Credicorp Ltd. Q1 FY2026 earnings call

Governance and Leadership Updates

• Shareholders approved 3 new directors and reelected 6 incumbents at the Annual General Meeting; new directors add complementary expertise in technology/AI, regulatory oversight, and strategic execution aligned with long-term priorities.
• A planned leadership transition will see Alejandro Perez-Reyes move to lead Mibanco, with Ignacio Belaounde assuming the CFO role later in 2026, demonstrating the firm's deep internal talent development.
• Effective April 1, 2026, a unified neobank unit was formed, bringing together Yape Peru, Yape Bolivia, Eo, and Chile's Tenpo under common leadership to leverage shared tech and operational capabilities.

Macroeconomic Context

• Peru's Q1 2026 GDP is tracking near 3% year-over-year, with domestic demand growing over 5% for 6 consecutive quarters, driven by strong high-frequency indicators (light vehicle sales up ~40%, capital goods imports up ~20%, cement consumption up 14%). Management maintains a 2026 full-year Peru GDP growth expectation of 3.5%, though risks are skewed to the downside with current tracking near 3.2%.
• Upcoming Peruvian presidential runoff is expected to feature two candidates with divergent economic visions, but management expects the Senate composition will provide legislative checks and balances that preserve macroeconomic stability, central bank independence, and institutional continuity.
• Regional operating conditions are mixed: Colombia sees resilient activity but pre-election policy uncertainty; Chile has softened early-year growth but improved private investment prospects under the new government; Bolivia remains challenging but has outperformed performance expectations.

Strategic Decoupling Growth Anchors

• Deepen penetration in underpenetrated markets: Expand financial inclusion across underserved client segments to drive growth while maintaining disciplined risk standards.
• Scale integrated digital ecosystem: Leverage platforms to accelerate client acquisition, deepen engagement, increase cross-selling, improve efficiency, and boost monetization, with the unified neobank unit serving as the core growth driver for digital payments and lending.
• Unlock cross-ecosystem synergies: Scale shared capabilities in data analytics and risk management across subsidiaries, driving improved decision-making, client targeting, and risk assessment, with early tangible benefits already realized.
• Deliver resilient cyclical returns: Maintain a prudent holistic approach to risk and capital management, strengthening capabilities across credit, liquidity, and operational risk while maintaining disciplined capital allocation to drive consistent performance through volatility.

Quarterly Operational Highlights

• Consolidated Q1 2026 results delivered a record high net income and 21.1% ROE, exceeding market expectations. Innovation portfolio contributed 9% of risk-adjusted revenues, advancing toward the 10% full-year 2026 target.
• Overall loan growth reached 8.2% year-over-year, led by BCP and Mibanco, with accelerating demand across retail and microfinance segments. Low cost deposits reached 63.9% of the total funding base, up from prior levels, driving a contraction in interest expenses.
• System-wide NPL ratio declined to 4.3% (below pre-2023 recession levels), cost of risk stood at 1.3%, and NPL coverage ratio reached 113.8%. The efficiency ratio was 45.8%, within the full-year guidance range.
• Core income grew 13.3% year-over-year, with double-digit growth across net interest income (10.9%), fee income (15.6%), and FX gains (30.6%). Risk-adjusted NIM trended upward to 5.81% driven by improved pricing, portfolio mix optimization, and effective risk management.
• A record high ordinary dividend of PEN 50 per share was declared, as capital levels across subsidiaries move closer to target levels.

1. BCP: ROE of 30.5% year-over-year. End-of-period total loans rose 7.3% (9.1% FX-neutral), driven by both wholesale and retail banking. NIM rose 21 basis points to 6%. NPL volumes declined 11.1%, cost of risk decreased to 0.8%, and risk-adjusted NIM reached a record high of 5.5%. Other core income rose 18.7% driven by transactional activity at Yape and FX gains. The efficiency ratio stood at 38.6%, contributing 30.5% of group ROE.
2. Yape (neobank unit): 16.4 million monthly active users, reaching ~82% of Peru's economically active population. Revenue per MAU increased 65% year-over-year, outpacing 26% expense per MAU growth, demonstrating rising operating leverage. Revenue-generating payment volume grew 80% year-over-year, and lending revenue grew 3.6x year-over-year. As of Q1 2026, Yape represents 17% of the group's fee income and 8% of the group's risk-adjusted revenues, up from 1% and 2.5% respectively year-over-year.
3. Mibanco: ROE of 21.7%. Quarter-end loans grew 12.4% year-over-year, with March disbursements hitting an all-time high. NPL ratio fell to an all-time low of 4.9%. NIM stood at 14.9%, cost of risk fell 29 basis points to a low level, and risk-adjusted NIM stood at 11.3%. Mibanco Colombia posted 18.3% ROE, up from single-digit levels a year prior, with double-digit loan growth. The efficiency ratio stood at 49.2%.
4. Grupo Pacifico (Insurance & Pension): ROE of 18.9%. Organic net income grew 11% year-over-year, with full consolidated net income (including Pacifico Salud) growing 19% year-over-year. The Life business drove growth via strong commercial execution in the bank assurance channel, while the P&C business saw net income decline due to lower corporate premiums and higher claims. Excluding inflation impacts on claims and 2025's extraordinary D&S business reversal, underlying insurance underwriting results are on track for high single-digit growth in 2026.
5. Investment Management (Credicorp Capital): ROE of 15.7%. AUM for wealth and asset management expanded 28% and 34% respectively year-over-year, driving higher revenue. Net income fell 8% year-over-year due to a low 2025 comparative base for operating expenses.

• Peru 2026 GDP growth guidance is maintained at 3.5%, with downside risk skew due to recent temporary supply shocks and political uncertainty.
• Full-year 2026 total loan growth guidance is maintained at ~8.5% (quarter-end balance basis, ~10.5% FX-neutral), with acceleration expected over the remainder of the year driven primarily by BCP retail banking and Mibanco.
• Full-year NIM guidance is maintained between 6.4% and 6.7%, supported by accelerating retail loan growth and a favorable portfolio shift toward higher-yield retail segments.
• Q1 2026 cost of risk came in below expectations; full-year cost of risk is now expected to approach the lower end of the prior guidance range, while risk-adjusted NIM is expected to remain within the prior guidance range, with upside potential given current trends.
• Full-year 2026 efficiency ratio guidance range is maintained.
• Fee income is expected to grow in the low double-digits in 2026, driven by improving economic activity and diversified income streams.
• Full-year 2026 ROE guidance is maintained at ~19.5%, but management notes that strong Q1 performance and positive ongoing trends put the firm on track to deliver results at the upper end of this level, while remaining prudent in light of existing macro and political uncertainties.
• The consolidated ROE is expected to see upside driven by stronger-than-expected loan growth, stronger risk-adjusted NIM, and lower-than-expected cost of risk.

• Global geopolitical tensions in the Middle East have increased uncertainty via higher energy prices, which could push up inflation and keep global interest rates higher for longer than expected.
• Peru faces temporary near-term supply side shocks from higher oil prices, localized energy disruptions, and adverse El Nino weather conditions, which have already reduced first anchovy fishing season output and could negatively impact agricultural productivity and GDP growth. A strong combined El Nino event could reduce Peru GDP by up to 1% if it materializes.
• The upcoming Peruvian presidential election could create near-term market uncertainty if a candidate favoring expanded state intervention prevails, though institutional checks and balances are expected to limit extreme policy shifts.
• Inflation in Peru rose to 4% year-over-year in April 2026, which may lead to tighter-than-previously expected monetary conditions.
• Regional risks include persistent policy uncertainty in Colombia ahead of its May 2026 presidential election and slower-than-expected growth in Chile despite improved private investment prospects. Bolivia continues to face challenging macroeconomic conditions.
• Lower-than-expected GDP growth or severe El Nino impacts could weaken loan repayment performance and push cost of risk higher than current expectations.

Q: What is the potential impact of the upcoming Peruvian presidential runoff and the El Nino weather event on the business and economy? / A: Management notes the runoff is very likely between two candidates with divergent economic platforms, but no major post-first-round alliances have formed yet, and public polling shows the race is effectively tied. For El Nino, Peru is currently experiencing two overlapping moderate weather phenomena that have already reduced the anchovy harvest and are impacting northern agriculture. Management is already monitoring impacts and has not changed credit policy; a full impact assessment will be possible by September. A strong combined event could reduce annual GDP by ~1%, consistent with prior moderate to strong El Nino events. Management remains confident that institutional checks and balances will limit economic policy volatility regardless of the election outcome.

Q: The lower-than-expected Q1 cost of risk is allowing more capacity for higher-yield lending; beyond cost of risk, what factors are supporting upside to the 19.5% full-year ROE guidance? / A: Management prioritizes risk-adjusted NIM over short-term cost of risk, and is confident increasing risk exposure in higher-yield retail segments because underlying segment performance is meeting or exceeding expectations. The 19.5% ROE guidance is maintained, but Q1 ROE came in above 20%, the Peruvian economy is performing strongly, loan growth is tracking better than expected, and risk-adjusted NIM is stronger than anticipated. These factors point to full-year ROE coming in at the upper end of the guidance range, though management remains prudent due to unresolved election and El Nino uncertainty. Capital allocation priority is reinvestment for growth rather than extraordinary dividends, given attractive unit economics in growing segments.

Q: How is Yape performing in Bolivia, and is there a plan to expand the Yape platform internationally to other markets like Chile? / A: Yape Bolivia has accelerated growth to over 2 million customers, making it one of the market leaders despite a pre-existing interoperable regulatory framework. Growth is driven by P2M merchant transactions, and the platform is following the Peruvian playbook of expanding utility payments and other value-added services to enable future lending monetization. The newly unified neobank unit (including Yape Bolivia, Yape Peru, Eo, and Chile's Tenpo) is built to leverage shared Yape technological capabilities across markets. Chile's Tenpo is already leveraging Yape's knowledge to target Chile's large cash-based economy, and the Yape platform has been reengineered to be easily exportable to new markets.

Q: What is the contribution of pension fund withdrawals to the recent favorable deposit mix improvement, and how sticky are these deposits? / A: Around half of the recent deposit base growth can be attributed to pension fund withdrawals captured by Credicorp, with the other half coming from structural growth in transactional activity as the economy becomes less cash-driven. These pension-related deposits will gradually decrease over the coming months as the funds are spent, and will largely disappear by the end of 2026. The structural transactional deposit growth is expected to continue, supporting a persistently higher share of low-cost deposits.

Q: Yape alone already accounts for 8% of group risk-adjusted revenue, hitting the original 10% full-year disruptive initiatives target this year; will you set a higher target, and is 30% Yape earnings contribution by 2028 feasible? / A: The original 10% target for all disruptive initiatives was set 4 years ago, and Yape has grown faster and reached scale earlier than originally expected. The firm is currently revising its targets for disruptive initiatives, with new targets expected to be shared next quarter. Revenue contribution will remain the primary metric for early-stage disruptive initiatives, with profitability metrics added as ventures mature. Management confirms that overall disruptive initiatives are expected to be accretive to Credicorp's group ROE in 2026, and a medium-term group sustainable ROE target (likely north of 20%) will be shared after the presidential election outcome is clear.