client as Higher revenues were partially offset by an increase in operating expenses, where the uptick was driven by a comparatively low base in the first half of 2025. As a result, net income increased 47% year-over-year.

Next slide, please. Now I'd like to examine the evolution of our consolidated balance sheet. Sequentially, interest earning assets grew 1.8%, driven primarily by loan growth at BCP and to a lesser extent, by higher investment balances as we capitalize from practical opportunities by leveraging our cash position. On the liability side, the 3.5% funding increase was driven by growth in demand and time deposits and an uptick in the balance of Central Bank funding instruments. On a year-over-year basis, interest selling assets rose 12.2% led by loan growth at BCP and Milan. The impact of this shift in the asset mix offset the impact of decreasing interest rates. Keeping the yield on interest-earning assets stable at 8.4%. On the liability side, lower interest rates and an increase in the share of low cost deposits drove a 29 basis point decline in the funding cost which stood at 2.2% at quarter end. Against this backdrop, NIM was 6.6% for the quarter. Next slide, please.

Moving on to loan portfolio quality. Portfolio quality continues to evolve favorably this quarter as NPLs dropped to 4.1%, driven by improvements in origination, monitoring and collection it. Based on current available information, we registered approximately $106 million in additional provisions related to El Nino risk. This brought our reported cost of risk to 9%. Excluding this impact, cost of risk stood at 1.6%, primarily reflecting portfolio growth within our risk appetite. Underlying portfolio trends remain solid, supported by healthier vintages and enhanced risk capabilities.

As a result, coverage levels remain strong, reinforcing the balance sheet's ability to observe future volatility while preserving capacity to support growth. In this context, the NPL coverage ratio rose and stood at 117.3%. Next slide, please. Core income grew 15.1% year-over-year on the back of diverse revenue streams with net interest income, fees and FX pace reporting double-digit expansion. Profitability metrics continued to strengthen year-over-year with risk-adjusted NIM standing at 5.5% this quarter, reflecting disciplined pricing, portfolio mix optimization and solid underlying credit performance.

The efficiency ratio for the first half of the year stood within guidance of 45.6%. Operating expenses grew 13.5%, fueled primarily by core business and BCP and investments in our innovation portfolio. Growth in core expenses at BCP was due mainly by IT expenses for commercial and transactional capability development. Expenses for our innovation portfolio, which were led by [indiscernible] rose 33% and represented 84% of disruptive expenses for the world. Next slide, please. First half ROE reached 21.2%, supported by the strength of our integrated business ecosystem and ongoing improvement in economic conditions.

Net income remained robust, bolstered primarily by accelerated loan growth across key businesses. Loan expansion was achieved alongside prudent risk management and complemented by an increase in contributions from diversified revenue streams which rose on the back of market leading transactional and digital capabilities. Now I will move on to our guidance. Next slide, please. We continue to expect [indiscernible] to grow around 3.5% in 2026, including the estimated impact of I. We are raising our outlook for loan growth measured in quarter end balances to around 12%.

And reflecting stronger-than-expected momentum primarily in retail banking at BCP and [indiscernible]. The expected loan in shift towards retail, coupled with a more recent scenario, where interest rates are expected to remain higher for longer should support NIM and risk-adjusted NIM, which we expect to stand at the higher end of our guidance rate. As retail origination continues to expand and we incorporate currently available information related to a no risk we expect the cost of risk to increase in the second half of the year and to remain within our guidance range.

We are also raising our fee income outlook, now expecting high-teens growth supported by stronger transactional activity continued economic momentum and our strategy to strengthen principally. The efficiency ratio is expected to remain within guidance. We are reaffirming our cargoes ROE guidance of around 19.5% with a current bias to the upside, subject to how El Nino evolves. Our operating income came in ahead of our expectations. Visibility on the potential severity of El Nino remains limited. As new information becomes available, we will continue to reflect updated and a related provisions.

Looking ahead to the medium term, as Gianfranco mentioned earlier, we expect ROE to move structurally higher. This outlook is supported by stronger loan growth across our core businesses, higher yield or volume mix sustained funding advantage and increasing contributions from 3 based revenues. As our ecosystem made initiatives continue to scale, we expect to capture greater operating leverage while maintaining disciplined risk management and capital allocation.

Together, these drivers strengthen our ability to deliver a medium-term ROE of around 22%. Before we begin the Q&A and given that this will be my last conference call as Credicorp CFO. I would like to take a moment to thank all of you for your support, engagement and constructive dialogue throughout my [indiscernible]. Your questions [indiscernible] have helped us make us better, and I'm deep [indiscernible].

As I take on my new role leading [indiscernible] Microfinance business, I look forward to staying connected with many of you and sharing our progress and perspectives on the opportunities ahead. I would also like to wish Ignacio every success in role. Having worked closely with him for the last 2.5 years, I am confident he will do an outstanding job, and I know Credicorp will continue to benefit under his leadership and expertise. Now I would like to open the Q&A session.

[Operator Instructions]. The first question will come from Ernesto Gabilondo with Bank of America.

Thank you. Hi, good morning, Gianfranco, Alejandro, Ignacio, Cesar, Francesca and Milagros. Congrats on your second quarter results and in your conviction of reaching a medium-term ROE of 22% in the next years. And also very helpful the slide that you provided about El Nino, very, very careful.

So my question would be on loan growth. Congrats on returning to a double-digit loan growth, and I noted that you're expecting around 12% growth in this year. But having said that, how should we think about the loan growth breakdown by segment? Just to understand if you would be conservative in the risky portfolio or how comfortable you are to grow the portfolio under a potential strong amino.

Thank you, Ernesto, for your questions. Regarding El Nino, I will say that our approach has been both a comprehensive trying to address the different dimensions on the impact and also very granular at the same time. As Alejandro has highlighted we have identified the parts of the portfolio by segment, by geography per field of the client that has going to be more impacted under the scenarios that we have contemplated. And we are adjusting and going to adjust gradually the appetite in this segment very heroically. So our impact is going to be related to this part of the portfolio, depending on the severity. But in the rest of the country, economic growth, our ambition and expectations remains strong.

[indiscernible] complementing Cesar's comments are -- actually, the question has like it's a twofold answer. One is specifically on amino we cease answered I would only add there that we're also trying to be proactive in helping our clients to be more prepared for the impact by industry, by region, really as [indiscernible]. But the other answer is more -- a longer-term answer is, as we mentioned along the presentation, business confidence is record levels. Traffic investments have been growing at double digits.

Private consumption has been growing at over 5% over the last, I think, 6 quarters already. And well, commodity prices are where they are and so on. So yes, no is, I would say, like a hiccup in terms of potential negative impact. But in a more longer-term vision, we are very confident that the macro environment is very, very positive.

This is Alejandro. Maybe just to add one more important data point to Gianfranco's comment is the loan penetration. I think I mentioned this some time before, but if you take constant exchange rate of December of 2025. At the end of last quarter, the penetration of loans in Peru fell 34%. In 2019, it was 42% to GDP. So I mean there's still an opportunity even to go back numbers that we've already seen. So we think the opportunity is big. And if we add to that the capabilities that we have developed, we are really confident in the midterm loan growth regardless of the hiccup that might come from the short term.

No, perfect. Very helpful. And just a follow-up on all these in terms of the trend for example, wholesale and retail, should we expect in both loan portfolios to be at the double digit because of what you were mentioning private investment, primary consumption, commodities prices, all that should be helping. And in that scenario, very, very granular in what could be exposed related to El Nino. So how should we think about the loan growth for both segments, double-digit for Bolt? Or how are you thinking about it?

Yes. We are expecting -- I mean, again, without considering the hiccup coming from El Nino, we are expecting double-digit loan growth for both wholesale and retail. Retail has been already showing it. And as we were mentioning, wholesale is picking up again. We did very high expectations from private investments. So yes, the short answer is yes, both portfolios should grow double digit.

The next question will come from Brian Flores with Citibank.

Good morning. Congratulations on the results and best of luck to Alejandro and Ignacio on the respective roles. I have a question on asset quality. The cost of risk seems to be very, very controlled despite the fast growth you're showing, right, across the board in SMEs, in AP, in consumer. So we wanted to understand strategically if we, as analysts, do you think we're I don't know, maybe underestimating how much better your underwriting is or the collection have improved because -- or do you think this is more extraordinary regarding the extraordinary liquidity in the system, the good conditions from the macro. I just wanted to understand how much do you think this is idiosyncratic and how much could this be more of a tailwind from the macro side?

Yes. Thank you, Brian, for the question. I think without that, the positive economic environment is a significant factor. But as we have mentioned previously, we have been working very discipline in several parts of the risk capabilities in the origination models, monitoring collections. And we have entered, I would say, after an initial phase of identifying particular improvements in a new phase in which we are developing, I would say, better, higher capabilities, and we are starting to reap the benefits of that.

The approach is very disciplined. BCP, Mibanco, also in the other subsidiaries of the group level by level, and we are developing and deploying these capabilities. These capabilities are also going to help us to withstand the potential impact of El Nino. But our long-term vision is that we are going to increase the capacity to originate higher -- in general, higher yielding loans with controlled risk monitoring very closely the risk appetite. Alejandro highlighted, specifically the collections. We have been more focused on models, origination, monitoring. And recently, we have started to develop additional capabilities and collections that are showing results in BCP and ban. So the short answer is the environment health, but we are doing our job improving internally.

Brian, just one quick comment on top of what a just mentioned. Don't forget that we don't manage that in by cost of risk, we manage by risk-adjusted NIM. So yes, the cost of risk may increase. But what we're convinced is that the risk-adjusted NIM is going to increase more than that because as we go into new markets, the Yape portfolio is a great example. Yes, the cost of this is higher, but the risk adjusted NIM is also higher.

No, super clear, Gianfranco. Just also, if I may, a quick follow-up on your recent comment. We know, obviously, we have a new administration coming in. Just wanted to check with you after maybe your initial approaches with them if you feel the tone in terms of partnerships in terms of growth is a bit more of it or are you a bit more constructive in terms of the outlook here for particularly growth, right?

Yes. Yes. Yes. As Alejandro mentioned before, the penetration and the financial system, we've gone back. It's not that it's still very low, and we've gone back. So we haven't had any specific contracts with the new administration. But from what we see and listen, the whole environment is much -- it's going to be much more proactive in terms of promoting financial inclusion, promoting growth, promoting private investments. And obviously, that environment is much more benign for growth of the financial system.

The next question will come from Renato Meloni with Autonomous Research.

I wanted you to expand your comments on the provisions for El Nino and what to expect going forward. So first, on the 106 million this quarter, was that like client specific? Or was that more sector-specific and the ones that you mentioned before? And then going forward, is this going to be like a recurring level for the next couple of quarters? Or this is enough for the foreseeable future?

Thank you. Thank you for the question, Renato. As we mentioned, we have done a very thorough analysis of the portfolio. talking specifically the provision thing we have gone print by client segment by segment in the wholesale part of the portfolio. And in the retail, we have used an approach of geography and profile of the client and we have several scenarios. And we are with the logic of expected losses that is embedded in the logic of IFRS 9, we are constituting provisioning, and we are going to have probably a second important point of control at the end of the second quarter, the beginning of the -- sorry, at the end of the third quarter, beginning of the fourth because in our conversation with the specialists, the climatologist, at this point, September, October, we are going to have a much better assessment of the severity.

We are moving in the expectation of medium and strong mind at this point, we are going to make a reassessment to calibrate the expected losses that we need to book this year. Perfect. So September, October, a potential new adjustment, and that's going to be it for this year. And when we go to 2027, when you mentioned it's the when the economy will see the impact, maybe another one there or potentially be first [indiscernible] what was that?

Yes, the way we provision through IFRS 9 is a forward-looking provision. Therefore, you're completely right. Depending on the data, I just mentioned, depending on the data, we can analyze in September, October, we will make a new assessment as we move forward and the real impact of El Nino comes into place, we will decide what that more than we. The model will tell us what the provision should be. remind our provision system is forward-looking

The next question will come from Daniel Vaz with Safra.

Hi guys, good morning. Congrats on the results. Alejandro, Ignacio, wishing you the success in your new roles. So my question is regarding your refreshed midterm ROE guidance. So we often as you are a bank, we often do a bottom-up analysis to your model. But Credicorp, you still are holding also, right? So you have a lot of businesses we could look at a top-down view or some of the parts view also.

So I guess my question is, which companies in your holding carry the most upside right now. So Mibanco is already running above the 22% guidance. BCP runs at 30s and Pacifico and the advisory runs below. So should we expect even better ROEs at the ones that already run above it or ROEs improving at the ones which we this level right now?

Yes. Thank you, Daniel. I'll first start talking about the levers that we believe are behind the new midterm ROE that we've shared and then give you some color on the specific question. So basically, we believe this comes from continuing to grow in the underpenetrated financial product segment. And this, by the way, is lending, but it's also investment, it's also insurance. So all in all, they are all underpenetrated segments, even if you compare them to countries like Colombia and of course, Chile, so there's still an opportunity to continue penetrating the other thing is that we are expecting higher risk-adjusted margins.

This is supported by pricing, the shift in portfolio mix that I mentioning, risk capabilities also. So we should see an impact there. The other important thing is an increase in fee income and monetization of our innovation portfolio. Seeing the most visible one, but other ones coming down the pipeline that should start to generate also more fee income and a positive operating leverage where basically income should grow faster than our expenses. So all of those things bring us to the new around 22% ROE.

When you talk specifically, I think there's both things can be true in the sense that we believe there's still space for some improvement in ROE in the companies that are performing strong to BCP, Mibanco, going back to this penetration in lending, et cetera, but if you think about also the under penetration in insurance and their penetration in mutual funds, there is still space also in the other company. So we are not seeing this like specifically in 1 or 2 companies. We believe there is space for improvement across the board.

On what [indiscernible] just mentioned. Also bear in mind the impact on the disruptive initiatives. They are very -- in terms of ROE, they are very accretive. So they're going to be accretive this year. And obviously, as we move forward, they should be -- or we expect them to be much more accretive. So that's another lever that you should take into account.

The next question will come from Carlos Gomez-Lopez with ABC.

And the first in, congratulations, and thank you to Alejandro for this time with us. It has been brief, but it has been good. And [indiscernible] I want to talk about the same question, which is the target priority. My question is a little bit different what is the urgency to increase the midterm ROE? You were around 17% for a long time. increased on last October to 18.5%. Now you got 22. At this point in time, where arguably everything is going right, you're delivering 21%, is this something that you are setting an internal goal or something has changed fundamentally that makes you believe that you actually need to be there.

And I also start because I go back in time over the last 10 or 20 years, your REs have been my number, 7.5%, 19%, that's even taking out of it. And you actually are less leveraged now than you were then to have more capital. So I mean it would stand to reason that maybe it doesn't get that high. So I want to understand why you need to move the target now? And again, I don't know that I can achieve it. I just wondering why?

This is Alejandro. So I'll begin by saying that, yes, we did mention the 19.5% in October of last year, but I specifically mentioned there that we were going into a big political cycle in all of Latin America. If you remember at that time, we were about to have elections in Colombia, a Chile, Bolivia, Colombia, Peru. And -- so we basically decided to take a conservative stance, and we were explicit about it. And we did mention then that we would come back after that cycle with a revised number, which is what we're doing right now. And when you look and I was just explaining the drivers, the ecosystem we've built our ability, the principality we build and our ability to better serve all these clients it makes us confident that we can achieve a higher ROE than the around 9.5%.

Even -- I mean, just to give you an example, even this year, if there was El Nino, we would have outperformed clearly that 19.5% and probably would have been above the 20% mark. So our ability to generate returns today is higher than the number we gave on a stable situation, I mean, taking away specific things like El Nino. So we thought it was the right thing to basically give a more realistic number on what we can achieve. In the coming years.

Yes. And Carlos, this is [indiscernible] on the spot. We also are a more -- a less leveraged company. So the risk of [indiscernible] lower than a few years before current liquidity ratio was in single digits. So -- but we're confident that the 22% is more than achievable.

The next question will come from Yuri Fernandes with JPMorgan.

I have -- and congrats also on the quarter, pretty good 20% despite the additional provisions. I have a curious about the quarter here on other income especially the noncore income. It moved up a lot this quarter, some 40% quarter-over-quarter. So if you can explain what drove it? I guess, on your comments in the automation effects, maybe secure mark-to-market. So what drove this? Is this client activity? Should this be more recurring? Or should we see a normalization of this other income line?

Yes, sure. So basically, I would say it's come from a lot of different sources as we increment this principality, we've been talking about there's more transactional fees that we generate both at BCP, Yape. I mentioned FX as a driver also which has been growing for the last few years. It had a very good return due to the volatility related to elections, but we still believe it can continue to have very strong results going forward. And in general, again, as we move further down with our strategy to increase principality we are getting a larger share of fees in the market, and we expected that to continue. And that's why we -- I mentioned earlier, we're now achieving the guidance that we're talking about high teens or mid- to high teens expected growth there. And we believe that should continue going forward.

No, super clear. And if I may, a second one here guys, just on cost and efficiency, could we see for the 22 ROE cost to income be much better? Because I know today, expenses and revenues, they are growing somewhat at a similar pace, but you are accelerating on growth you are pretty confident with risk-adjusted margins. I know you have your new initiatives, 350 bps guidance for cost-to-income headwind. But I don't know, could we start to see expenses slowing down? And maybe efficiency become a powerful tailwind for you?

Yes, the short answer is yes. This number hasn't changed when we were -- in October of last year, we talked about the mid-term cost-to-income closer to 3%. We are expecting to go in that direction, our view of the market takes in that direction as our innovation scale, Gianfranco mentioned, today, the innovation portfolio is positive in but it has around 300 basis points of drag on cost to income that is going to change as Yape scaling and goes from its current cost to income, which is higher than BTP and going below those numbers. more kind of like large neo banks. So all in all, what we see going forward is an improvement in the operating leverage. So basically, income growing much faster than expenses and going to be around 40% cost-to-income in the midterm.

The next question will come from Julianna Ohara with Goldman Sachs.

Congratulations on your results. I just have a quick follow-up on a comment you made earlier. I think you mentioned you're adjusting your portfolios based on what you're seeing for El Nino. I just wanted to know if you could share A bit more color is that would have some mix impact into NIM and your asset quality expectations. Thank you.

Yes. Thank you. The change is actually in the origination mix in specific areas. So we continue improvement in general, but identifying areas that are going to be more severely impacted as it meets with the profile of the clients. We adjust lowering the risk appetite temporarily in this segment. So temporarily, we are going to have, let's say, a less pronounced change in the mix of the portfolio, but the general trend continues.

Maybe I'll just add [indiscernible], as I mentioned in the guidance, we -- this is a -- we are expecting this year to have around 12% loan growth. So again, it's going to be a very strong year, where we might see a little bit of a lower loan growth is in 2027 when all the things that said mentioning will take place. Again, the main effect of El Nino are expected to be in 2027, and that could mean probably a little bit of a lower rate of growth in loans.

The next question will come from Andres Soto with Santander.

Good morning, everybody. Thank you for the presentation. I have two questions. The first one is a follow-up on the El Nino provisions. I understand you guys do a new assessment by the end of third quarter, the beginning of the fall on, but I would like to understand from your guidance for the full year, how much of additional provisions are you already considering for El Nino? Is it going to be similar to this quarter, we added 30 bps to the cost of rates, it's going to be higher, lower? Any color there will be helping.

Andres, this is Alejandro. The main color I'll give is that what we're expecting is to remain within guidance even with a severe line case. So I mean, we still don't know how far it's going to get, but given the dynamics we've seen this year where we were coming on the lower end of the guidance, what would probably happen is that we'll move towards the middle to higher end of the guidance, but stay within guidance even with the full provisioning of a severe need.

Okay. That helps. My second question is on Yape lending. We saw a significant acceleration this quarter I would like to understand this acceleration is coming from increasing the balances for your existing customers as you exchange duration? Or is it coming from new customers? Or is already reflecting the lending initiatives with SMEs within Japan.

So it's actually coming from both. As you have heard us, we start Yape with a mono quota, a mono installment. And then once we know your behavior, we go into a multi-installment, we do this for SME and for individuals. The growth is today primarily in individuals just because the SME is a little further behind. We started later. So we're seeing growth on both sides. And what we are seeing as well is recurrent in customers, so repayment and a secondary loan a third loan and we are seeing ticket growth and also term growth. Those contribute both on the loan portfolio side and of course, on.

So this is still gradual. This is very slow, but this is what we're seeing on both segments.

At some point, you mentioned what is the potential number of customers that you could reach via lending. Do you have any update to that number based on the performance that you have achieved over the past few quarters?

Yes. So Yape, as you know, has a base of over 160 million. You've heard that credit penetration in Peru is still low. We have today reached over 5 million customers through a loan, and the portfolio is around, I would say, we disbursed around 2 million loans -- so the growth rate here is important. We don't have a set target in terms of like 50% of Yape customers should have a loan or anything like that. But of course, we feel because of the product and the type of customer we serve. This is going to be a large scale in terms of loans. Small loans, again, this is not going into high loans, that's more BCP and more Bianco. This is very long short launch and shorter term as well. So growth should be expected.

The next question will come from Alvaro Galicia, Private Investor.

Well, you've just upgraded your medium-term ROE target to an impressive 22% driven by structural improvements and digital monetization. However, you also mentioned that the strongest impact of El Nino will likely materialize in Q1 2027. And a severe scenario could pressure along growth and fee income. Realistically, how much of that 22% of ROE guidance is at risk [indiscernible] shifts from a mantle shock to a severe even later this year. And what is the specific cost of risk threshold that would force you to work back in this new profitability target?

This is Alejandro. So when we talk about the midterm ROE, we're talking an ROE for the next 2 to 3 years. and we believe it is completely this mentioning, we are not necessarily expressing a specific guidance for 2027, which would, of course, be impacted by a severe El Nino and good potentially 2027, we could guide for a lower ROE than the 22%. Again, we're not saying anything as of now. but it doesn't change our expectation of achieving this 22% midterm ROE at all. It would just have a shorter-term impact. the same with loan growth. I mean we're expecting double-digit loan growth for the coming years, not necessarily the -- it's not necessarily going to be the case in 2027, depending on how severe El Nino happens to be.

The next question will come from Alonso Aramburu with BTG.

Yes. Just following that on a little bit on Alvino as well. How are you thinking about dividends, potential extraordinary dividends for the second half of the year? And maybe if I can ask about on a separate -- on a different way, if it's a severe El Nino what's the amount of provisions that you think you can -- you will have to book this year? Is it 500 million? Is it 1 billion? Maybe if you can provide a figure for that?

Yes. You mean the total provision? Yes. So again, we are not providing a number because, as was mentioned earlier, this is information that gated to our model and comes out with a certain number that we will include and we'll give more color as we put more provisions into the numbers. But again, as I mentioned, we are expecting to remain in guidance even in the case of a severe El Nino from what we see today.

So again, without giving a number, just to give you some color, imagine us going up to the upper side of our guidance, and that should give you a sense of what could end up happening, but it's going to depend on information that keeps coming in the coming weeks and months.

Yes. And maybe also. On the dividend question, we believe that we are very well capitalized. So the potential provisions or additional provisions because of our very strong Nino shouldn't affect the extraordinary dividend that we may pay this year because actually, we're paying profits that were generated last year. So yes, that's it.

It appears there are no further questions at this time. I will now turn the call back over to Mr. Gianfranco Ferrari, Chief Executive Officer, for closing remarks.

Thank you. As we close today's discussion, I want to come back to the main message I shared at the beginning of the call. We have greater confidence in Peru's medium-term outlook, and Credicorp is well positioned to capture the opportunities ahead. The results we discussed today, together with the updated medium-term ROE expectations we shared reflect that only a more constructive operating environment but also the structural progress we've made across our ecosystem.

Credicorp today has a deeper customer relationship, stronger digital capabilities, disciplined risk management and a more scalable business model. Importantly, our growth remains anchored in our purpose, improving lives by helping people and business drive. That purpose guides how we invest expand financial inclusion and support our customers and communities through changing conditions. We believe in Peru, and we believe Credicorp has an important role in shaping its future. Every day, we have the privilege of helping millions of people and businesses move forward, and there is no way of opportunity than that.

Before closing, I want to thank Alejandro for his partnership and leadership as CFO. I look forward to continuing to work closely with him in his new role being our microfinance business and Mibanco Peru. I also want to welcome Ignacio, who will join us as CFO and will be with us on next quarter's call. Thank you all for joining us today.

Thank you, ladies and gentlemen. This concludes today's presentation. You may now disconnect.

Good morning, everyone. I would like to welcome you to the Credicorp Limited First 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. [Operator Instructions]

Now it is my pleasure to turn the conference over to Credicorp's IRO, Ms. Milagros Ciguenas, you may begin.

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 at the Q&A session will also be Francesca Raffo, Chief Innovation Officer; Cesar Rios, Chief Risk Officer; and Eduardo Montero, Head of Insurance and Pensions.

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 of 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 recent macro and political environment, the key levers of our decoupling strategy and a brief overview of our quarterly results, followed by Alejandro Perez-Reyes, who will provide a more detailed analysis of key macroeconomic indicators, our financial performance and our outlook for full year 2026.

Gianfranco, please go ahead.

Thank you, Milagros. Good morning, everyone, and thank you for joining us today. Let me begin by thanking our shareholders for the strong support at our recent Annual General Meeting. The outcome of the Board elections reflects a deliberate strategy-led refreshment process, fully aligned with Credicorp's long-term priorities. As announced, shareholders approved the appointment of three new directors and the reelection of six current members. The new directors bring complementary expertise in areas that are increasingly critical for us, particularly technology and AI, financial and regulatory oversight and strategic execution as we continue advancing our transformation and strengthening our operating model. Importantly, our governance framework remains robust with key safeguards firmly in place, including a fully independent audit committee and independent directors leading critical committees. This provides a strong foundation as we navigate different operating environments.

At the global level, recent geopolitical tensions, particularly in the Middle East, have increased uncertainty, mainly through higher energy prices and their potential impact on inflation and the outlook for interest rates. Since our last conference call, Peru's economic activity has been affected by a series of temporary supply side shocks, including higher oil prices related to the conflict in the Middle East, a localized energy disruption and adverse weather conditions that led to contraction in primary sectors. That said, the positive momentum of the economy continues to remain solid. Several activities indicators, including private investment, continue posting double-digit growth, supported by resilient macroeconomic fundamentals and favorable export prices with copper currently trading at around $6.50 per pound.

Against this backdrop, we're maintaining our GDP growth expectation for 2026 at around 3.5%, though our outlook has become more skewed to the downside, with recent macroeconomic indicators tracking closer to 3.2%. More importantly, domestic demand remains particularly dynamic, growing above 4%, which we view as the more relevant driver for loan growth going forward.

As we await the official confirmation of results, the presidential runoff appears likely to feature candidates with markedly different economic visions, including one advocating for a significantly more interventionist role for the state. Should that candidate prevail, some initial market uncertainty could emerge. However, we believe the composition of the Senate is the more decisive factor and is trending toward a configuration that supports macroeconomic fundamentals and institutional continuity. In our view, this legislative balance will act as an effective counterweight helping to preserve political stability.

Peru's structural safeguards, including the Senate's veto authority and constitutional hurdles to significant policy shifts are likely to act as effective constraints, helping preserve the independence of the Central Bank and its mandate, particularly regarding monetary financing to the treasury. Given this, we remain confident that Peru's economic model will continue to prove resilient, supported by solid institutional frameworks. Against this backdrop, we continue to closely monitor price dynamics and monetary conditions. Inflation has seen an uptick to 4% year-over-year, mainly driven by transport, energy and food costs. As a result, monetary conditions are likely to remain somewhat tighter than previously anticipated.

Across the region, the operating environment remains mixed, reflecting the initial impact of external pressures. In Colombia, activity remains relatively resilient, supported by consumption, while policy uncertainty persists ahead of the presidential elections on May 31. In Chile, growth has softened amid weaker early year activity and higher oil prices. At the same time, the new government offers improved prospects for private investment. In Bolivia, macroeconomic conditions remain challenging with performance exceeding expectations. Overall, while external conditions remain dynamic, the resilience of our core markets, combined with the strength and attractiveness of our offerings give us confidence that 2026 will remain a solid year.

As we look ahead, we will further execute our decoupling strategy through four differentiated growth anchors. First, we're strengthening our leading position in the underpenetrated markets where we continue to see clear avenues of growth. We see significant room for -- to deepen financial inclusion and expand our reach across client segments where structural gaps persist. This enables us to grow while maintaining disciplined risk standards.

Second, we're scaling our integrated digital ecosystem. In 2026, we will leverage our platforms to accelerate client acquisition, deepen engagement and increase cross-sell while also improving efficiency and customer experience. A key component in our innovation portfolio is our neobank unit, which effective April 1, brings together Yape and iO in Peru, Tenpo in Chile and Yape in Bolivia under a common umbrella, led by Raimundo Morales. These platforms expand our reach and open new avenues for growth, particularly in payments and lending. More broadly, we're deepening our competitive moat by leveraging our scale, client base and ecosystem integration to drive sustained differentiation and progressively higher monetization.

Third, we are unlocking synergies by leveraging shared capabilities across our ecosystem. We're placing greater emphasis on data analytics and risk management capabilities that can be deployed across businesses. This also includes advancing our knowledge sharing agenda so that best practices can be applied across subsidiaries, improving decision-making, client targeting and risk assessment. While we are still in the early stages, we're already seeing tangible benefits, and we believe this represents a meaningful opportunity going forward.

Finally, delivering strong and resilient returns across economic cycles. This is underpinned by a prudent and holistic approach to risk and capital management across the organization. We continue to strengthen our capabilities across credit, liquidity and operational risk while maintaining a disciplined approach to capital allocation. This integrated framework is translating into more consistent performance and reinforces our resilience, enhancing our ability to navigate volatility, support sustainable growth and protect returns across different macro environments.

Turning now to the first quarter results. We reported a very solid ROE of 21.1%, which exceeded expectations and reflects strong fundamentals across our core businesses. Operational performance was robust across core businesses. Additionally, we achieved 9% of risk-adjusted revenues from our innovation portfolio this quarter, advancing toward our 10% target by the end of this year. We're seeing an acceleration of credit demand across our main lending segments. In the first quarter, loan growth was robust in BCP and Mibanco. We expect retail segments and microfinance to accelerate in the coming quarters.

Risk-adjusted NIM strengthened sequentially, supported by improved asset quality and a resilient underlying NIM as our loan portfolio expanded and funding mix improved. Deposit growth remained strong, reflecting system liquidity and sustained client confidence, while continued investments in service and digital capabilities deepened our client relationships and drove market share gains in low-cost funding, reaching 41.2% this quarter. Asset quality reflects proactive measures taken since 2023, including tighter origination standards, risk repricing, enhanced loan rescheduling and greater investments in analytics alongside a favorable macro environment.

Additionally, our strong solvency has enabled us to increase our dividend to PEN 50 per share, while also supporting our plans for sustained long-term growth. Our efficiency ratio is at 45.8% with our guidance -- within our guidance range as strategic investments in innovation and digital capabilities continue to drive diversified income streams and scalable growth through deeper market penetration. These results underscore the strength of our core operations and our long-term commitment to building a more agile, client-centric and resilient financial platform.

Before I turn the call over to Alejandro, I would like to congratulate him on his appointment to lead our finance -- our microfinance business at Mibanco. These transitions reflect the depth of talent we continue to build across Credicorp and our disciplined approach to succession planning and leadership development. We're also very pleased that Ignacio Belaunde will assume the CFO role later this year, bringing strong financial and strategic experience to the position. In the meantime, we still have Alejandro with us for one more quarter of earnings calls before this transition takes effect.

With that, Alejandro, please go ahead.

Thank you, Gianfranco, and good morning, everyone. As Gianfranco mentioned, we delivered remarkable overall operating results, including record high net income, which reflects solid growth in risk-adjusted revenue streams in our business ecosystem. As I discuss the quarter highlights, I will focus on the year-over-year operating trends. Loans measured in quarter-end balances increased 8.2%. This uptick was driven primarily by BCP through both retail and wholesale banking and by Mibanco. Asset quality improved across the board with Credicorp's NPL ratio declined to 4.3% for the quarter. This positive trend was driven by higher debt repayments, especially among retail banking clients, supported by ongoing refinements in underwriting standards and collections management and growth in liquidity through pension inflows.

In this context, the cost of risk stood at 1.3%, bolstered by improvements in payment performance in a more favorable macroeconomic environment and by strengthened risk management. Net interest income increased 10.9% spurred by growth in interest income, driven mainly by loan portfolio expansion by a contraction in interest expenses as interest rates fell and low-cost deposits continue to gain share to account for 63.9% of the funding base at quarter end. In this context, NIM stood at 6.6%.

Other core income grew 19.5%. Fee income increased 15.6%, boosted by transactional activity at Yape and BCP. Gains on FX transactions rose 30.6% through higher volumes at BCP. Lastly, the insurance underwriting results fell 9.1% on the back of lower premiums in the P&C business and inflationary pressures on expenses for claims in the Life business, which have no impact on the bottom line given that these claims are compensated with inflation-linked financial income. Excluding inflation-based impacts on claims expenses, the underwriting result rose 4% year-over-year, driven mainly by the Life business.

We delivered 21.1% ROE this quarter, fueled by strong loan growth, strengthened asset quality and diversified income sources, showcasing the success of our decoupling strategy, risk management measures and investment in digital capabilities. Finally, as Gianfranco mentioned, we recently declared a record high ordinary dividend of PEN 50 per share as we moved capital levels closer to target across our subsidiaries. Next slide, please.

GDP is expected to have grown close to 3% year-over-year in the first quarter, reflecting solid momentum in the economy despite localized energy disruptions and higher oil prices in March. More importantly, domestic demand is expected to have expanded by more than 5% year-over-year for the sixth consecutive quarter. High-frequency indicators continue to signal broad-based and robust expansion with several indicators posting double-digit year-over-year growth. For instance, during the first quarter, light vehicle sales led the gains, rising by nearly 40%, followed by uptick of nearly 20% in capital goods imports and 14% for cement consumption. Historic high terms of trade and ongoing business cycle momentum remain the key drivers of this performance.

While higher oil prices introduce uncertainty, Peru is less vulnerable than other peers of the region given its lesser net importer position. Another source of uncertainty going forward will be the impact of an El Nino event. So far, this has been felt in the first anchovy fishing season, but it is still early to tell how it will develop going forward. Also, as Gianfranco mentioned, while the presidential elections may generate some near-term uncertainty, the broader institutional framework, including the role of the Senate, should help limit the scope of abrupt changes and provide a measure of stability.

Next slide, please. The Federal Reserve has maintained its policy rate since December as it continues to assess incoming economic data and determine how rising oil prices impact inflation and employment. In Peru, annual inflation rose to 4% year-over-year in April, its highest level in more than 2 years, reflecting primarily higher local transportation prices. The Central Bank has indicated that inflation is expected to return to the target range within the forecast horizon and converge to 2% next year as the effects of these shocks gradually dissipate.

In Colombia, annual inflation accelerated to 5.6% in March, driven in part by the 23% minimum wage increase rolled at the beginning of 2026. To contain inflation expectations, the Central Bank has increased its rate by 200 basis points since December. Presidential elections will be held in 2 weeks and polls suggest a runoff is likely in June. In Chile, investment sentiment improved after President Kast's election, although recent gasoline price increases have tempered the outlook. Annual inflation reached 4% in April and the Central Bank has held the policy rate at 4.5%.

Next slide, please. BCP's profitability posted a solid start to the year, supported by loan growth under disciplined risk management and diversified sources of revenue. In this context, ROE stood at 30.5%. On a year-over-year basis, total loans measured in end-of-period balances rose 7.3%. In FX-neutral terms, loan growth stood at 9.1%, driven by both wholesale and retail banking. Notably, disbursements of long-term wholesale loans were buoyed by a favorable outlook for private investment. In Retail Banking, loan growth accelerated mainly in individuals, reflecting an increase in our risk appetite for consumer loans and an uptick in mortgage loan disbursements, which rose on the back of lower interest rates.

SME-Pyme loan disbursements were also boosted by an increase in our risk appetite. NIM rose 21 basis points to stand at 6%, mainly due to a decrease in the funding cost, while the yield on interest-earning assets remained resilient in an environment of lower interest rates. NPL volumes declined 11.1%, mainly due to debt cancellations by SME-Pyme clients under judicial recovery and secondarily by debt repayments from individuals who availed funds from pension fund withdrawals. Improvements in the quality of origination and in collections management also contributed to the result.

Provisions fell 35.1%, driven mainly by retail banking, which was positively impacted by improvements in payment performance across early vintages in consumer and credit card loans and by reversals in wholesale banking after a corporate client regularizes refinance exposure. In that scenario, the cost of risk decreased to 0.8%, while risk-adjusted NIM stood at a record high of 5.5%. Other core income rose 18.7%, driven mainly by an increase in fee income where strong transactional activity was channeled through Yape and other transactional products at BCP. A secondary driver was growth in gains on FX transactions, which was fueled mainly by retail clients served through digital channels.

Variations in volumes reflect volatility related to tensions in the Middle East and the electoral calendar. Although the ratio of other core income to assets stabilized this quarter due to asset growth, the contribution of fee income plus net gains from FX transactions reached its highest level since 2022, reflecting the strength of our diversified sources of revenue. Operating expenses rose 15.1%, mainly due to an uptick in administrative expenses. This evolution was driven primarily by Yape's use of cloud infrastructure and IT-related services and secondarily by marketing and consulting expenses in the traditional business. Our personnel expenses rose this quarter as we ramped up core business projects to develop commercial and technological capabilities. In this context, operating expenses and personnel expenses, in particular, led the efficiency ratio to stand at 38.6%.

Next slide, please. With 16.4 million monthly active users, Yape continues to expand its MAU base while shifting its focus towards deeper engagement and monetization. Reaching approximately 82% of Peru's economically active population, the platform has achieved nationwide scale. At this level of penetration, incremental growth is driven by higher recurrence, broader multiproduct adoption and monetization of an already large installed base, positioning Yape to continue cutting into cash's share of payments. The platform's positive evolution into a super app is reflected in its engagement metrics. Users transact 67x per month, supported by consistently strong customer satisfaction with an NPS of 77.

This deeper engagement translates into unit economics with revenue per MAU increasing 65% year-over-year to PEN 10.3, widely surpassing growth in expenses per MAU, which rose 26% to PEN 5.9. This proves that operating leverage is on the right, consistent with Yape's asset-light and scalable model. Payments account for 47% of total revenues, while also serving as a core engine for data generation and cross-selling. Revenue-generating total payment volume grew 80% year-over-year, reinforcing Yape's position as Peru's leading digital payment network. Lending revenue grew 3.6x year-over-year, positioning as the platform's fastest-growing vertical. In the first quarter of 2026, more than 5.7 million loans were disbursed, leveraging proprietary data, digital underwriting and distribution to serve the underbanked. With credit penetration at approximately 30% of MAUs, there's still significant upside to accelerate adoption.

Yape has the potential to significantly scale its contributions to Credicorp over time. As of the first quarter, the app represented 17% of the group's fee income and 8% of the group's risk-adjusted revenues year-over-year, up from 12% and 5%, respectively. Next slide, please. As Peru's microfinance system continues to gain traction amid a more dynamic economic backdrop, its performance has followed an upward trend. In this context, Mibanco outperformed its peers by strengthening its transactional value proposition, gaining productivity and strengthening credit risk management. As a result, Mibanco sustained double-digit loan growth and robust profitability of 21.7% this quarter.

From a year-over-year perspective, loans measured in quarter end balances grew 12.4%, riding an upswing in loan disbursements, which hit a new all-time high in March. The NPL ratio continued with a downward trajectory that began last year, falling to 4.9%, an all-time low. Our active pricing management, coupled with a decrease in the cost of funding boosted NIM, which stood at a strong 14.9%. The cost of risk fell 29 basis points on the back of lower risk vintages, which currently account for 88% of total loans. While the cost of risk remained low this quarter, we anticipate some gradual normalization in the second half of 2026 as we incorporate newer and smaller customer segments to bolster portfolio growth while remaining comfortably within our risk appetite. In parallel, risk-adjusted NIM stood at 11.3%, slightly below the 4-year high achieved last quarter.

Operating expenses increased due to higher administrative expenses related to ongoing investments in strategic projects, primarily linked to digital transformation initiatives to modernize our technological architecture and improve client experience. Efficiency improved despite these investments and stood at 49.2% at quarter end. Mibanco Colombia's results continued to rise and registered double-digit loan growth both quarter-over-quarter and year-over-year, bolstered by controlled risk management and improving productivity. Consequently, profitability stood at 18.3% at quarter end, which represents a sizable improvement over the single-digit levels reported at the same time last year.

Next slide, please. Grupo Pacifico delivered solid underlying results in the first quarter with ROE of 18.9% for the quarter. Organic net income grew 11% year-over-year, driven mainly by the Life business and partially offset by the P&C business. In our Life business, commercial execution was strong, supported by growth in our bancassurance channels and an uptick in issuances of optional policies in retail segments, both consistent with our strategy to deepen penetration in high-value customer segments. The net loss on securities dropped this quarter, reflecting a base effect generated by credit downgrades on a couple of assets in the investment portfolio in the first quarter of last year.

In our P&C business, net income fell. This evolution was fueled primarily by a drop in premiums in the corporate segment and secondarily by an uptick in claims in the personal and medical assistance lines. In addition to organic growth, our net income accelerated year-over-year following the consolidation of Pacifico Salud, which includes medical assistance, corporate health insurance and medical services. These businesses continue to advance through solid commercial dynamics and disciplined cost management, which bolsters our confidence in Pacifico Salud's long-term earnings contribution. If we include the full consolidation of Pacifico Salud's operations in Grupo Pacifico results, consolidated net income rose 19% year-over-year.

Next slide, please. ROE for our Investment Management & Advisory business stood at 15.7% in the first quarter. Let me give a brief overview of this quarter's year-over-year dynamics and underlying structural trends. Quarter results showed mixed dynamics. Revenues benefited from stronger performance in our Wealth and Asset Management businesses with AUMs expanding by 28% and 34%, respectively. Our capital markets line also evolved favorably in line with market conditions. These favorable business dynamics were partially offset by an increase in operating expenses, which was mainly attributable to a particularly low comparative base in the first quarter of 2025. In this context, net income fell 8% over the period.

Next slide, please. Now I would like to review Credicorp's consolidated evolution. Interest-earning assets rose sequentially, driven mainly by growth in investment balances as we took advantage of tactical opportunities to capitalize on our cash position. Loan growth fueled by BCP also contributed to the uptick in interest-earning assets, albeit to a lesser extent. On the liability side, low-cost deposits posted an increase, thanks to our solid transactional offering and inflows from pension fund withdrawals.

Structural balance sheet trends are better explained on a year-over-year basis. Loan growth, which was driven mainly by BCP and Mibanco, led the interest-earning asset mix to generate higher yields despite cash buildup. In this context, the yield on interest-earning assets rose 10 basis points year-over-year. On the liability side, lower interest rates, along with an increase in the share of low-cost deposits resulted in a 31 basis point decrease in the funding cost over the same period. In this context, NIM stood at 6.6% for the quarter.

Next slide, please. Moving on to loan portfolio quality. Asset quality continued to improve this quarter as NPL volumes contracted across segments. The NPL ratio at quarter end was 4.3%, which is below the levels reported prior to the 2023 recession. Provisions dropped over the last 12 months, buoyed by steady economic recovery, which strengthened repayment dynamics and by effective risk management at both BCP and Mibanco. In this context, the NPL coverage ratio rose and stood at 113.8%. Going forward, we will continue to accelerate retail origination while maintaining a disciplined approach to risk. We expect loan growth to maintain its dynamism. The cost of risk, in turn, is expected to increase modestly, but remain within our risk appetite.

Next slide, please. Core income reached new record levels, supported by this quarter's operating momentum across core businesses, which was driven by loan growth in higher-yield segments, a drop in the funding cost and an upward trajectory for transactional activity. On a yearly basis, 13.3% growth in core income was driven by diverse revenue streams with net interest income, fees and FX gains reporting double-digit gains. Net interest income grew 10.9%, benefiting from sustained growth in our low-cost deposit base and resilient asset yields. Fee income in turn rose 15.6% on the back of dynamic bancassurance, payments and transactional services, while the 30.6% uptick in FX gains was supported by higher transactional volumes and disciplined pricing.

Profitability metrics continue to strengthen with risk-adjusted NIM trending upward to 5.81%, reflecting improved pricing, portfolio mix optimization and effective risk management. The efficiency ratio for the year stood within guidance at 45.8%. Operating expenses grew 13.1%, fueled primarily by core businesses at BCP and investments in our innovation portfolio. Growth in core expenses at BCP was driven mainly by IT expenses for commercial and transactional capability development. Expenses for our innovation portfolio, which were led by Yape, Tenpo and Culqi, rose 40% and represented 84% of disruptive expenses for the quarter.

Next slide, please. ROE for the quarter was 21.1%, supported by solid business performance and a favorable economic backdrop. Net income reached a record high once again. We achieved this by capitalizing on our structural strength, our differentiated digital and transactional capabilities, low funding cost advantage, loan portfolio growth, particularly in retail segments and sustained improvements in risk management.

Now I will move on to our guidance. Next slide, please. We maintain our expectation for Peru's GDP growth stand at around 3.5% in 2026, though we recognize that risks to this outlook are tilted to the downside. We expect our total loan book to grow around 8.5% measured in quarter end balances or around 10.5% on an FX-neutral basis. Amid a dynamic economic backdrop and strengthening origination levels, we expect growth in balances to continue accelerating over the remainder of the year, driven primarily by retail banking at BCP and by Mibanco. The acceleration anticipated for loan growth and the shift in the mix towards retail should support NIM, which we expect to stand between 6.4% and 6.7%.

This quarter's cost of risk was below expectations. We anticipate that retail origination will continue to increase. As a result, the cost of risk is expected to approach the lower end of our guidance range and our risk-adjusted NIM is expected to remain within guidance. On the efficiency front, we maintain our guidance range for 2026. Turning to noninterest income. As we mentioned in our previous earnings call, we continue to expect fee income to grow in the low double digits this year, driven by an ongoing uptick in economic activity and in the diversification of our income sources. On the insurance side, our underlying insurance business is expected to continue performing solidly. However, the insurance underwriting result, which was bolstered by extraordinary reversals for the D&S business in 2025, is expected to drop by high single digits. Excluding the D&S business, the result is on track to deliver high single-digit growth.

Although we are reaffirming our ROE guidance of around 19.5% for 2026, the strength of our first quarter performance and the ongoing positive trends suggest that we are well positioned to achieve results on the upper side of this level. We remain prudent in the face of global and local uncertainties, but our outlook reflects confidence in our ability to deliver strong value for shareholders.

With this comment, I would like to open the Q&A session.

[Operator Instructions] Our first question comes from Ernesto Gabilondo with Bank of America.

Alejandro, best of luck in your new position, and Ignacio wishing you the same. Congrats on your record high results. My first question is whether you could provide some color on the presidential election and the potential impact of El Nino. Regarding the election, with almost 100% of the votes counted. And as you mentioned in your remarks, the second round appears likely to be in between Fujimori and Sanchez. Could you share any insights on potential alliances or support these candidates may receive from other potential contenders that are not passing to the second round?

And on El Nino, expectations are currently pointing to a strong event. A super El Nino is being ruled out for now. But based on your experience with this type of weather phenomenon, how likely is that this outlook change throughout the year? And in case of a strong El Nino, what measures would you expect to evaluate or implement?

Ernesto, this is Gianfranco. Thank you for your words. Let me take the political question, and then I'll ask Cesar and Alejandro, if you want to comment on the El Nino, which, by the way, there are actually two El Ninos as we speak -- El Nino effects as we speak. Yes, you're right. Officially, there's no official results. And so we do not know who the two candidates that are going to go to the ballotage or the runoff. But yes, we're close to 100%. So the probability of Fujimori and Sanchez going to the second round is very high.

Regarding your question on alliances and so on, there's nothing material as we speak. But on top of that, also bear in mind that the endorsement power that there is in Peru is quite limited. So we'll have to see what happens going on. Actually, the only poll that was published or that is public after the first round is that they're basically -- when I say they, Mrs. Fujimori and Mr. Sanchez are basically tied.

So with that, I will ask Cesar to go with the comments on El Nino, please.

Ernesto, regarding El Nino, I think first, it's important to clarify that we deal with two different phenomenon. The coastal El Nino that we are already in a El Nino phenomenon at this point. I am going to detail a little bit more. And the second one that probably is the more global awareness is the Central Pacific El Nino. These are two different phenomenon. Depending on the period of the year, this can affect Peru differently and particularly are dangerous when the confluence of these phenomenon coincide with the summer. Even say that, regarding the local El Nino, we are already in a low moderate effect at this point. It has already affected the fishing season, has been temporarily halted after only 1/4 of the usual harvest volume is expected for this year. So these effects are already impacting the economy.

And we are also closely monitoring the effects at this point in the agricultural sector. Usually, the impact is diminish the level of productivity, but in some cases, is also compensated by higher prices. So we are in the point that we are closely monitoring. We are still not changing our credit policy. And probably around September, we are going to have much clear indication of the real impact. And in this point, we should start taking measures considering not only this already mentioning effects, but heavy rains in the north part of the city. So in our expectations, we are already considering this moderate impact and closely monitoring potential higher impact for the last part of the year. I don't know if this helps.

Yes.

Ernesto, this is Alejandro. First, thanks for your words. I just wanted to give you a little bit more color or numerical color on the impact of El Nino over time. In 1998, we had what is considered an extraordinary El Nino and the impact on GDP in Peru was 1.7%. The moderate El Nino of 2017 was 0.8% and the strong El Nino of 2023 was 1.1%. So depending -- and going back to Cesar's comments, it's still very early to know what kind of El Nino we will get depending on the summer and the confliction of both the El Nino Costero and the El Niño, whether it's going to be moderate or strong, we're going to see the impact around 1% of GDP of Peru if it were to materialize.

Great. Super helpful. Good color. And then just my second question is related to asset quality. The cost of risk has become very well below your guidance. So just wondering whether there are potential downside risks or it's still early to assess that considering and we need to wait for the outcome of the presidential election and to evaluate the impact of El Nino?

Thank you, Ernesto. I would like to highlight two different behaviors in our portfolio. Let's say, Mibanco, as Alejandro has mentioned, has had a very good performance, but not a dramatical change recently, as you can see in the recent evolution. And these numbers reflect improved risk performance because at the same time that we are decreasing the cost of risk, we are increasing our exposure in low segment tickets, particularly below PEN 5,000. So a good performance, but not a dramatical change on the quarter.

In the case of BCP, you can see a significant change on the quarter. And I would like to mention two different kind of effects. One is a more structural effect that is the combination of the origination and the measures that we have taken recently that has improved the quality of risk segment by segment, and we are reaping the benefits of these measures taken. And additionally, we are starting to see also the contribution -- the increased contribution of more provisions of the new origination in higher-yielding segments that has been more pronounced the last quarter of last year and this first quarter, as you have seen in our figures. That's structural. And segment by segment, we are still seeing an improvement, but it's not a dramatical improvement.

But the effect that has been changing recently has been some one-off effect that has impacted the quarter in particular. We have an unusually high as a product of the boom in the mining sector of profit sharing. So this profit sharing has improved the one-off payment capacity of the middle segment that was the focus of our origination in the last 2 years. So good payment -- additional payments from the source. The liberated fund from the pension funds that has improved also in the same segment. And on top of that, a combination of payments in the wholesale portfolio. In contrast with the last quarter in which we have additional provision for a number of construction-related segment clients. In this quarter, we have liberation of provisions. So you have good underlying behavior in BCP with a slight decrease of the cost of risk gradually increasing as we shift the portfolio, but the combination of three very point in time effects in the quarter that I would say, exacerbated the decrease of the cost of risk.

As we start to originate faster and faster in higher-yield segments, we are going to increase the cost of risk towards the expected rates that Alejandro has shared, and our expectation is to be with the information that we have in the lower range of this -- the guidance.

The next question comes from Brian Flores with Citi.

I have one quick question or sorry, a follow-up on Ernesto's question regarding asset quality. So is it fair to say that this maybe extraordinary cost of risk that we have seen is allowing you to maybe allocate a bit more capital on, as you mentioned, higher-yielding credit, and we should see this maybe during this year? And then maybe my question is on your ROE guidance. I think you mentioned that maybe you could be on the upper side given the trends that you're seeing. And I think maybe cost of risk is perhaps the one that is allowing you to already be mentioning this. So I just wanted to see if besides cost of risk, you see also another of these key variables, maybe efficiency, allowing you to be on the upper side of the range, as you were mentioning.

Brian, let me provide a more, let's say, longer-term vision regarding the question on cost of risk, and then I'll ask both Cesar and Alejandro to answer on both the cost of risk and the ROE. First of all, we do not manage the company by only taking a look at cost of risk, but most importantly, by taking a look at risk-adjusted NIM. So what we've been providing, and I believe Alejandro mentioned it when he commented about guidance is that we do expect cost -- sorry, risk-adjusted NIM to increase even though we expect cost of risk at the same time to increase. And the main reason is because the retail portfolio and mostly microfinance and the Yape lending book is going to -- are going to grow at a much faster pace.

We are not -- having said that, we're not taking -- making decisions based on a short-term cost of risk results, but on a much more longer and structural vision regarding the opportunities we see mostly again in the retail portfolio in the underbanked and the unbanked and leveraging a lot on the data we've been gathering over the last actually 10 years through Yape and other digital channels.

And maybe I'll end that with the comment on guidance on ROE. It's not only a matter of cost of risk. And well, the first quarter has been over 20% already. The economy in Peru is really performing quite well. Therefore, we have a lot of tailwinds. So it's not only a matter of what we're doing as a company, but also the environment is quite good. I don't know if Cesar and Alejandro would like to add something in that sense.

I think Gianfranco has explained perfectly our general approach. And I will say, if we are taking confidence to increase our risk taking is because segment by segment, we are having results within our expectation or slightly better. That's what gives us confidence to continue growing and accelerating the risk taking in higher yield, higher risk segments. The temporary effects were exactly the temporary effects that are very welcome, but our strategy continues to perform based on the capabilities that we are building and the results that we are monitoring and adjusting.

Yes. Brian, this is Alejandro. I'm going to add something on the ROE guidance. We haven't changed the guidance, which is around 19.5%. But as I mentioned in my remarks, we are expecting to be on the upper side of that number given what we've already seen in this first quarter, and we've had an ROE above 20% and the strength of the economy. Having said that, there are, of course, some important events that we need to monitor that might have an impact like the elections and the El Niño that we were already discussing. But we believe that given the strength of the economy, given all the things that we've been developing, both in risk management, transactional capabilities, et cetera, and what we see, we should be able to be on the upper side of the 19.5% for this year going forward.

And again, it's not just cost of risk. There's also the loan growth that we're expecting that can be a little bit stronger. And hence the -- and then you have the risk-adjusted NIM that Gianfranco mentioned probably being strong for the year and all those figures together will probably allow us to be above the 19.5%. But again, we are at a moment in the year where we've seen an amazing first 4 months because April has also been very strong in the economy. But we are about to choose a new President, and there's this El Nino effect going on. So that's the reason why we want to remain prudent as of now.

Very clear, team. I appreciate. Just if I understood correctly, given the improvement in marginal ROE, your priority in capital allocation, if I understand correctly, should be reinvestment in growing, right, rather than extraordinary dividends, all of that because I think the unit economics are healthier, right?

Sure. I mean the priority is definitely growth, and we believe there's a big opportunity in many of the segments that we serve.

The next question comes from Thiago Batista with UBS BB.

Congratulations for the results, very strong numbers. Can you give me some indication about the performance of Yape in Bolivia? And also, if you believe this platform can be implemented in other places, let's say, in Chile, for instance. So those two points, how Yape is performing in Bolivia and if it's possible to see kind of internationalization of Yape?

Francesca, could you answer that, please?

Sure. Thank you, Thiago, for the question. Yape Bolivia has been growing at a steady pace. I would say that last year, it accelerated growth, reaching over 2 million customers for a smaller country that is Bolivia. But bear in mind that Bolivia has a different starting point than Peru, it had an interoperable system in place. So it's a different model, but we have been successful to gain market and to be the leader in the market. Having said that, we have a very solid competitor that is close by. So at a transactional pace, we are growing different again than Peru. More than just P2P transactions, there's a lot of P2M transactions. So it's a merchant driving system.

And we are following the path similar to Peru in having the monetization, which is putting a lot of services around utility payments and so forth and digitizing payments as a whole, and then gaining a lot of information to go into value-added services around lending and other products. So Bolivia is performing good. We've worked a lot around technology as well. As you know, we have a bank there, and we began that process with their technology.

And that brings me to the next -- your next comment around the internationalization. So Chile, for sure, with Tenpo as a neobank there, as Gianfranco mentioned, leveraging capabilities and there is a cash-based economy in Chile as well that we're, of course, looking at. The technological piece, I think, is super important, and Yape has been working around creating a platform that is much more exportable.

Yes. Maybe, Thiago, just to complement Francesca's answer, we announcing that -- on April 1, we created the neobanking unit under Raimundo Morales, CEO -- the current CEO of Yape -- Yape Peru. I mean, under that unit, Yape Peru, Yape Bolivia, iO and Tenpo are going to be operating. The logic -- part of the logic -- well, most of the logic is to leverage on tech capabilities, knowledge of the market and so on. And part of the logic is what you just said. Is there -- are there any possibilities to grow elsewhere?

The next question comes from Renato Meloni with Autonomous Research.

Congrats on the results. My question is on growth, right? You had been mentioning earlier this year, there still expected retail growth to remain solid. But this quarter, we saw a nice pickup on wholesale lending. So I wonder if you could explain a bit the drivers for that you expect this to continue? And then if you see some upside to the loan growth guidance.

Renato, thank you for your words. And regarding your question on the wholesale growth, I'm pleased after anyone could help me in that sense. But what we've been -- so let me go a step back. If you were to look at our book in the last, I don't know, 5 years, it's been basically flattish and mostly in the corporate world or in the wholesale world because I would say that Peru has gone through the perfect storm over the last 5 years. COVID, then I don't know, 6 presidents in 5 years or whatever, a lack of stability and so on. And therefore, private investment in general, and this was across industries, really stalled.

We started to see, and I believe we commented in last call, private investment grew double digits. I believe it was 11% last year. And that has kept -- that pace has -- so private investment has been -- has kept its pace this quarter -- the last quarter, sorry. And what has happened on the other hand, is that the domestic demand, as Alejandro mentioned, has been growing between 4% to 5% consistently over the last, I believe, it's 6 quarters. So across industries, there are companies that are operating at full capacity. So that's the main reason for loan growth in the wholesale portfolio.

That's perfect. But if you also consider this positive economic background that you mentioned, don't you think that the 8.5% loan growth guidance for the year might be a bit too conservative?

Could be, yes. But again, on the other hand -- you're right. On the other hand, the uncertainty that we mentioned at the beginning regarding global uncertainty, definitely, oil prices are going to -- Peru is a net importer. So oil prices could hit the economy and the uncertainty because of the elections, and we're going back basically to somehow a binary scenario, could bring some slowdown in that sense. We will have much more clarity after the second round.

The next question comes from Lindsey Shema with Goldman Sachs.

Congrats on the results. First, on deposits, we saw a really favorable improvement in deposit mix, which was partially attributed to deposits from the pension fund withdrawal. First off, how much would you attribute to pension fund withdrawal deposits? I know the last time we had talked, it was running pretty strong and you captured a good percentage of the liquidity into the system. And then also, how sticky would you consider those deposits? Is it something that we can expect as kind of a tailwind going forward? And then I have a second question, but I'll ask after that.

Sure. Thank you, Lindsey. Alejandro, can you take that one?

Sure. So yes, we did capture an important part of the withdrawal of the pension plan, but it's money that starts to get used and reduces over the following months. I would say that of the growth that we've seen in our deposit base, around half of it has been related to the pension fund withdrawals. The other half of it is our transactional capabilities and people operating in our principality and people operating in our system, in an economy that is slowly but turning more and more or less cash driven. So the money remains in the accounts.

So I think there's a structural reason why we've been growing steadily on that side, plus there's also this pension fund withdrawal that we should see decrease during this year and probably basically disappear. And it's also related to the prior question, it's also part of some of the retail repayments that we've seen. People use that money to repay retail and has an impact on the retail growth in the first quarter. But I would say, again, half and half between pension fund withdrawals and more structural reasons.

That was very clear. And then my second question is just on operating leverage and expenses at Yape. I mean, saw a pretty solid increase in operating leverage. How much of that was kind of just seasonality in expenses? How much is sustainable, especially with this new digital bank initiative? And then you mentioned that you could see some material impacts from that. Is that on the expense side? Is that on revenue growth because you're talking about going into different markets, expanding on that end? Just kind of what are the impacts there?

Francesca, can you take that one or Alejandro, whoever?

Yes. So for sure, there's a seasonality end of the year and also the elections, Yape has been very active in the branding positioning around the long-term view for growth for the country. So that's one part of the seasonality. But you're spot on in terms of there's still a lot of technological capability and investment being built in Yape around lending, around distribution, around the internationalization of the platform. So we're very mindful of the expenses. So they are not exceeding our expectations in terms of what we are planning for growth, for revenue and cost as well. So I would say under control, but yes, there's still investments to be done.

And maybe complementing that, Lindsey, how we see this as far as income grows at a faster pace than expenses, we're okay. We really believe that Yape in 2, 3 years should be operating at a much lower cost to income, which is what we care about it. And we'll have also an impact -- this actually is a double impact. So the cost to income will be lower. Yape will be a much more relevant business within Credicorp, Therefore, the positive impact in cost to income overall.

The next question comes from Carlos Gomez-Lopez with HSBC.

Let me join in the congratulations to Alejandro. You've been here for such a short time, we'll miss you, but congratulations. And congratulations in particular, for the increase in the margin. You've been telling us it was going to go up. We said it would not, but it went. So congratulations on that.

My question would be again on the asset quality and the cost of risk, which is lower this time. Could you please quantify what those recoveries in the corporate portfolio would be like? I mean when I look at the numbers, I guess your number is $120 million, $140 million lower than what we have expected. How much did you recover? Is that $40 million, $50 million, $60 million? Could you quantify that amount?

Cesar?

Thank you. In a usual month at BCP, you have a cost of risk of wholesale between 0.1%, 0.2%. The last quarter of last year was unusually high at 0.5%. And in this quarter was minus 0.1%. So you can say between 20 and maximum 30 basis points impact as a difference between what is usual. In relation to the last quarter, it's very significant, but the last quarter of last year was unusually high for the special cases that I previously described.

Okay. So 20 or 30 basis points on the wholesale portfolio?

Yes.

And if I can ask a question on Yape and we understand that the Central Bank is bringing in UPI from India. Could you tell us what impact, positive or negative that might have on your business?

Fran, can you take that one, please?

Yes, Carlos. Definitely, there's two views or two dimensions around the UPI. So we do believe that there is still an opportunity to capture cash. Still Peru is a cash-based economy. So there is potential to grow in transactions. And having said that, of course, there's going to be other players, new entrants in this payment ecosystem. But if you look at Yape's results and Yape's plans over time of being a super app and now a neobank to that, we have consistently been able to cross-sell more products. We're almost reaching three features per active users in Yape, different features, not just payments, but whether it's utilities or lending. So it gives us an opportunity to tap into a bigger market. And this is the view we're having, and we're participating aggressively with the Central Bank in the pilot.

And the project could be another payment network or you would join the payment network or you will be connected?

We will definitely be connected. So this is a completely interoperable system, and we could have our own closed loop for our own transactions wherever we want -- we believe this is better, whether it's a UX experience or, of course, if it's a cost issue, but it makes the market bigger because it becomes -- everything becomes interoperable.

The next question comes from Andres Soto with Santander.

My question also is around Yape, but this time around in terms of the contribution to Credicorp. When I look at the contribution to revenue, it's already at 8% for the quarter. Contribution to EBITDA is at 7%. So I have three separate questions around these numbers. The first one is, previously, you have mentioned that you expected disruptive initiatives to represent 10% of Credicorp revenue. Yape alone is already almost at that level. So what will be your new target for your disruptive initiatives in terms of the revenue contribution to Credicorp?

Andres, great question. All yours, Francesca.

So initially, we've shared many times with you in the Investor Days and the digital conversations we've been having. We set ourselves a target 4 years ago to represent 10% of risk-adjusted income for Credicorp. We're very happy, of course, as you mentioned, that Yape is one of the big ones. And our initial expectation was once these initiatives got into specific growth, they would graduate into more mature businesses.

In the case of Yape, what we are seeing is that it's still offering growth at a much faster pace than the other lines of businesses that are more incumbent. So we are actually today working around what the new North metric of that would be. And as you know, we're going to set aggressive metrics in terms of the contribution of the initiatives. Having said that, we're also beginning to see relevant contributions. Of course, they're smaller around Culqi, around other initiatives as Garda, what we've mentioned before. And we are currently reviewing to set a new appetite for the next 4 years or 3 years.

Thank you, Francesca. And the metric will be still around revenue because for Yape specifically, the number for contribution to profitability is almost the same as for revenue. So in my numbers, I have that Yape could represent as much as 30% of earnings of Credicorp by 2028. And do you see any reasons for that not to happen? Or in terms of how you measure your digital appetite will be still revenue the relevant metric or you will start looking at profitability?

So we're actually going to look at two things. One is the portfolio for disruptive initiatives. We think revenue is still the correct metric. And as you remember, we also set limits in terms of investments around ROE and around cost to income, which is something that we are constantly looking at and reviewing. But once we have a venture that is profitable, of course, we're going to set profitability indicators as well. And once we have this much clearer, we'll share what initiatives actually contribute to the limits of whether it's ROE or cost to income or the amount of cash expenditures and ones that need still time to mature where revenue adjusted income is the right metric. So this is a work in progress, and we will have this clear for the next 2 months or 3 months.

Exactly. Just to complement Francesca, Andres, and I don't remember if I said goodbye at the beginning. Not goodbye, good morning, Andres. We're exactly in that process. When we set that goal, it was 2, 3 years ago, we -- there was a lot of uncertainty because these are disruptive initiatives. As we all know, Yape has been quite a success. It is, I would say, much more advanced in terms of results than what we originally expected in terms of size of the results and timing of the results. And we're in that -- exactly in that process. Should we start measuring something and providing something different to the market. And that's the process. We hope that by next quarter, we will share that with you. And just a quick comment. We do expect this year that the overall disruptive initiatives ROE are going to be accretive to Credicorp's ROE.

Perfect. And on that note, Gianfranco, to setting new targets. I think that the other new target that we need to hear from you is regarding the overall medium-term target for Credicorp as a whole. In my numbers, if Yape is bound to represent, as I said, 30% of earnings, that will represent -- that will imply that Credicorp ROE by 2028 is going to be 25%. So the 19.5% is extremely, extremely conservative.

I'm taking note so as to set goals for the team. No, jokes aside. Remember last call that when we provided the -- actually, Alejandro provided guidance. He said, which is all of us, that by next call, after the results of the elections, we -- depending on the results, we may provide a what we call a sustainable ROE that might be in north of 20%. So let's wait. We're, I don't know, 3, 4 months away from that, and let's see what happens. And at the same time, we're working on what Francesca just mentioned.

Congratulations to Alejandro on his new responsibilities.

The next question comes from Yuri Fernandes with JPMorgan.

Congrats, Ignacio and also Alejandro. So repeating the words of everybody here. I'm going to miss you, Alejandro. So just a follow-up on trying to match two different questions on the call, margins and cost of risk for the guidance on risk adjusted, right? So what I understood from the call is cost of risk was low on wholesale and all the seasonality and you're growing, so cost of risk should move up, but you feel very comfortable with asset quality. But margins, the funding question, I think it's good, right? You have a very good funding. I think that helps.

And on the asset mix, this quarter, another question was wholesale, right? You're growing more on wholesale after years of not growing, and now it's going to be coming from retail. So the way I see here is there is upside risk for your margins. and correct me if you disagree, but cost of risk should also move up. Thinking those things together, Gianfranco, do you believe like you can continue to have your risk-adjusted NIM above the guidance as we are seeing here? Because, again, asset quality has been good, NIMs could have an upside. So just trying to understand if the guidance for risk-adjusted margins would be a little bit better or at least stay on the high level that we are seeing this quarter.

Yes, again, if there wasn't this uncertainty -- global uncertainty and the political situation in Peru, maybe we would have provided a new guidance today. So I will be providing a strong yes to you. But there are two ifs -- too many ifs, we believe as we speak. So everything tells us that your question is totally valid and your hypothesis is correct, but we'd rather wait and see really. And sorry for being so vague in my response, but that's what we feel today, what we believe.

No. It helps to understand the potential upside risk, but you are somewhat being conservative given the uncertainties in the scenario. It helps us here. If I may just a second one.

Sorry, this is Alejandro. I'm going to miss you too, Yuri. So no, I just wanted to say that your assumption is correct in the sense that given the low cost of risk we're experiencing and the strong NIMs, we should be on the upper side of the risk-adjusted NIM for the year. But again, as Gianfranco has mentioned, there are a lot of questions still out there. But we believe we can have a risk-adjusted NIM that continues to improve in the coming quarters.

If I may, just a second one, quick one. Just thinking about the profitability of the subsidiaries, right, when you go to Credicorp Capital, Pacifico or Mibanco, well, BCP was amazing this quarter. All the subsidiaries, they are running on levels of ROEs that historically, I believe, is the number that you usually mentioned. I think maybe Pacifico is a little bit below the 20s, but very close to that. Maybe to Gianfranco, like where do you see upside risk other than Yape on the subsidiaries? Do you think like there is room for further improvements on profitability of any of the subsidiaries? Or most of your take here is maybe Yape being the main driver for further profitability improvement for the group?

Great question, Yuri. And specifically on Pacifico, what we believe, and we've been vocal about it is that Pacifico over the last couple of years, its ROE has been over, I believe, 25%. We believe that's not sustainable. What we believe is it's sustainable, it's around 20%, which is where it is today. About the other subsidiaries, Mibanco is where we want to have it in terms of ROE. Maybe at Credicorp Capital, there's a potential opportunity to slightly increase ROE, even though we do have opportunities for growth there. So we might be investing a little bit more. And you're right, Yape and -- Yape is going to be a driver for sure. But also bear in mind, as I just mentioned, that the overall disruptive initiatives are being accretive. And Yape is the most obvious one, but there are others that they're either positive already or less negative and reaching breakeven. So overall, there might be a further positive impact going forward.

Congrats on the execution all those years.

There appears there are no further questions at this time. I will now turn the call back over to Mr. Gianfranco Ferrari, Chief Executive Officer, for closing remarks.

Thank you. Let me close by putting things in perspective and reflecting on the strength of our franchise. Credicorp has been around for over 30 years. And through BCP, we have more than 135 years of experience navigating complex and often volatile environments. Over that time, we've played a key role in supporting Peru's development, consistently working to expand access to financial services and advance the progress of individuals, businesses and communities. This commitment is deeply connected to our mission of improving lives through financial inclusion, and it is what has allowed us to build a resilient institution with a truly long-term perspective.

Looking ahead, we continue to see compelling opportunities in the region. The external backdrop remains favorable with what could evolve into a new commodity super cycle and countries such as Peru and Chile, particularly well positioned to benefit. Peru, in particular, is entering this period with healthy domestic demand, low inflation and a financial system that remains solid and liquid. These conditions create an important opportunity to accelerate investment, employment and productivity over the coming years.

Credicorp is uniquely positioned to capture that opportunity. This quarter is another clear reflection of that position with record high results that demonstrate both the consistency and strength of our franchise. At the same time, we have increasing clarity around our strategic priorities and are seeing tangible progress across our key growth anchors, reinforcing our confidence in our ability to sustain performance over the medium term while continuing to support our clients and the broader economy.

Before closing, I would like to briefly step back from the short-term political debate. While the leading candidates -- presidential candidates represent different visions for the country's economic future, we believe Peru's institutional framework and system of checks and balances continue to provide important safeguards for stability and policy continuity. What matters most now is preserving the conditions that allow the country to move forward while continuing to advance key social priorities such as education, health care, infrastructure and poverty reduction. Peru has a unique opportunity to achieve a more profound and lasting transformation, and it cannot afford to lose that momentum.

Thank you for your time today, and we look forward to speaking with you again next quarter.

Thank you, ladies and gentlemen. This concludes today's presentation. You may now disconnect.

Good morning, everyone. I would like to welcome you to the Credicorp Limited Fourth Quarter 2025 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. [Operator Instructions] Now it is my pleasure to turn the conference over to Credicorp's IRO, Milagros Cigüeñas. You may begin.

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&A session will also be Francesca Raffo, Chief Innovation Officer; Cesar Rios, Chief Risk Officer; Eduardo Montero, Head of Insurance and Pensions; and Jose [ Navire], Mibanco, Chief Financial Officer.

Before we proceed, I would like to make the following -- sorry, and also here in the Q&A session will be Diego Cavero, BCP CEO or Head of [indiscernible] banking.

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 of 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 key strategic highlights for the year 2025, our recent macro environment and a brief overview of our quarterly results. Followed by Alejandro Perez-Reyes, who will provide a more detailed analysis of key macroeconomic indicators, our financial performance and our outlook for 2026. Gianfranco, please go ahead.

Thank you, Milagros, and good morning, everyone. We closed 2025 on a very solid footing, entering the new year in a stronger position than we did at the end of 2024. This was a year where the hard work of our teams, the clarity of our strategy and the strength of our ecosystem came together to deliver results, not just in financial terms, but in how we showed up for our clients, our people and the markets we serve.

The backdrop was favorable. Peru's economy exceeded expectations with GDP growing around 3.5%, fueled by strong domestic demand, resilient consumption and record high exports above $90 billion.

Key commodity prices further increased to new highs, particularly copper, silver and gold, supporting investment flows and sentiment. The estimated mining investment pipeline for 2025 stands at $64 billion across multiple minerals, up 17% from 2024. Inflation remained low. Monetary policy became more supportive and employment and real income trends improved. Domestic demand significantly exceeded GDP and grew around 6%, supported by stronger confidence and access to credit.

Private investment exceeded expectations, expanding close to 10%, its strongest performance in 13 years, excluding the pandemic.

Peru enters 2026 from a fundamentally stronger position than in previous election years. In 2021, we faced an economic crisis, a public health crisis and deep institutional uncertainty. Today, we have a stable macro framework, strong external accounts supported by high commodity prices and record exports and a more pragmatic tone from policymakers. That doesn't mean there won't be noise in the political arena, but it does mean we're starting from a position of strength.

Across the region, the operating environment remained dynamic but generally supportive. In Colombia, growth came in at around 2.7%, supported by consumption, while investment remains subdued. More recently, new challenges have arisen after the increase of the minimum wage. In Chile, GDP also expanded around 2.7%, driven primarily by investment and to a lesser extent, by consumption, while inflation stood slightly above target. And in Bolivia, GDP contracted for a second consecutive year, while inflation doubled to around 20%, although the new government from Pro Pass has taken positive pragmatic first steps towards a favorable transition.

The economic decline, however, contrasts sharply with the country's strong digital adoption, where Yape has consolidated its position as the leading digital wallet.

Let me now shift to how our businesses performed in 2025 and the progress we've made across the group. Alejandro will provide more details in a moment.

In Universal Banking, BCP continued to reinforce its leadership in Peru, underpinned by disciplined execution, operational excellence and an increasingly seamless digital experience. Our transition towards a more efficient multichannel distribution model, supported by enhanced data and AI capabilities drove growth in retail lending, enabling us to serve over 3.2 million loan clients. We also reinforced our transactional leadership while consolidating our NPS advantage, reaffirming BCP's position as the bank of choice for millions of Peruvians.

In microfinance, we delivered double-digit loan growth and increased our profitability, strengthening the resilience of the business and setting the foundation for sustainable growth. In Peru, Mibanco consolidated its leadership and strengthened profitability by deepening its hybrid model, combining in-person advisory with digital tools and AI-driven risk analytics. This drove higher productivity and growth in smaller ticket loans, aligned with our risk appetite.

We also diversified revenue through transactional services and saving deposits, increasing fee income and strengthening our funding base. In Colombia, despite a challenging environment, Mibanco delivered double-digit loan growth and improved profitability, supported by disciplined risk management and operational efficiency.

In the insurance and pensions business, Grupo Pacifico increased its policyholders by 50% in the last 3 years, supported by integrated distribution and digital innovation, including one-click claims.

In health, the full consolidation of Pacifico Salud enabled broader access and stronger medical service offerings. In pensions, despite systemic challenges, Prima made significant strides in digital adoption, efficiency and client experience, improving NPS by 3 points.

In Investment Management and Advisory, our diversified portfolio and the strategic transformation executed over recent years delivered solid and sustainable results. Assets under management surpassed the $20 billion mark in Wealth Management and in Wealth Management and increased nearly 35% in Asset Management. We further strengthened our platform with Viva, our wealth tech offering in Peru, Colombia, Chile, which now manages over $1.5 billion in assets and is a key growth driver in the affluent segment, combining a digital-first experience with personalized advisory through a hybrid model.

In capital markets, the launch of our financial corporation in Colombia, Core, marked a key milestone, enhancing our local capabilities and advancing our regional strategy.

Regarding our innovation portfolio, risk-adjusted revenues represented 8.1% by the fourth quarter, advancing towards our 10% ambition. Yape, our most mature disruptive initiative, closed the year with nearly 16 million monthly active users who engage with the platform an average of 66 times per month. a testament to its growing role in driving both financial inclusion and monetization.

Lending activity scaled meaningfully with 4.1 million clients with a loan disbursed, highlighting the significant growth potential that remains ahead. In Chile, Tenpo reached an important milestone, surpassing 2.5 million clients and becoming the country's first neobank following the approval of its banking license in January. Meanwhile, [ Monocera ] continued to scale efficiently, enabling modular low-cost insurance distribution across multiple channels.

What unites these businesses is a disciplined purpose-driven approach to expanding access to financial services across the region. This same strategic clarity guides our entire organization, shaping day-to-day execution and long-term capital allocation through four core pillars: expanding financial inclusion across geographies and client segments, deepening risk and capital discipline as a foundation for profitable growth, scaling AI, data and digital platforms to unlock productivity, client experience and engagement and optimize business decisions and building trust and leadership in every market we serve through client experience and operational excellence.

Aligned with these priorities, we advanced key M&A moves. We took full ownership of our medical insurance business, which demonstrated strong strategic fit and execution discipline. We also announced at year-end an agreement to acquire [ Helm Bank ]. Let me take a moment and discuss the strategic rationale of this addition to Credicorp.

This transaction is fully aligned with our strategy to strengthen Credicorp's cross-border capabilities through a focused niche approach, enhancing our U.S. offering without pursuing a universal banking model in that market. We agreed to acquire 100% of First [ Helm Bank ] for $180 million, fully cash funded and consistent with our disciplined capital allocation framework. Helm contributes over $1 billion in assets and a solid presence in Florida, serving both the local community and a predominantly Latin American client base.

This move reflects a clear structural trend. Latin America clients continue to migrate assets to the U.S., where Florida stands out as a highly convenient location for investment, banking services and real estate exposure. Our target market is equally clear.

On the deposit side, we focus on affluent clients and regional corporates, while on the lending side, our priority segments are affluent LatAm clients and Florida-based residents. Helm meaningfully strengthens our platform by adding a fully licensed FDIC insured bank with core transactional capabilities that we do not currently offer in the U.S. while our Miami presence today focuses on corporate banking and private banking through our registered investment adviser and broker-dealer services.

Helm fills the gap with a franchise that offers full daily banking, residential real estate financing and credit cards, thus perfectly complementing our value proposition for internationally active clients.

With that, let me turn to our financial results. We delivered strong financial performance in the fourth quarter and for the full year, underscoring the strength of our execution and the favorable operating momentum across our businesses. We closed the quarter with a 16.9% ROE and 19% for the full year, reflecting not only record high net income, but also the continued diversification of our revenue sources across banking, transactional services, insurance, health, asset management and our digital platforms, strengthening the quality and resilience of our earnings.

These strong results were broad-based and consistent with our strategic priorities. Universal Banking and Insurance and pensions delivered very strong performance, while microfinance continued progressing towards its medium-term profitability target. Fee-based and transactional income continued to grow, underscoring the scalability of our platform.

Our results were supported by healthy momentum in core revenues with margins benefiting from a lower cost of funding and an improved funding mix alongside continued improvements in risk metrics. Risk-adjusted NIM stood at 5.5% for the quarter, supported by better asset quality and a structurally efficient low-cost funding base.

On the liability side, we continue to strengthen our deposit mix, reflecting strong digital engagement and sustained client trust. Importantly, these results were achieved while maintaining strong capital and solvency levels, reinforcing the robustness of our balance sheet. From an operational standpoint, our efficiency ratio came in at 49% in the fourth quarter, well within our expected range.

Overall, these results reflect a business that is more resilient, more diversified and better positioned for sustainable growth while continuing to generate a positive local impact by expanding access to financial services and supporting economic activity across the region.

I will now turn the call over to Alejandro, who will go into further detail on the macro environment, each of our operating businesses and our consolidated results. Alejandro?

Thank you, Gianfranco, and good morning, everyone. As Gianfranco mentioned, we delivered strong overall operating results, including a record high net income, which reflects solid growth in risk-adjusted revenue streams in our business ecosystem. As I discuss the quarter's highlights, I will focus on the quarter-over-quarter operating trends. Loans measured in quarter-end balances increased 3.6%. This uptick was driven primarily by BCP through both retail and wholesale banking and by Mibanco. Asset quality has improved across the board, and Credicorp's NPL ratio stood at 4.5% this quarter. The cost of risk stood at 1.8% on the back of fortified risk management and supported by improvements in payment performance and in the Peruvian economy.

Net interest income increased 4.2%, spurred by an expansion in interest income, mainly driven by loan portfolio growth and by a contraction in interest expenses after interest rates fell and low-cost deposits expanded and accounted for 61.4% of the funding base. In this context, NIM stood at 6.6%.

Other core income grew 6%. Fee income increased 5.2%, boosted by transactional activity at Yape and BCP. Gains on FX transactions rose 8.2% through higher volumes at BCP. Lastly, the insurance underwriting result fell 17.4%, mainly reflecting normalization in the disability and survivorship line of the Life business, which registered a base effect for favorable extraordinary reversals last quarter.

Excluding this line, underlying performance across our insurance operations remained solid with insurance underwriting results remaining relatively stable this quarter. All in all, we delivered 16.9% ROE this quarter, supported by the aforementioned operational dynamics while maintaining sound capital levels. On cumulative terms, ROE stood at 19%.

Next slide, please. Peru's macroeconomic performance in 2025 was strong despite heightened global uncertainty and lingering political concerns following President Boluarte's impeachment. GDP grew around 3% year-on-year in the fourth quarter, slightly lower than the rate observed in the previous period as the solid performance of non-primary sectors partially offset a slowdown in primary activities. The fishing sector registered a sharp contraction given that this year's cat quota was below last year's. Meanwhile, domestic demand remained robust, expanding more than 5% year-on-year.

High frequency indicators point to a continued broad-based strengthening of domestic demand. Most metrics ranging from consumption-related variables to investment and external conditions continue to post double-digit year-over-year growth.

In full year terms, GDP expanded roughly 3.5% in 2025, while domestic demand grew close to 6%, supported by the economic mid-cycle momentum and a boost from terms of trade, which reached their highest level in 75 years.

A similar performance is expected in 2026, marking a third consecutive year of GDP growth around 3.5% with domestic demand expanding above 4%. There is meaningful upside potential. Copper and gold prices recently reached historical highs and stand between 30% and 50% higher than their 2025 average, respectively. If they remain elevated and the post-election environment delivers greater policy predictability, improved governance and a more supportive backdrop for private investment, Peru could grow above its century long average of 4%.

Next slide, please. The Federal Reserve lowered its policy rate 75 basis points last year for a cumulative reduction of 175 basis points since 2024. This year, Fed fund futures are pricing in two additional rate reductions throughout the second half of the year. However, given the resilience of the U.S. economy and institutional changes ahead, including the transition to new leadership as Chair Powell's term expires, there is considerable uncertainty regarding whether further cuts will ultimately materialize.

In Peru, the headline inflation rate closed 2025 at 1.5%, its lowest year-end level in 7 years. After lowering its rate by 350 basis points since September 2023, the Central Bank delivered its most recent rate cut last September, and the outlook for [ Fedalising ] remains uncertain as the policy rate is now broadly aligned with its neutral level and the economy is expanding close to potential.

In Colombia, inflation accelerated to 5.1% in December 2025. Following the 24% increase in the minimum wage, market participants revised their inflation forecast for 2026 upward and now expect a higher policy rate than previously anticipated. In fact, the Central Bank increased its rate by 100 basis points in its most recent meeting to 10.25%.

In Chile, the currency has been the strongest performer among emerging markets after a second electoral round in which Jose Antonio Gas secured a decisive victory and further supported by copper prices rallying to record high. The policy rate stands at 4.5%, and the Central Bank is expected to maintain a wait-and-see stance throughout the year.

Next slide, please. BCP achieved a full year ROE of 24.7%. These strong results demonstrate the company's strategic strength, such as clear market leadership, disciplined risk management, unique digital services and advanced technology and transactional capabilities. These advantages contribute to robust local funding, diverse revenue streams and increased principality with our clients.

On a quarter-over-quarter basis, total loans measured in quarter-end balances rose 1.7%. In FX-neutral terms, loan growth stood at 2.7%, driven by both retail and wholesale banking. Notably, longer-term corporate loans began to recover this quarter despite political uncertainty. NIM remained relatively stable at 6.1%, reflecting resilience in the context of lower interest rates. Other core income grew 5.9%, mainly due to fee income where Yape and other payments and transactional services remain key drivers. NPL volumes declined 3.6%, mainly due to debt repayments by wholesale clients in construction and transportation sectors and due to higher write-offs and repayments of loans under judicial recovery by SME clients. Provisions rose 9.9%, reflecting dynamics in retail banking and a specific impact within Wholesale Banking. In Retail Banking, provisions for individuals remained stable but rose for SMEs. Core underlying risk in SME segments remained stable, but there was an increase in write-offs in SME PM, which drove the increase in total provisioning.

Within Wholesale Banking, risk associated with indirect exposure to certain clients in the construction sector rose. The cost of risk edged up to 1.4%, supported by favorable macroeconomic conditions in Peru. In this context, BCP's risk-adjusted NIM stood at 5.2%.

From a full year perspective, I would like to highlight the following dynamics. Loan balances grew 3.8%. However, loan growth in FX-neutral terms reached 7.8%, led primarily by retail segments, particularly individuals, reflecting the strong momentum of internal demand. It is worth highlighting the strong performance of mortgages, which grew 9.9%, propelled in part by lower interest rates.

In Wholesale Banking, loan growth was fueled by the same dynamics seen quarter-over-quarter, where recovery in private investment was a primary catalyst. NPLs contracted across BCP segments, led primarily by a decrease in Wholesale Banking, which raised debt repayments by corporate clients and secondarily by SMEs and individuals.

In individuals, the reduction in NPLs was attributable to a decrease in debt refinancing. This evolution, which was supported by a positive economic backdrop, reflects improvements in loan origination and collections management. NIM stood at 5.8% as lower interest rates negatively impacted the yield on interest-earning assets. This was partially offset by a decline in the funding cost. The cost of risk fell across segments in individuals and SME PME driven by improvements in payment performance after lower risk vintages increased their share of total loans, supported by a strengthening economic backdrop.

Other core income rose 15.1%. This solid performance was driven by growth in transactions to Yape, an uptick in fee income at BCP and an increase in gains on FX transactions, which grew on the back of higher transacted volumes. The ratio of other core income to assets continued to rise, reflecting the effectiveness of our strategy to diversify BCP's revenue sources. This progress is supported by ongoing relevant investments that strengthen our transactional capabilities and digital platforms.

Key projects on this front are [ Mainfree ], Mobile app 3.0, cybersecurity, among others. As a result, operational expenses and personnel expenses in particular, led the efficiency ratio to stand at 39.7%.

Next slide, please. Yape continues to consolidate its role as a leading driver of longer-term value creation. With nearly 60 million monthly active users, Yape has become the country's most loved and recognized brand. This connection with users has translated into an exceptional NPS, which peaked at 81 points by year-end, well above traditional financial services benchmarks. Our advances have reinforced engagement and users now conduct 66 transactions per month on average.

From a monetization perspective, monthly revenue per MAU continued to expand at a rapid pace, reaching PEN 9.6 as of December 25. Monthly expenses per MAU in turn were fueled largely by seasonal charges. Annually, average monthly revenue per MAU rose 62%, far surpassing the 15% growth in monthly expenses per MAU, demonstrating strong operating leverage. Payments remain the largest contributor, accounting for over half of total revenues. If benchmarked against the banking system, Yape fee generation would rank within the top 5 institutions in Peru. A strong growth in QR payments, bill payments and checkout solutions are evidence of increasing user adoption and revenue generated total payment volume almost doubled year-over-year. Lending has become the main driver of growth within Yape financial business now accounting for 23% of revenues, reflecting the platform's ability to translate engagement, data and risk management capabilities into scalable credit solutions. [indiscernible] disbursed over 16 million loans, expanding create access to 4.1 million users, of whom almost 1/3 are first-time borrowers.

Looking ahead, Yape represents one of Credicorp's most compelling sources of assets and strategic optionality by driving monetization across its existing user base and continue to leverage engagement and data as a powerful competitive mode terpenes strategic relevance within the ecosystem.

As of the fourth quarter of 2025, Yape doubled year-over-year its contribution to Credicorp's risk-adjusted revenue, which stood at 7.2%. This progress reinforces Yape trajectory to become our second largest contributor while maintaining a strong focus on financial inclusion.

Next slide, please. As [indiscernible] micro finance system continues to regain momentum amid the country's steady economic recovery, sector performance has strengthened notably. In this context, Mibanco performed its peers by deepening its hybrid model, gaining productivity and strengthening credit risk management. As a result, Mibanco delivered double-digit loan growth and robust profitability of 20% this quarter.

I would like to highlight key quarter-over-quarter dynamics. Loans grew 3.9% in quarter end balances, writing an upstream in loan disbursement, which hit a new all-time high in October. The NPL ratio continued its downward trajectory over the past year, falling to 5.3%, an 11-year low. NIM peaked at 15.2% and boosted by a shift in the mix towards small ticket higher yield loans.

In parallel, the cost of risk fell 44 basis points to stand at 4.8%. While risk-adjusted NIM reached a new 4-year high of 11.6%. From a full year perspective, loans measured in quarter end balances grew 11.2%. Our active pricing management, coupled with a decrease in the cost of funding, boosted NIM. The cost of risk fell 64 basis points as lower risk vintages continue to gain traction and now account for 84% of total loans.

Operating expenses remained under control and efficiency stood at 50.9%, supported by ongoing investments in strategic projects. In this context, Mibanco's full year contribution to ROE was 16.6%. Transitioning towards our target for medium-term ROE in the low 20s. Mibanco Colombia's results, which were supported by a more favorable economic environment for the micro finance sector continue to rise and registered double-digit loan growth year-over-year, bolstered by control risk management and optimize efficiency. As a result, profitability stood at 13.2% at quarter end and 10.3% for the full year. compared with losses recorded in 2024.

Next slide, please. Grupo Pacifico delivered another year of strong performance in 2025, achieving a solid ROE of 21.4%, supported by robust commercial dynamics across businesses. Growth reflected the expansion in our bancassurance channels and an uptick in the issuance of optional policies, reinforcing the value of our strategy to grow in retail segment.

On a quarterly basis, net income dropped 1% primarily impacted by a decrease in the insurance underwriting results, particularly in the Life business due to a base effect in the disability and survivorship line following extraordinary regularizations last quarter, and by higher operating expenses due to seasonality. This impact were partially offset by a decrease in the net loss on securities.

From a full year perspective, Grupo Pacifico delivered solid performance. Net income rose 13% and primarily on the back of Pacifico's full consolidation of the an Medical transaction. Excluding the consolidation effect, net income increased 4%, mainly driven by a 9% rise in insurance underwriting results. It is important to note that the results of the ongoing operating business grew 21%, partially offset by the contraction of the disability and survivorship line, which did not actively operate in 2025.

If we exclude D&S from our insurance underwriting results, the underwriting performance of the ongoing operating business was driven mainly by the Life business through a favorable performance in created individual lines and by the P&C business, particularly through better results in personal lines and cars. These operating results were partially offset by an increase in the net loss on securities, which was impacted by credit downgrades on a couple of assets in the investment portfolio and by higher operating expenses.

Our Corporate health insurance and medical services operations posted solid results and are well positioned for a strong 2026. Moving forward, we intend to bolster our commitment to providing high-quality products and services for both insurance.

Next slide, please. For our Investment Management and advisory business, full year profitability remained solid with ROE increasing 110 basis points to stand at 16.4%. Let me begin with a brief overview of this quarter dynamics and then move to the full year view on the underlying structural trends.

Quarter results showed mixed dynamics. Revenues benefited from stronger performance in Asset Management and improved treasury results. but declined in Wealth Management due to lower market rates and in capital markets due to a base effect after a high result last quarter. Expenses increased due to seasonal operating dynamics.

Turning to the full year view. Net income rose 2% over the period. This result was driven by a strong year in capital markets, which was led by an upstream activity, mainly through the trading unit. Solid performance in Asset Management, where AUM grew 35% and an improvement in treasury results. These positive dynamics were partially offset by higher operating expenses and lower revenues in Wealth Management despite a 24% growth in AUM.

Next slide, please. Now I'd like to review Credicorp's consolidated evolution regarding quarter-over-quarter dynamics. Growth in cash balances was fueled mainly by higher liquidity, which rose on the back of inflows from pension fund withdrawal. Nonetheless, within a mention of our loan portfolio, helped anchor our yields on interest-earning assets, which remained relatively stable with a minor 4 basis point increase.

On the liability side, Low-cost deposit share of total funding rose significantly, right in the way for higher liquidity in the market. More expensive sources of funding in turn raised a reduction in their share in our funding structure, with the exception of bonds who share grew on the back of a subordinated bond issuance by BCP. In this context, the funding costs dropped 12 basis points.

On a full year basis, loan growth, which was driven mainly by retail segments led the interest-earning asset mix to generate higher yields despite cash buildup. In this context, the yield on interest-earning assets rose 7 basis points.

On the liability side, interest rate dynamics complemented by a decrease in bonds and interest-bearing deposit share in our funding structure led the funding cost to drop 25 basis points. In this context, NIM stood at 6.3% on a full year basis. As the positive credit cycle consolidates, growth in retail lending powered by our strength and risk management and digital distribution capabilities should sustain means growth.

Next slide, please. Moving on to loan portfolio quality. Asset quality continued to improve this quarter as NPL volumes contracted across segments. The NPL ratio at quarter end was a low 4.5% and which is below the levels reported prior to the 2023 recession. Amid a steady economic recovery in the past year provisions have dropped over the past 12 months due to an improvement in payment performance and successful risk management measures, both at BCP and Mibanco. In this context, the NPL coverage ratio rose and stood at 112.4%.

Going forward, we will continue to accelerate retail origination while managing risk. Consequently, we expect loan growth to continue to recover its space and the cost of risk to rise slightly and remain within our appetite. Next slide, please. Core income showed solid sequential improvement in the quarter, supported by strong operating momentum. Net interest income increased 4.2% quarter-over-quarter. Supported by loan origination expansion and stable funding costs.

Other core income also contributed positively with fee income growing 5.2% quarter-over-quarter and FX gains rising 8.2%. These advances, which reflect higher activity at year-end, attest to consistently solid performance across core banking and transactional businesses.

On a full year basis, core income increased 6.4% and driven by diversified revenue streams. Net income rose 4.3% -- net interest income rose 4.3%, fee income 11.7% and FX gains 13.4%. The shift in the earnings mix and discuss credit cards progress in building a more resilient and scalable earning profile. Risk-adjusted NIM rose 51 basis points, standing at 5.8%. This evolution reflects how our pricing and risk management capabilities are becoming a competitive edge and enabling expansion into new market segments. The efficiency ratio for the year stood within guidance at 46.6%. Operating expenses grew 12%, fueled primarily by core businesses at BCP and by investments in our innovation portfolio.

Growth in core expenses at BCP was due mainly by an increase in personnel expenses related to commercial and technological and transactional capability development. Expenses for innovation portfolio rose 18.4% and led by Yape, Tenpo and Culqi, which represented 83% of disruptive expenses this year.

Next slide, please. ROE for the full year was 19%, supported by solid business performance and bolstered by the extraordinary gain from the [ Banmedica ] transaction in the first quarter. If we adjust for this transaction, ROE is 18.6% for the full year 2025.

Net income reached a record high even if we exclude the gain from the America transaction. We achieved this by capitalizing on our structural strength, differentiated the and transactional capabilities low cost of funding advantage and sustained improvements in risk management and loan portfolio growth, particularly in retail segments.

Now I will move on to our guidance. Next slide, please. We revised Peru GDP growth outlook to around 3.5% in 2026. We expect our total loan book to grow around 8.5% measured in quarter-end balances, amid a more dynamic economic backdrop and strengthen origination levels in 2025, we expect growth in balance sheet to continue accelerating this year, driven primarily by retail banking at BCP and [indiscernible].

The acceleration anticipated for loan growth and the shift in the mix towards retail should support NIM despite potential policy rate reductions in soles and dollars down the line. Accordingly, we expect NIM to stand between 6.4% to 6.7%. The cost of risk guidance is between 1.7% and 2.1%, this range reflects the 2025 improvements in asset quality indicators as well as the shift of our loan portfolio mix towards higher yielding segments. Given expected dynamics for NIM and cost of risk, risk-adjusted NIM should stand between 5.3% and 5.6%.

In 2026, we will continue to invest in the to transformation and disruptive initiatives to bolster our long-term competitive position. But we expect some of the efficiency for sale to begin to materialize. Given that, we expect the 2026 efficiency ratio to be situated between 45% and 46.5%.

Regarding noninterest income, we expect fee income growth to pick up and standing the low double digits as activity accelerates and our efforts to further diversify sources of income continue to gain traction. Although our underlying insurance business is expected to perform solidly the insurance underwriting results, which was bolstered by extraordinary reversals for the [ DNC ] [indiscernible] business in 2025 is expected to drop by high single digits. Excluding the [ DNS ] business, the result will grow by high single digits.

Finally, we expect our 2026 ROE to stand at around 19.5%. This year reflects solid core performance, sustained discipline on the risk front and continued revenue diversification. While local political uncertainties remain, we believe the fundamentals are in place to support this level of profitability. With these comments, I would like to open the Q&A session.

[Operator Instructions] Our first question comes from Ernesto Gabilondo from Bank of America.

My first question will be on the political outlook. Can you provide us with some update on the latest falls? What is the next date that we should be monitoring I was just looking to the [ Ipsos ] survey that was published some minutes ago and [ Rafael Lopez Aliaga ] is leading the pulse. So any color on who are the other potential candidates? What are the main proposals so far will be very helpful, especially as we are just 2 months for the election, right? And also related to this, when those Peru renovate Congress members, I think it will also be interesting. And then I will ask my second question after your response.

Yes, we just -- we read the -- I believe it's the same poll. Yes, [ Rafael Lopez Aliaga ] is leading with 12%, in the second place is Keiko Fujimori at 8%. And there's like -- I believe it's four candidates that are basically tied at 4%. Sorry, I said 4% [indiscernible] 8% and 4%, there for candidates around 4%. I would say that both Mr. Aliaga and Ms. Fujimori have pro market, the economic plans or government plans. Having said that, the issue is that still between and decided that people say that they will both blank, it's around 42%, which is very high still, so we're, I don't know, 2 months away from less than 2 months factory away from the elections, and that number is still very high. So the level of uncertainty is still there.

So that's -- I would say that's the environment. We should have pulse again in maybe a couple of weeks. We hope that those 42% of, let's say, undecided start to decide what the alert what their decision is, and we'll have more clarity in maybe 15 days.

Regarding the other part of the question, I would say -- I believe we've talked about it before. The positive side of this new election is that we're going back to a dual chamber, with senate and congress. We expect that to provide more, I would say, stability in terms of the political environment going forward.

On top of that, there are some thresholds that the parties need to reach in order to get seats at either the congress or see. So overall, we see regardless of [indiscernible] press, we see that the new structure -- political structure between executive power and legislative power should provide more stability for the country going forward.

Perfect. Just a follow-up on this one. When we know will be like the final candidate, I don't know if you already have the candidates or not. And also on this dual chamber with the Senate and Congress, the Board will also happen in April? Or when should we expect that?

Yes, yes. So starting with your second part of the question. Yes, everything is voted on April 12, yes, April 12. We already have the candidates definite, Don't ask me who they are because they are like 35% to 37%. So that's the situation.

Okay. No excellent. So then my second question is on your OpEx growth. So OpEx came at double digit during the quarter and the year. I believe you will continue with different strategic investments and strengthening Jay. But should we expect a little bit more moderate OpEx growth this year when compared to 2025.

And also related to this question, all the digital initiatives you are targeting to represent like 10% of adjusted revenues. But how are you thinking that could be moving going into 2027, 2028? I don't know if it's still too soon to provide a potential target for those years. And also related to this, how should we think about non-credited revenues or fees with all these digital initiatives paying off?

This is Alejandro. Thanks for the question. So regarding operating expenses, the day grown, as you mentioned, they are within our guidance, the level of expenses is related to the investments we're doing, both in innovation and in the core business to better serve our clients. And I mentioned a few of those before.

Going forward, we do expect to continue investing in these different initiatives. Having said that, I think we're going to start seeing more and more of the operational leverage of these initiatives. And right now, I've guided to a lower number for next year. And if you remember, in the Investor Day, we guided to a midterm, which is a 2- to 3-year term really of 42% in cost to income. So yes, we are expecting the increase in the income that is coming from all these initiatives to start to be felt in the ratio. So that's what we're expecting.

As for -- going forward, we haven't really guided a number on the impact. I mean I think we're going to get to the 10% this year as has been our appetite, and that should be achievable. And we haven't yet guided for a number going forward, but we do expect the current initiatives to continue to scale and continue to bring more income into Credicorp. So the reason why this change is that if you had -- if you were to have one of the initiatives leave what we call innovation, then that changes the actual number. But we haven't yet provided a new number for that, but all the current initiatives are scaling and growing in an important way.

Perfect. And just in terms of fees, given the monetization on Yape, should we expect that line in the double digits?

SP1 Yes. As I think I mentioned in my speech, we are expecting it to be in the double-digit area, the growth in fee income. .

Our next question comes from Brian Flores with Citibank.

Thank you for the opportunity. I have a question regarding Yape, right? Because lending now is representing over 20% of the revenue, which is more than double the contribution from the last quarter of '24. And I think you have mentioned that the portfolio is shifting towards multi installments, right, with longer durations. So I just wanted to understand connected with cost of risk. Is this shifting duration affecting the provisioning modeling for 2026. And also, I don't know if you could disclose the ROE target for Yape financial business segment versus the transactional side.

Yes. Maybe let me take the second part of the question, I'll ask [indiscernible] to answer the first one. We do not provide that breakdown regarding Yape and maybe as a segue to Sean's answer, bear in mind, risk-adjusted NIM, not only cost of risk. And in the Yape businesses, extremely relevant because, yes, the cost of this is much higher than the one of the traditional portfolio of the bank. But the risk-adjusted NIM is also much higher.

Actually, what Yape is evolving with different lines. At the beginning, the emphasis was in mono quota with a lot of experiments expanding the number of clients with very short term and small loans and as we understand the behavior of these clients, we are emphasizing now the multi quota that helps to build up portfolios much faster because we increased the duration from less than 1 month to more than 6 months and also increase the amount. And the expected cost of risk should remain very controlled because as a prerequisite, we began with a higher risk short-term duration loans. And as we mentioned previously, understand the behavior we scale the size and duration. And also, we are also increasing the participation in a small PMA business with very successful results.

So all in all, the risk-adjusted NIM should remain in comparable levels with probably a different composition of the cost of risk and the interest rates. A little bit less rate, a little less also cost of risk in the higher longer loans.

Perfect. And Gianfranco, if I may follow up. I think last quarter, you mentioned that generally during election years, we have our first part of the year. That tends to be a bit slower. But I would say maybe the end of the year also was with a very, I would say, healthy pace of growth. So I just wanted to check here, if you're sensing here that maybe we could have upside risks for growth. And if we are in line or EBIT ahead in terms of growth at this point of the year based on -- or comparing to your expectations?

Great question. And I bet if you provided the answer. Yes, this -- yes, we -- actually, in the last call, we shared what our chief economist the analysis our Chief Economy did a few months ago regarding your -- the [ FIM ]. This year, so far, -- that's not happening. The trend we're seeing in terms of economic activity is like there was -- this wasn't an election year.

And actually, I was reading earlier report by [ Apollo Cotoia ], which is one of the most renowned think tanks in Peru and the level of consumer confidence in February of 2026 is the highest since February 2020. So right before the pandemic. So yes, the positive sentiment around consumers, real salaries increased 3.7% last year formal employment increased 6% last year. So a long answer to your question, but the short answer is yes.

Our next question comes from Tito Labarta with Goldman Sachs.

Hi. Good morning, everyone. Thank you for the call. I guess, first, another follow-up on Yape, I mean you have guided for revenues tripling by 2028. But just how do you think about expenses for Yape, I assume they'll grow less than that. I don't know if you have any official guidance for how much expenses from Yape should grow over this time? And I guess what I'm trying to get to -- I mean, ultimately, I think Yape should be accretive to ROE. At the same time, you mentioned you will continue to invest in digital initiatives.

So net-net, if you think about Yape and then other digital initiatives combined with the investments in one -- and Yape to become more profitable that should be accretive to ROE. I don't know -- how much do the investments offset to some extent. So like net-net, how should we think about the potential accretion of ROE from those two things?

Yes, you're right. If you may recall, about 4 years ago [indiscernible] Digital Day, we said that the ROE from digital initiatives should be neutral by 2025 and should start to be positive like 2026. And definitely, we're going to reach that target. So this year, we expect the digital initiatives overall.

So obviously, Yape positive or negative. But overall, it's going to be positive starting this year. And the trend is that level of positive ROE should increase during the upcoming years.

Tito, this is Alejandro. Just to complement Gianfranco, costs the speed at which revenue per mile is increasing is much higher than the cost per mile and so Yape today has still a high cost to income, but we expect it in the next couple of years to actually reach levels below current BCP's cost to income. Cost to income. So it should start to have a very positive impact in cost-to-income in the next couple of years.

Okay. Great. And just in terms of quantifying, I mean, is it maybe 50 to 100 bps per year roughly more or less, I mean, just given, I think, excluding some of extraordinary adds in 25 ROEs around 18 for 19.5.

ROE, you mean?

Sort of accretion from...

Yes, it's a good. Yes, within that range.

Our next question comes from Renato Meloni with Autonomous Research.

Hi, everyone. Thanks I would like to stay on the theme of ROE and explore a little bit here the guidance in your midterm ROE, I mean you're already running almost 19.5%, which you guide right and you're expecting loan growth acceleration, margin expansion this year, but your OpEx is essentially eating out. And I understand your making these additional investments. But when do you expect -- do you have the potential to make much larger midterm ROE, right?

So when we're going to start seeing that or you think that they continue investing in disruptive initiatives, we will just maintain the ROE long term around this 19.5% because I think there might be some decent upside here.

Thanks for the question. And for opportunity to address that target that has come up actually in other conversations. So we guided for this midterm ROE in October of last year. And one clarification, what we're thinking about midterm, we're thinking 2 to 3 years, not the potential of Credicorp going forward. And we guided that, I would say, it was a conservative guidance given the fact that we were entering into a an electoral cycle in Latin America.

So it's already been -- we've already seen elections in Bolivia and in Chile with positive results. And we are close to seeing elections in Peru and Colombia in the next few months. So we intend to come back to the market and revise that after that cycle, so probably in the call in August. But given what we're seeing, given the potential of the economy and the positive trend we do believe we're going to come back with something north of the 20% mark, but I don't want to give the exact number right now until we run the numbers and seen the outcome of the elections, which are, of course, big events for the next few years.

Perfect. That's clear. And if you allow me to follow up. So structurally, where maybe like 5 years down the line, when the disruptive investments normalize. Where do you see your cost-to-income ratio?

Well, as I mentioned, in the next 2 to 3 years, we're thinking about the 42% mark. We'll probably be revising that over time and giving closer update, but that's the last number we have right now. Because, of course, it's all going to depend on other potential investments that we do. So it's hard to tell. If we were talking about just the current portfolio, of course, you would see a decrease in that number going forward, but we'll have to see what comes than the pipeline.

Our next question comes from Carlos Gomez with HSBC.

I wanted to ask you about your exposure to [ Rutas, the Lima ], the corporate in and whether you see any potential for recoveries from that particular credit, if you have an exposure.

And second, to what degree do you think that the positive performance of the economy of the business, has been helped by the good role from the pension fund? And could that be a break on activity when they are finished this year or next?

Yes, [indiscernible] comment about [indiscernible]. This is a position that represents less than 1% of our portfolio is a position which really provision of 80%. We're not accruing interest. And there are currently a couple of arbitration processes in the U.S. that is successful. We think that it would take a long time, but it will be benefit the actual position that we have. We do expect in the near short term payment that could be somewhere around between 5% and 10% of the bond. So and we do not expect further deterioration in the position we have in.

Would you take your [indiscernible].

Sure. So Carlos, going to the second part of the question. the withdraws from the pension plan, of course, have different types of impact. The withdrawal has been of 25,000 million -- or $25 billion in U.S. terms. We, as BCP has captured a little north of $11 billion of those $25 billion. The payments are going to continue until this -- until March, actually, the last payment is in March. And the effect in the economy, it depends on how much goes to consumption. But it certainly does help GDP. We have a calculation that, again, take it understanding that not necessarily everything is going to go into consumption, but it would be around 0.4% of impact on GDP potentially if everything went to consumption.

And if you think about the impact on our business, we expect for 2026, an impact of around 0.5% on loans -- I'm sorry, on deposits on low-cost funding. So that's a positive result. And in the credit part, it could have a negative impact of around 0.4%. Those are our calculations thinking about 2026.

I mean all in all, the short-term effects are positive, certainly not negative. I think the main issue is the long-term effect on pensions and the Peruvian economy but in the short term, the impacts are not that material.

And probably a small addition, also a reduction in cost of risk in a specific segment, particularly meat and higher segment individuals.

Sorry Carlos. Just to clarify, [ Egor Montero ] from [ Prazico ] took the question regarding [ Ruta Helima ] because the only subsidiary at Credicorp that has a position with [indiscernible], which is less than 1% of our portfolio of Pacifico is specific on the BCP or near BCP or any other subsidiary has a position in [ Ruta ] [indiscernible].

Our next question comes from Daniel Vaz with Safra.

Thank you. Hi, everyone. Congrats on the full year results and also guidance -- thank you for the guidance on 2026. I'm looking to the loan growth, if we compare to '25, you already grew 8.5% if you exclude the impact on the FX and also the Bolivia. And I'm seeing your '26 guidance also like around 8.5%. And when I look at Peru's GDP around 3.5%, domestic consumption close to 5%. And also if you take into consideration that you're accelerating in Mibanco, NPLs and multiyear lows BCP's consumer lending also growing above 10%. I mean, what are we missing here? What is currently holding overall credit below the double-digit level. I mean, what would need to change for you to accelerate more meaningfully? Maybe, I don't know, middle-market corporate loans or other segment that's pushing you behind?

And if I may have a second follow-up, are you planning to open Yape's P&L and separate from BCP, so you can have a clear cleaner vision on the efficiency ratio and et cetera, for the [indiscernible].

Daniel, this is Alejandro. I'll take the first question, and thanks for asking the question because it will give us an opportunity to clarify something. The guidance we've just given is for all of Credicorp. And there is one particular book, which is the Bolivia book where we are expecting a big -- a potentially big impact from exchange rates. So basically, we believe Bolivia is in the right direction. But in order to move forward, it's probably going to have some devaluation of the currency. And if that were to happen, that would impact our book, and that is considered in the 8.5%.

If you take BCP and Mibanco alone, we're expecting double-digit growth for this year in loans. And actually, at constant exchange rate is a little bit higher, around 11% for the year. So we are expecting and seeing an acceleration in the market. We expect that to continue and loan growth should be very strong this year. But there's this particular headwind in Bolivia that will have an impact on the whole of Credicorp when it materializes.

Regarding the maybe regarding the Yape question. The issue here is that Yape is within BCP. So Yape institution does not exist. So what we're currently. So it's very hard to come up with a financial -- pure financial statement. But what we're working on is in order to provide you with more information is working on how to be to provide more information, but all within the transparency we've always provided to the market. So that's a work in progress, and we may come up with something in that line in the future.

Our next question comes from Andres Soto with Santander.

My first question is regarding your loan growth guidance, but specifically connected this to Yape. Are you already including in this 8.5%, something from Yape, how much we can expect Yape to contribute to lending of credit Corby in 2026. And if you can elaborate on the ramp-up that you are seeing towards the multi-installment in the consumer loans and also the pilots that you are conducting in SMEs.

Yes, sure. The numbers do include it. Let's remember that preventing is in BCP's book. So when I was talking about this double-digit growth in BCP, I was including already the amount from Yape.

As for the growth, we are expecting the book to grow fast in the coming years. The number we're expecting I mean we're not giving guidance for the number of the specific book, but it should probably triple in the next couple of years. So that's the speed at which it's growing. Having said that, it's still a small portfolio for credit cards whole book, okay?

So it is growing fast and it has a good margin, so probably a bigger margin than other groups, but it's still going to be a smaller proportion of the whole book of the group in the coming years.

And in terms of expenses, cost of income is always difficult. There are multiple variables involved. But what are you looking to in terms of total expense growth in 2026.

You're talking about Credicorp? .

Credicorp. Yes, Yes.

Okay. So we actually guide for cost to income. So as I mentioned, we're expecting cost to income to reduce in the coming year. We -- if you look at the guidance we've just given even the upper side of the guidance is below the result of this year. We're seeing a lot of acceleration on the income of some of these initiatives.

So -- on the expense side, we are going to continue to invest in all of these not only disruptive initiatives, but also on the ongoing business and improving our capabilities to better serve the clients. So yes.

Okay. And finally, on capital, when I look at BCP at 14% core equity Tier 1, [indiscernible] -- how do you feel about those numbers considering the cycle both in terms of improved asset quality, but also faster loan growth? Where do you guys feel comfortable for what is coming ahead.

Sure. The way in which we usually work is, we have internal limits of 11% for BCP and 13.5% for Mibanco. And we -- 14.5% for Mibanco. And what we do is in March, we declared dividends and take the [ ED1 ] close to those levels. So the number you're seeing right now is pretty high because we've been building capital throughout the year. We will reduce it towards those levels in March. It has to be approved by the Board and by the shareholder meeting. But that idea, and so in that case, we will go back to those levels. We do see increase in loan growth, but it's already in our numbers, and there shouldn't be any problems with capital. going forward.

Perfect. And just be clear. So that money is going to go -- is going to the holding company and from the holding company, the intention is to distribute to shareholders.

Exactly. So the way which it works is the policy is we basically send all excess capital to the holding company. Usually, this happens in March and then in April, the credit or the holding company will propose a dividend and then declare it an ordinary dividend. And what we're aiming for, as I mentioned in our call is, and an increasing ordinary dividend each year. We're in line to being able to do that. And then depending on how the year goes, we might give a second extraordinary dividend, but that is dependent on the conditions of the year.

And obviously, this is subject to approval of [indiscernible] approval.

It appears there are no further questions at this time. I will now turn the call back over to Gianfranco Ferrari, Chief Executive Officer, for closing remarks.

As we look ahead to 2026, I'm very confident in our positioning. We are entering the year with a healthy pipeline across businesses and improving trade environment and a clear strategic focus. We expect loan growth of around 8.5%, supported by retail momentum at BCP and continued expansion at Mibanco, alongside stable and healthy margins with NIM expected to remain in the mid- to high 6% range. Asset quality is improving, and we expect the cost of risk to remain within our target range, supporting risk-adjusted profitability.

Our focus remains on three priorities: scale and monetize our digital ecosystem, expanding inclusion and accelerating new revenue streams, leverage synergies across businesses through data, talent and shared platforms to unlock growth and efficiency, execute with discipline, applying clear profitability thresholds and long-term value creation across core and disruptive initiatives. These are not new themes. They reflect the strategy we've been executing on consistently, and they're paying off. We are seeing tangible results across our platforms with fee income expected to grow at low double digits, continued progress in efficiency and sustained investment in digital capabilities. Thank you for your trust in Credicorp. We look forward to speaking with you next quarter.

Thank you, ladies and gentlemen. This concludes today's presentation. You may now disconnect.

RECONNECT

Good morning, everyone. I would like to welcome you to the Credicorp Limited Third Quarter 2025 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. [Operator Instructions]

Now it is my pleasure to turn the conference call over to Credicorp's IRO, Milagros Cigüeñas, you may begin.

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&A session will also be Francesca Raffo, Chief Innovation Officer; Cesar Rios, Chief Risk Officer; Cesar Rivera, CFO of Insurance and Pensions; and Rocio Benavides, Mibanco's Chief Financial Officer.

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 of 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 key messages of our recent Investor Day, our recent political and macro environment and a brief overview of our quarterly results followed by Alejandro Perez=Reyes, who will provide a more detailed analysis of macroeconomic indicators, our financial performance and our outlook for full year 2025. Gianfranco, please go ahead.

Thank you, Milagros. Good morning, everyone and thank you for joining us to review Credicorp's results for the third quarter of 2025. Just over a month ago, we had the pleasure of hosting our Investor Day in New York, where we marked 30 years since Credicorp's listing on the New York stock Exchange and shared our road map for sustainable growth and impact.

Our strategy is anchored in three key pillars: First, we are accelerating the scalability and monetization of our digital ecosystem by financially including more people and expanding the formal cashless economy. Platforms like Yape, [ Tempo and Garda ] are playing a bigger role across payments, credit and savings and are already generating new revenue streams.

Second, we are unlocking growth through business synergies across all our businesses by leveraging shared capabilities in data and AI talent and cross-business platforms to drive revenue diversification and efficiency.

And third, we're executing with discipline with a focus on profitability thresholds capital allocation and long-term value creation across both our core and disruptive initiatives.

We also reaffirm our medium-term targets an ROE of 19.5% and an efficiency ratio around 42% over a 3- to 4-year period. These goals underpinned by scalable platforms, improving asset quality and disciplined growth.

Before turning to the quarter's results, let me take a moment to acknowledge the recent political developments in Peru and macro conditions across the markets where we operate. Later on October 9, Peru's Congress voted to impeach [indiscernible], citing permanent moral incapacity shortly after the Head of Congress, [indiscernible] was sworn in as present. This follows a period of low approval ratings and growing public frustration with prime and governance.

While a broad leadership transitions have unfortunately become part of Peruvian landscape, the country has also demonstrated a long history of economic resilience and institutional continuity. At Credicorp, we've built our strategy and operating model for resilience. Our geographic and business diversification, strong capital and liquidity position and disciplined risk management allow us to stay focused on delivery even as the external environment shifts.

Over the past 30 years as a listed company, we've generated [ another ] total shareholder return above 14%, consistently outperforming our regional peers. That track record reflects more than strong financials. It speaks to a business model built to navigate uncertainty decoupled from macro cycles and anchored in long-term value creation. That's why when events like recent political changes unfold, we remain rounded and focused on what we can control. As always, we are monitoring developments closely.

The macroeconomic environment during the quarter was relatively stable with key indicators pointing to a [indiscernible] recovery across the region. In Peru, GDP growth for 2025 is now projected at 3.4%, up slightly above 3%. This revision is driven by higher-than-expected export prices and a boost of consumption following the eighth pension fund withdrawal. Domestic demand is forecast to grow nearly 6% its asset space in over a decade outside the pandemic rebound, driven by a more advanced economic cycle, record terms of trade, control inflation supporting real wages and advising trade demand. These trends point to improving business conditions with mining investment outlook strengthened by favorable export prices and new project ramp-ups. Despite the upcoming 2026 elections, we expect GDP growth to remain resilient, between 3% to 3.5%, largely supported by sustained gains in terms of trade. With inflation forecasted at 1.8% for 2025 and 2% for 2026, it remains comfortably within the Central Bank's 1% to 3% target range.

In September, the Central Bank carries positive rate for the third time this year to 4.25%, bringing it close to neutral level. This [ itch ] in cycle is already supporting credit growth and private consumption. [ Affects ] Markets and external balances also remained stable, supported by high commodity prices.

In Chile, GDP growth is driven by favorable terms of trade, mining reinvestment and resilient consumption, with a more pro-market outlook boosting medium-term expectations. Colombia's GDP is expected to grow 2.3% in 2025, up from just 1.6% in 2024, though fiscal pressures keep [indiscernible] cautious.

In Bolivia, economic adjustment challenges remain, but [indiscernible] past elections it ends two decades of [indiscernible] rule raising hopes for a more pragmatic reform-oriented economic agenda. All in all, we continue to navigate a dynamic external environment with products, agility and a focused approach to the areas where we can drive long-term value.

With that context, let me now walk you through the key results of the third quarter. We had another strong quarter with robust performance across our core businesses and consistent delivery on our strategic priorities. These results drove an ROE of 19.6% anchored in healthy operations and a proven risk posture. Universal Banking and insurance and pensions delivered very strong results, while microfinance continued progressing steadily towards its medium-term profitability target. Fee-based and transactional income also grew, underscoring the strength and diversity of our platform. Our innovation portfolio contributed 7.4% of our risk-adjusted revenue, keeping us firmly on track to our 10% target for 2026.

Turning to operate activity, dynamics improved and FX-neutral loan growth accelerated to 7% year-over-year. Origination pipelines remain healthy, particularly in retail banking and microfinance, positioning us for further momentum in the fourth quarter.

The positive credit momentum also supported margins. Risk-adjusted NIM stood at 5.5% in year-to-date figures supported by better asset quality and our structurally efficient low-cost funding base.

On the deposit side, we raised the share of demand and saving accounts to 39.5%, a direct reflection of our digital engagement strategy and the trust we've earned from our clients. Asset quality also continued to trend favorably, benefiting from enhanced origination standards, refined risk-based pricing and stronger collection execution.

Lastly, from an operational standpoint, our efficiency ratio came in at 46.4%, well within our expected range, reflecting the leverage in our digital capabilities and our disciplined cost management. Capital levels remain strong across all businesses.

With that, I'll turn it over to Alejandro to discuss our results and provide more insight into our operational and financial performance. Alejandro, please go ahead.

Thank you, Gianfranco, and good morning, everyone. This quarter's 19.6% ROE reflects sustained momentum in our core businesses and the increasing contribution of our innovation portfolio. We revalued Bolivia's balance sheet using a more market-reflective exchange rate, we generated an accounting year-over-year contraction of 2.1% in Credicorp's total assets this quarter. As I discuss the quarter's highlights, I will focus on the year-over-year operating trends.

Loans measured in quarter end balances increased 1.5%, negatively impacted by the revaluation of Bolivia's balance sheet and the depreciation in BCP's dollar portfolio. Excluding these effects, FX-neutral loan growth for the quarter was 7%. This increase was driven primarily by BCP mainly through mortgages and consumer loans in retail banking and by value.

Asset quality has improved materially year-over-year. NPLs contracted across the board and Credicorp's NPL ratio stood at 4.8% this quarter. The cost of risk fell to 1.7% on the back of fortified risk management and supported by improvements in payment performance and in the Peru and economy. Net interest income increased 2.7% spurred by a contraction in interest expenses after interest rates fell and low-cost deposits expanded and accounted for 58.1% of the funding base. In this context, NIM increased to stand at 6.6%.

Other core income grew 11.9%. Fee income increased 8.2%, boosted by transactional activity at Yape and BCP. Gains on FX transactions rose 23.4% through higher volumes at BCP. Lastly, the insurance underwriting result grew 33.1%, reflecting a stronger insurance service results in the life business. On the efficiency front, our cost-to-income ratio stood within guidance at 46.4%.

Next slide, please. Peru's economic outlook remains positive despite former President [indiscernible] impeachment. So far, there has been no significant impact on key financial variables, such as interest rates and the exchange rate. The pace of GDP growth accelerated in the third quarter to stand around 3.5% year-over-year. Domestic demand continued to outpace overall GDP growth as it has since mid-2024, expanding at a robust 6% for the fourth consecutive quarter. This sustained momentum is attributable to the mid-cycle phase of the economy and to the fact that the terms of trade are at the most favorable level seen in the past 75 years. High-frequency indicators continue to point to robust economic activity, driven by a steady recovery in employment and real wages.

In terms of private investment, business expectations, one of its key drivers remain in optimistic territory. Meanwhile, core proxies such as heavy-duty vehicle sales, capital goods, imports and terms of trade continued to grow at a double-digit pace. We revised our year-end GDP growth forecast upward from slightly above 3% to 3.4% based on two main factors. First, export prices for gold, copper and silver, which together account for half of Peru's local exports have risen significantly faster than expected, driving terms of trade to record highs.

Second, the pension fund withdrawal is expected to boost private spending and support household consumption. We expect economic activity to remain strong throughout the coming year with GDP growth projected in the 3% to 3.5% range despite pending elections in 2026.

Next slide, please. The Federal reserve lowered its policy rate for the second consecutive meeting in response to signs of a cooling labor market. Fed futures have moved another probability of one additional rate cut in December is evenly the split. In Peru, annual inflation has remained below 2% for 11 consecutive months which constitutes one of the lowest prints for both advanced and emerging economies. Following the 25 basis points rate cut in September, which brought the policy rate up to 4.25%, the Central Bank is close to what it considers the mutual rate.

In Colombia, inflation recently accelerated to 5.2% year-over-year in September, which remains above the upper bound of the target range of 4%. Inflation concerns coupled with fiscal challenges have led the Central Bank to keep its polish rate stable at 9.25% during the last three meetings.

In Chile, the Central Bank heads policy rate steady at 4.75% during its most recent meeting. Inflation slowed to 3.4% year-over-year in October, the lowest rate in more than a year, boosting expectations for a December rate cap. This Sunday, Chile will hold its general election and expectations for a more pro-market administration has seen a [indiscernible] for future growth.

Next slide, please. BCP maintained a solid ROE of 25.6%, which reflects resilient margins, diversified revenue streams and low cost of risk. On a quarter-over-quarter basis, total loans measured in quarter-end balances rose 1.7%. In FX-neutral terms, growth reached 2.4%, mainly driven by retail banking segments, which grew 3% while the wholesale banking portfolio increased 1.8%. NIM stood at 6.1%, increasing 10 basis points on the tale of a shift in the asset mix. Other core income grew 1.6% fueled by fee income from Yape. NPL volumes fell 0.9%.

In Retail Banking, NPL volumes declined led by individuals and as a close second by SMEs. Provisions rose 9.6%, reflecting both the recurring dynamics of retail banking and specific impact within Wholesale Banking. In Retail Banking, provisions for individuals remained stable, while provisions for SMEs rose slightly due to a base effect stemming from higher reversals last quarter linked to increased debt repayments in SME business. In Wholesale Banking, there was a relevant increase in the credit risk of one corporate client, which is currently paying up to date. The cost of risk edged up to 1.3%, driven by the dynamics of provisions and loan growth, which were supported by favorable macroeconomic conditions in Peru. In this context, BCP's risk-adjusted NIM stood at 5.2%.

From a year-over-year perspective, I would like to highlight the following dynamics. Loan balances grew 4.6%. However, loan growth in FX-neutral terms reached 7% led primarily by retail segments and closely followed by wholesale loans. Retail segments and consumer loans, in particular, were favored by positive economic conditions, while lower interest rates boosted growth in mortgages. In Wholesale Banking, middle market loans were up this quarter, bolstered by short-term lending to agri businesses. NPLs contracted across all BCP segments, primarily in SMEs and individuals. In individuals, the reduction in NPLs was attributable to repayments, which were fueled by higher liquidity and through improvements in loan origination and debt collection management. NIM decreased 6 basis points, writing a downward trend in the yield on interest-earning assets and partially offset by a lower funding cost, both in line with market rate trends. The cost of risk fell across retail banking segments, driven by improvements in payment performance after low-risk vintages increased their share of total loans, supported by a strengthening economic backlog.

Other core income rose 10.8%, fueled primarily by fee income which reflected solid results in Yape and BCP. Gains on FX transactions, which grew alongside an uptick in transactional activity in retail segments were a secondary driver of growth in other core income.

The ratio for other core income to assets maintained its upward trend, which is the result of our initiatives to diversify BCP's income streams. It is worth noting that this evolution reflects our investments in technological capabilities to bolster our transactional platform. The efficiency ratio stood at 38.7% at the end of the third quarter. Growth in operating expenses was spurred by provisions for variable compensation and hiring of digital talent for strategic projects.

Next slide, please. Yape continues to generate value across the Credicorp ecosystem with 15.5 million monthly active users, which is the equivalent of 82% of the economic Yape population. We aim to expand this user base to 18 million by 2028. Current users conduct an average of 58.5 transactions per month. Only 12% of this transaction generated revenue, indicating considerable room for further monetization. From a financial standpoint, revenue per monthly active user reached [ 7.4 ] while expenses per mile stood at [ 5 ], reflecting continued improvement in profitability and operational scalability. Although marketing campaigns aimed at driving feature adoption led to higher expenses in the quarter, no material shift in cost structure were observed.

In the last quarter, revenue grew almost 2x year-over-year. Looking ahead, we expect revenues to triple by 2028, primarily driven by higher revenue per mile as users adopt more monetizable features. Payments remain the dominant contributor accounting for 53% of Yap's revenue fueled by strong growth in QR, bill payments and checkout functionalities. Lending continues to gain momentum, now accounting for 20% of Yap's revenue. To date, over 3 million clients have received disbursements, 1 million of which constituted first-ever formal loans. Looking ahead, we aim to expand our disbursed client base to 8 million by 2028 as we deepen our understanding of user payment behavior and refine our risk management capabilities.

In e-commerce, [indiscernible] continues to grow, driven by Yape Promos and gaming, establishing a third monetization pillar. In aggregate, Yape contributed 6.6% of Credicorp's risk-adjusted revenue this quarter, advancing its mission to deepen financial inclusion, scale monetization and strengthen its strategic growth as the growth engine of Credicorp's digital ecosystem.

Next slide, please. Ongoing economic recovery continued to exert a positive impact on Peru's micro finance sector with Mibanco's performing sector peers. In this context, Mibanco's profitability kept rising and stood at 18.8% this quarter, supported by a rebound in loan disbursements in recent quarters and strengthened credit risk management.

I would like to highlight key quarter-over-quarter dynamics. Loans grew 2.4% in quarter end balances, writing an upswing in loan disbursements, which hit an all-time high in September. The NPL ratio fell for the fifth consecutive quarter to stand at 5.7%. NIM picked up 15%, boosted by a shift in the mix towards small ticket higher yield loans. In parallel, the cost of risk fell 7 basis points to stand at 5.2% while risk-adjusted NIM reached a 4-year high of 11%. From a year-over-year perspective, loans measured in quarter end balances grew 8%. Our active pricing management, coupled with the decrease in cost of funding, helped NIM increase. The cost of risk fell 101 basis points as lower risk vintages continue to gain traction and now account for 78% of total loans. Operating expenses remained under control and efficiency stood at 51.4%. In this context, Mibanco's year-to-date contribution to ROE was 16%, transitioning towards our target for medium-term ROE in the low 20s.

Mibanco Colombia's results continue to tick up, reflecting double-digit year-over-year loan growth, control risk management and optimized efficiency, supported by a more favorable economic environment for the micro finance sector. As a result, profitability stood at 12.3% at quarter end.

Next slide, please. At Grupo Pacifico, insurance underwriting results remained strong this quarter, supported by solid operational dynamics in both the P&C and Life businesses with ROE standing at 20.9%. On a quarterly basis, net income remained relatively stable. Insurance underwriting results rose 7% on the back of life business, which reported a decrease in insurance service expenses but was primarily driven by a drop in claims. The [indiscernible] business also posted an improvement in its underwriting results, albeit to a lesser extent. These gains were partially offset by a decline in P&C underwriting performance impacted by higher claims. Growth in underwriting results was offset by a drop in net interest income associated with life insurance contracts.

On a year-over-year basis, net income rose 23%, primarily on the back of Pacifico's full consolidation of the Corporate health insurance and medical services operations. Excluding the consolidation effect, net income rose 10%. Insurance underwriting results rose for the Life business, driven mainly by a decrease in claims on disability and survivorship and credit life lines. And for the P&C business, which reported growth in direct premiums in the cars and medical assistance lines. These impacts were partially offset by higher operating expenses and by an increase in the net loss on securities, which was impacted by credit downgrades on a couple of assets in the investment portfolio.

Next slide, please. Profitability, our Investment Management and advisory business increased this quarter with ROE standing at 17.4%. On a quarter-over-quarter basis, core income-generating businesses delivered strong results this quarter, reflecting improved capital markets activity particularly in the trading unit and continued growth in Wealth Management and Asset Management with AUM in U.S. dollars, up 6% and 14%, respectively. These dynamics were partially offset by higher operating expenses. As a result, net income increased 10%.

On a year-over-year basis, net income increased by 5%, mainly due to favorable performance of the trading unit in our Capital Markets business and stronger treasury performance. These dynamics were partially offset by higher operating expenses

Next slide, please.. Now I would like to review Credicorp's consolidated evolution regarding quarter-over-quarter dynamics. Loan growth was fueled by retail segments, leading to a higher yield interest earning asset mix. As a result, the yield on interest-earning assets rose 13 basis points. On the liability side, low-cost deposits raised an increase in their share of total funding and bond maturities triggered a decrease in interest expenses. These favorable dynamics were partially offset by an increase in the balance of time deposits at BCP. As a result, funding cost decreased 1 basis point.

On a year-over-year basis, the positive impact of a higher yield interest earning asset mix was offset by the negative impact of lower market rates. As such, the yield on interest-earning assets fell 9 basis points.

On the liability side, interest rate dynamics complemented by our competitive advantage in local funding, led the funding cost to decline 25 basis points. In this context, NIM stood at 6.6%, up 9 basis points. Going forward, growth in retail lending, powered by our strengthened risk management capabilities should sustain NIM's growth.

Next slide, please. Moving on to loan portfolio quality. Asset quality showed slight further improvement this quarter as NPL volumes continue to contract across segments, falling to levels below those reported prior to the 2023 recession. Amidst ongoing economic recovery, provisions have dropped over the past 12 months due to an improvement in payment performance and successful risk management measures at both BCP and Mibanco. The positive impact of this improvement exceeded expectations, which kept provisioning levels low once again this quarter. In this context, the NPL coverage ratio rose and stood at 110.1%. Going forward, we will continue to accelerate retail origination while managing risks.

In coming quarters, asset quality may improve from the back of a rising liquidity after the expansion fund withdrawal is rolled out from November 2025 to February 2026. Following that, we expect loan growth to recover space and the cost of risk to rise but remain within our appetite.

Next slide, please. Core income expanded 5.1% year-over-year, underscoring our ability to deliver consistent growth. Net interest income rose 2.7%, supported by a stronger funding mix and a higher yield loan portfolio. This help lead NIM to 6.6%, reinforcing the resilience of our margin. Other core income grew 11.9% driven by a key momentum from Yape and BCP and a 23.4% increase in FX gains on the back of higher volumes.

As highlighted during our Investor Day, other core income is expected to play a growing role in Credicorp's strategy to diversify revenue sources. This includes scaling digital monetization to Yape, expanding bancassurance, accelerating growth in remittances and deepening transactional engagements across traditional platforms.

Risk-adjusted NIM rose 50 basis points year-over-year to stand at a record high of 5.5%. This evolution reflects our risk management is becoming a competitive edge that enables expansion into new market

The efficiency ratio for the first nine months of the year stood within guidance at 45.7%. Operating expenses grew 12.8%, fueled primarily by core businesses at BCP and by investments in our innovation portfolio. Growth in core expenses at BCP was driven mainly by provisions for variable compensation and higher IT expenses. Expenses for our innovation portfolio rose 16.1% led by Yape [indiscernible] which represented 83% of disruptive expenses in the first nine months of this year.

Next slide, please. ROE for the first nine months was 20.1%, supported by solid business performance and bolstered by the extraordinary gain from the [indiscernible] transaction in the first quarter of the year. If we adjust for this transaction, ROE is 19.3% for the first nine months. On an accumulated basis, net income reached a record high, even when excluding the gains from [indiscernible] transaction. We achieved this by leveraging low cost of funding, a reduction in the cost of risk and an increase in lending. We are committed to generating diversified and robust revenue stream to ramp up revenues from other core income and transition toward a stronger, more resilient business [indiscernible].

Now I'll move on to our guidance. Next slide, please. As previously stated, we maintained our GDP guidance as we expect GDP to grow 3.4% this year. We expect our loan book to grow around 6.5% year-over-year measured in end-of-period balances. These figures do not consider the impact of the asset revaluation at BCP Bolivia, but do include the evaluation of the U.S. dollar against the Peruvian Sole. Amid a more dynamic economic backdrop and strengthened origination levels in the first nine months of the year, we expect balanced growth to continue accelerating in the last quarter, driven primarily by retail banking at BCP and by Mibanco. The acceleration anticipated for loan growth and the shift in the mix towards retail should support NIM as interest rates trend downward. Accordingly, we expect NIM to stand within our guidance range. While an increase in the cost of risk is anticipated in the final quarter, driven by a stronger focus on lending to higher-yielding segments, we expect it to close at the lower end of the guidance range. Accordingly, we expect the risk-adjusted NIM to move closer to the upper end of the guidance. On the efficiency front, we expect to be within our guidance range.

Regarding fee income and insurance underwriting results, we expect growth to stand at low double digits this year, supported by an acceleration in economic activity and ongoing diversification of our income sources. As a result, we maintain our full year ROE guidance at around 19%. This year reflects both solid core performance and sustained discipline on the risk front. While local political uncertainties remain, we believe the fundamentals are in place to support this level of profitability.

With these comments, I would like to open the Q&A session.

[Operator Instructions] Our first question comes from Ernesto Gabilondo from Bank of America.

My question will be related to asset quality. So NPLs and cost of risk are behaving much better than expected this year is well below your guidance provided. You mentioned you're expecting cost of risk to be at the low end of the guidance, it should be around 2%. So my question is, if it's not too conservative this guidance because cost to risk will have to be above 2% in the last quarter. So I just wanted to hear your thoughts on that [indiscernible] 2026, that probably you will accelerate the growth in the high-yield segment. How should we think about the cost of risk? Should we start about 2% or similar guidance that you have provided this year?

Ernesto, this is Gianfranco, allow Cesar to get into the details.

So thank you for the question. I would say that, in fact, the results are better than we initially expected at the beginning of the year is a combination of better results in the measures taking in the risk management front, but also a more dynamic economic backdrop. As we were mentioned, and Alejandro has been highlighted, the economy is growing faster, particularly if you consider consumer spending and this is positive for the quality of the portfolio. And at the end of the year, another factor is that we are going to have liquidity events, the ASP withdraws that are going to impact negatively, we'll say, loan growth but positive credit quality. So this is going to contribute to the numbers that we are laying out. And actually, Alejandro mentioned in the guideline that the cost of risk is going to be around the lower end. And the lower end is 1.8% that's the first part of the question.

In the second part, what we expect for the next year is to increase gradually as we have mentioned previously, the shift in the composition of the portfolio. But I will again emphasize that the positive thing is that we expect to do that, increasing the NIM. And so the risk-adjusted NIM should also increase in absolute trends in relation to the current levels.

Excellent. And just for a second question is on OpEx growth. So we noticed this quarter came at a double-digit. As you mentioned, the idea is to have revenue growth outpacing OpEx growth over the next years. But how should we think about OpEx growth next year? I don't know if you can break it down your expectation of OpEx growth, how much will be related to the disruptive initiatives like Yape, Tempo and how much to the ongoing business?

Sure. Yes. So we have seen important operating expenses growth this quarter, but it's inside of our guidance, as we've mentioned. So it's been planned as we are revamping capabilities, both in the core business and the innovation part. We expect to continue to invest in the future. But in the core business, probably at a lower speed than what we've seen in this year because, again, we've done some particular projects during this year. So it should come a little bit lower. And on the innovation side, we'll probably remain in similar numbers that will allow us to generate more income and hence, go to our midterm target that Gianfranco mentioned of 42% in the next 3 years -- around 3 years. So you should see a little bit of a lower growth of expenses in the core business and similar growth in the innovation part.

Our next question comes from Brian Flores from Citi.

have a question related to growth, right? Because your long-term guidance of ROE is 19.5%. And as you mentioned, you're ramping up. The economy is going well. Just wanted to see what should we think about the first quarter of the year given the political uncertainty, we have elections in April. So just wondering if we might see some deceleration in the first quarter as mostly corporates tend to be a bit more cautious. And as you mentioned, there are some impacts from withdrawals probably carrying into January, February. So if you think maybe we could see ROE levels similar to this year, which obviously are very positive? Or do you think we are, I would say, converging into this 19.5 long term in a sooner way? And then I'll ask my second question.

Sure. Brian, this is Gianfranco. I'll answer the uncertainty question regarding elections next year. And maybe based on data, if you do a back testing on what has happened in the last 4 or 5 elections, whatever, there's always -- so the previous year, there's basically no reduction in terms of growth, long-term growth or investment and so on. However, there is a slowdown over the last 4 elections, and there's a slowdown in the first quarter of the year of the election. So that's in line to what you're implying in your question.

Having said that, it's a tricky question because of what [indiscernible] and Alejandro mentioned before, the pace of growth in terms of GDP, consumer -- consumption in general, trade balances and so on. Some of those indicators are at record levels for the last, I don't know, 10 years -- actually, trade balances is at record levels over the last 7 -- last year. So it's tricky. So if you force me to give you an answer, my personal opinion is that next year, the first quarter of next year is not going to be as low as what has happened in previous elections.

Regarding ROE for the upcoming years, we will provide guidance next year. Next call actually rather than nowadays -- than two days, sorry.

I was just going to complement in a couple of comments. Again, Gianfranco has mentioned the economy is finishing the year very strongly [indiscernible] a couple of points, private investment in the last quarter, the third quarter of the year grew 10.4%. That's the highest since 2013. We already mentioned private consumption. So we are entering the year with a very positive situation. And also that's -- basically, there's going to be some election-related effects. But again, it's interesting to see which one is waiting more. So we're not expecting a big change in the first quarter.

Having said that, there is also the withdrawal from the pension plan. What we expect is for it to have an effect of around 0.5% in growth -- in less growth but more related to the extra cash in the hands of our consumers and the prepayments in loans based on that. But again, in this economic backdrop, we expect next year to -- I mean, we'll give guidance in the next call, but we expect next year to be a strong year in growth for Credicorp.

Perfect. Just to clarify, that 0.5% impact is full year? Or is it year-over-year in the first quarter?

It is full year, but it's going to be probably very much in the first quarter because the withdrawal starts in November and finished in February. So it is -- the full year effect is 0.5 percentage point, but again, probably very concentrated in the first part of the year.

No. Okay. Perfect. And then just to confirm, the -- I mean, the base line that we should think about in terms of growth is based on what I understand, similar to this level of 2025, right? The bits in the guidance?

Well, we'll give guidance again in the next call, but the way I would put it is, if you think of 2025, the beginning -- the first half of 2025 growth wasn't very strong. It's accelerated in the last quarter. So I would say that there's probably an opportunity to even better grow when you consider a full year in 2026.

No, perfect. I really appreciate the clarification because as Gianfranco was saying, this is indeed a tricky question, and it has a lot of moving parts. So I really appreciate -- if I can just very quickly on my second question, Yape's contribution nearly close to 7%. Just wondering if we can envision double-digit contribution by 2026?

Definitely.

Yes, very probably.

Our next question comes from Renato Meloni from anonymous research.

Hi, everyone. Congrats on the results. It's Renato from Autonomous Research here. So just a -- first a quick follow-up on loan growth. Just like picking up on your earlier comments, just wanted to know if you should expect to reach the loan growth guidance for this year? And if that's FX adjusted or just the nominal value?

And then my second question is on the NIM expansion. I just wanted to reconcile your comments because I mean we can see the mix shift here driving yields higher. But at the same time, you're commenting on this like lower risk vintages, they're positively impacting cost of risk. So I just wanted to put these two together and see what really happened here.

Alejandro, would you take that, the first one? [indiscernible] loan growth.

Sure. So loan growth, I would say that it's -- the number we've given in guidance is nominal, but it does consider the adjustment of Bolivia's restatement, okay, which is just an accounting incentive because we're using a different exchange rate. So it's not considering any impact of the dollar exchange rate. And we do expect to reach it. I mean if we consider the retail growth we've seen in the third quarter, just by continuing with that retail growth and having some wholesale growth, we should be able to be around that area. And again, with the economic backdrop, we believe it's very achievable in this year.

Yes. Go ahead, Cesar. The second question.

Yes. The second question. I understand your question because you say it's a combination of better quality but after the better quality, higher cost of risk. The issue is that we are talking about fundamentally of two different portfolios. We have been improving the quality of originations so the traditional portfolios are having less cost of risk gradually as Alejandro mentioned, as the year goes, we have moved newly originated part of the portfolio in relation to the originated portfolio in year 2023 that came with higher cost of rates. So this is a trend that grows the cost of risk down as the year passes, we are starting to originate in new segments with purposely higher cost of risk, higher margin, and this percentage is growing gradually. So the combination of these factors explains the initial draw diminishing the cost of risk and they'll gradually improved as the year ends and the next year began. I don't know if it's clarified the points.

Our next question comes from Yuri Fernandes from JPMorgan.

I have one regarding Bolivia. I know this year has been volatile on FX, the impairments like the readjustments, right, on the portfolio deposits. But now there was an important political shift in Bolivia. I know this is small for your entire operation. But this quarter, it was already better. So if you can comment on what you expect for Bolivia if the elections, like the new President should have any tailwind for you going forward, like any security gains you may have? Just trying to understand is Bolivia from headwind in the past years may become a tailwind for you here?

Yuri, let me take that question because I believe you know that I ran that bank for three years. So I'm quite knowledgeable about Bolivia. So even though it's very early stages for the new government, the initial definition or decisions they've made -- they're giving very positive signaling. The executive cabinet is very pro market and professional, they just appointed [indiscernible] yesterday, the day before, the new Central Bank President. He's a very well-seasoned technical guy. So the initial indicators are quite positive.

As you mentioned, Bolivia has -- Bolivia, sorry, has been small for us. I've been seeing it as a option value for us. And that option may become quite relevant going forward. We're positive on what Bolivia -- what can happen in Bolivia as a country. Having said that, there's a lot to be done on the political and economical and social matters for the government. But we're quite positive with the potential outcomes going forward.

No. Thank you, Gianfranco. So we'll keep asking about the uptick, but [indiscernible] that you have the optionality there. If I may, just a quick second one. Payout and dividends, your [indiscernible] accumulation has been pretty strong. I know you have the cash payment of the legal debate that we have on the taxes. But what should we expect here, like guide us through like capital returns for shareholders.

Yes.can you take it, Alejandro?

Yes. So basically, this year, the payout has been 58%. And as you alluded, we did that in just the regular dividend, we didn't pay an extraordinary dividend. Going forward, I mean there's growth in our business that, of course, consumes capital, but we do expect to maintain our increasing ordinary dividend and potentially with also extraordinary dividends. And I would say probably payout ratios should be higher than this year in the high 60s. But again, it's going to depend on whether there's any particular transactions. There's always the possibility of something that changes that. But in ordinary business, we should see an increase from this year not necessarily to the 2024 level where we had a payout of 75% but we were generating a lot of income without loan growth. So that, of course, doesn't consume capital. But again, higher than this year and with increasing ordinary dividends is what I would think we're going to see in the coming years.

Right. In the case of inorganic acquisition, like which areas do you see value for -- like insurance, we just had [indiscernible], but anything that is important for Credicorp nowadays?

So nothing [indiscernible] as we speak. As we mentioned -- actually, Alejandro just mentioned it. We will retain whatever is needed for financing growth, including potential inorganic operations. everything else will be paid as dividend. And the idea is to keep increasing the regular dividend. But as we speak, there's nothing relevant in terms of M&A.

Next question comes from Lindsey Shema from Goldman Sachs.

Just a follow-up on the impacts of the eighth pension fund withdrawal. I was wondering if you could kind of weigh the impacts against each other. I mean, it sounds like there's going to be better asset quality but slower loan growth? And then are you seeing any impacts to [ PRIMA ]? And then net-net, how are you seeing the impacts on the business? And then I'll ask a second follow-up afterwards.

Alejandro?

Yes, sure. So the withdrawal is going to be -- we expect it to be around PLN 25 billion. If we think about the usual share with retained inside Credicorp, that could be around PLN 10 billion. So there's a positive impact in local funding. We expected that to be around 1% more than we already expected in [indiscernible] funding both this year and next year. So that's a positive. As I mentioned, in loan growth as Credicorp, we are expecting around 0.5 percentage point less of loan growth next year. So that is a negative impact for the coming year.

As for Prima, the impact this year are very, very small. If you consider that this actually impacts basically fee income and it's happening very late in the year. Next year, there's certainly going to be an impact in fee income of around 10% of fee income if the numbers that we're assuming of withdrawal remains in place.

Maybe just a quick comment that goes beyond your question, actually, and we've been saying it for a couple of years already is unfortunately, we believe that the pension system in Peru has been destroyed by the politicians. We've been quite active in the past in trying to come up, we have a reasonable proposal that hasn't been taken into consideration. So hopefully, in the upcoming years, that pension fund system, both a public one and the private one can be fixed, and we come up with a value proposition and structuring that is reasonable for Peruvians. Otherwise, there's going to be a major issue, I don't know, 10, 15 years down the road.

And then for my second question, you continue to see strong loan growth at Yape. Could you provide an update on the unit economics, especially as you've started to increase the multi-installment loans?

Yes. I mean, as I mentioned, we are scaling the multi -- as you mentioned, the multi installment loans in Yape. Today, that -- I mean the cost of risk in that versus the rate that we're charging, it's a very positive business. It's still small. So we expect to scale it going forward. I don't have the unit economics to share at this time. But again, it is a growing business that should -- today, it represents around 20% of Yape's income, the whole lending business and we expect it to continue growing and become an even more important contributor to Yape.

Maybe to complement Alejandro's answer for you to understand how we're managing the loan book at Yape. We start lending -- so bear in mind that this is a mostly [ unbanked or underbanked ]. So we start lending on installment [indiscernible], very small ticket loans. And as we gain info and data from the customers, we ship them or increase the value [ prop ] in terms of tenor and size of the ticket both the [indiscernible] overall and the multi-installment are profitable businesses. So again, we don't have unit economics of each single loan, but we manage them by -- actually by vintages. And overall, the results are positive.

Our next question comes from Daniel Vaz from Safra.

I'm particularly interested on Mibanco here, it continues to surprise us, right? So I think ROE expansion, maybe improving asset quality also with good NIMs and you're coming from years, I guess, since maybe 2023, that your loan growth has been decreasing, right? So right now, we see a loan growth on the positive side coming from like 1% last quarter to 8% right now. So also very strong numbers in Colombia. I noticed like 20% year-over-year growth.

So looking at the whole picture, correct me if I'm wrong, but this outperformance and also controlled asset quality should give you even more confidence to accelerate growth in Mibanco, right? So I guess, looking at ahead like 2026, I would expect this loan growth to migrate like from, I don't know, maybe single digit to low teens, maybe mid-teens level portfolio growth, right? So you're seeing very, very good asset quality ROE expanding. Is this the case? I mean, should we think Mibanco like this to the upcoming quarters?

Thank you, Daniel, for your question. But let me get a couple of steps back to -- for you to have a more holistic mission. The whole microfinance sector in Peru has been hit very harshly over the last 4 or 5 years. The worst combination because rates went up, so the funding -- and most of the micro finance institutions funding is not retail funding or transactional funding is time deposits or capital market -- local capital markets. So rates went up that were -- they weren't able -- I'm talking to [ a system ]. They weren't able to pass through that increase in rate. Cost of risk went up, therefore, margins were really squeezed. On top of that, and I've always been very pleasing about it, the microfinance institutions, at least in Peru, the whole transactional business, fee income and so on, and this is the case of Mibanco, is very weak. So you see that when they have the perfect form over the last 3, 4 years. going forward, and I totally agree with what you just said regarding lending because -- at Mibanco because we expect the -- portfolio has already improved dramatically, the new vintages are performing better than the old vintages. So we are quite positive on the lending business going forward.

On top of that, Mibanco, and this is a more long-term strategy. On top of that, Mibanco is currently working in complementing that business. So in the next few years, you'll see that the fee income business, transactional business is going to grow at a faster pace than the lending business or the lending of that margin because we are focusing in bringing in more transactionality to Mibanco and the collateral effect is that the cost of funding should go down.

Our next question comes from Carlos Gomez from HSBC.

Congratulations, particularly in Yape and particularly on [indiscernible] you really took my question because I know that is close to your heart, but in that regard, you have the changes in Bolivia, you have the elections in Chile, the elections in Colombia as well as Peru. So it seems to me that you might have a target rich environment for investment around the region. Does that make you more inclined to perhaps invest more and distribute less? And if so, do you have a particular geographical difference right now? That will be the question. Yes.

Yes. Carlos, our region -- so again, Credicorp has been here for 30 years, BCP has been here for over 130 years. So actually, the vision we have goes beyond the political environment. Obviously, political environment impacts the performance of our countries and our appetite. Having said all of that, we are quite positive to what could happen, especially in Bolivia, Chile and Peru. Let me provide you more detail.

It's not only because -- it's not because of the change in government and government -- the upcoming government being more pro market or whatever, that's definitely relevant but more relevant than that is what's going on with commodity prices, specifically copper and lithium and gold in the case of Peru. So copper prices and you guys or your banks know more than we do. Copper prices should stay at high levels for a long period because of the investments that are being done in data centers and that data centers consume a lot of energy. And lithium, it's a matter of the transition, sorry, to electric vehicles and so on. And gold is like a [indiscernible] dollar basically. So we are positive on that. And well, both Chile and Bolivia are very relevant in lithium reserves, both Chile and Peru and really relevant in copper reserves. So the whole -- there are a lot of moving pieces, but the whole environment, we see a very -- a much more positive environment for the upcoming years when you compare that environment to what we have had in the last I don't know, 4, 5 years in these 3 countries.

We are happy to hear. And if I can sneak in one more question on the rates. Could you give us an update on your sensitivity to raise both U.S. dollars and soles?

Alejandro?

Sure. Carlos, the -- again, we've talked about this before. So we have a theoretical number of 100 basis points decrease in rate, both in soles and dollars parallel [indiscernible]. That number today is at 17 basis points, 15 of those come from the dollar part of the book and just 2 on the solid part. Again, this is a very theoretical example. And I mentioned in the Investor Day, actually, what we've seen in practices, our NIM growing, while the rates in Peru has come down more than 300 basis points. So the theoretical sensitivity to those 70 basis points, we are expecting actually NIM to continue very strong and risk-adjusted into growth in the coming years.

Our next question comes from Marcelo Mizrahi from Bredesco BBI. And we'll move on to our next question. We have Andres Soto from Santander.

My question is regarding Yape. And some of the numbers that you mentioned during the call, you said you expect revenue in Yape to triple by 2028. And the revenue in Yape already represents 6.5% of Credicorp total revenue. So it will be fair to assume that by 2028, that number should increase to 15% the revenue contribution from Yape? And if so and making assumptions also regarding the efficiency, the contribution to the bottom line should be in excess of 20%. Is this the way that you guys look at this?

Yes. Well, to your point, Yape is going to be a [indiscernible] contributor year-over-year for Credicorp. We are expecting it to be around the 15% mark of not necessarily revenue but net result for Credicorp in the next three years or so.

Okay. But even in that conservative assumption, Alejandro, if it represents 15% of income of earnings in 2028. Currently, when you look at the fourth quarter, it represented less than 5% for the full year, I would say, 2.5%, something like that. you will see an earnings accretion in excess of 10% of the level that you have now and the ROE of Credicorp is already at 19%, even higher than that. So the ROE by 2028 would be 21%. My point here is the 19.5% that you present as a medium-term target, sounds conservative considering the potential for earnings accretion coming from Yape.

Sure. No, I think your numbers are -- make a lot of sense. We mentioned around 19.5%. And again, we have elections in all the countries in this coming year. So we certainly -- I would say we are usually conservative in that kind of use. We're certain we'll come back and revise that at a later time when there's more certainty on the political outlook for other countries. But again, if everything works as planned, probably around 19.5%, will be on the higher end of that concept for sure. But again, we'll come and revise that later -- No. I mean we're going to be around 19.5% -- we're going to be on the ramp to the upside more than [indiscernible] that's what I was trying to say.

Andres, your pushback is -- this is Gianfranco, your pushback is correct. But again, even though we're positive on the outlook of what could happen in the region, we're still in Latin America. So volatility is part of the game. And that growth in terms of income at Yape, there are a lot of assumptions, a lot -- there's execution risk and so on. So you know us for a long time, yes, our outlook or our guidance is on the positive side, and Yape may have a relevant -- positive impact on the upside of that.

Not today, but in three years can be also a little bit of cannibalization between several vehicles. That is not relevant at all now.

Yes. That's a fair assumption, Cesar, the cannibalization will come against Mibanco and this [indiscernible] with a much higher potential for ROE. So it will be even accretive if that comes to happen.

You're totally right, Andres. The cannibalization should generate value rather than the destroy value.

Our next question comes from Alonso Aramburú from BTG.

Yes. Just following up on your recent comments, you mentioned that Yape is doing a pilot for the SME segment. So I'm just wondering if you can give us some color on that. How different is that to the strategy you're following compared to Mibanco. Is this targeting the same new Mibanco clients or these different clients? Are you using reps to visit some of these clients? Just to give us some color into how you're approaching this via Yape.

Alonso, this is Gianfranco. We're approaching Yape in a very different way -- a different model than the Mibanco model. It's basically based on transactions we gather through the app. So there's basically no human contact. That said, that model is much cheaper, much more efficient than the Mibanco model, but it's an untested model. So we are at the very initial stages, even though the vintages, which are not relevant yet, are performing quite well. But you see that the Mibanco model is a more expensive model, but it's a very prudent model with high ROEs, high NPS and so on, whereas Yape is an untested model. We still see that there's a lot of space, the larger one is [ land ] bank or under bank. But still, Mibanco only has 20-plus percent of -- low 20s market shares in the micro finance business. So there's a lot of space for gaining share overall. As Cesar mentioned before, as of today, we are not worried whatsoever in terms of cannibalization between Mibanco and Yape. Maybe, I don't know, two, three years down the road, we may we think the whole approach to the microfinance SME businesses here in Peru.

Our next question comes from Marcelo Mizrahi from Bradesco BBI.

Hello, everyone. Thank you for the question. My first time here. Very good to be here with you. So my question is regarding the insurance business. So in the last couple of quarters, the loss ratios are going down on life and also in Crediseguro. My question is to look forward if it is recurring. So look forward, these loss ratios will return to the levels of 50% on life or not. This is a new level of loss ratios to this line and looking to the Crediseguro, the same question.

Sure. Marcelo, there's been a particular effect on the survival business related to restatement done from some pension plans on the number of people [indiscernible]. So the thing is it's been an unusual positive result, and we should go back to more normalized levels going forward.

Okay. But those levels are around 20%, 30% loss ratios or they will come back to 50% as they was in the last year?

Let me -- so the short answer is what Alejandro mentioned, there are some exceptional impact on the loss ratios this quarter. Going forward to your question that is, is it going to be back at 50%. If I were to provide a short answer, it would be, yes, a more structural answer is that the further we go into the bancassurance and life insurance business on a more retail and lower-end segment, that the ratio should improve. Margins there are better. So it's not that we're going to have the ratios we have this quarter, but in the medium to long run, that the ratios we have in the past should be better going forward.

And the last one about insurance. So do you guys believe that this line will maintain this pace of growing more than the other lines, so it will generate value add value comparing to the other lines of the bank?

So yes, a great question. We always talk about the financial system in Peru is under penetrated and so on. When you see the level of penetration in insurance is -- that's even. I don't know if the word is worse or better. Worse in terms of receiving -- the Peruvian population coverage, but better in terms of business opportunity. So going to your question, we are quite positive that business should grow at really high rates for the upcoming years. And we're working very heavily on deploying new products, new channels, improving value propositions and so on, so as to reach the underinsured in Peru.

Ladies and gentlemen, there appear to be no further questions at this time. I would like to turn the floor back over to Mr. Gianfranco Ferrari, Chief Executive Officer, for closing remarks.

Thank you. We're entering the final months of the year with strong operating foundations and a clear sense of strategic direction. I want to reiterate the core message we shared at our Investor Day. Our strategy is built not just to perform in favorable conditions, but to [ lure ] and thrive across cycles.

Over the past 4 years, we have grown net income faster than Peru's nominal GDP, driven by the strength of our diversified business model, scalable platforms and disciplined execution. In that context, we've raised our medium-term ROE target from around 18% to approximately 19.5%, reflecting the benefits of a more inclusive digitally enabled business as we expand into new segments and broaden our addressable market. To get there, our strategy is focused on unlocking operating leverage and driving sustainable profitability. We will deliver higher risk-adjusted NIM through a more retail-oriented loan portfolio while increasing transactional and noninterest income from our disruptive initiatives. Together, these drivers will accelerate income growth, enhance efficiency toward the 42% level and strengthen our ability to generate superior long-term returns.

At the same time, we remain mindful of the broader context. While Peru continues to face political uncertainty, including its seventh presidential transition in under a decade, its macroeconomic institutions remain intact. This is a familiar pattern, political volatility consistent with economic resilience. That said, political uncertainty does carry an opportunity cost. And we hope that in time, greater political stability will allow the country to fully unlock its growth potential.

Early signs from the new administration point to a more pragmatic tone and renewed efforts to engage the private sector. Business sentiment is gradually improving, with more companies planning to invest, hire and expand activity in the upcoming quarters. In this environment, our focus is clear: execute with discipline, expand financial inclusion and deliver long-term value for our shareholders and the societies we serve.

Thank you for your continued trust and partnership.

Thank you, ladies and gentlemen. This concludes today's presentation. You may now disconnect your lines.

Good morning, everybody, and welcome to our 2025 Credicorp Investor Day and 30-year anniversary of listing in the New York Stock Exchange. Thank you all of you for coming here, and thank you all you that connected through the webcast. Over the next few hours, you will hear about how at Credicorp, we are building a future-oriented ecosystem that is driving innovation, expanding financial inclusion and accelerating growth across cycles.

Our management here will share with you how we are leveraging the best talent, the best technology and disciplined execution to deliver sustainable value unlock very interesting growth opportunities ahead of us. You will also have the opportunity to ask questions. Here, you have the detailed agenda with the topics we will cover. And now let me go through a couple of logistics here. After the management comments, we will have a 5-minute break to be followed by the Q&A session. We will first cover the questions that we have here in the room and then the questions that we have received through the webcast.

For webcast participants, you can submit your questions using the tableau text box below the broadcast screen at any time during the presentation. You can also click on question mark icon located on the side bar to the left of your screen to submit a question. We also want to hear from you your feedback regarding the experience in this event.

For webcast participants, the brief survey can be accessed via the survey link at the Resources tab on your screen. In-person attendees may fill out the survey online by scanning the QR code on your table tent card or by completing the printed handout.

Now I will pass for a moment so you can read our safe harbor. I will mention a couple of considerations. Today's management presentations include forward-looking statements reflecting our management's current beliefs and expectations about Credicorp's future plans, strategies, goals and results. These forward-looking statements are based on current information and actual results will depend upon known and unknown risks and uncertainties that could cause actual performance to differ materially from what we currently expect. Therefore, you should not rely these forward-looking statements as an assurance of the company's future performance. Please take a moment to read this slide.

And now I would like to introduce our Secretive Chairman, Luis Romero.

Thank you, Milagros. Good morning, and welcome to this very special Investor Day. This year marks the 30th anniversary of Credicorp listing on the New York Stock Exchange, a milestone that reflects not only our growth but also the trust and continuity that have sustained us across generations. For a century, all group like ours, anniversaries are not just moments to celebrate. There are moments to reflect on the vision that has carried us forward and to renew our commitment to the future. 5 years ago, I addressed you, for the first time as Chairman during the 25th anniversary, I had assumed this role amid challenging circumstances brought on by the pandemic.

At that time, I emphasize to our leadership team that every crisis presents an opportunity, an assertion that proved true for Credicorp, which has already established itself as Peru's leading financial group with an expanding presence in the Andean region. Since then, we have not only consolidated our leadership position, but also enhance our organization strength, demonstrating notable resilience through disciplined execution and a strategic long-term planning. These resilience enabled us to further distance ourselves from our peers and emerge stronger than ever.

In 30 years, we have navigated multiple crisis driven innovation and executed a strategy that has allowed Credicorp not only to withstand volatility, but to achieve steady growth. As a result, by the end of September, we had outperformed the market and generated a total shareholder return of 14.1% annually on average in Credicorp inception in 1995. From this position of strength, Credicorp is also consolidating its role as a regional player with growing operations in Latin America and a clear ambition to expand scale in key markets, through innovation, strategy, our company is well positioned to lead the financial sector into the future.

In an age of immediacy, patient becomes almost revolutionary. Our ability to focus on the long term and to remain steady has allowed us to decouple from the macroeconomic cycle and deliver consistent value to shareholders. This decoupling reflects both the diversification of our revenue sources and the expansion of our footprint in the region where we operate, strengthening our resilience across different markets and cycles.

Looking ahead, 4 priorities will remain at the heart at our strategy. Pillars that I believe explain not only credit cost longevity, but that of every institution that induced beyond a century. First, purpose. At Credicorp, our purpose is clear: to contribute to improving lives by driving the changes our countries need.

In practice, that means expanding financial inclusion strengthening financial education and creating long-term value for all our stakeholders. Second, innovation. For us, innovation is not only a onetime project, it's a mindset about learning, adapting and challenging ourselves to do things differently. Yape is proof of that. What started as an experiment is now the most loved brand in Peru and the leading digital ecosystem with more than 15 million active users and growing profitability.

And in the coming years, Yape will likely become one of our largest businesses, a catalyst for financial inclusion in Peru and beyond.

Third, culture and talent. Talent is our most valuable asset. Technical skills evolve quickly, but what sustains leadership is adaptability, critical thinking and empathy. At Credicorp, we are investing in digital capabilities in artificial intelligence, in finding the best talent even beyond our borders, and in preparing leaders who can both innovate and lead with humanity. Culture and strategy must always be aligned, and we actively measure and close gaps to ensure this is the case.

And finally, governance. Governance is essential. Good governance reduces the risk of errors, strengthening trust with our shareholders and ensure that decisions are made with clarity and independence. Our Board and committee structures are reflective of global best practices. We have also linked part of executive compensation to long-term sustainability and value creation indicators. These measures ensures accountability, discipline and alignment with the interest of all our stakeholders.

These 4 pillars, purpose, innovation, culture and governance will continue to carry Credicorp forward for the next 30 years and beyond. From its beginning, Credicorp was built with a conviction on finance can be a driver of progress. In communities like the ones in which we operate, where urging needs persist, the private sector has a moral duty not just to describe problems, but to act and drive change.

We embraced our responsibility, whether it is through expanding financial inclusion, democratizing insurance supporting SMEs or driving sustainability. We will further grow retail loans, especially through consumer finance and lead insurance penetration as it becomes more embedded in people's daily lives.

Moreover, we will increase credit and support services to micro and small entrepreneurs, a key component of social and economic development in the countries where we operate. We will be a more digital organization, embracing and leverage AI to deliver greater experiences through hyperpersonalization while enhancing productivity and efficiency.

Our proven ability to decouple from the macroeconomic cycle sets us apart. Even in challenging environments, we have consistently created value, expanding -- expanded inclusion and fortify our competitive advantage. The next chapter for Credicorp will be defined by stronger innovation, broader inclusion and an even greater positive impact on the communities we serve. I am excited and optimistic about what lies ahead.

Together, we are prepared not only to outperform the market, but to shape the future of finance in a region and beyond. I want to close with gratitude to our investors. Thank you for your trust and patience to our employees, more than 43,000 across the region. Thank you for your dedication and commitment with our purpose and to our clients. Thank you for challenging us every day to improve.

And let me leave you with this final remark. The best of Credicorp is yet to come. Thank you.

As we mark our 30-year leasing anniversary, we will start with a video, which features Raimundo Morales, our Vice Chairman, reflecting on Credicorp's journey since 1995. When he as CEO of the company led the New York Stock Exchange listing. Following that, Gianfranco Ferrari and Francesca Raffo, will share how we are building the next chapter of transformation at Credicorp. Thank you.

[Presentation]

So let me start by saying that 30 years have gone by and your English has improved drastically.

It's not only my English. [indiscernible] English has been better. I didn't know he has this posh accent. I'm talking about it's incredible. Actually, this -- the interview was only in Spanish, and obviously, we used AI for translation, something that was impossible 30 years ago, and it's incredible that we can do that. We as a world, in the world can do that nowadays. As it's incredible being here celebrating our 30th anniversary.

And both of us, we've been part of this journey actually. So for me, the most relevant part rather than being here today is what we've done through the last 30 years. And basically, it's not only a story about Credicorp, it's also a story about Peru. Peru has outperformed the -- our peers in the region in terms -- actually, whatever indicator you can use. Here, we're sharing the per capita GDP, it outperformed any single country in Latin America. But if you measure debt to GDP fiscal deficit, as of today, trade balance, you name it. It's been really, really good to the country. Some of you have visited us.

And the country you visited -- if you visited the country 30 years ago, you compare where -- how the countries today is a completely different country. If you go to the next slide, please. This picture is actually the same place 30 years ago as it is today. A major commercial area, whereas before it was a poor "area." As I mentioned before, poverty has been reducing by 50%. The involvement of economic active population has risen by close to 50%. So whatever indicator or macro indicator we can do -- we can measure has been great as a country. And within that environment, Credicorp has also performed quite well.

I would say that we not only rode the wave, but lead that way. As you can see, the 30-year TSR -- average TSR has been over 14%. We grew not only organically but also inorganically through different acquisitions in micro finance insurance in banking and so on. Well, and here we are. Here we are with a lot of expectations on what's coming up next. But I will like to have your vision about your experience during these 30 years within Credicorp.

So definitely, I think 1 of the boldest changes we see is the focus on innovation, been very explicit on that. But if you look at 3 years ago when we communicated our disruptive innovation strategy, we also reflected on -- this hasn't only happened 3 years ago. 10 years ago, we started a digital transformation for BCP. And we actually really changed the way consumers not only the landscape that you mentioned, but also the way consumers transact it. So we've been working hard around digitizing the country. 24% of our transactions used to be cashless.

Now 84% of the transactions are cashless. So that is a huge change. But if you look further back, Credicorp has been innovating for the past 20 years. We created a different net -- physical network called correspondent banking, which actually changed the convenience factor in the country. And we also entered the SME segment, which was very innovative at the time. So this is something that's been going on for the 100 years that Credicorp has been operating in the country. So what do you think is the main ambition? Where do you think that this...

Where do we go?

Where do we go?

Maybe since you mentioned the digital transformation and so on, -- maybe something that I would like to share is that -- and you may recall it, at the very beginning, we had a very long and harsh discussions regarding can we achieve experience or increase the NPS within our clients and at the same time, efficiency, be more efficient. And we had a lot of our internal arguments. And in hindsight, we were right that both objectives could be achievable by leveraging on basically technology and digital tools. I really believe that one of the key factors for success was that since the very beginning, we realized that digital was a means to an end rather than an end by itself.

And this is an example about -- in BCP, but it's across all of the companies, but the cost to serve per client has been reduced by close to 20%. NPS has skyrocketed among different -- our different subsidiaries. We built a brand that was mentioned before, Yape, which is today the most loved brand in Peru, period. It's not the most loved brand in the financial system or whatever. So we really I'm very proud of it. We really achieved this objective of being -- or providing the best experience regardless of the industry, but at the same time of being much more efficient in serving our clients.

I agree. And in addition to that, I think this ambition for growth, the way we approach it is we're willing to actually make the radical changes that we need. We come from a wholesale bank, we went to a retail bank from an affluent bank to a massive bank. And this is the approach that we're taking in many of the other lines of business of Credicorp. And also the shift from an inside-out approach, bringing products and sending them to the market versus really an outside-in approach of understanding customer needs, what they want, the way they want to transact bringing design thinking, UX and the capability of testing to really get a product in the market or service in the market that customers really value and need.

We talk a lot about Yape and its huge capability to transact 50 transactions per month on average. But also if you look at BCP, BCP now has 8 million customers using their mobile app with 20 log-ins per month, which is very high. We're transforming insurance with embedding insurance in daily life. We have platforms to provide a better service in terms of investment to make it more accessible to people and also health. We've managed to do this, which I think is really interesting, also working around financial education. We have a series in YouTube.

It has more than 80 episodes, chapters with more than 300 million views. So I think this -- the real change of approaching the whole thing in a much more customer-centric way is really connecting with our customers and our markets. But not to toot our own horn, let's bring a short video from a customer where we can realize the way we've impacted their business and also their life.

[Presentation]

It's very reaffirming to hear these stories from customers and very much needed because of the pace of growth and the level of change that we're aspiring to know. So for you Gianfranco, what has remained constant over time?

Yes. One of 1 million histories, right, of stories. Well, first of all, culture. I'm sure to every single company presentation, you go, everything single company mentions culture. But I really believe that -- even though we've been flexible enough to adapt our culture to the -- not only to the environment, but to the acquisitions we've made, some commonalities across subsidiaries have stayed there. The culture we have at Mibanco is completely different. Different from the culture we have at Credicorp Capital. But it makes sense.

One serves the micro entrepreneurs, the other one serve wealthy clients, we have a large asset management business. So the cultures need to be different, but some commonalities have to stay in place. So we -- the culture is there, our culture -- Credicrop's culture, I mean, trickles down to all of the subsidiaries. But at the same time, we've been savvy enough to adapt the culture to the segments and clients we're serving.

The second one, and Raimundo mentioned it in the video is, I would say, obsession with talent. Since the very beginning -- both of us have been at the Credicorp for over 30 years now, for 30 years at Credicorp, but we got employed even before that. And it's real. So since the very beginning, we invested a lot in talent. Today, that's even harder because of the capabilities that are needed to be in what's going on in the world. And that's the reason why we -- you may remember, when we started the innovation center at BCP, we didn't have a single UX designer, today at BCP, we may have 100, something like that.

We opened up an office in Madrid a few years ago where we have a large team of data and analytics people. We opened up an office in Buenos Aires to do something similar in tech and UX. We're in the process of opening an office in Sao Paulo to recruit tech people. So again, this keep investing in talent. And as Luis mentioned before, people -- our people is the best -- the most relevant asset we have.

The third one, as you mentioned before, is I would say, this appetite for innovation and even self disruption. We really don't care about if we are going to disrupt ourselves. As far as we keep our leadership and more importantly, we keep our clients happy and therefore, we have -- we build longer relationships. And maybe the fourth one is and is part of the agenda today, is this parenting advantage. By being Credicorp, by being able to build this ecosystem, we can leverage across subsidiaries.

And definitely, as an innovation officer, I see this story repeating every time we go into a line of business and propose growth. The ambition to disrupt ourselves, the 10% goal that we have to bring new sources of revenue for Credicorp. I think, is something that repeats the NPS and what that means of really changing how we designed value offerings for our customers. And the talent landscape is completely different to when I started at Credicorp. So I agree, and I see this evidencing in all the lines of business. What is your vision for the future in the finance in the region, not just Peru, but the region?

So let me go -- start with the macro, and then I'll end up with the answer to your question. I'm really positive about the macro within the countries where we operate, the macro specifically -- especially in Peru, but it's across mostly Chile and somehow Colombia. The macro indicators are very solid. So that's number -- reason number 1 for being positive.

The second reason is commodity prices, specifically copper. And copper because of the AI, I don't know if it's hype or whatever. But because of AI, a lot of data centers needed to be built in the next 5, 10 years, that means energy and energy means copper. And Chile is the largest producer of copper in the world, Peru has the largest reserves in the world. I believe it's the second or third producer. So -- and actually, a couple of research report -- recent research report say, the copper price should be anything between $5.50 and $6 per pound. That's a huge benefit for both countries. So that's reason number 2.

Reason number 3 is Latin America is still going to benefit from the demographic bonus for the next 10, 15 years, where other countries in the world, more mature economies, it's not the case. That's more on the macro.

On the financial businesses, still the banking penetration, insurance penetration, health penetration in the businesses in which we operate are still very low. Even though we've advanced a lot and we're going to share some of those -- some of that progress in the upcoming presentations. There's still a lot of room for growth.

And finally, I really believe that in our case, I would argue that our success in the past -- in the physical world was built on being -- having the largest network of physical presence, either branches, ATM, correspondent banks and so on. So the key was how to -- how to be -- again, the largest network. And that's -- in the end, it's convenience. So I would rather go to bank to BCP than to bank B or C because it was easier to get to the branch or the ATM or whatever.

Today, I have my phone here. Today, that convenience is here, right? It's my app, my banking app, my Yape app or whatever. So the play is UX, in my opinion, is how someone as a client can solve its daily needs in the best -- with the best UX in his or her phone. And that's the investments we're doing for the last 10 years, but even investing more and with a much more appetite nowadays.

So definitely distribution is going to continue to be disruption. The innovation portfolio really focuses on finding new businesses and using the distribution capability that we've developed through Yape, of course, and BCP and the other lines of business. And we have a pipeline that is very rich in initiatives. We have 30 initiatives. The most mature Yape that you've all heard about and how Yape continues not to just do transactions, but to really create a super app and be used as an ecosystem for Credicorp's products, but also its ambition to go to other geographies. So that is a view for the future.

Scaling Tempo is something very interesting for Credicorp in the region. Hopefully, we'll have a banking license pretty soon and be a neo bank in Chile. But we're also working around other capabilities, such as [indiscernible], the automatic saving capability that has daily rules for people to be able to save. And we're seeing good traction over almost 1 million customers using it, but also creating a capability that is a daily capability that could be used for collections or maybe investments in the future.

So we're also very obsessed with this one-stop shop kind of view for the SME business, and creating those capabilities also for the future, not just the transactions, but maybe the supply chain, collections, notary services, independent services for professionals to be able to collect their bills and so forth.

But maybe this innovations and everything that you've been talking about, you mentioned talent require the right people. So what's the story behind that? What's shaping the next talent for Credicorp?

What's shaping the next talent for Credicorp. I really believe that we are shifting philosophically from hiring the best MBAs because you have an MBA, which is still relevant, but to hiring people that are curious that are resilient, that are willing to bet -- willing to make mistakes, to learn from mistakes and so on.

We always share with you guys the success stories behind those success stories, there are a lot of failures. My way of seeing businesses and the future is, it's like playing baseball and you know more about baseball than myself. But it's like not even the best Babe Ruth, not even Babe Ruth had 100% batting average, right? So I really believe that by having -- by building the right team by hiring the best talent and by making decisions without having all of the information, but by having the right talent, you're going to be batting above average. So overall, the results, the positive results are much larger than the negative results.

So on average, we're going to be keep being successful. And as Luis mentioned, the next 30 years are going to be even much more interesting.

Much better. So I do think that, that Credicorp is in a privileged position to continue to innovate in LatAm. We have a proven track record. We have the experience and the ambition -- and I also want to highlight that we have a touch of humility and paranoia. You have a little bit of that. That keeps us challenged to be very aware of our surroundings.

You told me -- yesterday, you told me that there were some paranoids at Credicorp. Now you're telling me I am the paranoid. We'll have a conversation after. Thank you, Francesca, so much, and thank you all for being here.

[Presentation]

Okay. So we've been hearing about the opportunity in LatAm, in Peru as well, not just as significant, but transformational and it's grounded on Credicorp strategy and its evolutions and capabilities. So dynamic is clear, a cash-based economy, a young population that continues to grow, a lot of informality, conditions that create complexity but also opportunities to be able to scale.

And when we talk about 10x opportunities, we're not just talking about market size. We're talking about synergies among our companies to be able to really piggyback around the business lines that we have to reduce operational cost, to include new customers, to look for new sources of revenue to create more value. We look at our innovation initiatives now in that sense, looking at them as an ecosystem to see who else could benefit from what we've been constructing in the past years through our labs and our innovation centers.

So I think since 2020, we've included 6 million people into the financial system. We have a goal to include 8 million by 2028, 15 million customers in Yape, going to Bolivia, an international market to see where else we can take this, Pacifico embedding insurance into daily lives into very contextual transactions, visibly supply chain finance, really integrating the entire value chain for business customers and Mibanco becoming a full service partner for their customers.

In our panel today, we have 3 leaders, Monica, responsible for Bancassurance in Pacifico and BCP; Raimundo, that I think you've met CEO for Yape and Giovanni is responsible of products and channels, digital channels for the wholesale for the business division.

So let's start with you Monica. Insurance has been historically underpenetrated underserved. This is not new, bancassurance is something that we're doing in the past. But how is Pacifico leveraging the ecosystem to capture growth?

Thank you, Francesca. Well, bancassurance opportunity is very clear. Thanks to our strategic partnerships with BCP, Mibanco and since 2024 with Yape. We now have the opportunity to protect more than 18 million clients. And these are good news because as you have said, insurance penetration in Peru is one of the lowest in the region, representing only 2.2% of our GDP. But we don't see this as a barrier -- this is an opportunity for us for growth and also for innovation. And this is why we have defined a very bold ambition in Pacifico, which is to make Peru the most protected country in Latin America by 2030.

And this represents to double our current client base from $7.5 million to $15 million. And we truly believe that this positions us to become a driver of inclusion, but also are driving -- a driver for margin growth for Credicorp. In fact, bancassurance business represented by the end of 2024, 8% of Credicorp's net income compared with only 3% in 2021. Our ambition is to represent 10% matching international benchmarks. So the question is -- how are we going to achieve all these ambitions and all these goals?

And the answer is by strengthening 2 main capabilities we have been working on for the last 2 years. The first one to become a product factory. A product factory to launch products very quickly and to tailor them to all our client needs, client segments under different life stages. This has been really hard work because we don't only have to change our technical cores, but also our mindsets.

And the second capability is mass distribution. And what we do in this point is, our strategy is to leverage on all the wide reach and all the transaction activity that our partners in Credicorp already have developed. So by embedding insurance in the journeys of BCP, Mibanco and Yape, we turn all those daily transactions into protection opportunities. So that's how we turn insurance in something engaging and part of the daily business of our clients.

Super interesting. And we've talked about Yape being the digital cornerstone of Credicorp's digital strategy. And we've seen the importance in insurance and distribution. What's your view on the growth opportunity for Yape?

We're very optimistic. I'm very optimistic, but I think all of us in terms of the potential we have with Yape -- with over 18 million clients I think we've built a very powerful digital wallet, but also the most powerful distribution -- digital distribution channel of the country, right? And this scale and this reach is allowing us to start serving segments, which we didn't think was feasible to serve for the financial system before, right, especially all around informality.

And in Peru, 70% of the economy is informal. And we started to fully serve these new segments, reaching at -- reaching them at a very low cost with a very high-touch proposition and a very strong connection with our brand, right? And this is unlocking a lot of opportunities. And we aspire to have most of Peruvians become Yaperos in the near future, continuing this financial inclusion.

In payments, which is probably the first business we launched 3 years ago. We've gone from 0 revenue-generating transactions to around to more than 7 revenue-generating transactions per mile per month, right? Even though that's a huge growth and a potential or Yaperos do 57 transactions a month. So the space for growth when we see our penetration relative to TAM is still very, very big. We have 1 product that's closer or above the 60% of the time, but most of our products are still around 10% to 20%. So growing very fast, 2, 3, 4x year-on-year, and I think with a huge potential of growth.

In lending, I think we -- we broke a paradigm that it is very difficult to -- or it was impossible to serve the informal segment, right? And I think with the power of the Yape distribution, we started working with very small loans, very short term, we were able to do great risk management. Our cost of risk is very low, and we started experimenting a lot and growing. And even though we've already done like 15 million loans to 3 million clients.

I think we're still in the very initial stages of our lending business. There, we definitely see 10x opportunity in the mid- to long term. And I think that's a huge potential. Also when we start thinking of other products, right, insurance, working with Mibanco, there's a space to continue growing. And if we think of Yape on how we're doing this -- it's becoming kind of a virtuous cycle, right? We started with P2P, generally a lot of engagement, then launched payments products, which generate more and more engagement. So Yape users more, we get them to know better, then we started with lending, distributing Mibanco insurance, we do the retail offering and then they use us more.

So it's more powerful -- so we've gone into a very positive cycle while leveraging all of our strong capabilities from Credicorp in terms of infrastructure, risk management, et cetera. So that -- I mean we're very positive about the potential of Yape.

Super interesting to see how both the insurance and Yape complement each other. Giovanni, can you share within BCP unlocking value in the supply chain world? Can you share a little bit about that?

Thank you, Francesca, and good morning to everyone. For me, supply Chain Finance is one of the most exciting growth engines that we are activating within SMEs and middle market segments. Earlier this year, we decided to integrate both of these products on their unified leadership in order for us to gain focus. However, this integration since -- while this integration is recent, we started transforming factoring 3 years ago. And since then, we have made huge, huge progress.

To illustrate the market potential, well, I don't know if you see a graph, but to illustrate the market potential, take this into consideration. As of 2024, the penetration of this product in the Peruvian economy represents only 4% of Peru's GDP. If we compare it to countries with similar regulatory frameworks as Peru, we can see Chile here at the graph, they stand at 14% penetration and Spain represents 17% penetration. So there is huge, huge room to grow in this market.

In 2022, we identified this potential, so we start mobilizing a team that was going to be dedicated to transform the factoring business. And since then, huge progress has been made. So if we see a factoring business since 2022 until now, this segment has grown by 5x.

With integration of confirming and factoring, what we expect is this momentum to accelerate and continue growing. And what we see is in the next 5 years to grow by 6x this -- this our outstanding balances in this segment. How do we plan to capture the opportunity? That's the question that we are solving right now. And we have been leveraging Credicorp's spending advantage to access fintechs at provide us critical external data. And this data has been used for us to build more robust credit risk models and unlocking access to previously underserved businesses.

So that's the way that we are approaching this opportunity right now. And simultaneously, we have been building broader technological connectivities for our clients. So what we have been doing here is, today, more than 80% of our clients in the supply chain finance business disperse their loans in a digital way. So we have advanced very much in the past few years.

Also, in this segment, AI is enhancing our risk and pricing models and we are using the AI, especially for fraud detection and allowing us for a faster response time to our customers.

And finally, we are also paying attention to a payer experience. So -- in this segment, the payer is a critical part of the value chain, and we are embedding a portal into our clients' office banking. And what we are looking here is to provide them access to consolidate in one unified view all their invoices in our office banking. So what we are looking forward here is to optimize their treasury management for our customers. So that's the way that we are approaching the opportunity.

So let's dive a little deeper on how you are leveraging on start-up technologies, different technologies before, maybe insurance and you, Giovanni as well.

Okay. Well, for us, it would have been impossible to even dream of a product factory or mass distribution without technology. And that's where Moquegua comes as our technological enabler. Who is Moquegua? Moquegua is Credit Cards InsurTech, which was acquired in 2022 by Krealo, our corporate venture capital. And as I said, Moquegua has been instrumental for us and has led us growth efficiently, and it has also allowed us to design and to build products with very low cost and modular products that were previously out of our reach, but also Moquegua is an API-driven platform, and it has allowed us to connect very quickly.

It's like a digital highway that connects Pacifico within the companies in Credicorp, so it has been really, really a game changer. But it's also important to say that Moquegua is unlocking opportunities beyond CreditCorp. Yes, they are already taking part of new partnerships with very important retailers in the region like Falabella. And they are using the same technology they are using in Credicorp. so Moquegua is really helping us to expand our boundaries expand our limits.

Giovanni?

For us, it's also been a game changer, especially to gain scalability of our product offering. So what we currently have partnered with 2 fintechs that were presented to us by Krealo. Krealo is our venture capital arm, and they hold a minority investment on those fintechs. So for example, one of them is data mart. We started a partnership with them in 2024. And this -- this has been a key milestone for a factoring business. That year, we integrated via API connections.

Our -- within BCP data mart and the Peruvian tax regulator. And this integration will provide us was to capture data from SMEs in order to allow them to self-evaluate their financing capacity. And for us to enable the bank to preapprove a credit line and to disperse a loan within 24 hours. So we gained momentum. We gained velocity with this integration. And in less than a year, we already have more than 120,000 clients affiliated to the solution.

With a customer base of our 2 million SMEs, we expect this solution to continue growing in the future. Another example is what we are working with Shinkansen. It's another venture of where Krealo has invested in. They provide ERP integration and with a solution that we are working with them is to integrate our services in the ERP of our customers and be part or become part of the -- since the purchase order is created, become part of their solution. And this will allow us to anticipate the financing needs of our clients.

So it's -- I would say it's -- it's the way that we are gaining the scalability of our product offering and for reaching a higher and broader market.

So a lot of opportunities, great opportunities and new capabilities as well to achieve them. So What have we achieved so far? Where are we right now?

In our case, well, the results of this collaborative strategy are compelling. And I think that they also reflect the strength of our synergies, right? One of our main key results is the total volume of bancassurance premiums that include the mandatory and also the optional ones. And they have grown from $950 million in 2021 to $1.5 billion in 2024. But it's very important to notice that the optional premiums that are the focus of our strategy have more than doubled in the same period. And by the end of 2024, they represented more than 50% of total premium.

Another interesting results are, for example, our digital issuances. They have multiplied 10x from 200,000 to almost 2 million digital policies issued in 2024 and the number of products that we have launched. In 2024, we launched almost 30 new products and that's 15x if you compare it with the only 2 products that we launch in 2021.

And finally, the number of clients that we are protecting through bancassurance channel have also grown from 2.9 million to 4 million by the end of 2024. So there's a lot of work to do, but we think that we are on the right track.

In the case of Yape, we've been, I think, consistently growing our revenue per MAU for the last 3 years or a bit over 3 years since we started launching the business. While maintaining a very disciplined approach of in the cost to serve or the total cost of Yape per MAU around [indiscernible]. Those lines intersected last year, and we're continuing that positive trajectory, which is starting to generate very positive results. If we go to the specifics in payments, we are -- last year, we already represented almost like 20% of the consolidated fee income of BCP, of fee and transactional income. And we've launched multiple products, right?

We started with top-ups, then with the bill payments and paying POS, remittances, exchange rate, et cetera, et cetera. And we've continued growing the portfolio, and we have a full portfolio of products, disbursements, et cetera, that are -- some are just started or started recently and some are more consolidated, but all growing at very high rates. In lending, again, we feel very comfortable today. We have around 6 million people we can lend to. 2 years ago, we only had 2 million people we could lend to. We're doing 1.5 million loans a month.

And we kind of started with the mono installment loans, PEN 200 is very short term. We experimented a lot, expanded the population, and we accelerate that a lot. Right now, we are finalizing the testing of multi installments so the better payments to go to higher loans of longer duration and entering the payments segment. So a lot of very positive results and also a lot of engagement in our commerce part where we don't see a lot of the results, but every time more and more Yaperos are using all of our promotions, et cetera, that generate a lot of engagement for our other businesses.

I would know if you can see a graph here, but let me show you a couple of numbers. Since we began this transformational factoring the SME with the focus that we created to this product, it has grown by 5x from PEN 300 million in outstanding balances to over PEN 1.4 billion in outstanding balances as of -- the close of 2024. If you see the overall supply chain finance ecosystem, this has also grown. But what we are expecting is to grow the overall segment by 6x in the next 5 years. So with the technological solutions that we are investing in, we are convinced that they will allow them to gain a scalability of our product offering, scalability in the market and reach a broader market.

So what we expect to see in the next 5 years is those around PEN 5 billion to be nearly PEN 30 million outstanding for BCP.

Super. So we've heard from BCP, from Yape and from Pacifico. And now we're going to hear from Mibanco, and I'm especially -- I like client video. So a client video to also demonstrate how the client perceives the ecosystem and how we are actually giving that value proposition. So if we could put the video.

[Presentation]

So Raimundo, could you briefly share how the coordinated approach for SME is working?

So I think we believe that SME, I mean, going from the very, very small merchant to the small, medium companies, it's kind of a space with a huge potential in Peru, right? And we've defined kind of roles for each of our brands or our companies. So Yape plays kind of a payments logic around -- I mean, it has started with the financial inclusion and helps on the payments and all the collections of the business from the very small like the taxi driver to the smaller SMEs and it's an integrated approach, right?

And then when they start growing, they start using office banking or a more sophisticated solution, but we're kind of across the spectrum. When we start looking at the lending perspective, Yape is also starting at the very end with digital loans, very small ones, and we'll start growing independent, starting on our experimentation and going there. Mibanco brings world-class microfinance capabilities with advisers, with proximity and typically serves all those bigger micro companies, if you want, until they start growing, until they start needing more sophisticated needs, and that's what BCP comes in with a full offering.

In parallel, we leverage Pacifico because we can see in terms of offering insurance and solutions across the board. Of course, there are overlaps. It's not like, okay, this is the exact line, and we want them to be overlap because we want to give different offerings. So clients can decide what's the best solution for them, right? But we kind of look at this integrated approach. We have kind of natural spaces with significant overlap, and that allows us to have kind of an integrated view of how to serve the segment and how to evolve, how to start building solutions that could be leveraged by each of our companies.

We're convinced that the operating as an integrated ecosystem collaborating, can be replicated in different lines of businesses. And we will deliver growth beyond the sum of our parts. Thank you.

[Presentation]

So good morning, everyone. Thanks for being here. So far, we've been hearing about the opportunities we have as Credicorp going forward, both to expand our TAM, sorry.

I'll start again. So far, we've been hearing from our team, from our leaders, the opportunities we have going forward both by slimming down, improving experience. Okay. Now it works.

Okay. Thanks. So I'm not going to repeat the whole thing for the third time. But basically, we see a lot of opportunities going forward. And in this panel, the idea is to have a conversation about the enablers for that growth.

So I'm joined here by Andre Rezende, Credicorp Chief Technology Officer; Cesar Rios, Credicorp's Chief Risk Officer. And we're going to have a conversation around what we're building to sustain this growth.

So I'm going to begin with a broad question for both of you. And it's basically talking about the why. So why are we doing these investments? So the question would be, from your roles in the corporation, how do you view the opportunities we've been talking about? And how can you enable them both from risk and from technology. And Cesar, we might start with you.

Thank you, Alejandro. The opportunity is clear. We have much reach. We have as a Credicorp 18.8 million clients out of them 15.3 million are very active Yape users, but only 2.7 million have a credit. And if we take out the only Yape originated loans, we only have 1.9 million clients with credits in BCP, for example. So the opportunity is clear, there is a vast potential. Over the last years, we have been building a close relationship with the clients, integrated clients, acquiring a lot of transactional clients through BCP, Mibanco, BCP, Pacifico.

And we have been also developing analytical capabilities and a solid relationship with the clients. So the opportunity is to continue expanding our reach. We have a very solid market position in Peru, particularly in the wholesale segment and the affluent segments, but we have tremendous opportunity at the base of the pyramid. There is a lot of opportunity to include the bank, the under bank clients using the capabilities that we have building on over the last years. And the idea, the ambition is to convert these opportunities to include financial clients into a resilient engine of growth. But to do that, we need a very solid technological foundation.

Yes. Okay. So I mean, in terms of technology, we need to support all of these. And we knew that since the last, I mean, 30 years, the financial institutions are had a big challenge on how to grow and how to scale without risk, okay? And we, at a certain point, did our home work. If you look at our digital transactions, they went up from 36% to 97% in the last years, and the number of transactions like multiplied by 50, while the cost per transaction have been divided by 10. So the key point here is we did our homework in this time frame, but it's not enough.

Now we are expanding. We need to keep this foundation and grow even further. We are moving a lot of things to cloud, but carefully when analyzing all the steps, we are leveraging new technologies as SaaS. We are enhancing our cyber resilience technologies also as part of this journey. And this will allow us to sustain all this growth that we have been seeing in the last presentations. Besides that, I think we clearly believe that there's a lot of room for growth. These numbers, hopefully, we're going to -- in 5 years, we're going to be discussing 10x that, hopefully, and with the same resilience and the same security that nowadays our clients' experience.

Thank you, Andre. And continuing with you, let's move on to the how. So how are we strengthening our technological capabilities and creating a parenting advantage for Credicorp that makes it basically more than the sum of its parts.

Absolutely. Can you move to the next slide, please? Okay. We have like 5 major points in our strategy here. So first of all, we want to simplify and modernize. I mean we see that we have several components in our infrastructure in our architecture that can be simplified, okay? So less complexity, less platforms, less technologies. And this will allow us to be simpler and simpler means easier to operate, easier to scale and fast to react.

Another thing is one way of working. I mean, we have nowadays like 8,500 people somehow involved in software production, product, services, whatever, in credit card. So we are streamlining the way these people work. I mean, same components, same architectures same way of thinking. We know that there is a difference between the way a fintech works and the way a traditional company works. But we are streamlining whatever it's possible without harming the individual features of each company and bringing this to a reusable approach. I mean to -- if we're doing things right once, can we -- we should copy instead of redoing it.

Third point, business in a box model. This is one of the thing that excites me the most. I mean, we are moving to what we call regional approaches. I mean we can have for several business that we want to expand further even outside Peru, other countries, et cetera. One single platform in one single infrastructure we have one single architecture, one single ERP and from Peru or the country serving 3, 4, 5, 6 countries with the same team and the same platforms. This is in terms of scale and costs, I think the most effective way to do it. And 4 and 5, 4 centralized functions.

I mean, talking about parenting advantage. We know that several components that are needed in the day-to-day run of the business are not focus of the real business. So we see that we can centralize in the parenting level, things like administrative systems, procurement, HR, communications. So we are building platforms that will provide this in as-a-service mode for all the companies and allow them to focus on the business, all their energy on developing new business.

And in terms of tapping into start-up technologies, I mean, here is the partnership with Krealo, our venture capital arm, and I was delighted to see the previous examples on the previous panels like Monokera, [indiscernible] and Tempo. And we have a lot of very interesting things, very interesting technologies that will leverage solutions for our business.

I think it's the -- our major virtue here was to be able to combine the disruptive things of the new technologies with the good part of the traditional things of the traditional companies in the way that is very disruptive and winner. So the key point at the end is the ambition of technology here is to move from a point of view that we are a key enabler of services to become an enabler for creating new business models or new business growth engines for Credicorp.

Thanks, Andre. So clearly, we're building strong foundations. But what's really powerful is when this technology meets data and AI. So we have a short video from our leaders to tell us how we're integrating data, AI, cybersecurity with the technology in order to better serve our clients.

[Presentation]

So we're clearly building important capabilities. So Andre, can you talk a little bit about how our technology investments are enabling all of what we've seen?

I think, I mean, Alejandro, things are all interconnected. I mean when we see Eduardo talking about our data marketplace, where we are putting together in a clean, standardized already verified way, all our data from all companies. These enable a lot further and faster our capability to deliver AI engines to help our security to deliver risk models. I mean this is all connected -- and in terms of AI, just to mention here, I mean, we are -- AI is a hype, I mean, everybody is talking about it, and there are several ways to do it.

And every Monday, I receive a mail about new model or way to code something, which is exciting and nervous at the same time. But we are working with the business areas and technology in order to create a way to replicate good solutions of AI. We don't want everybody to just starting coding everything because this is maybe not cost effective. So we are creating a common architecture in terms of AI with a library of predefined models that have already worked in one company to replicating the others and to leverage everything we have that is good and all the experience between the companies. I think this is a good way to do it.

Great. Thanks. So shifting a little bit, Cesar, going back to you. How is technology, basically the technology investments changing the way in which we're doing risk and assessing risk.

Fundamentally in the different parts of the business as we are going to talk surely during this presentation, we are using technology to enhance our business capabilities and in the more risk management side as potential as Fernando has the last, we have been able to improve our cybersecurity posture with several measures and embedding best risk practices in emerging risks and nonfinancial risk, we are assuring that we capture the opportunity that this technology brings to us, at the same time, maintaining resilience and assurance a control risk through our process and products as we continue our transformation.

We double click a little bit on that and talk a little about the day-to-day changes in the risk management business.

Yes, no, I will say it's very directly. This integrated data capabilities has allowed us to improve significantly, for example, our capacity to model in a shorter period of time. We have been able to use this transactional data from BCP, Yape to improve model accuracy, monitoring and adjustments over time. We are converting really these capabilities and the capacity to take better decisions.

We are also using all of these capabilities, not only defense, but a real competitive advantage to move faster to produce better products and to convert all of these technologies and the capacity to reach better clients with greater security.

At the end, the goal of the risk transformation process that we are embarked is to capture these opportunities, at the same time, strengthening resilience and the capacity to grow in a fast and controlled pace.

The risk transformation process has 3 main drivers: The first one is protect, be sure that we go through this process with a controlled risk framework. The other thing is steer, be sure that we take decisions in a data-driven manner with the stress testing with solid risk framework.

And finally, growth, capture these opportunities, partnering with the business hand-to-hand to convert all these capabilities in an engine with growth to be able to expand our portfolios with confidence.

Thanks. And I know this is a multiyear program, but can you talk about the results we've seen so far.

Yes. Actually, we have several results I am going to share with you some of them, for example, as I mentioned before, using transactional data from Yape and BCP, we have been able to improve the accuracy of our models, leveraging the process in which we develop models, cutting their development time in almost half to 43% actually. And at the same time, improving accuracy.

And that has allowed us to open up the possibility to lend 0.5 million additional clients in the consumer segments. In the payment segment, for example, what we have been able to do, integrating data and modeling capabilities is almost doubling our capacity to originate digital payment loans and we also have developed the capacity to interact digitally the client to enhance the offer and we have in Peru, the first really interactive real-time capacity to approve a credit online.

So there are several other activities that we are doing in this line. As a result of these improvements, we have been able to reduce the provision of the first half of the year to 2025 in relation to 2024, combining adjusting the risk appetite. These improvements in the technology and leveraging improving in the macro, significant reduce on production, almost 46% year-over-year.

Great. Thanks. Good results. This is mainly BCP. So the question is beyond BCP, what are we seeing and how is this going to help again make us more than the sum of the parts.

We have proved a lot of concepts in this process. For example, we have been working in an integrated teams that we denominate the speedboats in which we combined product development, risk assessment, pricing. We have seen that working very effectively in BCP and we want to expand that, and we are starting to do that at Credicorp level, for example, with a more integrated SME strategy.

And we are also sharing capabilities that we have developed in model validation, monitoring, pricing in such a way that we actually combine the capabilities of all the companies tailoring with the needs of a specific business units to grow at a faster pace with control risk.

At the end, looking forward, what we want to do is to really integrate these capabilities with distribution, enhanced capabilities to better tailor the products, the term, the amount and pricing for specific business lines using centralized capabilities.

Great. Thank you, Cesar. One last question for you, Andre. So we're undergoing a lot of different investments, which are very valuable for the future of Credicorp. How do you consider the efficiency aspect of the future operation.

Yes. So I mean, if you look at the 5 levers that we mentioned previously, I mean, all of them have an important efficiency component -- when you find -- talk about simplify, modernize, one way of work and business in a box. I mean, we are talking about streamline, simplify, standardize our operations. in the best way possible.

So it means reduce of cost several, I mean, variables. For example, we're going to reduce number of providers. We're going to reduce the number of softwares. We're going to reduce cost of license. We're going to attach into one thing that Gianfranco mentioned, I mean -- if we have less platforms and software, we need -- our challenge for talent is a little bit -- not easy, but it's a little bit less challenging because we need less people that know lots of technology, which is quite challenging in the market. So each component that you mentioned here has an efficiency part involved on that as it grow, but observing efficiency is very -- a large focus on efficiency.

Great. Thank you. So we're finishing this panel. I think what's clear is that data risk AI, our technology, of course, are certainly not back office, but main parts of our growth opportunities and the ways to better serve our clients and to scale with confidence, which is the name of this panel. And certainly an important part of making Creditcorp larger than some of these parts. So thank you.

[Presentation]

Okay. So now I'm going to make a brief presentation focusing on what we've achieved so far, but actually, more importantly, on the avenues of growth we see going forward. So you saw something similar earlier with when Gianfranco showed this, this is our TSR since Credicorp, inception 30 years ago. We've had very strong results, 14.1% annualized TSR and compared with our peers -- our peer group in the region, we've actually been able to outperform in different time frames.

And that is the result of innovation culture and the disruptive culture that we've been hearing the whole day. And I think Francesca alluded to it, but it's not just innovation in a digital way we were innovative when we decided to bring agents to Peru to broaden our physical reach to our clients. We included analytics in microfinance and then, of course, the big digital transformation at BCP, which at that time in 2016, we had 20% of our clients working digitally with us.

At the end of last year, it was 76%, and it keeps growing. And of course, the most visible result from that digital transformation is Yape, our digital platform, which basically has reshaped the way in which payments are done in Peru. And we believe has the capability to reshape the way in which lending is done in the country, and it's an exciting opportunity, as Raimundo was mentioning.

Now Credicorp has changed in a lot of ways in the last 30 years. Here, some of them, you can see the number of clients since -- since the year 2000 has multiplied by 18. We have 18 million clients today. And the number of transactions has actually gone from 150 million transactions per year to almost 58 billion in this year if we annualize the result. Of course, that has come, and I don't know how much do you see in the back, I'm sorry, but there are some numbers below. It has come with important investments in IT to allow for this transformation.

And I think it's been very successful in allowing us to do it. We have an uptime of our main 8 applications of 99 -- almost 99.9% compared to a Latin American benchmark of 98.4%. And to try and make sense of what those numbers mean. I'll just tell you that 10 basis points is around a little bit over 2 hours of downtime in a quarter. So basically, our uptime is very strong. That has allowed us to be able to process all of these transactions with a lower cost, as it was alluded also earlier.

And at the same time, to generate engagement and principality with clients, have had some very important results that you can see here on the right. One of them, other core income, fee income has grown in an important way. And another one is the low-cost funding, which has also grown in an important way in 2015, it was like 44%. And Today, it's at 57% of our funding, which is a big competitive difference and advantage in the market.

Going back to the different avenues of growth our risk-adjusted revenue has grown 14x since the year 2000. But what's interesting is that it hasn't been only from lending. Of course, lending has grown in an important way, 17x, which is good. But also at the same time, we've seen FX income growing 17x, fees growing 7x and insurance here is only from 2022, which is a fairly new doubling in its importance. So basically, different avenues of growth that are enabled by the things we've been hearing today. The disruption, the different synergies, the ecosystem approach that we are bringing to the market.

We've talked a lot in one-on-ones and in different times about decoupling from the macro, which is basically being able to continue growing at a good pace regardless of whether Peru's GDP or the region's GDP is growing strong. And I think we've been successful in doing it and here are some numbers. If you look from 2021 to 2025 analyzed, we've been able to grow 19% per year.

The nominal GDP in that same time period in Peru has been 6%. So it's basically 3.2x GDP. That same number in the past decade was 1.6x. So we found avenues to continue growing despite the fact that GDP has moderated in Peru.

Here, I'm going to talk briefly about each of our business lines and try to give you some information on how we've been performing and what we're expecting in the near future. So Universal Banking has actually been showing important -- improvement in ROE, as you can see to the left, a shift towards more retail lending efficient channels, the growth in low-cost funding that I was talking about and this principality and engagement we've gotten with clients are part of what explains it.

And looking forward, we expect the business to remain in the -- with an ROE in the mid-20s. Microfinance looks like a different story. Of course, we had a complicated periods starting in 2020 with COVID and then Pedro Castillo, et cetera, that hurt the base of the pyramid mostly. That hurt our ROE, but I think we've turned it around that 14.1 you see there is a mix between Colombia and Peru. Peru being around 16% today in ROE, Colombia, 10% and growing fast.

And I mean we've learned a lot from the prior cycle, we've strengthened our risk management capabilities, our commercial capabilities and are basically today in the short term, focusing on smaller ticket sizes with higher NIM and efficiencies. And over time, we want to make the business more resilient, trying to build other sources of income and hopefully also some low-cost funding in the business, which is going to take a little bit of time, but we believe could basically make it more resilient. And expect that business to be in the low 20s as a return. Insurance and pensions, actually, very good returns, the year that looks really bad, it's basically COVID related. It was an important hit. That's also a result of shift to retail.

Monica talked a lot about bancassurance. That's been very important. And we believe there's an opportunity to keep growing in an important way in that business line and expect ROE also to be the low 20s. And finally, our Asset and Wealth Management business -- we -- a few years ago, we redefined the strategy, we integrated operations. We focused on the more scalable and stable businesses of asset and wealth. And the strategy has paid off. ROE has been increasing, and we're expecting that business line to have a high-teens ROE going forward.

And of course, Yape, which has grown into one of the main avenues of growth for the group. Raimundo mentioned some of these numbers. Our clients have basically almost doubled in the last 2 years from 8 million monthly active users to 15.3 million as of August of this year. The number of transactions per month is at 56.8% that basically clients are using twice a day, Yape, so high engagement, which we believe could go even higher. And if you get to see down here, and I don't know if that's possible, our revenues per mile have already crossed and continued widening the gap with our cost per monthly active user. And we think it should remain with a tendency. So that has been so far mainly due to the payments business, which was the first one of large business still with important opportunities.

If you look to the right, we see the next big opportunity that we have that we're already tackling, which is the lending part in August, we disbursed 1.4 million loans in the smaller ticket, installment loans, that's around PEN 330 million disbursed in the month. And we're basically growing fast and taking a large part of that market.

And the next frontier comes with from the multi-installment side of loans. We are earlier in that process, but with very positive signs of what we can do and I think this is an interesting avenue for growth for Yape, and of course, for Credicorp.

Now I'm going to talk a few minutes about the avenues of growth we see going forward. We said, well, you've been hearing about them all morning, but I'm going to give you a little bit more information on those. So they come from innovation, loans, fees and other income.

In innovation, we set a clear North Star of bringing 10% of risk-adjusted revenues by 2026. We think we're well on our way to achieving that goal, and we should do it. And by the way, that was with a defined appetite -- we have defined appetite of ROE, 150 basis points and cost-to-income of 350 basis points. So we are on our way to doing that. But what's also very exciting is the fact that we've built a lot of other ventures that are starting to scale and should allow us to maintain that aspiration of 10% into the future.

Examples, Francesca already mentioned them, Tempo on the virtue of getting the banking license and allowing us to grow in the retail segment in Chile. And Tiva, our wealth company basically just surpassed 1 billion in assets under management and growing rapidly. So a couple of examples of things that are scaling.

Other opportunities we see clearly today on the left, on the loan side, just a couple of examples. Consumer loans in that segment, specifically, BCP has around 16 million clients. but only 15%, a little bit over 2 million of those clients have loans with us. So we believe there's an important opportunity. These are already clients of ours.

And with all the new data we're getting of them from transactional activity through Yape, we believe we can have an important uplift in the lending in that segment. And a similar story in SME loans, also a market where we are present with BCP, Mibanco and now also Yape, but where we think we have space to grow, and we're attacking it in a very ecosystemic approach, sharing information between the different channels, I would call them as Credicorp of all these clients.

And with that information on data, we think we can increase the share of that market. And a few opportunities on the fee and other income side. One of them is Yape, although the payments business has grown very fast and it's important. We think the opportunity is still much bigger than what we've achieved so far. And we think it's an area that should continue to grow in an important way going forward. There's one reference here of what Kaspi achieves, I assume many of you know them, but it's a reference. And we think Yape has an opportunity to keep growing there, generating more engagement with clients, giving them more options what to pay and doing Yape.

Insurance, Monica talked about it earlier. We have more than 18 million clients, only like 2.4 million of those clients have a voluntary insurance with us. And when you consider the low penetration of insurance in Peru and the fact that I just gave you, we really believe that we have an opportunity to really increase our participation in that market. With bancassurance with embedded finance -- embedded insurance, I'm sorry, that was also alluded to earlier. So we think it's an exciting avenue of growth for Credicorp.

And one other one that we haven't mentioned today, but I just mentioned it right now, the remittances business, which has a PEN 1.4 billion opportunity and where we only represent 3% of the market. The reason for that is that we've always been on the distribution side of remittances, and we're important there. We have great channels. But it's just -- the origination part of remittances keeps 80% of the fee of the money involved. So we believe there's an opportunity to get into the origination business and increase that share of that 1.4 billion mark.

So with that, it brings us to the expected ROE for the next few years. We mentioned this in the conference call. We're expecting around 19.5% of ROE. And given the pace of the growth in income being higher than the part of the expenses, we basically expect cost to income to be around 42% in that time frame of 3 to 4 years.

So just to finish, I'll leave you with 3 messages. One, I think we've been able to deliver very strong results and a lot of value through our innovation, through our ecosystem, through engagement with clients.

The second one is we see clear avenues of growth, not necessarily dependent on GDP picking up. And we think we have the capabilities, that's the third point, the capabilities to capture those opportunities. And by that, we have or we're building the capabilities, as you've heard today, we have the best talent. We have a culture of innovation, self disruption. We have an ecosystemic approach that we are building, where the whole of Credicorp becomes more important than each individual business we have the best channels by far. And we have the most amount of data that will allow us to give our clients the best value proposition. Thank you.

Thank you, everybody. We will now have a 5-minute break. And also, I wanted to add, I don't know if everybody has been able to see the presentations. But in your table, you have a QR code to download the presentation. It is actually a more detailed presentation that tries to have all the messages that we have given here. So thank you, and we'll come back in 5 minutes.

[Break]

Okay. Please take your seats, everyone. And for those of you on the webcast, we are beginning the Q&A session. As a reminder, for webcast participants, you can submit your questions using the type your question text box below the broadcast screen. You can also click on the question mark icon located on the side bar to the left of your screen to submit your questions. Also, please do provide us your feedback on this event. For webcast participants, the brief survey can be accessed via the survey link on the resources top on your screen.

In person, attendees may fill out the survey online by scanning the QR code on your table tent card or by completing the printed handout. Please raise your hand, say your name and the company you are presenting. Let's open the Q&A.

Lindsey Shema representing Goldman Sachs. Thank you for this presentation today. It's been great to hear about all the disruptive initiatives in the works. On that note, I noticed on the very last slide, you showed the innovative portfolio finally breaking even. I just wanted to hear maybe a little bit more about that. And then you did keep that negative 150 bps of ROE appetite understand that is an appetite, and you don't exactly have to do that. But with the portfolio breaking even, should it stay that way for the near future? Or do you expect it to kind of go back to contracting from ROE in the near term?

And then one more, which is just you highlighted a lot of the closer-term disruptive initiatives, but maybe just mention a couple moonshoots, the really emerging things that you're excited about, that would be great.

Okay. So remember the last comment for Raimundo Morales saying that the world doesn't stop. It's -- you reach a point and then it's the next thing. This is the way we're looking at the innovation portfolio. So we have the discipline to get the income to really have a time frame of giving time to initiatives to mature, such as the old initiative maybe 7, 8 years. So it's taken us 7, 8 years to build it.

Once it gets to the maturity where we feel it's a line of business now that it needs to operate with different rules like other lines of business in Credicorp, it might leave the portfolio, but the appetite to gain 10% more income is still there. So the graphic is interesting because you reach the 10% and then you have a portfolio that needs to mature. Hopefully, there will be a lot of initiatives on the path but not necessarily maintain that 10% steady, so it goes down and up. So that's the view around that. And as you mentioned, the appetite is an appetite. It's a guardrail.

It doesn't mean that we spend that much or invest that much. And we have a portfolio of around 30 initiatives where we have a lot of initiatives early on. We kill some of them, and we only get the ones with more certainty mature over time. Tempo is one of the most exciting ones that is coming. Tyba, the investment one is another very exciting one for growth. [indiscernible] is also maturing within BCP for the acquiring business. And early on, we have initiatives around SMEs and around HealthTech.

Yes. And maybe just to add, one of the moonshots very early stages is health. We -- this is [indiscernible]. We had a partnership with United Health. We bought them out in March of this year. The health services in Peru are terrible. So just the very upper segment can reach good quality health services. And we believe that the same vision we had with Yape, 10 years ago, defining that our main competitor was cash. Today, our main competitor is how to group the access -- the access to good quality service by leveraging technology, obviously. Very initial stages, and we are very positive on that. That's a motion.

Daniel from [indiscernible]. I was just looking at your long-term goals or long-term ambitions for ROEs -- and it seems not too much optimistic when we compare like to the great opportunities that you showed the 10 times in all the presentation. That's -- I wanted to hear and touch base on the costs, like the IT costs as a percentage of our operating income. We saw a spike since like past 15 years to 8% of your operating income.

And with AI, you can probably leverage on that technologies and AI capabilities for you to decrease, I mean, the expenditures on IT and in CapEx, for example, I think -- we see a lot of Brazilian banks talking about the AIs reducing opportunity and reducing times for shifts in new technologies. So it could I mean I wanted to hear from you what are the AI's opportunities on costs because we hear a lot of on modeling on credit risk and costs could be also a great opportunity for you guys to capture a better cost-to-income in the long-term ambition as well.

Sorry, I didn't get it. Did you say optimistic or pessimistic?

I prefer to see as more pessimistic because you could be more optimistic on your ROEs, right?

I can start with the ROE. So basically, maybe one thing with the 10x and it could be a timing thing. When we think about this ROE, we think about the next 3- to 4-year time frame, and it's actually built bottom up. We could argue that there's some being a little bit conservative in some of the things that we're building bottom up, but of course, there are new things that we're trying to build.

So it's not that you want to put the most radical or positive case there, but it's a bottom-up thing to around, again, 3 to 4 years. Well, some of these 10x opportunities that we're talking about won't necessarily have matured at that time. So I do think there's potential to keep growing. In the cost-to-income, as I put forward here, again, in that time frame, 3 to 4 years, we're talking about a reduction in cost to income from the around 46% that we guided this year to around 42%. So we're expecting an important reduction in cost to income.

Some of it related to income, of course, but there are other things related to reduce reduction in costs on the run of the business and some of them coming from AI and productivity opportunities that we see.

So let me add an additional perspective here. The discipline around cost is very much there. And I think we have the track record of discipline there. But the proportion of technology in that cost is going to grow. It's not going to reduce. And we're comfortable with that. So what we're looking at really is more on the productivity side. When you look at AI, you look at content synthesis, content generation, customer engagement productivity is really capturing each piece of technology that we put, bringing the income around that, bringing the productivity.

And you've heard throughout our presentations underserved, under bank, under insured under whatnot. So this is, I think, the perspective. So the growth needs to come with that.

Yuri Fernandes from JPMorgan. I have a question -- actually 2 questions here. One, regarding your supply chain finance opportunity. 6x multiplier into 2030. What do those companies are doing today? What is the cost of risk, the ROE of this product? I'm just trying to understand the economics because they're going to move from PEN 5 billion towards PEN 30 million solid ballpark on this. So it's a big portfolio, right? So just trying to understand that the economics regarding this product, if you can share some data and why you believe this is the time to grow this and what those companies were doing before? So that's one question.

And the second question is regarding Yape, the 3x growth until 2028. You should not grow as much clients and we get it. You are already too big on Yape. It's a 20% number of clients growth, right? But you are calling for 2x revenue growth for Yape. And doing a very simplistic calculation, you are implying that RPAC will grow from maybe PEN 6 towards some PEN 16, PEN 17 like per client. So if you can talk a little bit about this on Yape, how much should be payments, how much should be credit. How should we think about the ROE of Yape because today, you don't have a lot of capital intensive and maybe this will be driven by credit and maybe you need to look at capital. So just trying to understand a little bit of the Yape growth as well.

Yes. Can you hear me well? Okay. So in terms of cost of risk, this is a product that stands between 1.5% and 2.5%. And has a low cost of risk, if you compare it to SME cost of risk, the SMEs range between 6% and 7%. So it's probably with a much lower cost of risk because you depend on the payer of the invoice, not on the client that we are lending the money to. So there's a low cost of risk.

In terms of ROE. Currently, the product is around 15%, 16% of ROE. But this is a product that in the next few years, it should expand to around 18% to 20% ROE. So that's in terms of ROE. And why it's a play right now because the low change in Peru in 2022 at the end of 2022, and it mandated the invoice to be enforceable in the country. So it is a recent play. It's a play that we've been working in the past few years. But it's a play of increasing the reach in the market. It's not about playing the current market as it is right now, it's expanding the market.

If you see the outstanding balances in the financial system in Peru, just here, it has grown around 20% in outstanding balances. So it has a play in the next few years of expanding market. And of those -- of that market have a relatively important market share as BCP has in any other segment.

So in Yape, indeed, we're expecting very significant growth potential. I would say that the bulk of that growth is our lending business, which is very incipient, I would say. I mean we -- and even though Yape has 8 years, we started the lending business 2 years ago. So I mean -- and if one thinks of the nuance of this world, it was like 8 or 9 years before going public and really doing that exponential growth. We've, in this past 2 years, invested significantly in experimentation, in understanding, expanding the population we're willing to lend to. And that is starting to pay off, but in our kind of first wave of product, right? The mono installment loans, which will be, by definition, the smaller part of our portfolio because it's a very small loan, very low duration, but it is the one that starts informing us who is creditworthy for the next periods, right, and as we grow.

So that's why we believe in lending opportunities, more 10x than 3x, if you want, conceptually, while our payments business is again, growing significantly more than doubling year-on-year and very relevant.

A lot of our products that are growing at very high rates, smaller ones, are still in 10%, 15%, 20% of the addressable TAM. And what we've seen in our more mature products is that we can reach 50%, 60% of the TAM. Because again, we are replacing the cash economy, right? A lot of our payment we're doing before remittances in Peru or today, most of them are distributed through Western Union offices or I mean, in general, we go and collect. Now it's through Yape.

So it's taking out that cost of the system, and we become much more efficient and you can do that for any of our different businesses. So I mean today, I would say payments is like 55%, 60% of our revenue lending is like 20 or I mean if you do full year, it's probably more in that 15 or 10 or so. And when you look at all the benchmarks, the bulk of the revenue is lending, right? So the mix, if we think of 16, 17, probably will be with a lending more in the PEN 8 or more in the 50%, 60%. We can't project exactly, but that is kind of the fundamental shift.

And again, if you look at the financial system in Peru, the number of debtors out of the 20 million adults, if you take out the new ones that will come from Yape, it's between 5 million and 6 million out of 20 million adults, so that's opportunity the other 15 million that are not served by the financial system.

Nicolas Riva from Bank of America. A bit of a different topic I'm going to ask about your presence in the bond market in the fixed income market at both Credicorp, the holding company and BCP. I think Credicorp earlier this year, there was a maturity in a global bond that you didn't refinance in international markets. So there's no outstanding from CrediCorp.

And then at BCP, I think you're looking to price, I think, even today, maybe a Tier 2 bond -- so my question would be on funding needs. And really, your idea regarding your presence in the international bond market, if you want to keep a presence at the Credicorp level. And then at BCP, I have always thought of the Tier 2s in the case of the Peruvian banks as most likely to be called because you can issue the old style Tier 2s. So I wanted to ask you to confirm that, that's the idea basically to continue calling the Tier 2s and issuing the old Tier 2s to replace those and also funding needs in senior for BCP.

Let me answer the Credicorp philosophy and then you go to the details. The bond you mentioned, the one that we called Credicorp bond was issued during COVID. So it was like an insurance we bought -- a cheap insurance we bought -- actually, in the end, it had positive carry. So if you go beyond that insurance, it's never issued. We've never issued in the capital markets. And the plan is not to issue unless there's something relevant to do with that. Philosophically, it's not like leveraging for the sake of leveraging at the holding company. I'll ask Alejandro to answer the BCP.

Sure. so basically, from a pure funding perspective, today, we don't really have much needs going back to what I was mentioning about the growth in low-cost funding. I think we're okay. If you see the recent issuances by BCP, they've been in Tier 2 bonds, and it's more related to capital requirements as -- we go fully loaded Basel III at the end of next year and the capital buffers we want to retain because we're fully compliant with Basel III even today but we want to retain certain buffers. So that's the reason why you've seen us in the market with Tier 2 bonds.

And as you mentioned, we are in a process exactly as we speak. But again, it's more capital related than funding related. Historically, what we've done is being capital related, we want to keep the bond for as long as it is value as capital. So going back to your call on call. But of course, each one of those has to be approved, if we call them or not at the Board level. So -- but that's the philosophy behind it. And we -- we, of course, want to have options open. So we like to be close to investors and to potential buyers of our bonds and open new markets constantly.

Just in case at some point, you need to go. But again, today, there is no real funding need. It's more a capital need.

Maybe a segue to your question, which, in my opinion, is very relevant is BCP used to have 39%, 40% market share of retail deposits, low-cost deposits. Today, it has like -- sorry, when you have 40% of market share, is almost "impossible" to gain market share, right? Because of the initiatives we have had around more on cash, most -- the most relevant being Yape, today, the market share is around 44%. And it's not -- the play is not how to gain market share, but how to enlarge the market.

Most of that gain in market share has come from savings that were under the mattress before. And by financial inclusion, sorry, there has been a collateral benefit for BCP overall. And that 57% of cheap funding that we've gone -- we've reached is maybe in the future might be slightly higher, too.

Andrew from Morgan Stanley here. Throughout the discussion, there was a lot of emphasis around consumer lending, expanding retail lending at the base of the pyramid. So -- my question is, especially with the new developments and technology tools, AI modeling, what pace do you think you can kind of grow that retail portfolio. Currently, retail loans account for about 56% of the book.

Do you have an ambition or target to where you want to see that grow over the next 3, 5 years? And then as you do this, -- are you targeting similar risk-adjusted returns? Are you hoping for higher risk-adjusted returns with these new retail borrowers? So what is the long-term impact to the net interest margin of BCP and Credicorp from the strategy?

Yes. Thank you for the question. Actually, we have been growing the participation of the retail book in BCP and Credicorp in general over the last years. If you go back several years ago, was more below 50% retail. And now, as you say, is above -- a little bit above 55%. We expect to continue to change this composition as we gradually grow faster in retail than in wholesale.

In wholesale, we are going to grow mostly aligned with the growth of the economy. But in retail, we have two, I would say, two opportunities to improve our capacity to lend better to our more traditional segments and to go further in new segments using new technology, cheaper distribution channels as Yape, for example.

And gradually, we are probably going to go around 1% displacing for a year until some point in which probably more given for risk appetite framework, we are going to frame a share in the market that we consider reasonable.

To do that with confidence, we are building a lot of tools, as I mentioned previously, in terms of modeling, monitoring portfolio management tools that allow us to have a more comprehensive vision of what we are originating, and a very Credicorp vision also. For example, in SME business, as was explained previously, we are integrating the capabilities of Yape, Mibanco, BCP to have a coordinated approach to tackle this segment.

And the impact on risk adjusted NIM, the addition of risk adjusted NIM.

Very important because actually, what we manage the business is not by line, but I will say profitability for segments, and our main goals are a number of clients' volumes and risk-adjusted NIM.

And the expectation as this gradually, the cost of risk is going to grow, but the risk-adjusted NIM is going to get a little bit faster. So even in an environment of reducing reference rate, our expectation is to grow the risk-adjusted NIM, probably 10 basis points per year as we adjust the portfolio.

I think we have a question from Andres -- Carlos also. Carlos.

Carol Gomez, HSBC. So 2 questions. One, on the technology side. Could you give us an update on how much you intend to invest in Tenpo because after all, that is a full bank in Chile. That seems like a big project. And we have not heard about [ EO ] for a while, and that was launched, I think, 2 years ago and it was a new replacement, so we wanted to know where other stands. Second, more at the macro level. In your projections and your expectation for 19.5% ROE, how sensitive is that to the level of interest rates?

You can answer the last one, and then we'll go with Tenpo one.

Sure. So there's a theoretical exercise and then I'll explain what we expect in reality, okay? So the theoretical exercise, which is 100 basis points of rates coming down, both in soles and dollars in a parallel way. So it has a lot of assumptions there. It's 17 basis points impact on margin, which basically 15 of those 17 come from the dollar portfolio based on maturity and repricing.

Now in reality, we've been able to actually improve NIM in this cycle of rates coming down. Just to give you a number in 2023, which was the height of rates, we had a 6% NIM, we are targeting to closing this year with a higher NIM than that number. So how have we done it? Basically, well, as you know, there are a lot of forces at play, if you will, but this increase in low-cost deposits. And the shift that Cesar was mentioning towards the retail portfolio has allowed us to maintain a resilient NIM, actually grow it a little bit from 2023 and probably maintain it in the coming years as we improve the risk-adjusted NIM.

Yes. I'll take the Tenpo question and then pass it to Rai for the EO question. Tenpo is the largest investment at the [ Credi ] portfolio. We may have invested so far $250 million, mostly to cover losses some of it because we're in the process of getting the banking license and some capital requirements have been called.

Going forward, we expect to reach breakeven by 2028, we're on track. But I would argue that we're going faster than what we expected, especially what has surprised us a lot is that it's a complex structure. I don't want to get into the details, but the level of deposits we're getting because at some point in time, so basically, we're still -- we're a bank, we're funding the growth by equity, which is not sustainable. And even though on the lending side, which is basically credit cards, it's performing quite well. At some point, we slowed down that growth because we were unsure how the deposit traction was going to be. And it has surprised us in a positive way.

So far so good, $250 million roughly investment at Tenpo, 2 million clients, over 1 million active clients going at a better pace than the original business case really.

Yes. Regarding EO, EO is a different place -- significantly different play than a Yape or a Tenpo in terms of scale and size, right? It is a niche play, but focused on the young affluent segment, if you want. And getting that right, it takes time, and we've been working in the past 2 years to kind of crack what's the value proposition that really generates engagement significantly higher NPS. So our bar is very high on when to really accelerate and scale. And we've been doing a lot of testing in terms of product. And also to make sure we can get the unit economics positive, right?

So that is the work we've been doing. The results currently are very positive in a positive track. We would expect, if things continue going this way, to do an acceleration probably next year. But we want -- we didn't want to just grow for the sake of it because this is a segment where we really want to reach a segment that is high demand, right? It's not the first card, it's not -- I mean it's already digitized and bank client.

Maybe Carlos, that's an example going back to my conversation with Francesca, we always talk about the successes. EO is one example. I wouldn't say it's a failure, but we've struggled a lot. It costs us more money than what we expected. It's not at the level where we expected originally. As Raimundo said, we're correcting the business. But again, that's a great example. Some things don't work, right?

Andres, and then we will switch for a moment to the web question. Go ahead, Andres.

My question is, it's clear that you have a huge opportunity in Peru ahead of you. When you reflect about what has been the history of Credicorp recently and the expansion into other countries, at some point, you thought Mibanco, the microlending business was going to be the spearhead to international expansion. How do you see your portfolio of assets? How do you envision the next 30 years in terms of -- is it going to be still Peru? It's going to be a Latin American platform? How do you see the different business playing in that strategy?

I would argue that we've been victims of our own success. As we -- the first slide I showed, Peru has been the economy -- the country that -- its economy has performed the best along Latin America. So when the country -- the economy that is growing the most among the reasonable markets for us is your stadium, your country, you'd rather play local than visitant, right, going to soccer or whatever sport.

The story for the last 15, 20, 25 years in Peru has been a story of success for the country. So that's one -- I would say that's one of -- the most important reason why we're still a Peruvian company. And 95-plus percent of whatever indicator you have, you can measure is Peru. Having said that, going forward and part of the decoupling strategy is how to increase -- it's not reduce, it's increase our presence or the relevance of other countries in our businesses.

And by that, the logic behind is how to leverage on the ecosystem we built both in Peru, but we have some assets or some pieces of the ecosystem in -- mostly in Bolivia, Colombia and Chile, where we can add through some add-ons start growing at a faster pace. So yes, that's where we stand, going forward to your question is, we expect nothing concrete, but whatsoever, but our vision is that we should have a more -- a stronger presence in other countries in the next 10 years.

Perfect. And if I may follow up, on the Yape, the strategy for Yape and your thoughts on whether it makes sense to keep it inside BCP or do a spin-off. And in terms of the international expansion of Yape, you are already in Bolivia, are you considering entering any other country?

Yes, there are 2 questions there. We've discussed a lot internally and with some of you regarding whether to spin off Yape from BCP or not. And in the end, it's a matter of generating value versus unlocking value, right? So where we stand today, and nothing is carved on stone, but today, the decision is we're not going to spin off Yape because there are a lot of synergies, but having Yape within BCP, we're going to work in disclosing more information so as that the market can understand the potential of Yape and value Yape -- Yape within Credicorp correctly.

So -- and on top of that, Yape's strategic for Credicorp's growth for the next 10, 15 years. So that's where we stand today regarding what to do with Yape internally. As we speak, we're evaluating other countries in Latin -- so let me go a step back. When we decided to go to Bolivia, it wasn't because Bolivia is the sexiest country in Latin America, but it was because we wanted to prove the hypothesis that Yape could be successful without leveraging on the largest bank or the most relevant bank in that market.

And we've been quite successful in Bolivia. Bolivia has -- in relative terms, we've been more successful in Bolivia than in Peru. Bolivia already has 3 million active users. When we launched Yape, BCP Bolivia had a small app there. We had like 4%, 5% of the market. Today, we have 32%?

25%.

25%. It's performing quite well. So the hypothesis has been proven. So what we're doing today is evaluating what countries are similar to -- but Peru was in terms of cash usage 10 years ago. And we have had some very interesting surprises, positive for prices.

There is a large country at the north part of [indiscernible].

Okay. I will switch for a moment to the webcast questions. We have a question from [ Ernesto Gabilondo ] from Bank of America. For many years, we have not seen fintech competition in Peru, like in Brazil or Mexico. Recently, we noted Revolut is applying for a digital banking license in Peru. Given Revolut's experience in other countries where do you see they will be more aggressive in the Peruvian market? And what would be Credicorp's advantages that has been preparing for that?

So I mentioned the paranoia and the humility at the beginning. And I think this is exactly it. We're very aware of what's going on in the market. And we've talked about the innovation strategy around business domains and horizons in time. So we do look at this in terms of what businesses we're at, whether it's SME, retail banking, insurance, et cetera, and also the horizon in time of how radical the innovation is.

If you look at our portfolio, we're doing things Alejandro mentioned the cross-border. We're aggressively pursuing 5 or 6 initiatives, whether it's receiving the remittances, whether it's originating the remittances around Yape, whether it's investing through Krealo in [ Remedy ] technology partner around this business. That's one part.

The other part is the lending piece, which is huge. Then we mentioned a Warda, the savings piece. And all these pieces are what we see different competitors or different start-ups for fintechs, actually pursuing innovation around that. And what we're trying to do is have the pieces there with the distribution power of Credicorp. So yes, we're attentively looking at this, and we think we're pursuing all the right path to be able to gain the principality of our customers, which is what we want in the long-term.

Okay. I will follow up with another question about innovation also from Ernesto. In the past, you have mentioned disruptive initiatives should represent 10% of risk-adjusted revenues by 2026. How do you see this evolving by 2028?

So the graphic that Alejandro mentioned, didn't have a time line, exactly, was just a concept. So what I said in the beginning is that the maturity and the profitability of this investment take time. We have a disciplined governance and method to do it. So what we expect is maybe the next 3 or 4 years, we still have to clarify this, get again that 10% with the most mature initiatives in the portfolio. So I wouldn't say 2028 but close to '29 or '30, we will be looking at the Tenpo's and the Tyba's, the most mature ones.

Maybe just to complement that, I would love to have a Yape every year, but it's hard. But going forward, I believe that it's achievable that -- so when Yape graduates from the disruptive portfolio, we don't have -- I don't know Yape, Tenpo might be relevant, but I don't think it's going to be as large as Yape. But from a portfolio point of view, it's much better to have, I don't know, 6 initiatives that when you'd add them up, reach 10% that having one that adds 10%. So philosophically, we're in a much better position for the upcoming years.

Great. Now we have a question from Andrew Stobart from Baillie Gifford. Are you being ambitious enough with your long-term targets for ROE and cost to income and loan growth. I think you have commented already about ROE, maybe we can comment a little bit on cost to income and loan growth.

Yes. A great question on loan growth because -- and one of the charts that Alejandro presented is going to help my point. We have had this conversation with several of you. If you see our loan book over the last 5 years has been flattish, basically. Profits have doubled. So obviously, lending is core part of our business. NIM is -- NII is critical to our business. But we're not only a bank, and we're not only a bank that lends money. We have other sources -- other relevant sources of income.

Fee income -- the fee income business in general have been growing at close to double digits over the last 4, 5 years. So the appetite for loan growth is there. We -- Alejandro, you can help me with that. But I would like to take advantage of this question to highlight that the business is not only about lending, goes beyond that.

Yes. I would just add that we -- agreeing completely with what Gianfranco was saying, we do see loan growth picking up in the coming years. We've had a few years of really subdued loan growth in Peru due to a lot of events, starting with COVID and a lot of presidents, et cetera, et cetera. But things, I believe, have changed. We see more activity. And in our numbers, we are including a reasonable number in loan growth for the next couple of years.

You want to -- I'm not going to give the number, but I can tell you that we're talking about low double-digit growth potentially in the coming years when we look forward. So -- and especially thanks to the retail part growing a little bit faster, actually, yes, growing faster and wholesale, we mentioned very much tied to the economy.

As for the cost to income, again, this might be a time frame issue. When we -- when I showed the 42%, this is a number we're aiming for in the next 3 years. We'll have to see how we capture more efficiencies. But I did want to mention something, and it's that 42% is the cost-to-income for Credicorp. The reason why I mentioned this is because a lot of people compare that number with banks, and we're not just a bank, okay? If you look at the number for BCP today is 39%, very competitive in the Peruvian market, and we have aspirations to bring it down in the coming years.

So it is a good cost to income. The thing is that we have other businesses that operate at higher cost to income, like microfinance can be closer to 50%, the Asset and Wealth Management business can be closer to 60% as an industry. So my point is that blend takes us to the 42% in the not-so-distant future. And of course, we're always looking at opportunities to keep improving on that.

Okay. Now I'll go with a question from Mark Lien from Lazard. Mibanco continues to leverage on the wider Credicorp ecosystem. However, Mibanco's ROE to date still lags versus itself in 2019. Unlike Credicorp's other business units, given a spate of restructuring at Mibanco over the past years, could the panel comment is Mibanco's addressable [ opt ] may have been raised, resized or even cannibalized or the strong franchise growth in Yape by the strong franchise growth in Yape?

Yes. The -- so Peru has gone through a perfect storm over the last -- since 2019 or whatever, COVID, Castillo, I don't recall how many presidents in the last 5 years -- 7 or 6 presidents, 6 presidents in the last 5 years and so on. And the most volatile segment or sector is the micro entrepreneurs. So it's not only a story about Mibanco. The ROE of Mibanco -- for Mibanco competitors has been in the single digits or even losing money.

So as Alejandro mentioned in his presentation, Mibanco's ROE is coming back. So we're positive -- confident that the low 20s -- we are on track to reaching the low 20s ROE, which were the ones we had in the past. By the way, we had this conversation among ourselves a few months ago. The ROE of the microfinance business since we got into the micro finance business in 2009, the average ROE has been 17%. So, so far, so good. I don't think -- but let me go a step back.

On top of that, and I always criticize the Mibanco team is that we've been doing half the business of banking at Mibanco, which is lending. When you compare the Mibanco lending business -- overall business, sorry, which represents 95%, 94% of total income to BCP's SME lending business, Mibanco performs better during the last 5 years. The issue is that for BCP lending, SME -- SME lending at BCP is 35%, 40%. And the other 60% is deposits and fee income. Mibanco has no value proposition in terms of fee income and deposits, and we're working on that. So going forward, we're not only building a company that's going to be back at the low 20s ROEs but also a more resilient company.

Regarding the question on Yape. Yape is playing around SME today. It's very tiny. However, if we -- we project ourselves 2, 3 years down the road, you could argue that we're going to end up with 3 different business models or 3 different channels serving the same "segment" Yape, Mibanco and BCP SME. Today, we don't care. It might not be the most effective -- sorry, efficient way of doing business, but it's definitely the most effective way of doing business today. Mibanco has an expensive model, but it's a proven model. Yape is much cheaper, but it's unproven. So we need to figure out what's the best model to the best clients and the best segment. That's going to take 2, 3 years down the road.

And also just to complement and we're also experimenting between, hey, if we disbursed Mibanco loans through Yape because of the relationships. So is there a way to get the best of both worlds together. So there's going to be a lot of experimentation and exploring in the next couple of years around that world.

And if you may add sharing capabilities, so each one can improve.

Okay. Yes, we will switch back. So Monika has a question.

Monika from Lazard. My question is, as you increase this cooperation between the different division, which, in some ways, you have deliberately placed to focus on certain industries and certain segments. How do you incentivize the people working across correctly that you as a core entity can benefit. That's question one. And second, as you target these -- this like micro lending segment, et cetera, are we facing any regulatory headwinds from rates being capped?

Yes. So regarding question number one, our compensation packages, we have different compensation packages, but they are very variable oriented. So a bulk of our compensation is variable and based on -- as you mentioned, indicators. So we've been evolving.

I believe we're not there yet on how to have shared indicators, not only at this level, but I don't know, 2, 3, 4 levels below. A great example is bancassurance. That's another story of us sharing the success, but that has taken us, I don't know, 10 years of fighting because we didn't -- fighting among the different subsidiaries because we didn't have what you just mentioned, we didn't have common indicators.

Today, the bancassurance teams across Yape, Mibanco, Pacifico and BCP, they all share exactly the same indicators, regardless of what company they're working in. So that's -- I don't know if I answered your first question.

Regarding the second question, regulators -- technical regulators, so Central Bank and Supreme Tennessee were against rate caps because they're technical. And they realize that rate caps what generate is financial exclusion, not financial inclusion. Unfortunately, political regulators are not as savvy. Therefore, they -- somehow they came up with a "solution" that even though it's not perfect, it's suitable, which is we have rate caps, but they're very high. Actually, we operate obviously below, but not only below the rate cap, but below that maximum.

So we don't see, again, politicians are politicians, but we don't see any headwinds as you mentioned, in terms of reducing those rate caps in the near future. And sorry, as a matter of fact, we operate a microfinance institution in Colombia. The Colombia's GDP is 40% larger than Peru's GPDs. The informal economy is quite similar. The whole micro finance system in Colombia is smaller than Mibanco Peru, makes no sense. The main reason is rate caps, which are lower -- much lower.

Okay. We have one more question.

[indiscernible] from Autonomous Research. So you showed that your average transaction -- revenue generating transaction at Yape's about 7.3% per average user, right? So where do you expect to get by 2028 in the long-term? And if you could like break down how you're getting there? And then second, just a quick follow-up on the international expansion. When should we expect any announcements on that? Is this something that's more the long-term or something that's more imminent?

Yes. On the first one, it's tough to predict, but you see per transaction [ or issue ] our revenue-generating volume today is around 11% or 12% of our total payments volume. We expect or we aspire to have that number at least twice as big percentage-wise. But our total payments volume is also a moving target, right? It is increasing 1.8x year-on-year or 2x. So it is an exponential growth. But again, if you translate that to transactions, maybe it's probably more than double. We don't know the exact number today, but we're bringing more and more functionalities.

And I mean, if we think of the -- we have 15 million MAUs, right? Our top functionalities have like 7 million MAU, top-ups, maybe bill payments, then you have like the QR codes that are between 5 million and 6 million. And then the rest are between -- are below 1 million, so -- in terms of payments. So as those start increasing frequency, we will see significant uplift. And also like the POS payments, et cetera, there's going to be focusing within its user. So we are seeing a significant uplift potential there.

On your second question regarding M&A, tomorrow, no. No, the serious answer is -- and we were talking about some of you before is, we shifted the strategy. So we've done a lot of them -- I don't know a lot. We've done M&A transactions throughout the last 10, 20 years. But we've been very reactive, so waiting for the transactions to show up. 2 years ago, we shifted that strategy. And we -- today, we have a team that is constantly looking at what's going on in LatAm in the businesses that are either core to us or adjacent to our business. There's nothing relevant on the table, but obviously, we cannot provide any additional information.

[indiscernible] international expansion, does that imply that you would do that via M&A or you can just expand more?

Actually, it's both. It's both. So yes, yes, it's both.

Okay. I will go back to the webcast. There's a question from Alice Popescu from Altrinsic. For Pacifico and product factory distribution via Monokera. Please elaborate on the speed and breadth of rollout plan, all distribution channels, platforms at once. What are biggest execution risk do you foresee?

Well, about the speed with Monokera. So as an example, the last product that we have just launched with Monokera, talk about 2 sprint. So that's about a month to make the whole product configurated on the platform and to launch it through a channel. It's almost 3 months. So if you put it like from the beginning of the process until it's on the market, it's about 4 months to launch a new product. So that it's very, very fast, right? For example, in Yape, we now have almost 6 products on production in Yape, and we have launched these 6 products in a year. So you can see how speed is really getting faster with Monokera.

Yes. Maybe to complement Monica's answer. The challenge Pacifico has is not about distribution channels. Today -- because we've been talking about the Peruvian -- sorry, the [ Grickor ] system, which has -- if we add up all the clients, it's like 2x Peru, something like that. But with Pacifico also signed an exclusivity agreement with Falabella, which is the largest retailer in Peru. So Pacifico today in terms of channel, sorry, has the largest bank, the largest microfinance institution, the largest digital wallet and the largest retailer.

So the challenge Pacifico has is how to not only develop and launch, as Monica mentioned, the factory and be quite fast, but also to kill products fast that don't work. So work on adoption. And somehow, we're going to -- by testing and learning, come up with the right value proposition for different segments and through different channels.

And one more point, I think Monokera is a LatAm company. It's not a Peruvian company. So this gives us optionality to operate in a different part of the business in the region as well. So testing the markets in Peru, how to connect to mobile banking to Yape, to different channels. So this is -- it goes to a point of the investments that we have are looking at a regional view not only a Peruvian view.

Okay. Last question because we are running out of time, also from Alice. Today, you have continued to emphasize the message about growing -- growth coming both from lending, but also other elements. To that extent, what is the normalized capital level CET1? Would you optimize from here across the long-term?

Sure. So basically, I'll say the philosophy that we follow when it comes to capital. The main subsidiaries that have restrictions on capital, BCP and Mibanco, we have a minimum level of CET1 in which we want to operate in each one, being 11% at BCP and 15% at Mibanco. All the excess capital at those companies as well as in the other companies in Credicorp go up to the holding company once a year. And then we distribute everything that's not going to be needed as a dividend.

We retain a little bit and then depending on the year, if there's no strange or unexpected situation, positive or negative, we pay a second extraordinary dividend, but that's just depending on the year. So in the last few years, we've been paying increasing regular dividend. Last year, we paid an extraordinary dividend. This year, as we mentioned in the call, we won't. But again, we optimize for capital all the time, take it up to the Credicorp level and pay out everything that's not needed for the growth of the business.

Aren't there any questions? No? No, because I want to address one point -- one issue that surprised me, no one has asked because whenever we are in a private conversation, it always pop up which is elections. A couple of messages or maybe 3 messages. One, today, unless we have a crystal ball, we have no clue who's going to be present, 37 candidates, too soon to tell.

But most importantly, the second message is we're going -- the country is going back to 2 chambers. So we're going to have Congress and Senate. And for any party to reach either chamber, they need to get at least 5% of the votes. So mathematically, no party may reach actually. If you divide 100 by 37, it's less than 3. But jokes aside, the experts say that anything between 4 to 7 parties should be at the chambers. So we expect much less volatility in terms of political issues going -- after the elections, regardless of who becomes President and so on.

And the third message, which is for me, the most relevant message of all is see Credicorp's performance over the last 30 years. We've navigated leftist government, rightist governments, dictatorships, quasi dictatorships, long tenors, short tenors and so on. And we've performed, I would say, quite good.

So we're used to navigating. I don't want to look arrogant whatsoever, but we're used to navigating in those choppy waters. So we feel quite comfortable that, as [ Lucho ] mentioned before, the best of Credicorp is yet to come. Thank you so much for joining us. And I have a switch, right?

Thank you, everybody, for your questions. And also, I would really appreciate the feedback. You are having some handouts around, so please do it. Thank you.

Thank you all for joining us today. Celebrating 30 years on the New York Stock Exchange is a big milestone, and it's really about the people, our teams, our clients and you, our fellow shareholders, who have been part of this journey.

We've shown you today how far we've come, but what excites us the most is what's ahead. We have the scale, the digital edge and the purpose to capture the next decade of growth. And we're doing it while bringing more people and small businesses into the financial system than ever before. If there's one message I want to leave you with is this. Credicorp's ecosystem today is stronger, faster and more focused than ever before. We're not just ready for the next chapter. We have the playbook, the talent, the capabilities to lead it. I hope our presentations today helped you understand how Credicorp is greater than the sum of its parts.

Let me close by echoing the words of our Chairman at the start of this Investor Day. The best of Credicorp is yet to come. Thank you for your trust in us. Now please join us for a toast to be followed by a Peruvian lunch. Our entire team will be available to answer any further questions. Enjoy and thank you very much.