CREDICORP THIRD QUARTER 2026 EARNINGS CONFERENCE CALL - CREDICORP LTD

Good morning, everyone. I would like to welcome you to the Credit Corp. Limited 3rd Quarter 2026 Conference Call. A slide presentation will accompany today's webcast, which is available in the Investor section of Credit Corps' website. Today's conference call is being recorded. As a reminder, all participants will be in listen-only mode. There will be an opportunity for you to ask questions at the end of today's presentation. If you would like to ask a question, please signal by pressing star 1 on your telephone keypad. If you have connected to the call using the HD web phone on your computer, please use the keypad on your computer screen. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Now, it is my pleasure to turn the conference over to Credit Corp's IRO, Milagros Siguenas. You may begin. Thank you, and good morning, everyone. Speaking on today's call will be Gianfranco Ferrari, our Chief Executive Officer, and Ignacio Bellagonde, our chief financial officer. Participating in the Q&A session will also be Francesca Raffo, Chief Innovation Officer, Cesar Rios, Chief Risk Officer, Diego Cabrera, Head of Universal Banking, Eduardo Montero, Head of Insurance and Pensions, and Rocío Benavidez, CFO at Nibank. 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 statement section of our earnings release and recent filings with the SEC. We assume no obligation to update or revise any forward-look statements to reflect new or change events or circumstances. Gianfranco Ferrari will begin the call with remarks on recent macro and political environment and a brief overview of our quarterly results, followed by Ignacio Belaunde, who will provide a more detailed analysis of key macroeconomic indicators, our financial performance, and our outlook for full year 2026. Gianfraco, please go ahead. Thank you, Milagros. Good morning, everyone, and thank you for joining us today. Last quarter, I spoke about our growing confidence in Peru's medium-term outlook. Today, that confidence remains intact. Peru continues to show a strong economic momentum. Domestic demand and private investment remain strong, while high copper prices continue to support exports and the country's external position. Business expectations and consumer confidence also remain positive. Our economists expect domestic demand to grow close to 6% this year and private investment close to 14%, even as El Nino weighs on from primary activities. Importantly, the political transition has continued to evolve broadly in line with our expectations. The government has signaled continuity in macroeconomic policy and a focus on supporting private investment, while taking steps to accelerate investment and expand the project pipeline. Peru also enters the coming months from a position of macroeconomic strength. International reserves are high, public debt remains low, and the country has a strong external position. These are important buffers as we prepare for the effects of Armenia. In addition, the Ministry of Finance has announced a fiscal stimulus plan to mitigate the potential adverse economic impacts of Armenia, since our last call. the expected intensity of the event has increased. The latest official forecasts indicate a high probability that the coast of El Nino will persist into 2027, with the greatest risk concentrated over the coming months, including heavier rainfall across parts of Peru's northern and central coast, and potential drought conditions in southern Peru associated with the global aluminium. We're taking this risk seriously. Across Credit Corp, we've been preparing early. We are closely monitoring the customers, sectors, and regions most exposed and reinforcing our contingency plans across our physical and digital channels. We also are taking preventive actions in our credit portfolios, including motivating origination in consumer and SME segments where we see greater vulnerability. At the same time, we want to be there for our customers when they need us. Our responsibility is to manage risk with discipline while helping businesses and families navigate potential disruptions. There is still uncertainty around the ultimate impact of El Nino. What we can control is how well we prepare and how quickly we respond. We believe the actions we're taking put us in a strong position to navigate the months ahead, protect portfolio quality, and support our customers. Against this backdrop, the strong operating momentum we saw during the first half of the year continued into the third quarter. Before discussing our results, I also want to invite you to our strategic update on November 17th. We look forward to sharing how our integrated ecosystem and the capabilities we have built are translating into new opportunities and stronger growth, profitability, and sustainable value creation across Cary Corp. I hope many of you will join us. We delivered another quarter of strong execution, generating a 19.9% return on equity, which keeps us on track toward our medium-term ROI of around 22%. Supported by solid operating performance across our businesses and increasingly diversified sources of earnings. Growth momentum remains strong. Credit demand continues to expand across our main lending businesses, reflecting the strength of domestic activity and our ability to capture opportunities across customer segments. Our profitability continues to benefit from disciplined execution and our structural funding advantage. Risk-adjusted NIN improves to 5.7%, supported by a favorable funding mix with low-cost deposits representing 62% of our funding base. At the same time, we remain focused on preserving portfolio quality and have incorporated our quarter-end assessment for El Nino-related risk into our provisioning. Our coverage ratio increased to 120.9%, reflecting our prudent approach to risk management. This discipline is particularly important as we prepare for the potential effects of El NINO, balancing growth opportunities with preventive measures in more vulnerable segments. We also continue to make progress in building a more scalable and diversified business. Our efficiency ratio improved to 45.1%, while our innovation portfolio contributed 10.7% of risk adjusted in the variance, surpassing our 10% ambition. These results reinforce our confidence that the capabilities we have built are increasingly translating into stronger operating performance and sustainable profitability. Overall, we are pleased with our performance this quarter, and with the progress we continue to make across all of our businesses. Ignacio will now take you to our results in greater detail. Thank you, Gianfranco, and good morning, everyone. As Gianframco mentioned, we delivered a 19.9 ROE this quarter with strong operating performance supported by accelerating loan growth, healthy underlying credit trends, and robust revenues. Importantly, these results include additional provisions based on our assessment of the linear risk at quarter end. As I discuss the quarter highlights, I will focus on the year-over-year operating trends. Loans measured in quarter end balances rose 14.8%. This evolution was driven primarily by PCP, where growth was led by retail banking and secondarily by wholesale banking. MiBanco also contributed to loan growth, although to a lesser extent. The NPL ratio dropped to 3.9%, supported by enhanced origination quality and stronger collection capabilities. The cost of risk stood at 2% this quarter, reflecting both portfolio growth and our updated assessment of a linear risk at quarter end. Underlying cost of risk remained healthy at 1.6% this quarter. Net interest income increased 17.7% on the back of loan growth in higher yielding segments. Against this backdrop, NIM stood at 6.9%. Other core income grew 18.8 percent. Fee income increased 20.4 percent, boosted by strong levels of transactional activity. Gains on FX transactions rose 14.3 percent through higher volumes at BCP, which rose in the context of higher volatility. Lastly, the insurance underwriting results decreased, mainly reflecting a base effect from reserve releases recorded in the third quarter of last year in the light business. Overall, the quarter demonstrates the resilience of our businesses, which are supported by a robust capital position and sound asset quality. Next slide, please. Peru's economy maintained a solid momentum in the third quarter, with GDP estimated to have grown by around 3.3% year over year. Domestic demand, which continues to be a key driver, expanded above 5%, supported by another quarter of double-digit growth in private investment. This trend helped offset lingering weaknesses in primary sectors, which continue to face a million related disruptions. High-frequency indicators continue to point to strong domestic activity, while private investment expectations remain near historical highs. The new administration has signaled its intention to streamline administrative procedures and facilitate the execution of major investment projects, particularly in mining and infrastructure. If successfully implemented, these measures could help extend the current investment cycle and support medium-term growth. Next slide, please. In Peru, annual inflation rose to 5.3% in October, while core inflation, excluding transportation costs, remained around 2%. The central bank is closely monitoring potential second-round effects and El Nino-related pressures. In Colombia, annual inflation stood at 6.3% in September, well above the central bank's target range. As a result, monetary policy has tightened with cumulative interest rate hikes, reaching 300 basis points since December. Meanwhile, the new administration has adopted market-friendly stands, but execution and its ability to strengthen fiscal credibility will be critical to sustaining investor confidence. In Chile, the growth outlook has continued to weaken amid higher oil prices and weaker-than-expected copper production. Meanwhile, inflation stands at 4.5% year-over-year, while the central bank has kept its policy rate unchanged at 4%-4.5%. In Bolivia, the IMF approved in October a three-year, $1.9 billion program. This is also expected to catalyze around $4 billion in additional financing from other international financial institutions, supporting efforts to restore macroeconomic stability and sustainable growth. Next slide, please. As Gianfranco mentioned, El Niño remains a transitory downside risk to the near-term outlook, and the extent of its impact remains uncertain. We continue to monitor its evolution closely and incorporate new developments, including the recently announced fiscal stimulus plan, into our outlook and our assessment of potential impacts on our businesses. Since our last earnings call, our base case shifted from a strong to a very strong El Nino scenario at quarter end. We adjusted our credit assessment and mitigation actions accordingly. The Peruvian government has announced a temporary and targeted fiscal package of close to 1.5% of GDP to mitigate the impact of El Nino and other external shocks. The package includes cash transfers to vulnerable households, infrastructure and maintenance spending, credit guarantees for MIPES to support new lending and loan rescheduling, as well as temporary tax deferrals for affected businesses. With an annualized fiscal deficit of just 0.9% of GDP as of September, Peru has ample room for this response. Based on our quarter-end assessment, estimated direct exposure to potentially affected clients is approximately 8% of total loans. Importantly, we continue to see this as a concentrator rather than broad-based risk while underlying portfolio quality remains healthy. We believe we have been actively managing this risk ahead of its potential peak inflows with a growth-based approach that includes close monitoring of exposed clients and sectors, early warning analytics, targeted underwriting adjustments, and proactive client engagement. This allows us to identify vulnerabilities earlier and respond as conditions evolve. Looking ahead, the outlook for El Nino is evolving from a very strong to potentially extreme scenario. While the ultimate economic impact will also depend on the effectiveness of mitigation measures, we remain confident that additional provisions required can be absorbed within our current guidance ranges. Overall, healthy portfolio quality, stronger risk capabilities, and robust balance sheets provides significant capacity to absorb potential volatility while continuing to support our clients and deploy our strategy. Next slide, please. BCP delivers a 27.7 ROE this quarter, underscored by accelerated loan growth, healthy underlying credit trends, and strong transactional income. Profitability remains solid while incorporating additional provisions based on our assessment of El Nino risk at quarter end. From a quarter-over-quarter perspective, total loans grew 5.1% or 4.9% in FX neutral terms. Retail loans fueled expansion, primarily through consumer loans and, secondarily, through SMEP working capital. Post-tay loans also registered growth, which was primarily attributable to an uptick in corporate loans. NIEM stood at 6.4% as the portfolio shifted towards higher yielding retail segments while the funding cost remained stable. Other core income rose 6.5% driven by a 10.3% increase in fee income. Fee growth has supported by a seasonal pickup in transactions and stronger activity at YAPE, reflecting higher engagement. To a lesser extent, BCP's integration of multi-merchant payment fees also contributed, as part of the efforts to bring the platform closer to our core banking franchise. The NPL ratio fell to 3.7%. This result was driven by improvements across business segments on the back of fortified risk management capabilities. Underlying risk credit trends remained healthy. This quarter, we also recognized additional provisions based on our assessment of El Nino risk as of quarter end. By segment, underlying provisioning was mainly driven by portfolio growth in specific retail segments, particularly consumer and SME PYME, while higher yielding products continue to perform within our expectations. In this context, the cost of risk stood at 1.6%, while risk-adjusted NIN stood at 5.3%. On a year-over-year basis, total loans rose 14.6% and 15% in FX-neutral terms, led by retail banking and secondarily by wholesale banking. NIN rose 28 basis points, mainly driven by lower funding costs as low-cost deposits increased their share of total funding, with a shift toward higher-yielding assets also contributing. The NPL ratio dropped 103 basis points, fueled primarily by the SME team and individual segments, which registered improvements in origination and collection capabilities. Cost of risk rose 30 basis points impacted by additional aluminum-related provisions. Underlying credit trends, nevertheless, remained healthy. Other core income rose 20.8%, driven mainly by growth in the fee income, where strong transactional activity was channeled through YAPE and other transactional products at BCP. Gains on FX transactions also contributed to this result, albeit to a lesser extent as transacted volumes rose significantly in a context marked by high volatility. As a result, the ratio of the core income to assets ticked upward, reflecting growth in revenues from diversified streams. Finally, operating expenses increased 15% year-over-year in the first nine months of 2026, fueled by investments to support business growth and higher activity levels. Administrative expenses increased mainly due to IT-related services and cloud infrastructure, particularly at YAPE, as transactional volumes continue to scale. Personal expenses also increased as we continue to strengthen technological and risk management capabilities, and secondarily, as variable compensation runs alongside strong performance across our businesses. In this context, the efficiency ratio stood at 38.8% for the first nine months of the year. Next slide, please. Moving on to YAPPE. JAPE closed this quarter with 17 million monthly active users. Engagement continued to deepen, with MAU completing an average of 71 transactions per month. This scale and engagement positioned JAPe to deepen financial relationships and play a broader role in customers' lives. Monetization continued to advance, and total risk-adjusted revenue was 1.8 times the level recorded in the same quarter last year. Revenue for MAU reached 11.9 soles, while expenses for MOU remained relatively stable standing at 6.1 soles. In this scenario, JAPE's contribution to Credit Corp risk-adjusted revenues increased to 9.8% this quarter. Payments remained a significant source of revenue, supported by broader adoption of mature services services such as QR payments, bill payments, and checkouts, complemented by a strong growth in emerging use cases such as remittances. Beyond payments, JAPE is expanding its new banking value proposition. Lending is an important part of this evolution, and growth this quarter was driven primarily by multi-installment and SME loans. The total lending portfolio reached 2.3 billion soles. To date, more than 6 million customers have, at least once, borrowed through YAPE. By leveraging our capabilities, we will continue to penetrate a broader market responsibly. The objective is to ensure that lending remains aligned with customers' repayment capacities and our risk appetite as we strive to maintain resilient risk-adjusted returns. At YAPI, we continue to focus on transforming everyday engagement into deeper customer relationships as we expand service offerings, steer transactional activity towards profitable growth, and capture operating leverage. Next slide, please. Mivanco delivered a strong 20% ROE discharger, evolving positively on the back of loan growth and disciplined risk management, while incorporating additional NEO-related provisions based on our quarter-end assessment. continue to foster revenue diversification efforts to enhance the resilience and quality of earnings. On a quarter-over-quarter basis, loans measured in quarter-end balances grew 5.8%, riding a map swing in low disbursements, which hit an all-time high in September. Net interest income was boosted by strong loan growth, which was also partially offset by a slight increased in the cost of funding. In this scenario, NIEM rose 16 basis points to stand at 15.3%. The NPL ratio, in turn, continued to trend downward, dropping to 4.8%. Cost of risk rose and stood at 5.8%, reflecting additional NEO-related provisions, while underlying credit performance remained healthy. Against this backdrop, risk-adjusted NIEMs stood at 10.7%. From our year-over-year perspective, loans were up 18.7%, driven by growth in smaller ticket loans. In this context, our NIM rose 29 basis points, fueled mainly by a higher yielding asset mix and supported by a drop in the funding costs, which fell alongside growth in low-cost deposit share of the mix. Other income rose 40.1% this quarter, bolstered primarily by growth in insurance premiums, which rose on the back of a record-breaking quarter for loan disbursement and increase in sales of optional insurance policies. The cost of risk rose 64 basis points year over year, reflecting the same dynamics explained on a quarter-over-quarter basis. Spending expenses increased 9.1% year-over-year in the first nine months of 2026, reflecting investments in digital and transactional capabilities alongside higher personnel expenses associated with business growth and improved performance. Strong operating income drove an improvement of more than 3 percentage points in the efficiency ratio, which reached 47.6% for the first 9 months of the year. Nibanco Colombia maintained a strong momentum, delivering solid client growth while preserving disciplined risk management and improving commercial productivity. As a result, ROE reached 18.4% in the quarter. Next slide, please. Grupo Pacifico delivered a solid 20.6% ROE this quarter on the back of strong commercial execution across businesses. On a year-over-year basis, net income for the quarter increased, led by Our Life Business, the largest contributor to net income. Our Life business posted healthy growth this quarter, where annuities and individual life, supported by strong momentum in bank assurance and retail sales, were the top contributors to growth. This performance was partially offset by lower results in the disability and survivorship line, which reflects a base effect associated with provision reversals in the third quarter of last year. In the P&T business, net income fell, driven primarily by commercial lines and vehicles, where lower underwriting results were recorded. Our corporate health business posted higher net income for a 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. Net income in our investment management and advisory business was supported by resilient performance across our recurring businesses. Our OE, 2014.7%, normalized after a particularly strong second quarter in capital markets, which benefited from heightened market volatility. From a year-over-year perspective, revenues increased, supported by solid performance across our recurring businesses. Capital markets led contributions primarily through the sales business and its corporate units, which benefited form higher FX trading volumes. Wealth management was the second largest driver of revenue disorder, followed by asset management both supported by growth in AUMs. The positive evolution of revenues was largely offset by growth of operating expenses, as increased in commercial activity and business, growth of personal expenses higher alongside increased variable compensation. In this scenario, net income dropped 9%. Next slide, please. Now, I would like to examine the evolution of our consolidated balance sheet. Quarter over quarter, interest earning assets remained relatively flat, as loan growth was offset by a decline in cash and different banks. This resulted in higher yielding asset mix. On the liability side, total funding declined 1.6%, mainly reflecting the scheduled cost of a BCP subordinated bond. The continued shift toward low-end-cost funding sources also reduced our reliance on central bank funding instruments. On a year-over-year basis, interest-earning assets rose 10.8%, led by loan growth. As a result, the yield on interest-earning assets increased and stood at 8.8%. On the liability side, the increase in low-cost deposits drove a reduction in the funding cost, which stood at 2.2% for the quarter. In this context, NIMH rose 36 basis points year-over-year to stand at 6.9% for the quarter, next slide, please. Moving on to portfolio quality. Asset quality continued to improve this quarter with an NPL ratio that dropped to 3.9%, supported by stronger origination, monitoring, and collection capabilities. Provisioning this quarter incorporated additional provisioning following our assessment of El Nino risk as of quarter end. Underlying credit performance, nevertheless, remains healthy overall. In this context, cost of risk stood at 2% this quarter. Coverage strengthened further to 100.9%, which positions us to absorb potential volatility and focus on growth mindful of targeted underwriting adjustments in this context. As conditions evolve, our expected credit loss estimates will continue to reflect the latest information. Next slide, please. Poor income grew 18% year-over-year on the back of diverse revenue streams with net interest income, fees, and FX gain, reporting double-digit expansion. Profitability metrics continue to strengthen year- over-year, with risk-adjusted NIM standing at 5.7% this quarter, reflecting disciplined pricing, portfolio mix optimization, and a solid underlying credit performance. The efficiency ratio for the first nine months of the year decreased 26 basis points year-over-year and stood within guidance at 45.4%. Operating expenses grew 13.6% year- over-year for the first nine month of 2026, fueled primarily by core business at BCP and investment in our innovation portfolio. Growth in expenses in core businesses at BCPs was driven mainly by ongoing investments in commercial, technological, and risk management capabilities, and secondarily, by growth in variable compensation aligned with strong business performance. Expenses for our innovation portfolio rose 33% over the same period, supporting growth in transactional activity and revenues across these businesses. Next slide, please. ROE reached 20.4% in the first nine months of the year, supported by strong operating performance across our integrated business ecosystem and favorable economic conditions. Net income remained solid, underpinned by accelerating loan growth and healthy asset quality. Growth in our diversified revenue streams was driven by strong transactional activity as investments in digital capabilities fueled expansion in our transactional businesses. Given the attractive opportunities we see to deploy capital to support profitable growth, we do not expect to declare an extraordinary dividend this year. We believe this is consistent with our disciplined capital allocation framework and our focus on maximizing long-term shareholder value. Now, I will move on to our guidance. Next slide, please. We maintain our expectation that Peru's GDP will grow around 3.5 in 2026, including the estimated impact of El Nino. Our outlook for loan growth measured in quarter end balances remains at around 12%, underpinned by strong momentum in retail banking at BCP and MiBanco. We expect the full year cost of risk to remain within guidance range through the year, despite a likely increase in the last quarter as our loan book continues to expand and we incorporate available information related to El Nino risk into our models. Additionally, accelerating loan growth and the ongoing mixed shift towards retail should help position NIM and risk-adjusted NIM at the higher end of the respective guidance ranges. This interest rate outlook remains positive for asset yields. In the case of fee income, we expect high-teens growth supported by strong transactional activity, ongoing momentum, ongoing economic momentum, and our strategy to strengthen principality. The efficiency ratio is expected to remain within guidance. Against this backdrop, we expect our performance trends will keep us on track to reaching our 2026 ROE guidance of around 19.5%. Looking beyond 2026, we reaffirm our medium-term ROE target of around 22%. Now, I would like to open the Q&A session. Thank you. We will now begin the question and answer session. If you would like ask a question, please signal by pressing star 1 on your telephone keypad. If you have connected to the call using the HD web phone on your computer, please use the keypad on your computer screen. If you are using a speaker phone, please make sure your mute function is turned off to allow your signal to to reach our equipment. We will pause for just a moment to allow everyone the opportunity for questions. We also ask that you please only ask one question at a time. After each question has been addressed by our speakers, you will then be allowed to ask as many follow-ups as needed, but again please only ask one questions at a time, thank you. And the first question will be from Ernesto Gabilondo from Bank of America. Please go ahead. Thank you. Hi, good morning, Gianfranco, Ignacio, Francesca, Cesar, Milagros, and good morning to all your team. Congrats on your results, and thanks for the opportunity to ask questions. My first question will be on El Nino. So total exposure to El Nilo is around 8% of the total loan portfolio. I believe in the past you have provisioned around 10% of that 8% exposure. So did you expect to reach that level between the fourth quarter and the first quarter of next year? I just wanted to understand how much additional provisions you would be considering in total for Nino and how should we think about its creation during the next quarters? Good morning, Ernesto. This is Gianfranco. Thank you for your question. I'll ask Cesar to answer it. Hi, Ernestro. Thank you. Thank you so much for the question. Going through your information, you are considering 8% exposure that we mentioned around the $160 billion portfolio will lead to $13 billion total exposure. But to take down that, to actually really impact the clients, you need to consider a panel considering geography, more specifically location, sector, and risk sensibility. So with the figures that we have, we are not expecting to have 10% provision for El Nino for this amount. The figures that мы have at the end of the quarter are around 500 million soles. is 100 million provision the second quarter and around 400 this quarter. And we expect, as Ignacio mentioned, to constitute additional provisions this quarter, considering that the increase of the expected severity, but also the positive effects of the measures that have been announced by the government in October 22 and November 1. Just to add, Ernesto, a building on what Cesar mentioned is we do expect to, even though we may do more provisioning in the last quarter, to end up within guidance. Yes. Understood. And just, again, to clarify the numbers, so you have already created like around 200 million solids of provisions you expect to create more in the fourth quarter up to 500 million solids can we expect these additional provisions to be recognized during the fourth quarter and the first quarter or you think will end in the four quarter to clarify the figures uh the second quarter we make one hand around 100 million solid provisions. In the third quarter, there are 400 additional provisions. Probably this figure needs to be explained a little bit more because the total impact that you see in the P&L is slightly below, but during this quarter, we released specific provisions for risks that didn't materialize, better performance of pilots, specific recoveries in wholesale, and a recovery for insurance covered loans. So the total impact in the P&L is less than this 400, but the total amount is around 500 at the end of the third quarter. We expect to have additional provisions with information that we have, not at the ends of the first quarter, but today. We expect it to be within guidance, even without considering the positive impact of the measures announced by the government, but we need to finally calibrate because at this point are very general in their description. Perfect. Now, thank you very much. And then just a second question on the political side. I just wanted to hear if you have any advances or proposals from the government on the economy, any potential reform, or any regulatory issue on the pipeline? So, there are actually two answers to that question, Ernesto. The Congress, you know that we're dual chamber now, but Congress didn't approve any executive powers so that the executive power could take or could make decisions in that sense. So in that line, nothing specifically. However, I just read in the newspaper today that yesterday the Ministry of Finance announced that they're working on a set of specific legislation so as to fasten and improve the process of investment authorizations, mining projects, and so on. But nothing specific as we speak, really. Okay. Very helpful. Thank you very much, Gianfranco and Cesar. Thank you. And the next question today will come from Tito Labardo from Goldman Sachs. Please go ahead. Hi. Good morning, everyone. Thank you for the call and taking my question. I think also following up on the question on El Nino, I understand that you'll be within the cost of risk guidance, but just to clarify because you know currently you're running at 1.7 percent cost of risk the guidance is between 1.72.1 so if you're at 1 7 then it's modest provisions for every 2.1 there could still be a lot more provisions so i wasn't quite clear i think you had mentioned that provisions should be higher in 4q relative to 3q just really trying to get a sense of how much more is left to provision and i understand there's some uncertainty um regarding that but it wasn't really clear how much more you still may need to provision um and and along those lines just kind of thinking about 2027 i know you have the long-term guidance of 22 percent roe but given the el nino risk in the short term is 2027 you're probably below that because of el nina or just just like any other impact from El Nino that could impact 2027 as we think about that as of now. Thank you. Go ahead, Cecil. Yes, I will answer you based in two kinds of things. The calculation of the provisions and the measures taken to control the risk. In terms of provision, yes, we expect to have more provisions during the fourth quarter. The end result, the most current information to be within range. And the range, as you mentioned, is between 1.7 and 2.1 is within range. We expect to have covered the identifier with this level of provisions. We don't know if there are going to be additional information at the end of the year that will change this perspective. We are considering now a very severe scenario. Now the anomaly in the temperature I'm sure we are considering it the latest one to give you this information. The impact of El Niño is going to be also in the loan growth and the underlying quality of the general portfolio. But the direct impact should be captured with the provisions that we do during this year. As a reference, in our expectation of GDP growth, we are considered in around 0.9% impact this year of El around another one percent impact next year so in our expectations we are already considered a general slight deterioration in the credit quality and the loan growth but not considering the direct exposure but the general impact in the economy. Tito, this is Gianfranco maybe complementing what Cesar mentioned as you know that the provisioning under IFRS 9 is forward-looking therefore the bulk of the provisions should be made this year maybe there might be some impact because next year I mean because of what you just mentioned the uncertainty but the bulk of the provisioning should be make this year going to your ROE question sustainable ROE questions we do see the linear impact as a bump in the road really that the whole as I mentioned at the beginning of my speech the whole macro environment, private investment, private consumption, and so on, we really believe that we have as a country, I mean, we have a lot of tailwinds. Obviously, the linear effect may have an impact this quarter, yes, fourth quarter, and maybe the first half of this year, but I'll say next year. But in the medium term, we do, we reconfirm our vision of 22% sustainable ROE. Okay, great. Thanks, Gianfranco and Cesar. That's helpful. Clearly, I think just the short-term impact that we're trying to figure out for the long-term definitely looks very good. Thank you. Thank you, and the next question will be from Carlos Gomez-Lopez with HSBC. Please go ahead. It appears that that line has just disconnected, perhaps taking them off mute. We'll move to our next question and that is yuri fernandez with jp morgan please proceed hey guys good morning hi john franco and also everybody uh cesar uh i have one regarding long growth um we have been debating a lot um provisions and el nino and and thank you for clarifying the 400 million we were getting to a smaller amount on our estimates here so good to know this was was higher but the growth has been very strong, right? And revenues, they also have been very strong. So my question is, can you keep this growth on IAP, on MiBanco and everything, given the higher level of uncertainty from El Nino, or should we expect some slowdown? So just trying to get some more color on growth outlook ahead, even the uncertainties. Thank you. Ignacio? Thank you, Yuri. We do see a substantial opportunity to grow lending over several years, although we do not necessarily assume that we are going to grow meetings every single year, as Gianfranco and Cesar were mentioning, 2027 is a bump in the road. The actual pace actually will depend on demand, and most importantly, whether we can generate attractive risk-adjusted returns on our path to growth, no? But essentially, we have two sources in that opportunity. The first is a stronger Peruvian economy supported by domestic demand and private investment that has increased demand in credit in all segments that we service. But second and very important is that Peru remains underpenetrated in credit, and our Our investments in capabilities such as data, underwriting, and more efficient distribution are allowing us to expand the number of customers we can serve profitably. So that allows us to reach new customers and to deepen existing relationships. We do not are going to grow for growth's sake. Our idea is that economic conditions, portfolio performance, and risk-adjusted means will determine how quickly we can expand in that context. Yuriy complementing Nacho's answer, and this is a conversation we have had in the past. Bear in mind that basically our loan book has been flattish over the last five years. And two main reasons, two different reasons there. One of the retail portfolio was at some point in time after the COVID and the political turmoil we had, the quality of those portfolios deteriorated. And the other one was because of the political situation, there was basically no private investment, whereas nowadays, as I mentioned, private investment is growing at 14% this year, and that figure could be sustainable at least in the next two or three years. And also consumer – sorry, the consumer portfolios, the retail portfolios are performing much better. Obviously, we have to be cautious because of El Nino, but again, this is a temporary issue, so overall, we do see the opportunity to keep growing at this pace, at similar pace over the upcoming years. Sorry, just to finish, because I forgot that, is that if you see trade penetration today to GDP, it's lower than pre-COVID. So it's that we're, quote-unquote, recovering that level that we were as a country five, six years ago. Well, super clear, Gianfranco. So you have the room to go back to 2018 penetration, better commercial confidence, low leverage of consumers, so growth. Even though 2027, as Inacio mentioned, may be a little bit more challenging, the outlook for the coming years is still good. So if I may just quickly on IAPE here, it's pretty good, the growth on our pack, way above cost to serve, you know, like you're growing revenues, 10% of the risk-adjusted revenues. So don't get me wrong here on my question, but we are starting to see a few metrics slowing down a little bit. And we know there are a limited number of Peruvians to use IAPES, so number of users is slightly down. But what caught my attention was revenue generating TPV growing only 0.5 quarter over quarter. What was this? Why was there a slowdown on the revenue generating a TPV for IAPE? Thank you. We need to increase the birth rate in Peru to get more IAPEROS. So, yeah, IAPES, actually, as a matter of fact, this is a joke, but as a Matter of fact, I recently read that the level of penetration of digital wallets in Peru is the largest in the world compared to the population of that country. So, yes, the number of yaperos is not going to grow at a faster pace. I'll ask Francesca for the specific answer on the TPD, but we're really positive in terms of growth potential for IAPE, and we may further discuss these issues next week on our Investor Day. But Francesca, complement me. Yes. So the actual number of revenue-generating transactions, the growth at the transaction pace, as you mentioned, is slowing down just because the number of customers and the population. So that is the main reason why there's not that much growth there. Having said that, we've shared in the past that YAPE has several monetization paths still to be developed. One is cross-border, which has to do with transactions, and we're working hard there. Also, on the loan portfolio side, where we are continuing to grow on the consumer segment and also on the MIPES segment, early on on the MIPE segment. So I think on the IAPE view, this is more on a neobank view. I'm beginning to see not only the transaction piece, but also on the whole value proposition for the customer base. And we've shared that also that the number of users, we are continuing to not only look at transactions, but the number of features that customers are using. And that continues to grow at a healthy path, but slower than transactions. Oh, super clear, Francesca. Thank you, Gianfranco and Inas, and congrats again on very strong revenue quarter. Thank you. Thank you! And the next question will be from Carlos Gomez-Lopez with HSBC. Please go ahead. Thank you. And apologies, my line dropped before. I wanted to go back to the provisions for El Nino. And I know you are trying to clarify it, but I was not very, very clear. So you have gross provisions, if I understand correctly, of $400 million for El Nino, which are offset by a number of factors. You may want to go over them again, which is recoveries in wholesale, recoveries and insurance. and better performance from some pilots. Could you quantify that? What is the gross recovery that you have there that offsets the 400 million, more or less, in El Nino provisions? Thank you. These special recoveries are around 200 million. All right. So the net that we could call extraordinary discourse That would be around $200 million then. That's correct. That's right. Yes, but I would like to emphasize that with that, you have adequate coverage for the PEN. There are special releases for specific, very particular situations, a recovery in a wholesale, a recovery mortgage portfolio. So the provision for El Nino totals around $500 million. The stock? The stock. The stock of provisions is around 500 million. The impact on the P&L this quarter has been 200 million. Very good, very clear. And then for the fourth quarter, given the information that you have today, are those 500 million enough, or is it the reasonable expectation that you may go from 500 to, I believe I heard mentioned 800 million before or something like that? We expect to constitute additional provisions with information that we have in the recent months but the end result is that we are going to be within guidance that is between 1.7 and 2.1 percent that's very wise right can you can you narrow a little bit we cannot provide forward-looking figures uh that's what we can provide with with the information we, as Cesar mentioned before, with the information we have before, so by September 30th, we were quite sure that the reasonable coverage. However, the data on the NINO is updated, I believe, every 15 days, something like that. We are recalculating the level of provisions needed because the recent data is that the Nino as a matter of fact the temperature of the sea is higher today than it was in September 30th and things like that so we do not have a specific figure today but so beyond young not not being able to provide forward forward-looking data we're still working Some impact it's going to have still this quarter. And the 1.72.1, that includes all provisions, including El Nino? Excuse me? Yes. The 1.7.2.1. The guidance is from the whole book. Sure. Very clear. Thank you. Thank you, the next question is from Renato Maloney from Autonomo Research. please go ahead. Hi, everyone. Good morning here, and thanks for taking the questions. So first on provisions, just to clarify something, my understanding from your comments is that the build-up in provisions for El Nino are mostly on the wholesale and commercial book. So I'm wondering if you factor in some second-order effects on the consumer side, or if this is something that naturally comes up in your expected loss models and then provisions there adjust or if we might see some effect there. And then we think this context, do you think that you can still grow at the current level, like there was a decent acceleration in consumer lending this quarter? So do you you think you can grow at that pace over the next couple of quarters? Thank you. Hi, Renato. I think it's important to clarify the most important impact in provisions conform the retail portfolio for PCP, individuals, PIME, and MiBanku. We have, as we previously mentioned, a model that quantifies the potential impact, the sensitivity of the client, the geography, and the sector in which the client operates. And most of the impact comes from the retail segments. The mention to the wholesale was differently, that in the third quarter, we released provisions because we have specific payments of clients already provisioned that they have pulled in full the obligations. Two different factors. Got it. Regarding the growth question, as we mentioned before, Renato, we cannot be too specific on the quarters because, again, the next couple of quarters, this quarter and the next quarter are going to be affected directly by El Nino. Having a longer-term vision is what we expect the portfolio to grow at double digits. Yeah, that's understood, thank you. And if we can stay in this point a little bit, so you've been, I mean, there's the increase in penetration, like the segment is growing broadly for the industry, but you're also being gaining share, right? Do you think you can still continue to gain share? Do you see a limitation there? You might converge to industry levels? Yes. The short answer is yes. However, we do see the most relevant – more relevant than gaining share is first that the economy is performing quite well, and as you mentioned, penetration is at lower levels than it was five, six years ago. And on top of that, we're creating markets, really, or expanding markets, basically through YAPE. So I would say those two are much more relevant at gaining market share. Excellent. Thank you, and congrats again on the results. The next question will be from Andres Soto from Santander. Please go ahead. Hello, everyone. Thank you for the presentation. I have a couple of questions here. The first one is regarding your loan growth. Jean-Franco, you have mentioned in the past the impact of El Nino in 2027 is via loan growth more than on provisions, assuming that you already made enough of them in 2026. When we think about loan growth for Cracov next year, can we assume that the area that is exposed to El Ninos, which you mentioned, is 8 percent of the portfolio, that's the one that is going to be hit by lower growth but for the remaining of the portfolio the 90 plus percent 90 percent plus sorry uh you you may expect a continued logo based on the data that you described before hi andres this is that's exactly right this is exactly right what we expect is that outside of that um share of the portafolio that would be directly impacted we have ample room to grow uh what we will be looking towards growth in 2027 and we monitor very closely in the returns and the credit uh capacity of our customers within that context that being said we also think other segments are continuing to be growing considering the current macro economic context of peru yeah thank you ignacio and and then a question on on provisions but now thinking about the linear compared to this event with the one in 2023 the linear that didn't happen i will call it that way uh obviously the the cycle was very different back then by but uh when you look at the provisions that you guys made it represented 70 pips of the annual cost of risk on that year and it looks like you know on the upper end of your guidance this is what you are are including here um as the worst case scenario what i would like to understand is uh for that uh 70 bips uh in 2023 what was the the portion of the portfolio that uh you were covering or uh what what what makes that different from the scenario that we are seeing today assuming that this is uh on the flip side uh a worse uh el nino uh based on on the current assessment Hi. Thank you for the question. I wouldn't take the 2023 as a reference point because this situation is different. Our tools are different. The underlying situation of the country is significantly different. We were in 2023 in a weakness situation that we are in a position of expense. So for the actual calculations, we have considered all these tools. And the other thing that I would like to probably emphasize is not only the calculation of the provisions, but the measures that we have taken to reduce and to manage the risk. For example, in wholesale banking, we are managing specific exposures, extending the maturities, taking additional coverage. In retail banking, we selectively have identified clients that need support. In other cases, we have reducing origination in specific areas to reduce through the last quarter's expected losses. So, of course, we consider the last NINOS as a reference, but more in terms of geographical impact than in terms during impact in the specific portfolio due to these differences. Yeah. I understand. Also, if you go back to 2023, you should also see what happened with provisions on 2024, because recall that, yes, again, this is a forward-looking methodology. So in the end, 2023, we quote-unquote over-provisioned because of the data we had at that time. So this is balancing act, really. Perfect. Thank you very much, both. And the next question is from Marcelo Mizrahi from Bradesco BBI. Please go ahead. Marcelo, your line is open. Perhaps your line is muted. Marcelo we are still unable to hear you. All right, we will move to the next question, which will come from Sam Roy with NEXA. Please go ahead. Sam, you have the floor. Mr. Roy, your line is open. Are you there? All right. We will move to Alonzo Arambru from BTG. Please go ahead. Yes. Hi. Good morning, and thank you for the call. So one more on provisions. It looks like your recurring cost of risk is around 1.5%, 1.6%. Maybe if you can give us some direction as to where do you see that moving, excluding the El Nino provisions. And second, can you give us an update on what's happening with EO and Tempo? Thank you. Thank you, Alonso. How are you? This is Ignacio. Yes, so as I mentioned, our current underlying cost of risk for the overall portfolio is sitting at around 1.6%, excluding all one-time or extraordinary effects due to El Nino and other reversals that Cesar has commented in detail. And that is consistent with the second quarter. While at the same time, we have expanded our risk-adjusted NIM, excluding these extraordinaries from around 5.7 in the second quarter to 5.9 in the third quarter, no? So all in all, we are very comfortable with how this is trending in terms of the profitability. Of course, as we move forward into increasing our share of the retail mix in these new capabilities, we anticipate that cost of risk could go up in the following years. However, that is translating also into a better risk-adjusted mean, and one of the key drivers of our medium-term ROE guidance of around 22 percent. Fonseca, could you answer the IEO and TEMPO question, please? Yes. So around TEMpo, we're very proud that we are processing transactions now as a bank. We're beginning the process with Chile on time. We still have until the end of January to finish the whole thing. And the number of active customers around the credit card business continues to grow, not at the pace we expected. We were more on being a bank and trying to complete all the regulatory pieces. But now that that is done, we will continue the path to growth. And I would like to share that the percentage in terms of market share for credit card is a little over 1%, and on the deposit side, a little above that, closer to 2%. So with a beginning of presence being number 9 or number 10 in the Chilean market. So that's an interesting path. And also we've shared that we're going to be changing management by next year, also very, very coherent to what we're trying to achieve in terms of growth and a path to monetize faster. On the EOP, growth is also constant. We're close to a portfolio of 100,000 credit card customers, and we're very satisfied with the number of the activity, the level of constructing the loan book for revolving, and also the NPS level. And, as you know, we created the neobank path, which is YAPE and EO together to share technology and we'll hear more of that in the strategic update, to actually create a value proposition that is more robust, not only around payments and lending, but also on a neoban perspective. Thank you. And ladies and gentlemen, this concludes today's question-and-answer session. I will now turn the call back over to Mr. Gianfranco Ferrari, Chief Executive Officer, for closing remarks. Thank you for your questions. As we look ahead, I remain very confident in both Credit Corp and Peru. Peru has enormous potential. When investment growth, businesses expand, and confidence improves, we create more opportunities for Peruvians. But realizing that potential requires us to continue investing, improving productivity, and building the capabilities that will allow the country to grow over the long term. As a country's leading financial group, we have an important role to play in that process, helping people and businesses progress, expanding access to financial services, and investing in capabilities that can contribute to Peru's development for many years to come. That responsibility is particularly important as we prepare for the potential impact of aluminium. We recognize the challenges it may bring to families, businesses, and communities. We have taken preventive measures across our operations and great portfolios, and we stand ready to support our customers through potential disruptions. Our priority is to navigate this period with prudence while continuing to be there for those who depend on us. Our results this quarter reinforce our confidence in Precox's ability to deliver on that responsibility while generating sustainable returns, with a medium-term ROE of around 22%. We continue to see the benefits of the investments we have made, the strength of our diversified business model, and our disciplined approach to execution. That is also the context for our strategic update next week. We have built a stronger, more innovative credit corp, and we're entering a new phase in which we expect to translate those capabilities into deeper customer relationships, new avenues for growth, greater operating leverage, and sustainable value for our shareholders. There will always be uncertainty. What matters is our ability to make good decisions, adapt, and continue building opportunities. We have done that through great court history, and I am confident in our ability to continue doing so. I look forward to sharing more with you next week. Thank you again for joining us today. Thank you, sir, and thank you, ladies and gentlemen, for attending today's call. This concludes today's event. You may now disconnect your lines. Take care.