Credicorp Ltd.

Credicorp reported quarterly ROE of 20.3%. Year over year, loans increased 13.1%, net interest income rose 13.3%, other core income grew 19.7%, fee income increased 15.9%, and FX gains rose 29.8%. The NPL ratio declined to 4.1%, cost of risk was 1.9%, risk-adjusted NIM stood at 5.5%, and efficiency ratio was 45.4%. BCP reported 29.2% ROE, Mibanco 22.9%, Grupo Pacifico 19.1%, and Investment Banking & Wealth Management 23.5%. For 2026, management now expects GDP growth around 3.5% including El Nino, loan growth around 12%, fee income growth in the high teens, efficiency ratio within guidance, and ROE around 19.5% with a current bias to the upside. Management also said full-year 2026 cost of risk should remain within guidance, even with El Nino-related provisions.

Gianfranco Ferrari framed the quarter as evidence that Credicorp is benefiting from both a better operating backdrop and internal structural improvements. He highlighted stronger business confidence, rising private investment, and favorable commodity prices in Peru, while calling El Nino a temporary and manageable shock rather than a structural change to the outlook. His tone was upbeat and confident, especially in explaining why management now believes Credicorp can sustain a medium-term ROE of about 22%.

Alejandro Perez-Reyes focused on the operating drivers behind the quarter and the updated outlook. He cited 13.1% loan growth, 13.3% growth in net interest income, a 4.1% NPL ratio, 1.9% cost of risk, and $106 million in additional El Nino-related provisions, noting that excluding that impact cost of risk would have been 1.6%. He also said funding costs declined to 2.2%, NIM was 6.6% at the consolidated level, and the efficiency ratio for the first half was 45.6%. On guidance, he raised 2026 loan growth to around 12%, fee income to high-teens growth, and said ROE remains guided around 19.5% for 2026 but with upside bias, while emphasizing that medium-term ROE should move structurally higher toward 22%. He also said the current dividend outlook should not be affected because potential additional provisions would not change profits already generated last year.

Analysts pressed management on whether double-digit loan growth is sustainable across both retail and wholesale portfolios, how much of the low cost of risk is due to better underwriting versus a supportive macro, and how much El Nino could force additional provisions or weaken 2027 growth. Management said growth should remain solid in both retail and wholesale, with El Nino mainly affecting specific geographies and client segments, while the rest of the country remains constructive. On provisions, they said the $106 million booked this quarter was based on client-by-client and segment-by-segment analysis, and that another reassessment is likely around September or October once weather visibility improves. They also said a severe El Nino could pressure 2027 results, but does not change the medium-term 22% ROE target.