CREDICORP THIRD QUARTER 2026 EARNINGS CONFERENCE CALL - CREDICORP LTD

Explicit Guidance:

• 2026 GDP Growth: Expecting Peru's GDP to grow approximately 3.5% for the full year 2026, including an estimated 0.9% direct impact from El Niño.
• Loan Growth: Full-year 2026 loan growth (quarter-end balances) maintained at approximately 12%, driven by retail banking (BCP) and MiBanco.
• Cost of Risk (CoR): Full-year 2026 CoR expected to remain within the 1.7%–2.1% range. Management notes a likely increase in Q4 2026 to absorb El Niño-related risks, but the aggregate remains within guidance.
• NIM & Risk-Adjusted NIM: Anticipated to settle at the higher end of guidance ranges for 2026 due to accelerating loan growth and a portfolio mix shift toward retail.
• Fee Income: Expects high-teens growth for 2026, supported by transactional activity and economic momentum.
• Efficiency Ratio: Projected to remain within existing guidance ranges for 2026.
• ROE (2026): On track to achieve ~19.5% return on equity for the full year.
• Medium-Term ROE: Reaffirmed target of approximately 22% for the medium term (post-2026).
• Dividends: No extraordinary dividend expected for the remainder of 2026 to support capital allocation for profitable growth.
• El Niño Provisioning Impact: Management estimates a 1% additional impact on credit quality/loan growth in 2027 beyond the 2026 direct impact.

Business-Segment Outlook:

• BCP (Retail & Wholesale): Loan growth driven by consumer loans and SME working capital; expected to continue expanding market share and penetration to 2018 levels.
• YAPE: User base growth slowing due to high digital wallet penetration; focus shifting to monetization via lending (MiBanco integration, multi-installment/SME loans), cross-border payments, and deeper relationship features rather than pure transaction volume growth.
• MiBanco: Expected to sustain double-digit loan growth; underlying credit trends remain healthy despite higher CoR from El Niño provisions.
• Nibanco Colombia: Maintaining strong momentum with solid client growth and disciplined risk management; ROE target of 18.4% achieved in Q3.
• Grupa Pacifico: Life insurance (Our Life) expected to drive growth; P&T (Property & Casualty) and medical services facing mixed results due to underwriting cycles and base effects.
• Investment Management: Expecting resilient performance in recurring businesses; capital markets and wealth management to benefit from market volatility and AUM growth, though expenses are rising.
• TEMPO (Chile): Processing transactions as a bank; regulatory completion by end of January; targeting ~1% credit card market share and ~2% deposit share; new management expected next year to accelerate growth.
• EO (Chile): Portfolio nearing 100,000 credit card customers; integrating with YAPE to create a neobank value proposition.

Market and Competitive Outlook:

• Credit Penetration: Peru remains underpenetrated relative to pre-COVID levels; significant room to expand customer base and recover previous penetration levels over the next 2-3 years.
• Private Investment: Expected to sustain double-digit growth (approx. 14% in 2026) for the next 2-3 years, driven by mining and infrastructure projects, creating tailwinds for commercial lending.
• Competition: Focus on "creating markets" and expanding through digital capabilities (YAPE) rather than solely gaining share; confidence in maintaining market leadership.

Macro / Industry Outlook:

• El Niño: Transitioning from "very strong" to potentially "extreme" scenario; direct exposure estimated at 8% of total loan portfolio. Government fiscal stimulus (1.5% of GDP) expected to mitigate impacts.
• Peru Macroeconomy: Domestic demand expected to grow near 6%; private investment near 14% despite El Niño pressures on primary activities. Political transition seen as continuous with a focus on supporting private investment.
• Regional Macro:
  • Colombia: Inflation at 6.3%; monetary policy tight (300 bpts cumulative hike); new administration market-friendly but execution on fiscal credibility is key.
  • Chile: Growth outlook weakening; inflation at 4.5%; rates unchanged.
  • Bolivia: IMF $1.9B program approved to restore stability.
• Inflation & Rates: Peru's inflation at 5.3% (Oct); central bank monitoring second-round effects and El Niño pressures.
• 2027 Outlook: Viewed as a "bump in the road" due to El Niño's lingering effects on the economy, but medium-term macro tailwinds (investment, consumption) remain strong.

Strategic Initiatives:

• Strategic Update: Scheduled for November 17, 2026, to detail integrated ecosystem capabilities and new growth avenues.
• Digital Transformation: Continued investment in IT, cloud infrastructure (YAPE), and data analytics to improve underwriting and distribution efficiency.
• Risk Management: Enhancing capabilities in early warning analytics, targeted underwriting adjustments, and proactive client engagement to manage El Niño exposure.
• Neobank Integration: Merging YAPE and EO capabilities to offer robust lending and payment solutions in Chile.
• Capital Allocation: Prioritizing reinvestment into business growth and innovation over extraordinary payouts to maximize long-term shareholder value.

Risks and Headwinds to Outlook:

• El Niño Severity: Potential shift to "extreme" conditions could necessitate higher provisions or slower growth in affected segments (8% of portfolio).
• Economic Slowdown: Second-order effects on loan growth and credit quality could persist into the first half of 2027.
• Political & Regulatory: Uncertainty regarding the new administration's ability to pass legislation for investment streamlining and fiscal credibility (specifically in Colombia).
• Expense Inflation: Continued rise in IT and personnel expenses to support digital scaling and risk capabilities.
• Operational: Temporary disruption to primary activities and infrastructure due to heavy rainfall and drought.

Management Tone on the Future:

• Confidence: High confidence in Peru's medium-term outlook and the company's ability to achieve a 22% ROE; describes El Niño as a manageable "bump in the road."
• Prudence: Emphasizes disciplined risk management and proactive mitigation over reaction.
• Growth Narrative: Shift from "growth for growth's sake" to "profitable growth" driven by risk-adjusted returns; focus on deepening customer relationships and monetizing digital platforms (YAPE).
• Resilience: Highlights strong capital position, low cost of risk (underlying), and diversified earnings as buffers against volatility.

Miscellaneous:

• Provisioning Specifics: Q3 El Niño provisions totaled ~500 million soles (stock), with 200 million soles in net impact on P&L due to offsetting recoveries and specific provision releases. Additional provisions expected in Q4 but total book remains within the 1.7-2.1% guidance.
• 2023 Comparison: Management explicitly states 2023 is not a valid reference due to different macro conditions (weakness vs. current strength) and improved risk modeling tools; 2023 involved over-provisioning which is being balanced against current forward-looking models.