The following is a summary of the Credicorp Ltd. (BAP) Q4 2023 Earnings Call Transcript:
Financial Performance:
Credicorp reported an ROE of 15.8% for the year, factoring in significant Q4 charge due to expected losses.
Net Interest Income saw an increase, attributed to disciplined interest rate adjustments made in H1 2023.
Despite reductions in reference rates, an increase in income was observed owing to favorable balance sheet dynamics.
Credicorp's loan growth of 0.4% was primarily driven by retail banking at BCP.
The firm noted a 13.2% decrease in insurance underwriting due to higher claim expenses.
Provisions notably increased to $250 million, with cost of risk at 3.2% and NPL ratio at 5.6%.
Yearly Operating Expenses grew by 10% attributed mainly to investments in IT and digital capabilities.
Business Progress:
Though marred by adverse events, BCP reported an increase in NII of 5.1% due to optimization of the funding base.
Mibanco observed negative impacts on results because of unfavorable macro conditions, social conflicts, and climate anomalies.
Credicorp projects loan book growth of 3-5% for the year 2024.
The company intends to increase weightage of retail loans in the loan book, thereby augmenting portfolio yield.
Digital transformation and disruptive initiatives, forming a significant part of the firm's strategic direction, will remain key areas of investment.
Credicorp expects Yape to break even in profits this year, envisioning increased income streams from transactional activities and financial services on Yape markets.
The proportion of low-cost deposits, which positively contributes to their margin, has been predicted to keep rising.
Improved net interest margin and controlled cost of risk are expected to increase their income in the coming year.
Credicorp forecasts an acceleration in fee income from underlying businesses and disruptive initiatives, particularly Yape.
The company projects mitigated volatility due to a changing balance sheet composition.
Commitment remains high to disruptive initiatives for the next five years with consistent monitoring of performance.
More details: Credicorp IR
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