Good afternoon, everyone. I am Milagros Cigüeñas, Investor Relations Officer at Credicorp. Welcome to our 2024 strategic update event with a focus on innovation. Thank you to everyone joining us here today, both at the webcast and here in person. Today, we will share how our innovation strategy drives sustainable growth. We will highlight our key milestones and discuss our projects pipeline. Our team will also explore our plans to expand our market reach to decouple from the macroeconomic trends and to enhance digital services across our region. Finally, you will also have the chance to ask questions, both from the webcast and here from the room. This slide shows today's detailed agenda and the topics we will cover. Let me go through a couple of logistics details. After the first chat, we'll have a Q&A session, starting with questions from the webcast audience, followed by those from in-person attendees.
For webcast participants, you can submit your questions at any time using the Ask Question text box below the broadcast screen. If it is not visible, just click the question mark icon on the left sidebar. We also have a brief survey, and we would appreciate your feedback on this event. You can find the survey link under the Resources tab on your webcast screen or on the cloud icon on the left sidebar. Before turning it over to Gianfranco Ferrari, our CEO, I would like to pause for a moment so you can take a look at our Safe Harbor Statement for this event. Now, please make yourself comfortable, and I will leave you with a short video, which will be followed by Gianfranco's opening remarks. Thank you.
They say that success belongs to the venturesome, those who look to the future with optimism, those who constantly challenge themselves, those who believe. At Credicorp, innovation is in our DNA, a vision of sustainable leadership, a self-disruptive mindset, a long-term focus. For these reasons, we are convinced that to remain competitive, we must continue to invest in innovation, developing our digital capabilities, and constantly challenging our core business. Grow, be more efficient, and offer our clients the best experience. These are our North Stars, and these can only be achieved with a self-disruptive mindset. Because at Credicorp, innovation is the base upon which we build our leadership, which drives our growth and ensures our sustainable future. Credicorp, powering sustainable growth through innovation.
Good afternoon. Thank you for joining us today. I would like to open our strategic update session today by briefly taking you back to March 2022, when we had our first digital day in New York. At that time, we set a target for an ROE of approximately 18% by 2025, focusing on accelerating innovation, transforming our core businesses, and generating new digitally led growth opportunities. I had just become CEO, and we introduced Francesca Raffo, who is here today as Chief Innovation Officer, along with Raimundo Morales, Yape's CEO, who's also here today, and Adolfo Vinatea, Krealo's CEO, who again, is also here today. Today, Credicorp is on track to achieve an ROE of 18%, despite facing an unexpectedly challenging macroeconomic environment.
When we set this ROE target, we projected GDP growth to be between 1.8% and 2.2% for 2023. It actually contracted by 0.6%. Nevertheless, we achieved a consolidated ROE of 17.6% in the first half of 2024, in line with our full year guidance of around 17%. Our journey towards a sustainable ROE is supported by the strong performance of our different lines of businesses. At our 2023 Investor Day, we forecasted an ROE in the low 20s for BCP through 2026. We have already achieved 23.7% ROE in the first half of this year. We also forecasted Yape to reach breakeven by the end of 2024. It actually reached that level by May. Other disruptive initiatives are following suit.
With an improving macroeconomic environment, we are confident these profitable, positive trends will continue, enabling us to deliver the expected results through 2025 and 2026. Our innovation strategy is crucial to achieve our vision of being a sustainable financial leader in Latin America, guided by an important purpose, which is also future-oriented and focused on generating superior value for our employees, customers, shareholders, and communities. Through innovation, we deliver the best customer experience, expand our addressable markets, and ensure long-term growth. Since 2022, we've increased investments in innovative initiatives to enhance our digital and analytical capabilities, positioning us as an omnichannel financial services company. A significant part of our success lies in accelerating digital transformation and innovation at both Credicorp and its subsidiaries.
Today, we will focus on this aspect of our journey, ensuring we attract and retain the best talent through our comprehensive value proposition, which has also been a key factor to our success. Additionally, integrating sustainability at the core of how we do business remains essential. As a result, across all channels, we have financially included 4.7 million people since 2020, and are now concentrating on driving impact and furthering engagement. At BCP, our digital customers now constitute 72% of total customers, increasing 21 percentage points since 2022. Digital clients show higher engagement, averaging 2.5 banking products per client, compared to 1.4 for non-digital customers. Additionally, digital monetary transactions represent 83% of total monetary transactions, 23 percentage points more than in 2022. Improvements at BCP extend beyond customer engagement.
We've increased primary banking relationships and expanded deposits, providing access to competitive funding. Enhanced customer insights, increased client touch points, and strengthened digital analytical capabilities allow BCP to offer better tailor-made products, leading to higher satisfaction. Reflecting these efforts, our customer NPS improved by 11 percentage points in the last two years. Finally, digital acceleration has also led to greater efficiency, allowing us to reduce branch locations by 7.7%, lower unit transactional cost, and by the way, reducing transactional cost by 56%, and improve efficiency by 382 basis points since 2022. We are consolidating digital transformation in our core businesses, while at the same time building disruptive initiatives. Growth in these initiatives will help us further decouple from the environment-macro environment by expanding our TAM, generating new revenue streams, and capturing market opportunities efficiently.
Our core income relative to assets has outpaced expenses, expense growth, driven by income expansion rather than low growth. In 2022, core income grew at 2.2x nominal GDP and 1.7x last year. This underscores the effectiveness of our innovation. Meanwhile, our risk appetite in core lending has remained closely aligned with GDP trends. Yape exemplifies our success, having become the preferred digital platform in Peru and achieving profitability last quarter. We will continue to disrupt ourselves, investing to capture new opportunities and ensure long-term competitiveness. Tenpo, our digital wallet in Chile, has rapidly established a strong position in a competitive market, and we aim to expand further when we obtain our banking license. Our goal is for disruptive innovation initiatives to contribute 10% of Credicorp's revenues after provisions by 2026.
By leveraging our digital capabilities, we address banking needs anytime, anywhere, creating a positive network effect that drives sustainable growth. We are committed to accelerating investment in technology and digital transformation to drive growth and efficiencies, optimizing our businesses for long-term success. Now, I'll turn over to Francesca, who will elaborate on our strategies and achievements. Thank you.
Good afternoon to all. Let me sit up here. What I want to do is walk you through the process of disrupting ourselves. Generate growth, relevant growth, and to enhance customer experience, one of our main goals as service provider, and as such, we encourage and funnel initiatives while carefully tracking their progress along the way. The process begins by defining our corporate disruptive innovation strategy. We have a proactive strategy grounded on ambitious objectives with clear boundaries that guide our priorities. As you've heard, our North Star goal is to generate 10% of Credicorp's revenue income after provisions by 2026. To do so, we are developing new business models, new revenue streams, for which we need to develop and acquire new capabilities. This will help us improve our operational efficiency, market responsiveness on an ongoing basis.
Our primary goal is to gain market penetration by disrupting ourselves before others do. First, we do this by developing new best-in-class value propositions, which we call Horizon One: growing in segments in our current markets. An example of this is iO. Last year, we launched a fully digital credit card with a very differentiated value proposition and experience. So far, activity as a percentage of clients that have used the card the last thirty days is promising. Although iO competes directly with some of BCP's credit card products, we expect that the combined performance will increase Credicorp's leadership in the mass affluent segment. Second, we aim to expand our TAM and cover white spaces, looking for new businesses, new segments, and/or new geographies. These are Horizon Two initiatives.
Since our disruptive innovation strategy was put in place, we have expanded our presence in over half of our innovation domains through pilots, initiatives, or full-on investments. An example of this is insurtech in Chile and Colombia, one of our largest Horizon Two innovation domains. The domain's total addressable market is over $4 billion, and we are continually exploring new ways to penetrate this space. For instance, Tenpo, our venture in Chile, is starting to offer insurance products to its 2 million user base, while Monokera, the embedded insurance venture, is looking for partnership opportunities with insurance, insurers, and channels outside of Credicorp. Another example of how disruptive initiatives expand our TAM is Yape, our wallet now super app, which is penetrating the e-commerce market, a completely new revenue pool for Credicorp.
We will further discuss how Yape does this in a few minutes. Third, we want to accelerate the adoption of key capabilities that are essential to maintain our leadership in the long term. Horizon Three refers to technological and digital assets and capabilities that might completely transform the way we do business and we operate. For example, we have recently launched a cognitive AI program across all of Credicorp. In the first months, we have exceeded expectations in adoption, NPS, and productivity, thus increasing the implementation speed and scope. Other contributors to enhanced capability are our innovation labs, who help us enhance innovation capabilities in our lines of business, and our corporate venture capital fund, Krealo, which, from which we will hear more in a bit.
To execute all of this, we have reaffirmed our investment appetite for disruption, which continues to be within the boundaries of up to 150 basis points of ROE and up to 350 basis points of cost-to-income per year. These limits are reviewed annually in the investment committee, together with the board of directors, to guarantee alignment around performance and strategy. While portfolio ambition is very large and strategy is centralized, the sourcing of ideas and development of disruptive initiatives are performed at a line of business level. This approach foster Credicorp's lines of business to develop a strong mindset for growth, empower teams to take ownership, embrace learning, and expedite decision-making.
To help these teams move fast, decentralized, we provide tools that help them pivot, graduate, and also stop initiatives in a timely and informed manner. This allows us to invest with more confidence in only those initiatives with the greatest potential. This disciplined approach ensures the portfolio is well-diversified and also aligned with our strategic goals and financial limits. We constantly monitor a set of metrics that assess our portfolio's activity, strategic performance, financial performance, and also confidence. In terms of activity, we make sure to have enough initiatives entering the funnels, enter the innovation funnel stage, and that we do it at the right speed and also with healthy kill rates. During 2023, our portfolio grew 21% in terms of number of initiatives, despite a 17% kill rate.
Regarding strategic performance, we ensure our portfolio aims to develop our priority. In our prioritized innovation domains. 40% of our more advanced initiatives are based outside Peru, and most of them generate relevant learnings that are constantly being transferred to Credicorp's lines of business. For example, Tenpo, the neobank in Chile, has developed an exceptional loyalty program. This is being transferred as key learnings to BCP in order for them to increase customer satisfaction. Our financial performance metric monitor our performance against our North Star goals and also financial limits. We are on track to reach our 10% North Star by 2026. Although Yape currently represents 80% of our portfolio revenues after provisions, by 2026, we expect it to reach 65%, thanks to the contribution of other initiatives that are beginning to scale.
This is the result of having built a robust pipeline of disruptive initiatives. The fourth dimension is portfolio confidence, which measures the overall health of the portfolio based on past performance and future challenges. This dimension tells us about the probability of success for a given venture at any given point in time, allowing, again, us to improve capital allocation. As is shown in the slide, we employ a VC-inspired approach to evaluate performance according to the development stages, with very specific OKRs. As of today, more than 50% of our more advanced ventures have a high probability of success. This has been improving over time, working around execution and discipline around killing initiatives early on. Culqi, our venture in the acquiring business, originally managed by Krealo, serves to illustrate this point.
From 2022 to 2023, active users grew 3.5x , and retention rates went from 85% to 95%, proving its market fit stage. We then committed more funds to accelerate growth. It has multiplied revenues by nine times with an LTV over CAC ratio of over 1.5. Now, we are working on optimizing expenses while continuing with growth. After Culqi achieves this with its current runway, we will take it to the next change and commit further funds for it to be able to continue escalation and break even. We are confident that our long-term commitment to innovation is the right path. Our strategy is grounded on Credicorp's priority with clear objectives, boundaries, and governance. This is not an easy task, and we are focused on bringing the best-in-class talent to fulfill our ambitions.
Now, two talents, Adolfo and Raimundo, who lead very important innovation units, to share how we do this in a daily manner. Thank you. We start with a fireside chat. Let me start with Adolfo, Krealo. We've shared a little bit about our portfolio approach to innovation, but could you give us more detail as to the corporate venture fund? How do you do the portfolio view? How do you manage this?
Thank you, Fran, and good afternoon, everyone. So to talk a little bit about how we originate deals in Krealo, we first start with actually the strategic view from the Credicorp level. So we start with the investment horizons that you just outlined. Within those, we have the domains, and as you all might know, fintech is around 50% of total VC investing in Latin America, so it's very broad. So starting from very specific domains and even going into subverticals is critical for our focus and how we can really streamline the pipeline. After that, we build an investment case for each deal, and there we balance both what is the strategic value case and what is the potential financial performance for each deal.
And as a CVC, I would say that the strategic piece is just as important or even more than the financial return, because this is where we have that strategic fit with Credicorp. So for every transaction early on, we have consistently asked ourselves two questions: What value can that startup bring to Credicorp? And what value can Credicorp bring to that startup? And if we can't answer that quickly, then it's just not a deal for us. What's also been really key for originating our portfolio is governance. And this is critical because first, at a Credicorp level, the innovation committee gives us clarity on multi-year funding, and that's critical for us to be really able to construct a portfolio.
You know, it's really hard to do just on an annual funding basis, so we have that good long-term view. Then we have a Krealo investment committee, and a few key things here are that our investment committee has a Credicorp view, not an individual line of business view. So that means we can be very transversal in what we're trying to do and invest in, and we can actually invest for the benefit of Credicorp as a whole, rather than just one line of business. We have several independent members there, and basically, we've enabled a process of very agile decision-making.
It's a very VC-style approach, and so we're able to close deals in a timely manner, and this is greatly appreciated by the founders we back because, you know, some CVCs sometimes have delays in decisions, but we have set up a very agile process. In terms of deal structure, Credicorp is our only investor, to use an industry term, so we can be very flexible. We are pre-Series A investors. We want to be multiple-round, long-term investors for the founders we back. We can do minority transactions, or we can do controlled deals according to what makes strategic sense for us. And basically, what we're trying to do is really, we do not do many investments and just try and find what is the next unicorn, but we're trying to do approximately three transactions a year in each one of them with significant strategic value for Credicorp.
And then, of course, after we invest, you know, we have two concurrent objectives. Of course, we really work hard on surfacing that theoretical strategic value, and we are looking to help the founders and achieve their business goals and also get that financial return. So we're very structured. We have a lot of structured touch points with the companies. We also have very structured reporting, and our style is to be a hands-on investor. We actually don't shy away from participating in governance, but we rather prefer to have a board seat or an observer seat or even advisory board seat at the ventures we back.
We believe those forums are great for strategic discussions, surfacing strategic value and of course, assisting the founders in how they build their businesses. And maybe just to finalize, you know, it's always nice to talk about our successes, for example, Culqi, that was just mentioned, but I think we're equally proud of our discipline when ventures don't necessarily go according to plan. In our case, for example, Domingo or more recently, Sami Shop. You know, by using this rigorous operating model, we're really on top of KPIs and, you know, this is VC, we know not all of our investments are gonna trend in the right direction, but I think we're really on top of business performance, and we're able to be agile and be able to take divestiture decisions in a timely manner. By doing that quickly and early, we're able to have a very healthy portfolio.
Great. Super, super, super clear, and I love the point of the purpose of strategic value. Highlighting the purpose of the fund, finding strategic value for Credicorp. Now, let's switch to Yape. Yape began as one product, one feature. How is that innovation funnel? How do you manage that innovation around product and the life cycle of Yape?
Thanks, Francesca, and good afternoon to everyone. Yape's story, as you mentioned at the beginning, the first five years, we focused on scaling one product, which was basically yapear, make a payment, and acquiring new clients, right? And that was kind of the growth until our first, I would say, serious strategic reflection of how we want to go forward. We defined that we want to evolve Yape from a wallet to a super app. And that's where we kind of decided to say, "Okay, we need to do this. We need to launch three business lines." One was payments, the other one financing, and the third one retail. With perception of being able to solve everyday needs, not only simplify yapear's life, right? So that was kind of the first approach.
It was a few months, strategic reflection, structure, et cetera. Within that, we started defining, okay, what products do we launch, no? And the more natural, where do we start? And I think that has allowed us to grow significantly in revenue generating payments. At the beginning, that business is growing like 3.5x year-on-year. This allows us to almost more than double in the revenue every year. But I think the key here is: how do we define what's next? Now, we've launched 15 products, more or less, since we started, and we always look, like, at three criteria. One is fit with a yapear or engagement.
I mean, does this really solve a pain point that Yapear has or solves their something in their daily life, and will they use it regularly? Sometimes it's pains that they don't know they have, right? They were used to doing a top up, paying cash, walking to a corner, et cetera. Once you build the solution in Yape, they say, "Wow, this is different," and we generate that again. So the first one is this fit engagement. The second one is scalability. Will this be a product that will be used by hundreds of thousands or millions of Yapearos? We won't focus on niche products, given our current scale. And the third one is monetization. Okay, is there a revenue model behind this? Can we be really successful?
What's interesting on this approach is that you have to be really good in at least two of these three criteria for us to decide to go after the product, not necessarily the three. Let me tell you an example around this, right? Lending, for example. We developed a product. Can we do, like, a one-click lending, you disperse automatic something very simple that will really generate engagement fee, that will solve a daily pain for Yapearos? And we said, "Yes, we can do it. Check." This kind of solve everyday needs, right? You need a financing for 20 days, 30 days. The second was, can this scale? The answer is, there's 10 million Yapearos that don't have access to the credit and financial system, right? So definitely, it can scale.
There is clearly the market. The third question was, okay, is this profitable? And when you look at the Monokera, no, you say, okay, a PEN 200 loan for a 25- or 30-day duration, it's a tough sell that it will be really profitable. So we started and said: Okay, let's make it as profitable as possible. Let's see how we can reach, because it depends, of course, in cost of risk, in how you're able to collect, if you need to spend on acquisition cost or you just display the app. Over time, as we started proving it, it had a significant usage, it started growing, and we found we were able to make that product profitable.
And this was a really important step, but even now Monokera is an interesting business, not a huge business, but it's a really good business. But the strategic value is that now we have a much better capacity to understand creditworthiness of millions of Yapearos that before we didn't. I mean, in a year and a half or so since we launched, we've made over three million loans to a million Yapearos. Half of those clients had never had a loan in the financial system. We're significantly increasing. Using this information, we went from two million leads to we're going up to five million leads with a lot of testing, et cetera, so we will be able to lend to around five million people in the next few months.
And that's kind of the first step, right, in the lending journey. Now we're starting to explore something similar in multi-installment loans. So, okay, how do we do from the people that have paid or used loan lending? Maybe we can give a higher loan of three or four months and start growing that way. So this is just an example of when we look at our innovation and how do we approach this, we do it in a very structured way in thinking of these three dimensions, but not necessarily the three of them have to be great, no?
Fit, scale, and monetization, to remember. Switching a little bit of gears to talk about the Credicorp umbrella. How, Adolfo, do you see how you live the collaboration within Credicorp, from Krealo to Credicorp, from Credicorp to Krealo? Could you share a little bit on that?
Yeah, and I think, you know, our track record of our portfolio collaborating with Credicorp, I think, is, you know, great evidence of how we fit into the overall innovation strategy, and it's really the reason why we invest. We invest in companies so they can collaborate with Credicorp. This is a key, you know, activity for us, and we spend a lot of time on it. In the end, you know, I would say collaboration with Credicorp is embedded into how we construct the portfolio. We're thinking about this before we invest. We spend a lot of time with different areas of the business units, trying to understand what their needs may be. It could be technical, it could be talent, could be the need of a disruptive business model.
We try to see if our existing portfolio fits those needs, or we use that to originate investment thesis, and that's how we go out and look. This is very embedded in the entire construction of our portfolio, and I guess the best way is examples, right? So let me give you several. One is Monokera. This is our insurtech out of Colombia, and they've built a great software platform that connects to insurance companies' core legacy systems and then to digital channels, and it really allows them to embed, properly embed insurance products. And with Monokera, we've connected them to Pacífico, to the group's insurance company, and to Yape.
What we've been able to do is, with a very agile and technical solution, allow Pacífico to deploy not just existing products embedded in Yape, but also to create new products and embed them in Yape as well. With this technology and with this investment, we've really accelerated this innovation. I think today we're already around two hundred and forty thousand new insurance policies sold via Yape embedded with Monokera technology, which has been a great start. Of course, Monokera books as revenue a fraction of that revenue, but the financial impact for Yape and for Pacífico is, of course, much larger. That's been a great collaboration so far, and it's ongoing, and we'll be launching a lot of new products to the market soon. Another example, maybe something a bit more mature is tyba.
Tyba is our wealth tech company, and they collaborate very closely with Credicorp Capital. So tyba is a wealth tech focused on the affluent segment. So they have a value prop that has mutual funds, time deposits, very interesting international stocks offering, domiciled offshore, and they put that all in a completely digital offering, but then they also contribute the security and the regulatory strength of Credicorp Capital. And when you combine that, we think it's a really compelling value proposition, and there are thousands of families in Peru, Colombia, Chile, that are looking to be more sophisticated in their family investment and savings decisions, and we believe that, you know, tyba fits that market very, very nicely.
Credicorp Capital works with tyba and can benefit from tyba's obviously tech infrastructure, tyba's distribution of their products, tyba's agile software development capabilities. And then conversely, tyba has access to the whole portfolio of very sophisticated products that Credicorp Capital has. Of course, the research, access to the regulatory vehicles, so it becomes a very unique parenting advantage. And that's what the value proposition reflects and is really valued by the affluent segment because they get access to products and services that are usually more reserved for high-net-worth individuals or private bank clients. And results so far have been really, really positive. Tyba is now at approximately $800 million of AUMs, so it's scaled quite nicely.
And this is great for tyba, but it's also a nice new source of net new money in a very different segment, which is the affluent segment for Credicorp Capital, so it's a win-win. And maybe just one more example, BCP and Culqi. And here I can really illustrate another aspect of our innovation operating model, which is the exit. And this is ingrained into the entire Credicorp portfolio. You know, Credicorp, as an investor, doesn't need to exit like a traditional VC fund, but we aim to exit at Krealo all of our investments because it provides discipline. And that exit could be to the market, or it could be internally to a Credicorp unit.
And in the case of Culqi and BCP, it you know, it's a great example. You already mentioned that the business scaled very nicely, so the processing volume in Culqi scaled around 8.6x-8.7x from 2021 to 2023. So the product market fit was there. But more importantly, the collaboration with BCP really began to flourish. So we had Culqi cross-selling their products with BCP Treasury Services. Of course, Culqi leveraging Credicorp, BCP's immense distribution capabilities, which is another great parenting advantage, but at the same time, benefits for BCP, because as of now, you know, we've been able to accomplish that more than 80% of Culqi clients choose to deposit the collected funds into BCP bank accounts. So that's a great source of flow.
So again, another very great collaboration, and then, because of the maturity, it became time to exit. The PYME or the SME segment of BCP made a natural fit. We were able to complete that process during this first half, and the performance continues to be great. Culqi has grown another two point seven times the process volume in the first half of this year versus last year, so it's another continuation along the journey of the innovation portfolio.
Great. Clear examples, I think, of how the fund contributes to the lines of business in terms of strategic value and also growth and creation of new business. We've heard a lot about what Yape gives, no, brings to Credicorp. What does Credicorp bring to Yape?
Yeah. So, I mean, Yape today is the result of multiple collaboration initiatives across Credicorp, right? I mean, to start with, Yape was born within BCP's Centro de Innovación, the CIX, and we scaled, leveraging a lot of assets of BCP. When we think on collaboration, I think, kind of [audio distortion] on three dimensions. Like a good consultant, everything has three reasons. The first one is the parenting advantage, you know, mentioned by Adolfo. The best example is, in order for Yape to reach the first million customers, the branch network had a target of affiliating new users to Yape, and that was the only reason, or the main reason, we were able to scale so fast and get there. Our contact center initially was fully managed by BCP.
When we started lending, we got two million leads from the risk team of BCP. So, it's really. It helps start and helps us get faster to where we want to get. The second, I would say, is our work together on expanding BCP current businesses. So, for example, or Credicorp's current business. One example is the insurance business that, leveraging Monokera, we were able to connect Pacífico and Yape, and we've become the first channel for selling SOATs for Pacífico within a year after launch, right? Almost double the amount of insurance being sold by Pacífico. Similar story in bill payments. BCP is the leading payment or collection institution in the country, and it's connected to almost 10,000 companies. As Yape, we leverage that connection.
We work through that connection, work together with our corporate banking teams to go and have conversation with all the corporations that need collection and include Yape as an additional channel for that. Two years later, again, half of the collection in revenue at BCP or the bill payments revenue comes from Yape. And I think that is a constant effort where we work together. The third one, I would say, is a bit of us working to enhance some of Credicorp capabilities. In Yape, given our separate structure, the financial inclusion, the digital disruption way, we've been able to attract different talent that would have probably never come to work for a bank. And we've brought in terms of analytics, digital marketing, IT, et cetera.
Simple example is, we are kind of pioneering the personalization work in the app, right? There are already sections in Yape where, depending on past behavior or on who you are, you'll get a different experience than the person next to you. Those are things that now we're taking to the bank and helping accelerate those things. So I think it's a mix of working together and joint efforts and joint goals, no? So there's a disruption logic, but also a significant collaboration logic in everything we do.
Great. So we're running a little bit short on time, so we have, like, the last three minutes. Give us a brief snapshot of your pipeline. What's coming? What do you expect, no, the next months for Yape to be like?
If you look at Yape's potential, and we'll talk about more a year or two years down the road, I would say, now, for three business lines, today, payments is, like, 55% of our revenue. We still believe that there's a 4x opportunity in payments, right? Our initial products, most successful top-ups already has like a 60% market share, but the other products are more around 10% of their potential. So the opportunity to grow is still there, and we believe payments will continue to be our main revenue driver in the future. Thinking on financing, there we have, like, two sources of revenue. Today, the most important is the floating revenue because of the money that sleeps in Yape.
That will grow with transactional volume and depends on what happens to interest rates. It might increase or decrease. And the other part is lending. We believe that lending should become the number one business of Yape in the long term. But we know that it's very easy to lend, but to lend smartly with a controlled cost of risk takes time. So we'll do that cautiously, and right now, we're working in phases and developing a capability to feel comfortable of lending to more and more people, increasing the average loan size, the durations, et cetera. And we expect next year for lending to really take off and achieve full potential somewhere in 2026 or 2027. In terms of the retail world, which includes the physical, I mean, the store, the promotions, insurance, it is a longer-term view, a longer-term bet.
Probably the insurance will come a bit faster than the other topics, but on the very long term, and this is probably more in a three-year or five-year horizon, this could be 10%, maybe 20% of our overall revenue. But it is a significant source of engagement and client usage, and as we develop products like buy now, pay later, et cetera, in our own store, it will help develop a lot of the other businesses. We have had initial success. I mean, today, we are the number one promotion channel in the country. We're the number five non-food e-commerce in the country, if we talk about number of transactions. So, there is initial success, but it will take, I think, longer to consolidate and become a relevant business for Yape.
Great. Now you have a challenge because you have one minute, but maybe a brief snapshot of the most evolved next thing in Krealo, which is Tenpo.
Sure, and you know, maybe we'll steal a minute, but so it's always nice to talk about Tenpo and to be very succinct. You know, Tenpo's aim is to disrupt the Chilean retail banking industry, and you can look at it as basically being three stages and three licenses, and right now we're in stage number two. So you know, over three, almost four years ago, so Tenpo's kind of half the age of Yape, if you may. You know, we had the prepaid license, and first we needed to start from scratch, so we needed to onboard clients. We did successfully that in 2021 , then we needed to make them be active and engaged. 2022 went great, and we really surpassed our internal metrics of that phase one, which is kind of the digital wallet.
With that, we applied for the credit card license, and we got that in 2023, and we launched our very first credit card in August of 2023. And of course, to be a bank, you need to know how to lend, so phase two is critical. And I'm really pleased to say that phase two is going above expectations so far. As of last month, we have around 70,000 active credit cards in Chile with numbers of transactions and levels of engagement and volumes that are well above our expectations. But most importantly, our 90-day NPLs, measured by Chilean standards, are at about 3.1%. So the team is demonstrating really, really crucial credit discipline, and we believe this is a solid foundation that we're setting for future growth in the years to come.
But then, of course, to actually compete with the banks in Chile, we also need a banking license. So that's why in January, we went to the CMF to solicit a full banking license, and we aim to be the very first digital bank in the history of Chile. And, you know, I can't say much about the times. Regulator will decide that, but I would say at some point during 2025, we will achieve that license. And a gain, this is the Credicorp playbook. So the north stars are growth, customer satisfaction, and efficiency. Growth, as I mentioned, is going very well. Satisfaction, our NPS is well above 70 by internal measures, materially above the local banks, and our efficiency is also on a great trend.
We're below $2, so we're really delivering on those north stars. And then just to close, you know, the Chilean retail banking market seems penetrated on the surface, but we do believe that Credicorp has the right, not only business experience, but regulatory experience, and our innovation mindset and framework to make this happen. And if you just think about a little bit the numbers, I mean, there's a lot of issued cards, but if you look at actually active cards in Chile or debit cards, you know, 10 million of those are at a state-affiliated bank with a very limited digital offering. If Tenpo were a bank today, and its prepaid card or debit card, they're almost the same product, we would already have more active cards than any other Chilean private bank, except the top four.
So I think we're scaling very well, and hopefully, credit card will be the same story. You know, again, putting the retailers aside, you know, the largest Chilean private bank only has less than a million active credit cards in every given month. So we think there's a very big opportunity for digital disruption there. And just to close, you know, similar to Yape, this will be a you know, a multi-year journey to break even, but also similar to Yape, we'll use the same discipline in cash allocation, in monitoring results, and agile decision-making as we accompany Tenpo throughout its journey.
Thank you both. Super, super interesting and a lot of, a lot of detail, a lot of color. Now, let me bring the team, the whole team, for a Q&A session.
Yes. Okay, so we received already some question from the webcast audience, and we go for the first one. In your 2023 Investor Day, you presented the goal for disruptive initiatives to contribute around 10% of BCP revenues by 2025. Now, you updated that goal for 2026. Can you elaborate on what led to that delay? Also, can you provide an overall breakdown of each initiative contribution to the 10% of revenues? Should the 150 basis points ROE investment continue in the medium term?
Let me take the first one. There are three questions there. Actually, we updated the 10% aspiration for next year. Actually, that's good news. The denominator, so the traditional income, grew at a faster pace than what we originally expected. Actually, the income from innovation, in absolute terms, is higher than what we mentioned, what we expected in 2023. We should reach around 8% of income this year and should exceed the 10%.
2025. 8%, 2025.
No. 2025? Sorry, 2025 and 2026, we should exceed, actually, the 10% mark.
The first question. The second was?
The breakdown.
The breakdown of the initiatives. Of course, Yape is the most mature and the largest right now, and I would mention three more: Tenpo, that we talked about today, Culqi, and iO, which were mentioned also in the speech. These all have to do with banks or financial, not neobanks, attacking, whether it's a Peruvian market or the Chilean market. Those are the biggest in size and ambition and the TAM that are going. Then I would say the insurance, Monokera and embedded insurance initiatives, and the newest ones, which are beginning in the runway, are around health tech, on the health part and the insurance of health as well.
Maybe regarding the question about the 150, t he impact on the 150 basis points on ROE, we've maintained that indicator. Recall that, I believe in 2022 , we said that by 2025 , we should be cash flow neutral from all the digital initiatives. We remain on track, and we expect that to by 2025 to be again cashflow neutral.
Yes, and let me, I showed a chart around the way we look at the investments and the returns. What we are saying is that annually, we're going to review this. This is not set in stone. This has to do with our markets and our performance. But what we do feel is that we are going to be looking for growth, and we need to find new sources of revenue, not just the current businesses. So we do need to invest in new sources of new lines of business, new revenue streams. But it's not necessarily a straight line because as you've seen with the Yape and the Tenpo example, these are things that take some time. We're very disciplined in terms of what we expect from each initiative at a given stage to fund it for the next change. So this is going to be reviewed constantly.
Maybe that's a good segue for a comment I would like to make is, so how the equation works is the aspiration of 10% of disruptive initiative of income generated by disruptive initiatives is gonna be set. Obviously, I don't know, Yape, which is the most mature, is not gonna be a disruptive initiative forever. So at some point in time, that initiative will be graduated, therefore, the impact on income will be reduced. Also, the impact on cost to income and the impact on ROE. So the three indicators, 10% of income, 350 basis points of negative impact, let's say, on cost to income, and up to 150 basis points in ROE, work together. Going forward, what we've decided is that regardless of Yape graduating whenever it's gonna graduate, we're gonna keep, sorry, those indicators and obviously manage them, as Francesca just mentioned, on a yearly basis.
Okay, our next question is regarding Yape. Francesca said that Yape is expected to represent 65% of Credicorp's disruption revenue by 2025. Can you also provide a breakdown of Yape's revenues in terms of fees and risk-adjusted NII? How big you expect Yape's loan portfolio to be by 2026? And over the medium term, what is your ambition? I have run some numbers, and I estimate that over the medium term, Yape could represent 15%-20% of Credicorp's loan book. How do you feel about these numbers?
Great. Great. It's great input for me.
I got new targets now. So let me go with a longer-term question first. It could potentially be something like that. I mean, if we think that there's ten million Peruvians that are Yapearos, that have never had a loan from the financial system, we could aspire to numbers like that, but that would be , at the very long, we're not budgeting for that, or, I mean, we don't have that view. Yape lending business will be a smaller average, significantly smaller average ticket size, with significantly higher yields. So our lending portfolio might have a 30% yield or 40% annual yield because it's high rotation. Today, we have 30-day loans, we have 90-day loans or things like that, and with low-cost risk, we can achieve a really high or relevant yield.
At least in the near future, I don't have the plans for the loan book to be so big, but it should be very profitable. If we think in terms of Yape's breakdown for 2026, which is a couple of years ahead, we still believe that payments will continue being between 40% and 50% of Yape's revenue. Probably the floating revenue will go down from 1/3 to 20% or so, and the lending portfolio might be another 20%-30%, or. I mean, it should continue to evolve, right? The thing with lending is that it's difficult to project a very high number because we'll be very conscious on the cost of risk to make that this is scalable, and in some moment it will explode.
I don't know if it's 2026. It will start definitely next year, and as we include new products, but the consolidation might be in 2027 or 2028. But on the long term, we do expect lending to be at least half of our business. Yes, of our revenue.
Maybe just on a more strategic response, we do see Yape as the underserved, underbanked vehicle for people and SMEs. So the ramp-up in growth is still there, no? And whether it's lending, deposits, payments, and value-added services, I think the potential for growth in those segments is still in our countries, no? Very available, and still will be there. So it will be bigger, much bigger.
Yeah. And maybe Raimundo said we're not budgeting those figures. I would add the word "yet." Because the market is there, definitely. But those are untapped markets, both at the SME, micro SMEs, with the model where we foresee, and in the consumer business, as Francesca mentioned, either targeting the underbanked or the unbanked. So the market is there. The challenge is to reach those markets successfully, which no one in Peru has tapped those markets successfully yet. So that's the challenge. Besides the Gota Gota. Don't laugh. It's real. We can be competitive with the Gota Gota through Yape.
Okay, thank you. Our next question is related to the innovation portfolio and its impact on efficiency ratio. You have mentioned in the past that around three hundred and fifty basis points of BCP's cost-to-income would be related to the disruptive initiatives. Would it be possible to break it down on your key digital initiatives? Interesting to hear how much is today allocated to Yape, Tenpo, and Krealo. And for my second question, Yape has been very successful, so which of your other initiatives is moving on that same direction?
I can take the first one. Good afternoon, everyone. The breakdown of the cost to income currently on, in disruption initiatives is Yape is around 1/3 of what we're investing in, in disruption. Tenpo, around 20%; Culqi, 15%, and then you go to iO, around 10%, and then, a bunch of other smaller initiatives.
The other is regarding Yape.
Regarding Yape?
No, about the portfolio, no. Yape has been very successful, so which of your other initiatives is moving on that same direction?
Tenpo, Culqi, and iO, no?
Yeah.
These are the most mature and where we're investing more because we're confident that performance is there. So these are the biggest ones now, as mentioned also by Alejandro, no?
Maybe just a quick comment. It's not that every single initiative we start, or launch, or buy is successful. We've killed and even at very early stages, I don't know, tens of initiatives, Francesca or Adolfo. Yes. So those are the ones we're mentioning today is that the ones that even though they haven't reached break even, we believe they're successful or are in the path to be profitable, let's say. We've killed a lot on this trip before before reaching the level they've reached as of today.
Okay, now going back to Yape. You mentioned the intention to increase Yape's penetration on SMEs. Can you elaborate on the strategy? Raimundo later said that payments is a 4x opportunity at Yape. Can you describe the new products that will drive this growth?
So in the payments world, I would divide this probably starting with the second question is our revenue generating payments volume a year ago was like 5% of our total payments volume, and now it's almost 10%. Okay? Again, our total payments volume doubled. So that means that our revenue generating payments volume is growing by 4x. And this is basically driven by our first growth was top ups, like I mentioned. Again, that's now a mature business for Yape, already mature because of our size in the market. We've taken almost the market. The other two large payments businesses are bill payments and an issuer fee because we have a debit card behind Yape, and when we pay in a POS, we receive an issuer fees.
Those which are more relevant than top ups are still, I would say, 10%, maybe 15% of their potential. That could grow very significant. The other side of the equation that goes to the first question is the Yape Empresas world, where we, in the bigger businesses, we've developed a product for larger businesses to collect on top of PEN 25,000 , like $6,000-$7,000, and they pay an MDR and we've built this solution, which is a closed loop for them, which is starting to take off, and that should also be a very relevant payments business over time. So with these two things, we still believe that the potential is there and a 4X growth is aggressive, but it's achievable, no?
In terms of the small business segment, we have 2.5 million small businesses that are Yapearos that collect through Yape, and our product offering for them is still very incipient. We believe we need to. We've started with B2B payments so that they pay their providers through Yape. We want to. Our next challenge on lending is develop a lending proposition for all the small businesses. There's a very interesting agenda coming in the small business side, which is relatively untapped from a revenue side. We have a lot of engagement and payments happening there.
Thank you, Raimundo. Now we go to for Tenpo. What is the cost of getting a banking license in Chile? What is a realistic return for Tenpo in five years or when it is mature?
So let's say by the letter of the law, there are minimum capital requirements and then percentages. So they mix, but I would say roughly, the cost of the actual banking license could be anywhere between $20 million and $30 million, by the letter of the law. Again, this is not precise because of the mixes and what is the state of the balance sheet of the company at the time the license is awarded. In terms of return, I wouldn't venture to give out a specific number. By definition, we are, and as we've all mentioned, we're here to build sustainable businesses, and given the opportunity and the size of, and potential of the Chilean retail market, we are targeting healthy ROEs in the medium term for Tenpo. I'll leave the speculation in terms of valuation more to the market and to the investors.
Okay. Where is the next country or geography where you plan to take Yape or Tenpo?
That's an interesting question, so Yape, as you know, we've taken it to Bolivia. We've been a year there in Bolivia with, I think, successful first year. Today, we have two million Yapearos in Bolivia, so the model. We've confirmed that the model, we can take it to another place. It's growing. It's still in initial phases. It's, I would say, two or three years behind what Yape, where Yape is today, but we see the potential, and our initial indicators say that, we're going on the right direction. So far, that is kind of our plan. We want to finish consolidating the opportunity in Peru and Bolivia.
If we were to look at other opportunities or evaluate and say: Okay, can this be taken to another place? We'll probably look for informal economies with a lot of cash and with similar characteristics. We don't have any concrete plans today on the table.
Maybe just to add, the reason for going to Bolivia at that time wasn't that Bolivia is the sexiest market in Latin. It was that, as you may know, we own a bank there, and what we were expecting to is prove the thesis or the hypothesis that we can launch Yape in a market where the partner bank wasn't the leading institution there. Our bank is, I believe, the fifth bank in Bolivia. And as Raimundo just mentioned, so far, so good. Yape in Bolivia is performing very well.
The next step is, if we go to another country, is remember that from the very first day, the strategy behind launching Yape was war on cash. It's a country which the usage of cash is still very extensive, and by the lessons we've learned in Bolivia, the other criteria would be: are there any interesting and interested institutions to partner with us?
Okay, I would like to pause for a moment on the question from the webcast to see if we have any questions here in the room. Don't be shy. Juan Dominguez.
Hi, thank you for the opportunity. I just wonder if you can give us more context on how you have designed the incentives and compensation to allow for self-disruption, right? And so far, from what I'm hearing, there is not much overlapping between your Yape initiatives and your traditional bank, because you are unlocking TAM, but eventually that will happen. So how are you thinking about that?
Here we tell the nice part of the story, right? They fight every day, internally. So there's overlap. There's overlap. We really don't care if there's overlap. I've been working at Credicorp for twenty-nine years now, and every time we've tried to say: "Okay, this business goes up to here, and this business starts here," we always leave white spaces. So it might not be the most efficient way to attack a market, but it's a more effective way to attack a market. That's regarding the overlap question. Regarding the incentive question, we have several different incentive programs at Credicorp, depending on what company you work for, what role you play, and so on.
The two of these guys, so Raimundo and Adolfo and their teams, they have a compensation plan very similar to the ones that if they were operating in a startup, in the case of Raimundo, or as a VC partner, in the case of Adolfo, which is very different to the compensation package either Francesca, Alejandro, or myself have.
One other thing here is, we're constantly trying new models around this as well, so we do a lot of shadow type of thing. So we align teams when they need to be aligned in terms of, for example, the lending portfolio that Yape is building might contribute to the lending portfolio of BCP, so they're aligned in terms of resources and so forth. And sometimes we make them compete a little bit more, depending, as you said, on the size of the TAM, where the market is, and how mature the venture is. So this is also something that is in permanent review.
Okay.
I think we have also a lot of discipline on not disrupt, destroying significant value, right? So it's not that I can go and offer the same thing, BCP, at half the price, and then, oh, I'm very successful because I got a new client. So, so, so we leave that, a lot of discipline there so that we don't destroy value on the way.
Okay, any other question here in the in-person audience? Okay, I have more here. Can you please comment on your funding plans? Tier 2 Bonds of BCP, is it reasonable to assume you will continue calling these instruments and replacing them with new Tier 2s? Credicorp Bonds 25, is it reasonable to assume these will be refinanced in the global market?
I'll take that one. As for the Tier 2s, the short answer will be yes. We've said to the market we plan to call them at the date, and we are gonna refinance them. We actually just did an issuance a couple weeks ago, which is basically to take advantage of the market, considering the fact that we have bonds being called next year. We're gonna do the same during 2025 because we have other bonds coming due, or actually gonna be called in 2025 and 2026. As for the Credicorp bonds, that's a different story. We issued them to take advantage of very low rates in a time of higher uncertainty. That is not necessarily the case today. So even though we haven't sat yet to have the conversation, we could probably let them just mature.
Okay, next question: In one of the slides, you mentioned Yape could be exceeding the portfolio at maturity. What do you mean by exit? Full exit?
I'll do an IPO. No, it's exiting from the innovation. I mean, to take it out, convert it into a business unit, right? Instead of an innovation part of the innovation group. So we push ourselves to set a new, I mean, we need to bring that 10% back again, through other disruptive initiatives. So once we reach a threshold, we take it out of the.
Innovation portfolio.
Yeah, the innovation portfolio. Yeah.
More challenge to the appetite for innovation. You are reiterating your boundaries for disruption initiatives not to erode more than 150 basis points of ROE or three hundred and fifty basis points of cost to income. It is impressive that you have been able to keep these boundaries over the past two years, considering also the challenging macro backdrop. But looking ahead, as the macro improves and revenue from these initiatives accelerates, should not Credicorp attain for more ambitious goals?
The answer is yes. I would love to launch a Yape every year. It's tough. It's not easy. Actually, as I mentioned before, the year Yape graduates, I don't know, in 2026, 2027, whenever, that 10% goal, which should be exceeded at that time, is gonna be a challenge to reach again 10%. I do believe that the appetite we have is the right appetite, and the appetite and the discipline and the structure, the organizational structure, we have is the right approach. If we launch three Yapes, in terms of access, I'm talking Yape around the success of Yape.
At the same time, in the same year, because we became extremely brilliant, we will come back to you guys and tell you: "Okay, this makes sense, this makes sense, this makes sense." As of today, we believe that the guardrails we've set are the right guardrails. It has taken a long time for us to explain the market, how we are approaching, how we're managing, and so on. So we feel comfortable where we stand today. That doesn't mean that going forward, we may evaluate what we've said.
Okay, next question about capital allocation. Success with the innovation portfolio should help the group regenerate a higher ROE and faster pace of capital generation. Is it reasonable to assume a higher portion of capital distribution as a logical outcome over the next two to three years?
Our dividend policy or capital allocation policy is very simple. We retain whatever is needed for basically the banks to finance growth. You know, we need to keep our Common Equity Tier 1 of, I never recall. It's 11.5 at BCP. 11 or 11? 11% at BCP, 14.5% at Mibanco, and whatever excess we have, we pay that as dividends. When we say we, the subsidiary is paid as dividends. At Credicorp level, if there's nothing relevant to where to invest, we pay everything as dividends. As a matter of fact, we recently announced a new dividend, and you may recall it, Alejandro. The dividend payout ratio for this year is gonna be 70 something. Yeah, 75% of profits. So we are already providing a high dividend payout ratio.
Okay, next question: We have seen in other geographies that fintechs are starting to remunerate deposits at 15%. Mercado Pago is present in Peru, so in case you start to see this type of competition, how would be your strategy to compete on digital deposits?
Okay, so I mentioned iO. IO is a neobank, and it's a growth strategy and also a defensive strategy in Peru to be able to customer service clients with a different digital value proposition. So one of the vehicles which serve to respond to this is that. Second, a smaller initiative that is scaling very fast. I mentioned in the last meeting we had Warda, which is savings pockets, where customers allocate funds to saving, is already in our mobile app and is growing at a very fast pace. This could also allow us to give customers interest rate, you know, on a portion of their deposits. And, well, the rest is also ongoing at a bank level, you know, to change our strategy in terms of funding.
If I can just comment, it all goes back to the innovation appetite. I think there's a lot of very indirect strategic benefits from Credicorp of this appetite. For example, we're funding at the same time three kinds of very different retail neobanking, if you may. You have the iO approach, you have the Yape approach, which is a strategy, and the Tenpo approach, which is a completely different strategy. It really allows us to play that competition from different sides of the chessboard. You know, in Peru, you know, we're preparing, and we have vehicles to defend. In Chile, we're actually preparing to be more attackers. So it's very interesting, and we continuously have strategic conversations around topics like these, but then we can actually go out and have pieces in the market to actually interact. So it's something we monitor, you know, very closely.
Okay, thanks. Last opportunity for the audience here in person. Any questions? Okay, these are all the questions that we have received. We thank you very much, and now we will have the closing remarks with Gianfranco.
Yeah. I'd like to close today's event by highlighting three key messages for you to take away, emphasizing how we are continuously preparing for the future. First, backed by strong performance across most of our lines of businesses, we remain on track to achieve our sustainable ROE target of 18%, despite an unexpectedly challenging macroeconomic environment. Second, a critical driver of our success has been the acceleration of digital transformation and innovation, positioning us to adapt and thrive in a rapidly evolving environment. Digital transformation within our core businesses has significantly increased customer engagement and operational efficiency. Currently, 72% of our clients at BCP are digital, demonstrating higher satisfaction and stronger engagement. This transformation has also resulted in our ability to reduce the number of branch locations, lower transactional costs, and improve efficiency.
And finally, our innovation strategy is geared toward generating 10% of Credicorp's risk-adjusted revenues from new business models by 2026. This includes building innovative capabilities, expanding market reach, and enhancing operational efficiency. Our key objectives focus on penetration of markets with new value propositions, exploring untapped business segments, and accelerating the adoption of transformative technologies. And finally, we will continue to be on the forefront of shaping the financial products and customer experiences of the future. Our disciplined approach ensures alignment with our strategic objectives and prudent financial management. On behalf of our senior management team and the entire team at Credicorp, all of whom share the goals and commitments we've highlighted today, I would like to thank you for your presence and participation this afternoon. Thank you all for joining us in person and via webcast. Thank you.