Good morning everybody and welcome to our 2025 Credicorp Investor Day and 30 year anniversary of listing in the New York Stock Exchange. Thank you all of you for coming here and thank you all of you that are connected through the webcast. Over the next few hours you will hear about how at Credicorp we are building a future-oriented ecosystem that is driving innovation, expanding financial inclusion, and accelerating growth across cycles. Our management here will share with you how we are leveraging the best talent, the best technology, and disciplined execution to deliver sustainable value and unlock very interesting growth opportunities ahead of us. You will also have the opportunity to ask questions. Here you have the detailed agenda with the topics we will cover. Now let me go through a couple of logistics here.
After the management comments, we will have a five minute break to be followed by the Q&A session. We will first cover the questions that we have here in the room and then the questions that we have received through the webcast. For webcast participants, you can submit your questions using the "Type your question" text box below the broadcast screen at any time during the presentation. You can also click on the "?" icon located on the sidebar to the left of your screen to submit a question. We also want to hear from you, your feedback regarding the experience in this event for webcast participants. The brief survey can be accessed via the Survey link at the Resources tab on your screen. In-person attendees may fill out the survey online by scanning the QR code on your Table 10 card or by completing the printed handout.
Now I will pause for a moment so you can read our Safe Harbor. I will mention a couple of considerations. Today's management presentations include forward-looking statements reflecting our management's current beliefs and expectations about Credicorp's future plans, strategies, goals, and results. These forward-looking statements are based on current information and actual results will depend upon known and unknown risks and uncertainties that could cause actual performance to differ materially from what we currently expect. Therefore, you should not rely on these forward-looking statements as an assurance of the company's future performance. Please take a moment to read this slide and now I would like to introduce our Executive Chairman, Luis Enrique Romero Belismelis.
Thank you, Milagros. Good morning and welcome to this very special Investor Day. This year marks the 30th anniversary of Credicorp listing on the New York Stock Exchange, a milestone that reflects not only our growth but also the trust and continuity that have sustained us across generations. For a century-old group like ours, anniversaries are not just moments to celebrate, they are moments to reflect on the vision that has carried us forward and to renew our commitment to the future. Five years ago, I addressed you for the first time as Chairman during the 25th anniversary. I had assumed this role amidst challenging circumstances brought on by the pandemic.
At that time, I emphasized to our leadership team that every crisis presents an opportunity, an assertion that proved true for Credicorp, which has already established itself as Peru's leading financial group with an expanding presence in the Andean region. Since then, we have not only consolidated our leadership position, but also enhanced our organizational strength, demonstrating notable resilience through disciplined execution and strategic long-term planning. This resilience enabled us to further distance ourselves from our peers and emerge stronger than ever. In 30 years, we have navigated multiple crises, driven innovation, and executed a strategy that has allowed Credicorp not only to withstand volatility, but to achieve steady growth. As a result, by the end of September, we had outperformed the market and generated a total shareholder return of 14.1% annually on average since Credicorp's inception in 1995.
From this position of strength, Credicorp is also consolidating its role as a regional player. With growing operations in Latin America and a clear ambition to expand scale in key markets through innovation strategy, our company is well positioned to lead the financial sector into the future. In an age of immediacy, patience becomes almost revolutionary. Our ability to focus on the long term and to remain steady has allowed us to decouple from the macro-economic cycle and deliver consistent value to shareholders. This decoupling reflects both the diversification of our revenue sources and the expansion of our footprint in the region where we operate, strengthening our resilience across different markets and cycles. Looking ahead, four priorities will remain at the heart of our strategy. Pillars that I believe explain not only Credicorp's longevity, but that of every institution that endures beyond a century. First, purpose.
At Credicorp, our purpose is to contribute to improving lives by driving the changes our countries need. In practice, that means expanding financial inclusion, strengthening financial education, and creating long-term value for all our stakeholders. Second, innovation. For us, innovation is not only a one-time project. It's a mindset about learning, adapting, and challenging ourselves to do things differently. Yape is proof of that. What started as an experiment is now the most loved brand in Peru and the leading digital ecosystem with more than 15 million active users and growing profitability. In the coming years, Yape will likely become one of our largest businesses, a catalyst for financial inclusion in Peru and beyond. Third, culture and talent. Talent is our most valuable asset. Technical skills evolve quickly, but what sustains leadership is adaptability, critical thinking, and empathy.
At Credicorp, we are investing in digital capabilities, in artificial intelligence, in finding the best talent even beyond our borders, and in preparing leaders who can both innovate and lead with humanity. Culture and strategy must always be aligned, and we actively measure and close gaps to ensure this is the case. Finally, governance. Governance is essential. Good governance reduces the risk of errors, strengthens trust with our shareholders, and ensures that decisions are made with clarity and independence. Our board and committee structures are reflective of global best practices. We have also linked part of executive compensation to long-term sustainability and value creation indicators. These measures ensure accountability, discipline, and alignment with the interests of all our stakeholders. These four pillars—purpose, innovation, culture, and governance—will continue to carry Credicorp forward for the next 30 years and beyond.
From its beginning, Credicorp was built with the conviction that finance can be a driver of progress in communities like the ones in which we operate, where urgent needs persist. The private sector has a moral duty not just to describe problems, but to act and drive change. We embrace that responsibility, whether it is through expanding financial inclusion, democratizing insurance, supporting SMEs, or driving sustainability. We will further grow retail loans, especially through consumer finance, and lead insurance penetration as it becomes more embedded in people's daily lives. Moreover, we will increase credit and support services to micro and small entrepreneurs, a key component of social and economic development in the countries where we operate. We will be a more digital organization, embracing and leveraging AI to deliver greater experiences through hyper personalization while enhancing productivity and efficiency.
Our proven ability to decouple from the macro-economic cycle sets us apart even in challenging environments. We have consistently created value, expanded inclusion, and fortified our competitive advantage. The next chapter for Credicorp will be defined by stronger innovation, broader inclusion, and an even greater positive impact on the communities we serve. I am excited and optimistic about what lies ahead. Together we are prepared not only to outperform the market, but to shape the future of finance in our region and beyond. I want to close with gratitude to our investors. Thank you for your trust and patience. To our employees, more than 47,000 across the region, thank you for your dedication and commitment with our purpose. To our clients, thank you for challenging us every day to improve. Let me leave you with this final remark. The best of Credicorp is yet to come. Thank you.
As we mark our 30 year listing anniversary, we will start with a video which features Raimundo Morales, our Vice Chairman, reflecting on Credicorp's journey since 1995 when he, as CEO of the company, led the New York Stock Exchange listing. Following that, Gianfranco Ferrari and Francesca Raffo Paine will share how we are building the next chapter of transformation at Credicorp. Thank you.
Raimundo, what do you remember most about the IPO?
We always call it an IPO, but in reality it was a share exchange from Credicorp with the shares of Banco de Crédito del Perú and Atlantic Security Bank. The bank, which was the most important entity, had a large branch network and a deposit-gathering business, very retail focused. On the asset side, Banco de Crédito del Perú was basically a corporate bank. The insurance company was basically a business with corporate clients, and Atlantic was private banking and that sort of thing. What we thought was that there was synergy between them, and that's how Credicorp was created. From there, we thought we should list on the New York Stock Exchange because first, it would make us much more independent from Peru at a time when, as a country, we were very isolated from the rest of the world.
We thought this would give us access to the capital markets, and that's why we chose the New York Stock Exchange. Analysts and investors would say there's no liquidity, and since there's no liquidity, that stock won't be able to appreciate in value. Our decision at that point was, let's not worry so much about liquidity and the stock market and instead focus on making sure our business works the way it should. Let's do the fundamental things right, and eventually the stock price will go up, which is exactly what happened. In the end, I think that at least my success, which is Credicorp's success, the most important thing I did was to be able to hire professional people, good people, top-tier people. I think that's what got us to where we are today.
The fact that we had a controlling group, which is the Romero family, who have managed over these past 30 years to maintain a significant role within Credicorp and have always acted professionally, ethically, and with concern for their shareholders, concerned about their clients. I believe that presence gives investors a great deal of reassurance because there is a strategy not just for 24 hours or three months, but a strategy for 20 or 30 years. That's where we're headed.
What surprises Raimundo Morales the most about Credicorp today?
It's a different world. It's a world that has changed and is changing very quickly. We used to be a bank, a bank and some relatively small companies with many models that look to the past. I believe that the models we use today at Credicorp, in most of Credicorp's companies, are models that look toward the future. They are more modern models, models that work much more with statistics and use part of the experience we've had, but use it to project forward and to see where we're headed. For me, that's a very radical difference. Sometimes I sit there in the boardroom and when I hear someone I don't understand, I think they must be really smart. Right?
Thank you.
Let me start by saying that 30 years have gone by and your English has improved drastically.
As you see, hello. It's not only my English; Raimundo's English is even better. I didn't know he has this posh accent I'm talking about.
It's incredible.
Actually the interview was in Spanish and obviously we used AI for translation, something that was impossible 30 years ago. It's incredible that we can do that. We as a world, in the world can do that nowadays as it's incredible being here celebrating our 30th anniversary and both of us, we've been part of this journey actually. For me the most relevant part rather than being here today is what we've done through the last 30 years. Basically it's not only a story about Credicorp. It's also a story about Peru. Peru has outperformed our peers in the region in terms. Actually, whatever indicator you can use here, we're sharing the per capita GDP, it outperformed any single country in Latin America. If you measure debt to GDP, fiscal deficit as of today, trade balance, you name it, it's been really, really good.
The country, some of you have visited us and the country you visited, if you visited the country 30 years ago and you compare how the country is today, it's a completely different country. If you go to the next slide, please. This picture is actually the same place 30 years ago as it is today. A major commercial area, whereas before was a poor, quote unquote, area. As I mentioned before, poverty has been reduced by 50%. The involvement of economic active population has risen by close to 50%. Whatever macro indicator we can measure has been great as a country and within that environment, Credicorp has also performed quite well. I would say that we not only rode the wave, but led that wave. As you can see, the 30-year average TSR has been over 14%.
We grew not only organically but also inorganically through different acquisitions in microfinance, insurance, in banking and so on. Here we are with a lot of expectations on what's coming up next. I would like to have your vision about your experience during these 30 years within Credicorp.
I think one of the boldest changes we see is the focus on innovation being very explicit on that. If you look at three years ago when we communicated our disruptive innovation strategy, we also reflected on this hasn't only happened three years ago. Ten years ago, we started a digital transformation for Banco de Crédito del Perú and we actually really changed the way consumers, not only the landscape that you mentioned, but also the way consumers transacted. We've been working hard around digitizing the country. 24% of our transactions used to be cashless. Now 84% of the transactions are cashless. That is a huge change. If you look farther back, Credicorp has been innovating for the past 20 years. We created a different physical network called correspondent banking, which actually changed the convenience factor in the country.
We also entered the SME segment, which was very innovative at the time. This is something that's been going on for the hundred years that Credicorp has been operating in the country. What do you think is the main ambition? Where do you think that this is going?
Where do we go?
Where do we go?
Maybe since you mentioned the digital transformation and so on, maybe something that I would like to share is that, and you may recall it, at the very beginning we had very long and harsh discussions regarding can we achieve experience or increase the NPS within our clients and at the same time efficiency, be more efficient. We had a lot of internal arguments and in hindsight we were right that both objectives could be achievable by leveraging on basically technology and digital tools. I really believe that one of the key factors for success was that since the very beginning we realized that digital was a means to an end rather than an end by itself. This is an example in Banco de Crédito del Perú, but it's across all of the companies, the cost to serve per client has been reduced by close to 20%. NPS has skyrocketed.
Among our different subsidiaries, we built a brand that was mentioned before, Yape, which is today the most loved brand in Peru, period. It's not the most loved brand in the financial system or whatever. I'm really proud of it. We really achieved this objective of being or providing the best experience regardless of industry, but at the same time of being much more efficient in serving our clients.
I agree. In addition to that, I think this ambition for growth, the way we approach it is we're willing to actually make the radical changes that we need. We come from a wholesale bank. We went to a retail bank, from an affluent bank to a massive bank. This is the approach that we're taking in many of the other lines of business of Credicorp. Also, the shift from an inside out approach, bringing products and sending them to the market versus really an outside in approach of understanding customer needs, what they want, the way they want to transact. Bringing design thinking, UX, and the capability of testing to really get a product in the market or a service in the market that customers really value and need. We talk a lot about Yape and its huge capability to transact 50 transactions per month on average.
If you look at Banco de Crédito del Perú, Banco de Crédito del Perú now has 8 million customers using their mobile app with 20 logins per month, which is very high. We're transforming insurance with embedding insurance in daily life. We have platforms to provide a better service in terms of making it more accessible to people and also health. We've managed to do this, which I think is really interesting. Also working around financial education. We have a series in YouTube, it has more than 80 episodes, chapters with more than 300 million views. I think the real change of approaching the whole thing in a much more customer centric way is really connecting with our customers and our markets. Not to toot our own horn, let's bring a short video from a customer where we can realize the way we've impacted their business and also their life.
It's very reaffirming to hear these stories from customers and very much needed because of the pace of growth and the level of change that we're aspiring to now. For you, Gianfranco, what has remained constant over time?
Yeah, one of a million histories, right, of stories. First of all, culture. I'm sure at every single company presentation you go to, every single company mentions culture. I really believe that even though we've been flexible enough to adapt our culture not only to the environment, but to the acquisitions we've made, some commonalities across subsidiaries have stayed there. The culture we have at Mibanco is completely different. Completely different. Different from the culture we have at Credicorp Capital. It makes sense. One serves the micro entrepreneurs, the other one serves wealthy clients. We have a large asset management business, so the cultures need to be different. Some commonalities have to stay in place. The culture is there. Our culture, Credicorp's culture, trickles down to all of the subsidiaries. At the same time, we've been savvy enough to adapt the culture to the segments and clients we're serving.
The second one, and Raimundo mentioned it in the video, is, I would say, obsession with talent since the very beginning. Both of us have been at Credicorp for over 30 years now. For 30 years at Credicorp, but we got employed even before that, and it's real. Since the very beginning, we invested a lot in talent. Today that's even harder because of the capabilities that are needed to be in what's going on in the world. That's the reason why you may remember when we started the Innovation Center at BCP, we didn't have a single UX designer. Today at BCP we may have 100, something like that. We opened up an office in Madrid a few years ago where we have a large team of data and analytics people. We opened an office in Buenos Aires to do something similar in tech and UX.
We're in the process of opening an office in Sao Paulo to recruit tech people. Again, keep investing in talent. As Lucho mentioned before, our people is the best, the most relevant asset we have. The third one, as you mentioned before, is, I would say, this appetite for innovation and even self-disruption. We really don't care about if we are going to disrupt ourselves as far as we keep our leadership and, more importantly, we keep our clients happy and therefore we build longer relationships. Maybe the fourth one, and is part of the agenda today, is this parenting advantage by being Credicorp, by being able to build this ecosystem we can leverage across subsidiaries.
Definitely. As an Innovation Officer, I see this story repeating every time we go into a line of business and propose growth. The ambition to disrupt ourselves. That 10% goal that we have to bring new sources of revenue for Credicorp. I think is something that repeats the NPS and what that means of really changing how we design value offerings for our customers. The talent landscape is completely different to when I started at Credicorp. I agree and I see this evidencing in all the lines of business. What is your vision for the future in the finance in the region? Not just Peru, but the region.
Let me start with a macro and then I'll end up with the answer to your question. I'm really positive about the macro within the countries where we operate, especially Peru, but it's across mostly Chile and somehow Colombia. The macro indicators are very solid. That's reason number one for being positive. The second reason is commodity prices, specifically copper and copper because of the AI need. I don't know if it's hype or whatever, but because of AI a lot of data centers needed to be built in the next five, 10 years. That means energy and energy means copper. Chile is the largest producer of copper in the world. Peru has the largest reserves in the world and I believe it's the second or third producer. Actually, a couple of recent research reports say that copper price should be at anything between $5.50 and $6 per pound.
That's a huge benefit for both countries. That's reason number two. Reason number three is Latin America is still going to benefit from the demographic bonus for the next 10, 15 years, where other countries in the world, more mature economies, is not the case. That's more on the macro, on the financial businesses.
Still.
The banking penetration, insurance penetration, health penetration, the business in which we operate are still very low even though we've advanced a lot. We're going to share some of that progress in the upcoming presentations. There's still a lot of room for growth. I really believe that in our case, I would argue that our success in the past in the physical world was built on having the largest network of physical presence, either branches, ATM, correspondent banks and so on. The key was how to be again the largest network. In the end, it's convenience. I would rather go to bank to BCP than to bank B or C because it was easier to get to the branch or the ATM or whatever. Today, I have my phone here. That convenience is here, right? It's my app, my banking app, my Yape app or whatever.
The play is UX in my opinion. It's how someone as a client can solve its daily needs with the best UX in his or her phone. That's the investments we're doing for the last 10 years, but even investing more and with much more appetite nowadays.
Distribution is going to continue to be disrupted. The innovation portfolio really focuses on finding new businesses and using the distribution capability that we've developed through Yape, of course, and Banco de Crédito del Perú and the other lines of business. We have a pipeline that is very rich in initiatives. We have 30 initiatives, the most mature Yape that you've all heard about and how Yape continues not to just do transactions, but to really create a super app and be used as an ecosystem for Credicorp's products, but also its ambition to go to other geographies. That is a view for the future. Scaling Tempo is something very interesting for Credicorp in the region. Hopefully we'll have a banking license pretty soon and be a neobank in Chile.
We're also working around other capabilities such as Warda, the automatic saving capability that has daily rules for people to be able to save. We're seeing good traction, over almost a million customers using it, but also creating a capability that is a daily capability that could be used for collections or maybe investments in the future. We're also very obsessed with this one stop shop kind of view for the SME business and creating those capabilities also for the future. Not just the transactions, but maybe the supply chain, collections, notary services, independent services for professionals to be able to collect their bills and so forth. Maybe these innovations and everything that you've been talking about. You mentioned talent require the right people. What's the story behind that? What's shaping the next talent for Credicorp?
What's shaping the next talent for Credicorp? I really believe that we're shifting philosophically from hiring the best MBAs because you have an MBA, which is still relevant, to hiring people that are curious, that are resilient, that are willing to bet, willing to make mistakes, to learn from mistakes and so on. We always share with you guys the success stories, but behind those success stories there are a lot of failures. My way of seeing businesses and the future is like playing baseball. You know more about baseball than myself, but it's like not even the best Babe Ruth, not even Babe Ruth had 100% batting average. Right. I really believe that by building the right team, by hiring the best talent and by making decisions without having all of the information, but by having the right talent, you're going to be batting above average.
Overall, the results, the positive results are much larger than the negative results. On average we're going to keep being successful. As Lucho mentioned, the next 30 years are going to be even much more interesting, much better.
Yeah. I do think that Credicorp is in a privileged position to continue to innovate in Latin America. We have a proven track record, we have the experience and the ambition. I also want to highlight that we have a touch of humility and paranoia. You have a little bit of that that keeps us challenged to be very aware of our surroundings.
Yesterday you told me that there were some paranoics at Credicorp. Now you're telling me I'm the paranoid. We'll have a conversation after. Thank you, Francesca, so much, and thank you all for being here.
Thank you.
I think it was a very valuable experience. The only thing we didn't achieve, and I think we're only now starting to accomplish it a bit more quickly, was that we thought the bank's network, those 400 branches we had, would help us sell retail insurance over time because the bank had a very good name, a very good reputation, and Pacifico was not a familiar name for the majority of the Peruvian population. In reality, we didn't achieve that at first. I think now there's a lot more of that happening. As a result of all that, we slightly refocused the market we were going to target. In other words, we saw that the corporate client, who is an important client, is also not very loyal and faces a lot of competition. At that time, international banking was already arriving as well as this retail client.
It was a client who in reality wasn't being served and was very difficult to serve for the international banks or the other banks that were being established here. We already had all the infrastructure to do it. I think that over time we have managed to shift market segments and today, both in Grupo Pacífico Seguros and in the bank, we have a significant share of the retail business, which is what is currently supporting our growth.
We've been hearing about the opportunity in Latin America, in Peru as well. Not just as significant, but transformational, and it's grounded on Credicorp's strategy and its evolutions and capabilities. The dynamic is clear: a cash-based economy, a young population that continues to grow, a lot of informality, conditions that create complexity but also opportunities to be able to scale. When we talk about 10x opportunities, we're not just talking about market size, we're talking about synergies among our companies to be able to really piggyback around the business lines that we have to reduce operational cost, to include new customers, to look for new sources of revenue, to create more value. We look at our innovation initiatives now in that sense, looking at them as an ecosystem to see who else could benefit from what we've been constructing in the past years through our labs and our innovation centers.
I think since 2020 we've included 6 million people into the financial system. We have a goal to include 8.8 million by 2028. 15 million customers in Yape, going to Bolivia as an international market to see where else we can take this. Pacifico embedding insurance into daily lives, into very contextual transactions, visibly supply chain finance, really integrating the entire value chain for business customers, and Mibanco becoming a full-service partner for their customers. In our panel today, we have three leaders: Monica, responsible for bancassurance in Pacifico and Banco de Crédito del Perú; Raymundo, that I think you've met, CEO for Yape; and Giovanni, responsible for products and digital channels for the wholesale, for the business division. Let's start with you, Monica. Insurance has been historically underpenetrated, underserved. This is not new bancassurance. It's something that we're doing in the past.
How is Pacifico leveraging the ecosystem to capture growth?
Thank you, Francesca. The insurance opportunity is very clear. Thanks to our strategic partnerships with Banco de Crédito del Perú, Mibanco, and since 2024 with Yape, we now have the opportunity to protect more than 18 million clients. These are good news because, as you have said, insurance penetration in Peru is one of the lowest in the region, representing only 2.2% of our GDP. We do not see this as a barrier. This is an opportunity for us, for growth and also for innovation. This is why we have defined a very bold ambition in Pacifico, which is to make Peru the most protected country in Latin America by 2030. This represents doubling our current client base from 7.5 million- 15 million. We truly believe that this positions us to become a driver of inclusion, but also a driver for margin growth for Credicorp.
In fact, Pacifico's business represented by the end of 2024, 8% of Credicorp's net income, compared with only 3% in 2021. Our ambition is to represent 10%, matching international benchmarks. The question is, how are we going to achieve all these ambitions and all these goals? The answer is by strengthening two main capabilities we have been working on for the last years. The first one, to become a product factory. A product factory to launch products very quickly and to tailor them to all our client needs, client segments, and their different life stages. This has been really hard work because we do not only have to change our technical cores, but also our mindsets. The second capability is mass distribution.
What we do at this point is our strategy is to leverage all the wide reach and all the transaction activity that our partners in Credicorp already have developed. By embedding insurance in the journeys of Banco de Crédito del Perú, Mibanco, and Yape, we turn all those daily transactions into protection opportunities. That is how we turn insurance into something engaging and part of the daily business of our clients.
Super interesting. We've talked about Yape being the digital cornerstone of Credicorp's digital strategy. We've seen the importance in insurance in distribution. What's your view on the growth opportunity for Yape?
We are very optimistic. I am very optimistic, but I think all of us, in terms of the potential we have with Yape, with over 18 million clients, I think we've built a very powerful digital wallet, but also the most powerful digital distribution channel of the country. This scale and this reach is allowing us to start serving segments which we didn't think was feasible to serve for the financial system before, especially all around informality. In Peru, 70% of the economy is informal. We are starting to fully serve these new segments, reaching them at a very low cost with a very high touch proposition and a very strong connection with our brand. This is unlocking a lot of opportunities and we aspire to have most of Peruvians become yaperos in the near future.
Continuing this financial inclusion in payments, which is probably the first business we launched three years ago, we've gone from zero revenue generated transactions to more than seven revenue generated transactions per mile per month. Even though that's a huge growth and a potential, our yaperos do 57 transactions a month. The space for growth when we see our penetration relative to TAM is still very, very big. We have one product that's closer or above the 60% of the TAM, but most of our products are still around 10%- 20%. Growing very fast, 2x, 3x, 4x year on year. I think with a huge potential of growth in lending, I think we broke a paradigm that it is very difficult or it was impossible to serve the informal segment. I think with the power of the Yape distribution, we started working with very small loans, very short term.
We were able to do great risk management. Our cost of risk is very low and we started experimenting a lot and growing. Even though we've already done like 15 million loans to 3 million clients, I think we're still in the very initial stages of our lending business there. We definitely see 10x opportunity in the mid to long term. I think that a huge potential also when we start thinking of other products, right? Insurance, working with Mibanco, there's a space to continue growing. If we think of Yape on how we're doing this, it's becoming kind of a virtuous cycle.
Right.
We started with P2P, generate a lot of engagement, then launch payments products which generate more and more engagements. Yape uses more, we get them to know better. We started with lending, distributing Mibanco insurance. We do the retail offering and then they use us more. It is more powerful. We have gone into a very positive cycle while leveraging all of our strong capabilities from Credicorp in terms of infrastructure, risk management, et cetera. We are very positive about the potential of Yape.
Super interesting to see how both the insurance and Yape complement each other. Giovanni, can you share within Banco de Crédito del Perú unlocking value in the supply chain world? Can you share a little bit about that?
Thank you, Francesca, and good morning to everyone. For me, supply chain finance is one of the most exciting growth engines that we are activating within SMEs and middle market segments. Earlier this year we decided to integrate both of these products under unified leadership in order for us to gain focus. However, this integration is recent. We started transforming factoring three years ago, and since then we have made huge, huge progress. To illustrate the market potential, take this into consideration. As of 2024, the penetration of this product in the Peruvian economy represents only 4% of Peru's GDP. If we compare it to countries with similar regulatory frameworks as Peru, we can see Chile here at the graph, they stand at 14% penetration, and Spain represents 17% penetration. There is huge, huge room to grow in this market. In 2022, we identified this potential.
We started mobilizing a team that was going to be dedicated to transform the factoring business, and since then, huge progress has been made. If we see a factoring business since 2022 until now, this segment has grown by five times with integration of confirming and factoring. What we expect is this momentum to accelerate and continue growing. What we see is in the next five years to grow by six times our outstanding balances in this segment. How do we plan to capture the opportunity? That's the question that we are solving right now. We have been leveraging Credicorp's parenting advantage to access fintechs that provide us critical external data, and this data has been used for us to build more robust, create risk models and unlocking access to previously underserved businesses. That's the way that we are approaching this opportunity right now.
Simultaneously, we have been building broader technological connectivities for our clients. What we have been doing here is today more than 80% of our clients in the supply chain finance business disperse their loans in a digital way. We have advanced very much in the past few years. Also in this segment, AI is enhancing our risk and pricing models, and we are using the AI especially for fraud detection and allowing us for a faster response time to our customers. Finally, we are also paying attention to the payer experience. In this segment the payer is a critical part of the value chain, and we are embedding a portal into our client's office banking. What we are looking here is that provide them access to consolidate in one unified view all their invoices in our office banking.
What we are looking forward here is to optimize their treasury management for our customers. That's the way that we are approaching the opportunity.
Let's dive a little deeper on how you are leveraging on startup technologies, different technologies before maybe insurance and you, Giovanni, as well.
Okay. For us it would have been impossible to even dream of a product factory or mass distribution without technology. That's where Monokera comes as our technological enabler. Who is Monokera? Monokera is Credicorp's insurtech which was acquired in 2022 by Krealo, our corporate venture capital. As I said, Monokera has been instrumental for us and has led us to grow efficiently and it has also allowed us to design and to build products with very low cost and modular products that were previously out of our reach. Monokera is an API-driven platform and it has allowed us to connect very quickly. It is like a digital highway that connects Pacifico within the companies in Credicorp. It has been really, really a game changer. It's also important to say that Monokera is also unlocking opportunities beyond Credicorp.
Yes, they are already taking part in new partnerships with very important retailers in the region like Falabella and they are using the same technology they are using in credit card. Monokera is really helping us to expand our boundaries, expand our limits.
For us it's also been a game changer, especially to gain scalability of our product offering. We currently have partnered with two fintechs that were presented for us by Crealo, who's our venture capital arm, and they hold a minority investment in those fintechs. For example, one of them is Datamart. We started a partnership with them in 2024, and this has been a key milestone for the factoring business. That year we integrated via API connections between Banco de Crédito del Perú, Datamart, and the Peruvian tax regulator. This integration provided us the ability to capture the data from SMEs in order to allow them to self-evaluate their financing capacity and for us to enable the bank to pre-approve a credit line and to disburse a loan within 24 hours. We gained momentum, we gained velocity with this integration.
In less than a year, we already have more than 120,000 clients affiliated to this solution. With a customer base of over 2 million SMEs, we expect this solution to continue growing in the future. Another example is what we are working with Shinkansen. This is another venture that Crealo has invested in. They provide ERP integration, and with a solution that we are working with them, we are integrating our services in the ERP of our customers and become part of their process since the purchase order is created, become part of their solution. This will allow us to anticipate the financing needs of our clients. I would say it's the way that we are gaining the scalability of our product offering and reaching a higher and broader market.
are a lot of opportunities, great opportunities and new capabilities as well to achieve them. What have we achieved so far?
Where are we right now?
in our case? The results of this collaborative strategy are compelling, and I think that they also reflect the strength of our synergies.
Right.
One of our main key results is the total volume of bancassurance premiums that include the mandatory and also the optional ones. They have grown from $950 million in 2021 to $1.5 billion in 2024. It is very important to notice that the optional premiums that are the focus of our strategy have more than doubled in the same period. By the end of 2024, they represented more than 50% of total premium. Another interesting result is, for example, our digital issuances. They have multiplied 10 times from 200,000 to almost 2 million digital policies issued in 2024. The number of products that we have launched in 2024, we launched almost 30 new products. That's 15 times if you compare it with the only two products that we launched in 2021.
Finally, the number of clients that we are protecting through the Bancassurance Channel has also grown from 2.9 million to 4 million by the end of 2024. There is a lot of work to do, but we think that we are on the right track.
In the case of Yape, we've been, I think, consistently growing our revenue per mile for the last three years, or a bit over three years since we started launching the business while maintaining a very disciplined approach of maintaining the cost to serve or the total cost of Yape per mile around S/4. No, those lines intersected last year. We continue in that positive trajectory, which is starting to generate very positive results. If you go to the specifics in payment, we are. Last year we already represented almost like 20% of the consolidated fee income of Banco de Crédito del Perú or fee and transactional income. We've launched multiple products, right? We started with top ups, then we did bill payments and paying POS, remittances, exchange rate, etc., etc. We've continued growing the portfolio and we have a full portfolio of products, disbursements, etc.
Some are just started or started recently and some are more consolidated, but all growing at very high rates. In lending again, we feel very comfortable. Today we have around 6 million people we can lend to. Two years ago we only had 2 million people we could lend to. We're doing 1.5 million loans a month and we kind of started with the mono installment loans. S/200 is very short term. We experimented a lot, expanded the population and we accelerated that a lot. Right now we're finalizing the testing of multi installment loans or the better payments to go to higher loans of longer duration and entering the PMS segment.
A lot of very positive results and also a lot of engagement in our commerce part where we don't see a lot of the results, but every time more and more jumperos are using all of our promotions, etc., that generate a lot of engagement for our other businesses.
I don't know if you can see a graph here, but let me show you a couple of numbers. Since we began this transformation of factoring the SME with the focus that we dedicated to this probe, it has grown by 5 times from PEN 300 million in outstanding balances to over PEN 1.4 billion in outstanding balances as of the close of 2024. If you see the overall supply chain finance ecosystem, this has also grown. What we are expecting is to grow the overall segment by 6 times in the next 5 years. With the technological solutions that we are investing in, we are convinced that they will allow them to gain scalability of our product, offering scalability in the market and reach a broader.
What we expect to see in the next 5 years is those around PEN 5 billion to be nearly PEN 30 billion outstanding for Banco de Crédito del Perú Super.
We've heard from BCP, from Yape, and from Pacifico, and now we're going to hear from Mibanco. I especially like client videos and a client video to also demonstrate how the client perceives the ecosystem and how we are actually giving that value proposition. If we could put the video.
At Mibanco, our ambition is clear.
To become the leading force in microfinance.
Empowering entrepreneurs and small businesses across Peru and beyond.
We are evolving from a lending-centric.
Institution to a comprehensive financial partner, leveraging.
The full capabilities of the Credicorp ecosystem. Our strategy is based on sustainable customer.
Growth, income diversification, and greater resilience in the face of macro-economic fluctuations. We aim to raise the proportion of funding from savings deposits from 13% in.
2024 to the low 20s by 2028.
Additionally, our objective is to increase fee-generated income from 5% in 2024 to the high single digits by 2028, building.
A more balanced and robust financial foundation. A key driver of this transformation is our customer-centric approach. Through our partnership with Yape, we are.
Leveraging shared technology, data, and distribution to expand our customer acquisition capabilities.
This will allow us to offer seamless.
Embedded experiences from assessing credit using Mibanco's proven models to disbursing funds in real time, accelerating financial access and unlocking.
New cross-selling opportunities. Another pillar is the expansion of our insurance offering through Monokera, which allows us.
To serve new customer segments and generate non-credit-based fee income.
We are now able to provide a broader range of products from multiple insurers.
Independently of loans, while strengthening our commitment to financial inclusion.
Our collaboration with Bisipin enhances our foreign exchange capabilities through their advanced FX engine.
Offering dynamic pricing based on branch location.
Time of day and transaction amount.
We are also piloting shared branches with.
MSAPI to optimize infrastructure and offer a full range of services in one place. We have launched Warda Pilots to actively promote goal-based saving among customers with informal financial habits, thereby strengthening their financial resilience. These efforts are further complemented by our strong commitment to comprehensive financial education, effectively equipping micro businesses and informal workers with the essential knowledge to make informed decisions and adopt formal banking practices. By truly executing these strategic priorities in a coordinated, ecosystem-driven way, Mibanco.
Is actively paving the way to significantly diversify its revenue, building resilience and making.
Meaningful impact on the communities we serve.
Hola, mi nombre es Vilmark.
Raimundo, could you briefly share how the coordinated approach for SME is working?
I think we believe that SME, I mean going from the very, very small merchant to the small medium companies, is kind of a space with a huge potential in Peru. We've defined kind of roles for each of our brands or companies. Yape plays kind of a payments logic around. I mean, it has started with the financial inclusion and helps on the payments and all the collections of the business, from the very small, like the taxi driver, to the smaller SMEs. It's an integrated approach. When they start growing, they start using office banking or a more sophisticated solution. We're kind of across the spectrum when we start looking at the lending perspective. Yape is also starting at the very end with digital loans, very small ones, and we'll start growing, starting on our experimentation and going there.
Mibanco brings world-class microfinance capabilities with advisors, with proximity, and typically serves all those bigger micro companies, if you want, until they start growing, until they start needing more sophisticated needs. That's where Banco de Crédito del Perú comes in with a full offering. In parallel, we leverage Pacífico because we can see in terms of offering insurance and solutions across the board. Of course, there are overlaps. It's not like, okay, this is the exact line, and we want them to be overlaps because we want to give different offerings so clients can decide what's the best solution for them. We kind of look at this integrated approach.
We have kind of natural spaces with significant overlaps, and that allows us to have kind of an integrated view of how to serve the segment and how to evolve, how to start building solutions that could be leveraged by each of our companies.
We are convinced that operating as an integrated ecosystem, collaborating, can be replicated in different lines of businesses, and we will deliver growth beyond the sum of our parts. Thank you.
In the last, I would say.
10 years, the investment in and vision for innovation, as well as the appetite for innovation, have increased a lot. How do you see that?
I think that all of these things that we are discussing are in this context. You're an athlete, they're marathons. Right. The thing is, this marathon never ends. I mean, when you think you've made it, you can't stop because everyone else keeps moving forward. What we're doing is not stopping at the finish, but rather continuing on to the next marathon and then the next, so we can keep advancing and putting a bit more distance between us and our competitors. I think we've been doing well, focusing on our clients, caring about our shareholders and looking out for our depositors. I think that's key.
The fact that we have people innovating within, for example, Yape, the most relevant feature that has recently emerged as an innovation, shows that we're on the right track and we are making and have made significant investments to stay as far ahead as possible in terms of modernity.
Oh, no, I can't.
No, I just wanted, moderator.
She's a mother.
So.
Good morning, everyone. Thanks for being here. So far we've been hearing from our team, from our leaders, the opportunities we have going forward, both by standing down, improving experience.
Though I can do it three times.
Okay.
Thanks.
Okay, now it works. Okay, thanks. I'm not going to repeat the whole thing for the third time, but basically we see a lot of opportunities going forward. In this panel, the idea is to have a conversation about the enablers for that growth. I'm joined here by Andre Resende, Credicorp's Chief Technology Officer, and by Cesar Rios, Credicorp's Chief Risk Officer. We're going to have a conversation around what we're building to sustain this growth. I'm going to begin with a broad question for both of you and basically talking on the why. Why are we doing these investments? The question would be from your roles in the corporation, how do you view the opportunities we've been talking about and how can you enable them both from risk and from technology? Cesar, we might start with you.
Thank you, Alejandro. The opportunity is clear. We have much reach. We have, as Credicorp, 18.8 million clients. Out of them, 15.3 million are very active Yape users, but only 2.7 million have a credit. If we take out the only Yape-originated loans, we only have 1.9 million clients with credits in Banco de Crédito del Perú, for example. The opportunity is clear. There is a vast potential. Over the last years, we have been building a close relationship with the clients, integrated clients, acquiring a lot of transactional clients through Banco de Crédito del Perú, Mibanco, Banco de Crédito del Perú, Grupo Pacífico Seguros. We have been also developing analytical capabilities and a solid relationship with the clients. The opportunity is to continue expanding our reach. We have a very solid market share position in Peru, particularly in the wholesale segments and the affluent segments.
There is tremendous opportunity at the base of the pyramid. There is a lot of opportunity to include the unbanked, the underbanked clients using the capabilities that we have been building over the last years. The idea, the ambition is to convert these opportunities to include financial clients into a resilient engine of growth. To do that, we need a very solid technological foundation, which is a great segue to.
Yes, Tom? Working. Yeah. Okay. In terms of technology, we need to support all of this. We knew that since the last, I mean, 30 years. The financial institutions had a big challenge on how to grow and how to scale without risk.
Okay.
We at a certain point did our homework. If you look at our digital transactions, they went up from 36% to 97% in the last years. The number of transactions multiplied by 50 while the cost per transaction had been divided by 10. The key point here is we did our homework in this time frame, but it's not enough now. We are expanding. We need to keep this foundation and grow even further. We are moving a lot of things to clouds, but carefully when analyzing all the steps. We are leveraging new technologies as SaaS. We are enhancing our cyber resilience technologies also as part of this journey. This will allow us to sustain all this growth that we have been seeing in the last presentations. Besides that, I think we clearly believe that there's a lot of room for growth.
These numbers, hopefully in five years we're going to be discussing 10 times that, hopefully, and with the same resilience and the same security that nowadays our clients experience.
Thank you, Andre. Continuing with you, let's move on to the how. How are we strengthening our technological capabilities and creating a parenting advantage for Credicorp that makes it basically more than the sum of its parts?
No, absolutely. Can you move to the next slide please? Okay, we have like five major points in our strategy here. First of all, we want to simplify and modernize. I mean, we see that we have several components in our infrastructure, in our architecture that can be simplified. Less complexity, less platforms, less technologies. This will allow us to be simpler, and simpler means easier to operate, easier to scale, and fast to react. Another thing is one way of working. We have nowadays like 8.5 thousand people somehow involved in software production, products, services, whatever in Credicorp. We are streamlined in the way these people work. Same components, same architectures, same way of thinking. We know that there is difference between the way a fintech works and the way a traditional company works.
We are streamlining whatever it's possible without harming the individual features of each company and bringing this to a reusable approach. If we're doing things right once, we should copy instead of redoing it. Third point, business in a box model. This is one I think that excites me the most. We are moving to what we call regional approaches. We can have for several business that we want to expand further, even outside Peru, other countries, etc. One single platform in one single infrastructure, with one single architecture, one single ERP, and from Peru or other countries serving 3, 4, 5, 6 countries with the same team and the same platforms. This is, in terms of scale and cost, I think the most effective way to do it. Four and five, four centralized functions.
Talking about parenting advantage, we know that several components that are needed in the day-to-day run of the business are not focus of the real business. We see that we can centralize at the parenting level things like administrative systems, procurement, HR, communications. We are building platforms that will provide this as a service mode for all the companies and allow them to focus on the business, all their energy on developing new business. In terms of tapping into startup technologies, here's the partnership with Crello, our venture capital arm, and I was delighted to see the previous examples on the previous panels like Monokera and Tiva and Tempo. We have a lot of very interesting things, very interesting technologies that will leverage solutions for our business. I think it's our major.
Virtue.
here was to be able to combine the disruptive things of the new technologies with the good part of the traditional things of the traditional companies in a way that is very disruptive and winning. The key point at the end is the ambition of technology here is to move from the point of view that we are a key enabler of services to become an enabler for creating new business models or new business growth engines for Credicorp.
Thanks, Andre. Clearly we're building strong foundations, but what's really powerful is when this technology meets data and AI. We have a short video from our leaders to tell us how we're integrating data, AI, and cybersecurity with the technology in order to better serve our clients. At Credicorp, we are integrating data management and AI with strong cybersecurity to deliver scalable, meaningful value for customers across our businesses.
Hard Credicorp. Data and AI are.
Really transforming the way we operate, delivering better customer experiences, greater productivity, and smarter decisions that drive stronger performance.
To support this, we have modernized our.
Data and analytics ecosystems across our businesses, bringing scalability, resilience, and the ability to innovate faster. A major milestone has been the launch.
Of Credicorp's data marketplace, a single space where all of our businesses can share and consume data products.
This is transforming how we understand our customers, enabling more tailored experiences and stronger value propositions. With these capabilities in place, we are ready for the next chapter.
Expanding into new markets, unlocking new efficiencies.
Creating sustainable growth across all of Credicorp.
At Credicorp we're scaling AI and machine.
Learning to transform the way we serve.
Our clients and operate our businesses.
First by enhancing customer experience with Hyper.
Personalization, advanced chatbots, and Voicebot that make every interaction faster, smarter, and more seamless.
Also boosting operational efficiency by deploying AI.
Copilots and productivity tools that accelerate co.
Generation and streamline workflows, freeing our teams.
To focus on what matters most.
Finally, enabling smarter decisions through advanced analytics solutions.
From our ALM optimization tool, which finds.
The best investment query within regulatory limits.
To CRM orchestrators that deliver personalized offers across channels, and we are just getting started.
We are moving beyond copilot that support.
Employees to fully AI-driven agents, digital.
Workers who will help us reimagine entire.
Domains and redefine how our businesses operate.
We are also advancing our cybersecurity capabilities.
Hand in hand with the technology, innovation, and data developments, as part of that, we place cybersecurity as an enabler for the business as well.
As a key area for sustainable world growth.
Adopting the security by design into every application, every architecture, and every process.
First, in data security, we safeguard sensitive.
Information at every stage, storage, processing, and.
Sharing with consistent standards across all businesses.
Second, in cloud security, we protect our.
Cloud infrastructure with robust governance and constant vulnerability assessments. Third, our employees are trained as the.
First line of defense, where simulations help us minimize the human-related risks.
Strengthen the culture of security.
Finally, our third party risk management program ensures suppliers and fintech partners meet our.
Minimal standards and controls.
We follow international standards such as NIST, a framework which guides us to improve.
Our maturity and controls. Cybersecurity is now fully integrated into our risk transformation program, reinforcing resilience while enabling growth, securing our data, our process, and our people. We protect the trust of over 20.
Million clients in our business every day.
Ensuring that innovation at Credicorp scale with.
Confidence and trust securely, responsibly, and sustainably.
Through technology based on cloud, data, and AI.
Within a secure framework, we aim to.
Provide clients and employees with smarter and secure solutions.
This approach places us at the forefront.
Of our industry's transformation and fuels our next wave of growth. We're clearly building important capabilities. Andrei, can you talk a little bit about how our technology investments are enabling all of what we've seen?
I think, I mean Alejandro, things are all interconnected. When we see Eduardo talking about our data marketplace where we are putting together in a clean, standardized, already verified way all our data from all companies, these enable a lot further and faster our capabilities to deliver AI engines to help our security to deliver risk models. This is all connected. In terms of AI, just to mention here, AI is a hype. Everybody's talking about it and there's several ways to do it. Every Monday I receive a mail about a new model, a way to do code. Something which is exciting and nervous at the same time. We are working with the business areas and technology in order to create a way to replicate good solutions of AI. We don't want everybody to just start, you know, coding everything because this is maybe not cost effective.
We are creating a common architecture in terms of AI with a library of predefined models that have already worked in one component to replicate in the others and to leverage everything we have that is good in all the experiences between the companies. I think this is a good way to do it.
Great, thanks. Shifting a little bit, Cesar, going back to you. How is technology, basically the technology investments, changing the way in which we're doing?
Risk and assessing risk fundamentally in the different parts of the business. As we are going to talk shortly during this presentation, we are using technology to enhance our business capabilities, and in the more risk management side as potential as Fernando has told us. We have been able to improve our cybersecurity posture with several measures and embedding best risk practices in emerging risks. In non-financial risks, we are assuring that we capture the opportunity that risk technology brings to us, at the same time maintaining resilience and assurance, a controlled risk to our process and pros as we continue our transformation.
Can we double click a little bit on that and talk a little bit about the day-to-day changes in the risk management business?
Yes. No, I will say it's very directly this integrated data capabilities has allowed us to improve significantly. For example, our capacity to model in shorter periods of time. We have been able to use this transactional data from Banco de Crédito del Perú Yape to improve model accuracy, monitoring, and adjustments over time. We are converting really these capabilities and the capacity to take better decisions. We are also using all of these capabilities, not only as defense, but a real competitive advantage to move faster, to produce better products, and to convert all of these technologies and the capacity to reach better clients with better security at the end. The goal of the risk transformation process that we are embarking on is to capture these opportunities, at the same time strengthening resilience and the capacity to grow in a fast and controlled pace.
The risk transformation process has three main drivers. The first one is protect, be sure that we go through this process with a controlled risk framework. The other thing is steer, be sure that we take decisions in a data-driven manner with stress testing, with solid risk frameworks, and finally growth, capture these opportunities, partnering with the business hand to hand to convert all these capabilities in an engine with growth to be able to expand our portfolios with confidence.
Thank you. I know this is a multi-year program, but can you talk about the results we've seen so far?
Yes, actually we have several results. I am going to share with you some of them. For example, as I mentioned before, using transactional data from Yape and BCP we have been able to improve the accuracy of our models, leveraging the process in which we develop models, cutting the development time in almost half, 43% actually, and at the same time improving accuracy. That has allowed us to open up the possibility to lend to half a million additional clients in the consumer segments. In the PYME segment, for example, what we have been able to do integrating data and modeling capabilities is almost doubling our capacity to originate digital PYME loans. We also have developed the capacity to interact digitally with the client to enhance the offer. We have in Peru the first really interactive real-time capacity to approve a credit online.
There are several other activities that we are doing in this line. As a result of these improvements, we have been able to reduce the provision of the first half of the year to 2025 in relation to 2020, combining adjusting the risk appetite, these improvements in the technology, and leveraging the improvement in the macro, significant reduction, production almost 46% year over year.
Great, thanks. Good results. This is mainly BCP. The question is beyond BCP, what are we seeing and how is this going to help again make us more than the sum of the parts.
We have proved a lot of concepts in this process. For example, we have been working in integrated teams that we denominated speedboats, in which we combined product development, risk assessment, and pricing. We have seen that working very effectively in Banco de Crédito del Perú, and we want to expand that. We are starting to do that at Credicorp Ltd. level, for example, with a more integrated SME strategy. We are also sharing capabilities that we have developed in model validation, monitoring, and pricing in such a way that we actually combine the capabilities of all the companies, tailoring with the needs of specific business units to grow at a faster pace with controlled risk at the end.
Looking forward, what we want to do is to really integrate these capabilities with distribution enhanced capabilities to better tailor the products, the term, the amount, and pricing for specific business lines using centralized capabilities.
Great, thanks. Thank you. Cesar, one last question for you, Andre, so we're undergoing a lot of different investments which are very valuable for the future of Credicorp. How do you consider the efficiency aspect of the future operation?
Yeah, so I mean if you look at the five levers that we mentioned previously, I mean all of them have an important efficiency component. When you find out, talk about simplify, modernize one way of work and business in a box, we are talking about streamline, simplify, standardized our operations in the best way possible. It means reduce of cost in several variables. For example, we're going to reduce number of providers, we're going to reduce the number of softwares, we're going to reduce cost of license, we're going to touch into one thing that Gianfranco mentioned. If we have less platforms and softwares we need, our challenge for talent is a little bit not easy, but it's a little bit less challenging because we need less people that know lots of technology which is quite challenging the market.
Each component that you mentioned here has an efficiency part involved on that as it grow. Observing efficiency is very, a large focus on efficiency.
Great, thank you. We're finishing this panel. I think what's clear is that data, risk, AI, and technology, of course, are certainly not back office but main parts of our growth opportunities and the ways to better serve our clients and to scale with confidence, which is the name of this panel and certainly an important part of making Credicorp larger than the sum of its parts. Thank you.
You were the CEO 30 years ago. Today you are the Vice Chairman of Credicorp. From a personal point of view, what do you feel about during these 30 years and celebrating the 30th anniversary of.
I feel proud of this organization. I started in 1980 working for the group for Banco de Crédito del Perú. In 1987 I went to Atlantic, and in 1990 I joined as General Manager. At that time the bank was worth $50 million. Today the Credicorp Group is $20 billion. In my experience, the pride one feels in seeing what has been built, and today I believe we have the ability to compete head to head with any financial institution in the world. I mean, if you look at the quality of the people we have in our organization, it gives me peace of mind knowing that no one is going to walk all over us. I truly believe we have that competitive advantage. It's also ingrained in our culture, in our concerns.
We are constantly talking about who the next generation is, who is out there, how they are preparing themselves. Will they be able to face challenges and be citizens of the world? I think that's where we are not just proud to be Peruvians, but citizens of the world.
Okay, so now I'm going to make a brief presentation focusing on what we've achieved so far, but actually more importantly on the avenues of growth we see going forward. You saw something similar earlier when Gianfranco showed this. This is our TSR. Since Credicorp inception 30 years ago, we've had very strong results. 14.1% annualized TSR. Compared with our peers, our peer group in the region, we've actually been able to outperform in different timeframes. That is a result of the innovation culture and the disruptive culture that we've been hearing the whole day. I think Francesca alluded to it, but it's not just innovation in a digital way. We were innovative when we decided to bring agents to Peru to broaden our physical reach to our clients, when we included analytics in microfinance.
Then of course the big digital transformation at Banco de Crédito del Perú, which at that time in 2016, we had 20% of our clients working digitally with us. At the end of last year, it was 76%, and it keeps growing. Of course, the most visible result from that digital transformation is Yape, our digital platform, which basically has reshaped the way in which payments are done in Peru and we believe has the capability to reshape the way in which lending is done in the country. It's an exciting opportunity, as Mundo was mentioning. Now, Credicorp has changed in a lot of ways in the last 30 years. Here are some of them. You can see the number of clients since the year 2000 has multiplied by 18. We have 18 million clients today.
The number of transactions has actually gone from 150 million transactions per year to almost 58 billion in this year. If we analyze the result, of course that has come. I don't know how much you see in the back. I'm sorry, but there are some numbers below. It has come with important investments in IT to allow for this transformation and I think it's been very successful in allowing us to do it. We have an uptime of our main eight applications of almost 99.9% compared to a Latin American benchmark of 98.4%. To try and make sense of what those numbers mean, I'll just tell you that 10 basis points is around a little bit over two hours of downtime in a quarter. Basically, our uptime is very strong.
That has allowed us to be able to process all of these transactions with a lower cost, as it was alluded to earlier, and at the same time to generate engagement and principality with clients that have had some very important results that you can see here on the right. One of them, other core income, fee income has grown in an important way. Another one is the low-cost funding, which has also grown in an important way. In 2015, it was like 44%. Today, it's at 57% of our funding, which is a big competitive difference and advantage in the market.
It.
Going back to the different avenues of growth, our risk-adjusted revenue has grown 14 times since the year 2000. What's interesting is that it hasn't been only from lending. Of course, lending has grown in an important way, 17 times, which is good. At the same time, we've seen FX income growing 17 times, fees growing 7 times, and insurance here is only from 2022, which is a fairly new double in its importance. Basically, different avenues of growth are enabled by the things we've been hearing today: the disruption, the different synergies, the ecosystem approach that we are bringing to the market. We've talked a lot in one-on-ones and at different times about decoupling from the macro, which is basically being able to continue growing at a good pace regardless of whether Peru's GDP or the region's GDP is growing strong. I think we've been successful in doing it.
Here are some numbers. If you look from 2021 to 2025 analyzed, we've been able to grow 19% per year. The nominal GDP in that same time period in Peru has been 6%, so it's basically 3x GDP. That same number in the past decade was 1.6x. We found avenues to continue growing despite the fact that GDP has moderated in Peru. Here, I'm going to talk briefly about each of our business lines and try to give you some information on how we've been performing and what we're expecting in the near future. Universal banking has actually been showing important improvement in ROE. As you can see to the left, a shift towards more retail lending, efficient channels, the growth in low-cost funding that I was talking about, and this principality and engagement we've gotten with clients are part of what explains it.
Looking forward, we expect the business to remain with an ROE in the mid-20s. Microfinance looks like a different story. We had a complicated period starting in 2020 with COVID and Pedro Castillo, et cetera, that hurt the base of the pyramid mostly, that hurt our ROE. I think we've turned it around. That 14.1 you see there is a mix between Colombia and Peru, Peru being around 16% today in ROE, Colombia 10% and growing fast. We've learned a lot from the prior cycle. We've strengthened our risk management capabilities, our commercial capabilities, and are basically today in the short term focusing on smaller ticket sizes with higher NIM and efficiencies.
Over time we want to make the business more resilient, trying to build other sources of income and hopefully also some low-cost funding in the business, which is going to take a little bit of time, but we believe could basically make it more resilient and expect that business to be in the low 20s as a return. Insurance and pensions actually have very good returns. The year that looks really bad is basically COVID-related. It was an important hit that's also a result of shift to retail. Monica talked a lot about bancassurance. That's been very important, and we believe there's an opportunity to keep growing in an important way in that business line and expect ROE also to be in the low 20s. Finally, our asset and wealth management business.
A few years ago we redefined the strategy, we integrated operations, we focused on the more scalable and stable businesses of asset and wealth. The strategy has paid off. ROE has been increasing, and we're expecting that business line to have a high teens ROE going forward. Of course, Yape, which has grown into one of the main avenues of growth for the group. Raimundo mentioned some of these numbers. Our clients have basically almost doubled in the last two years from 8 million monthly active users to 15.3 million as of August of this year. The number of transactions per month is at 56.8 million. That basically means clients are using it twice a day. High engagement, which we believe could go even higher.
If you get to see down here, and I don't know if that's possible, our revenues per mile have already crossed and continue widening the gap with our cost per monthly active user. We think it should remain with that tendency. That has been so far mainly due to the payments business, which was the first one, a large business still with important opportunities. If you look to the right, we see the next big opportunity that we have that we're already tackling, which is the lending part. In August we disbursed 1.4 million loans in the smaller ticket money installment loans. That's around PEN 330 million disbursed in the month, and we're basically growing fast and taking a large part of that market. The next frontier comes from the multi-installment side of loans. We're earlier in that process but with very positive signs of what we can do.
I think this is an interesting avenue for growth for Yape, of course, for Credicorp. Now I'm going to talk a few minutes about the avenues of growth we see going forward. You've been hearing about them all morning, but I'm going to give you a little bit more information on those. They come from innovation, loans, fees, and other income. In innovation, we set a clear north star of bringing 10% of risk-adjusted revenue by 2026. We think we're well on our way to achieving that goal and we should do it. By the way, that is with a defined appetite of ROE 150 basis points and cost-to-income 350 basis points. We are on our way to doing that.
What's also very exciting is the fact that we've built a lot of other ventures that are starting to scale and should allow us to maintain that aspiration of 10% into the future. Examples, Francesca already mentioned them. Tempo, on the verge of getting the banking license and allowing us to grow in the retail segment in Chile. Tiva, our wealthtech company, basically just surpassed $1 billion in assets under management and is growing rapidly. A couple of examples of things that are scaling. Other opportunities we see clearly today on the left on the loan side, just a couple of examples. Consumer loans in that segment specifically, Banco de Crédito del Perú has around 16 million clients, but only 15%, a little bit over 2 million of those clients, have loans with us. We believe there's an important opportunity.
These are already clients of ours, and with all the new data we're getting from their transactional activity through Yape, we believe we can have an important update in the lending in that segment. A similar story in SME loans, also a market where we are present with Banco de Crédito del Perú, Mibanco, and now also Yape, but where we think we have space to grow and we're attacking it in a very ecosystemic approach, sharing information between the different channels. I would call them as Credicorp. Of all these clients and with that information on data, we think we can increase the share of that market. A few opportunities on the fee and other income side. One of them is Yape. Although the payments business has grown very fast and it's important, we think the opportunity is still much bigger than what we've achieved so far.
We think it's an area that should continue to grow in an important way going forward. There's one reference here of what CASPI achieves. I assume many of you know them, but it's a reference and we think Yape has an opportunity to keep growing there, generating more engagement with clients, giving them more options what to pay and do in Yape insurance. Monica talked about it earlier. We have more than 18 million clients. Only like 2.4 million of those clients have a voluntary insurance with us. When you consider the low penetration of insurance in Peru and the fact that I just gave you, we really believe that we have an opportunity to really increase our participation in that market with bancassurance, with embedded finance, embedded insurance. I'm sorry, that was also alluded to earlier. We think it's an exciting avenue of growth for Credicorp.
One other one that we haven't mentioned today, but I'll just mention it right now, the remittances business, which has a $1.4 billion opportunity and where we only represent 3% of the market. The reason for that is that we've always been on the distribution side of remittances and we're important there. We have great channels, but the origination part of remittances keeps 80% of the fee of the money involved. We believe there's an opportunity to get into the origination business and increase that share of that $1.4 billion mark. With that it brings us to the expected ROE for the next few years. We mentioned this in the conference call. We're expecting around 19.5% of ROE. Given the pace of the growth in income being higher than the part of the expenses, we basically expect cost-to-income to be around 42% in that timeframe of three to four years.
Just to finish, I'll leave you with three messages. One, I think we've been able to deliver very strong results and a lot of value through our innovation, through our ecosystem, through engagement with clients. The second one is we see clear avenues of growth not necessarily dependent on GDP picking up. We think we have the capabilities. That's the third point, the capabilities to capture those opportunities. By that we have, or we're building the capabilities. As you've heard today, we have the best talent, we have a culture of innovation, self-disruption. We have an ecosystemic approach that we're building where the whole of Credicorp becomes more important than each individual business. We have the best channels by far and we have the most amount of data that will allow us to give our clients the best value proposition. Thank you.
Thank you, everybody. We will now have a five-minute break, and also I wanted to add, I don't know if everybody has been able to see the presentations, but in your table you have a QR code to download the presentation. It is actually a more detailed presentation that tries to have all the messages that we have given here. Thank you, and we'll come back in five minutes.
Sa Sam.
Sa.
That's number four.
Okay, please take your seats everyone. For those of you on the webcast, we are beginning the Q&A session. As a reminder for webcast participants, you can submit your questions using the type your question text box below the broadcast screen. You can also click on the question mark icon located on the sidebar to the left of your screen to submit your question. Also, please do provide us your feedback on this event. For webcast participants, the brief survey can be accessed via the survey link on the Resources tab on your screen. In-person attendees may fill out the survey online by scanning the QR code on your Table 10 card or by completing the printed handout. Please raise your hand, say your name and the company you are representing. Let's open the Q&A. Hi, Lindsey Marie Shema representing Goldman Sachs.
Thank you for this presentation today.
It's been great to hear about all.
The disruptive initiatives in the world work. On that note, I noticed on the very last slide you showed the innovative portfolio finally breaking even. I just wanted to hear maybe a little bit more about that. You did keep that negative 150 bps of ROE appetite.
Understand that is an appetite and you.
Don't exactly have to do that. With the portfolio breaking even, you.
Should it stay that way?
The near future, or do you expect it to kind of go back to?
Contracting from ROE in the near term?
One more, which is just you highlighted a lot of the closer term disruptive initiatives, but maybe just mention.
A couple moon shots, the really emerging.
Things that you're excited about. That would be great. Thank you.
Okay, so remember the last comment for Raimundo Morales saying that the world doesn't stop. You reach a point and then it's the next thing. This is the way we're looking at the innovation portfolio. We have the discipline to get the income, to really have a time frame of giving time to initiatives to mature, such as the Yape old initiative, maybe seven, eight years. It's taken us seven, eight years to build it. Once it gets to the maturity where we feel it's a line of business now that it needs to operate with different rules like other lines of business in Credicorp, it might leave the portfolio, but the appetite to gain 10% more income is still there. The graphic is interesting because you reach the 10% and then you have a portfolio that needs to mature.
Hopefully there will be a lot of initiatives on the path, but not necessarily maintain that 10% steady, so it goes down and up. That's the view around that. As you mentioned, the appetite is an appetite, it's a guardrail. It doesn't mean that we spend that much or invest that much. We have a portfolio of around 30 initiatives where we have a lot of initiatives early on, we kill some of them, and we only get the ones with more certainty mature over time. Tempo is one of the most exciting ones that is coming. Tiva, the investment one, is another very exciting one for growth. Kulki is also maturing within Banco de Crédito del Perú for the acquiring business. Early on, we have initiatives around SMEs and around health tech.
Maybe just to add, one of the moonshots, very early stages, is health. This is public. We had a partnership with United Health. We bought them out in March of this year. The health services in Peru are terrible. Just the very upper segment can reach good quality health services. We believe that with the same vision we had with the app.
Ten.
Years ago, defining that our main competitor was cash. Today, our main competitor is how to.
To.
Improve the access and the access to good quality service by leveraging technology, obviously, stages with positive, and that's a motion. Yes.
Hi everyone.
Thank you for the opportunity, making questions. Daniel from Safa Daniel Vaas I was.
Just looking at your long term goals or long term ambitions for ROEs, it seems not too much optimistic when.
We compare to the great opportunities as you showed, the 10 times and all.
The presentation.
I wanted to hear and touch base on the costs, like the IT costs as a percentage of operating.
Income, we saw a spike since the past 15 years to 8% of your operating income. With AI, you can probably leverage on that technology and AI capabilities for you to decrease, I mean, the expenditures on IT and in CapEx, for example. I think we see a lot of Brazilian banks talking about AI as reducing opportunity and reducing times for shifts in new technologies. It could, I mean, I wanted to hear from you what are the AI's opportunities on.
Costs, because we hear a lot of.
On modeling on credit risks and costs.
Could be also a great opportunity for you guys to capture a better cost.
To income in the long term, ambition as well. Thank you.
Sorry, I didn't get it. Did you say optimistic or pessimistic?
I prefer to see as more pessimistic.
Because you could be more optimistic on your ROEs, right?
Yeah, who wants one?
Yeah, I can start with the ROE. So basically maybe one thing with the 10x and it could be a timing thing. When we think about this ROE, we think about the next three to four year time frame and it's actually built bottom up. We could argue that there's some being a little bit conservative in some of the things that we're building bottom up. Of course there are new things that we're trying to build. It's not that you want to put the most radical or positive case there, but it's a bottom up thing to around again, three to four years. While some of these 10x opportunities that we're talking about won't necessarily have matured at that time. I do think there's potential to keep growing, growing.
In the cost-to-income, as I put forward here again in that time frame, three to four years, we're talking about a reduction in cost-to-income from the around 46% that we've guided this year to around 42%. We're expecting an important reduction in cost-to-income, some of it related to income of course, but there are other things related to reduction in costs on the run of the business and some of them coming from AI and productivity opportunities that we see.
Go ahead. Sorry.
Let me add an additional perspective here. The discipline around cost is very much there, and I think we have the track record of discipline. The proportion of technology in that cost is going to grow, it's not going to reduce, and we're comfortable with that. What we're looking at really is more on the productivity side. When you look at AI, look at content synthesis, content generation, customer engagement, productivity is really capturing each piece of technology that we put, bringing the income around that, bringing the productivity. You've heard throughout our presentations, underserved, underbanked, underinsured, under whatnot. I think the perspective is that the growth needs to come with that.
That was going to be my answer. There's just another question in the back, I believe. There you are.
Hey.
Hi Gianfranco. Thank you. Thank you everybody. Yuri Rocha Fernandes from JP Morgan. I have a question. Actually, two questions here. One regarding your supply chain finance opportunity. Six times multiplier into 2030. What are those companies doing today? What is the cost of risk, the ROA of this product? I'm just trying to understand the economics because you're going to move from S/5 billion to towards S/30 billion. Ballpark on this. It's a big portfolio.
Right?
Right. Just trying to understand the economics regarding this product. If you can share some data and why you believe this is the time to grow this and what those companies were doing before. That's one question. The second question is regarding Yape. The three times growth until 2028, you should not grow as much clients. We get it, you are already too big on it. It's a 20% number of clients growth, right? You are calling for three times revenue growth for Yape and doing a very simplistic calc, you are implying that ARPAC will grow from maybe S/6 towards some S/16, S/17 per client. If you can talk a little bit about these on Yape. How much should be payments, how much should be credit? How should you think about the ROE of Yape?
Because today you don't have a lot of capital intensive and maybe this will be driven by credit and maybe you'll need to allocate capital. Just trying to understand a little.
Bit of the EAP growth as well.
Thank you.
Okay, Johan, you should answer the first.
Yes, you hear me well. Okay. In terms of cost of risk, this is a product that stands between 1.5% and 2.5%. It has a low cost of risk. If you compare it to SME cost of risk, the SMEs range between 6% and 7%. It's a product with a much lower cost of risk because you depend on the payer of the invoice, not on the client that you are lending the money to. There's a low cost of risk. In terms of ROE, currently the product is around 15%, 16% of ROE. This is a product that in the next few years should expand to around 18%- 20% ROE. That's in terms of ROE and why it's a play right now, because the law changed in Peru in 2022, at the end of 2022, and it mandated the Italian invoice to be enforceable in the country.
It is a recent play. It's a play that we've been working the past few years. It's a play of increasing the reach in the market. It's not about playing the current market as it is right now. It's expanding the market. If you see the outstanding balances in the financial system in Peru just this year, it has grown around 20% in outstanding balances. It has a play in the next few years of expanding market and of that market have a relatively important market share as Banco de Crédito del Perú has in any other segment.
Thank you. Right.
In Yape, indeed we're expecting very significant growth potential. I would say that the bulk of that growth is our lending business, which is very incipient, I would say. Even though Yape has eight years, we started the lending business two years ago and if one thinks of the neobanks of this world, it was like eight or nine years before going public and really doing that exponential growth. We've in these past two years invested significantly in experimentation, in understanding, in expanding the population we're willing to lend to and that is starting to pay off. In our kind of first wave of product, the mono installment loans, which will be by definition the smaller part of our portfolio because it's a very small loan, very low duration, but it is the one that starts informing us who is creditworthy for the next period and as we grow.
That's why we believe in lending opportunities, more 10x than 3x if you want conceptually, while our payments business is again growing significantly, more than doubling year on year and very relevant. A lot of our products that are growing at very high rates, the smaller ones, are still in 10%, 15%, 20% of the addressable time. What we've seen in our more mature products is that we can reach 50%, 60% of the time, some because we are replacing the cash economy.
Right.
A lot of our payments we were doing before remittances in Peru or today, most of them are distributed through Western Union offices or, I mean, in general you go and collect. Now it's through Yape. It's taking out that cost of the system and we become much more efficient. You can do that for any of our different businesses. Today I would say payments is like 55-60% of our revenue.
Lending must be.
Lending is like 20 or, I mean, if you do full year, it's probably more in that 15 or 10 or so. When you look at all the benchmarks, the bulk of the revenue is lending. The mix, if we think of 16, 17, probably will be with lending more in the S/8 or more in the 50, 60% range. We can't project exactly, but that is kind of the fundamental shift. Again, if you look at the financial system in Peru, the number of debtors out of the 20 million adults, if you take out the new ones that we come from Yape, it's between 5 and 6 million out of 20 million adults. That's opportunity, the other 15 million that are not served by the financial system.
I think there was another question in the middle.
Yeah, there are a couple.
Hi, Nicola Arriba from Bank of America.
Thanks for the chance to ask questions.
A bit of a different topic.
I'm going to ask about your presence in the bond market, in the fixed income market, at both Credicorp Ltd., the holding company, and Banco de Crédito del Perú.
I think Credicorp. Earlier this year there was a maturity in a global bond that you didn't.
Refinance in international market.
There's no bond outstanding from Credicorp. At BCP, I think.
You're looking to price, I think even today maybe a Tier 2 bond.
My question would be on funding needs and really your idea regarding your.
Presence in the international bond market. If you want to keep a presence.
At the Credicorp Ltd. level and then at Banco de Crédito del Perú.
I have always thought of the TR2s in the case of the Peruvian banks as most likely to be called, because you can issue the old style TR2s.
I wanted to ask you, confirmed.
That's the idea, basically, to continue calling the Tier 2s and issuing the ORSAL Tier 2s to replace those, and also funding needs in senior for BCP.
Thank you.
Let me answer the credit corporate philosophy and then you go to the details. Alejandro, the bond you mentioned, the bond that we called the credit corporate bond, was issued during COVID. It was like an insurance we bought, a cheap insurance we bought. Actually, in the end it had positive carry. If you go beyond that issuance, we've never issued, we've never issued in the capital markets, and the plan is not to issue unless there's something relevant to do with that money. Philosophically, it's not by leveraging for the sake of leveraging at the holding company. I'll ask Alejandro to answer the BCP.
Sure. Basically, from a pure funding perspective, today we don't really have much needs. Going back to what I was mentioning about the growth in local funding, I think we're okay. If you see the recent issuances by Banco de Crédito del Perú, they've been in Tier 2 bonds and it's more related to capital requirements as we go fully loaded Basel 3 at the end of next year. The capital buffers we want to retain because we're fully compliant with Basel 3 even today, but we want to retain certain buffers. That's the reason why you've seen us in the market with Tier 2 bonds. As you mentioned, we are in a process exactly as we speak. Again, it's more capital related than funding related. Historically, what we've done is being capital related. We want to keep the bond for as long as it is valued as capital.
Going back to your call on call, of course, each one of those has to be approved if we call them or not at the board levels.
So.
That is the philosophy behind it. We of course want to have options open. We like to be close to investors and to potential buyers of our bonds and open new markets constantly just in case at some point you need to go. Again, today there's no real funding need, it's more a capital need.
Maybe a segue to your question, which in my opinion is very relevant, is BCP used to have 39, 40% market share of retail deposits. Low cost deposits today has like, sorry, when you have 40% of market share, it's almost, quote unquote, impossible to gain market share. Right. Because of the initiative we have had around War on Cash, the most relevant being Yape. Today the market share is around 44% and the play is not how to gain market share but how to enlarge the market. Most of that gain in market share has come from savings that were under the mattress before and by financial inclusion. Sorry. There has been a collateral benefit for BCP overall and that 57% of cheap funding that we've got, we've reached, maybe in the future might be slightly higher too. There was a question somewhere.
Yeah, thank you for the presentation.
Andrew from Morgan Stanley here. Throughout the discussion, there was a lot of emphasis around consumer lending expanding retail.
Lending at the base of the pyramid.
My question is, especially with the new developments and technology tools, AI modeling.
What pace do you think you can?
Kind of grow that retail portfolio? Currently, retail loans account for about 56% of the book.
Do you have an ambition or target?
To where you want to see that.
Grow over the next three, five years?
As you do this, are.
You targeting similar risk-adjusted returns? Are you hoping for higher risk-adjusted?
Returns with these new retail borrowers?
What is the long term impact?
To the net interest margin of BCP and Credicorp from this strategy?
Cesar?
Yes, thank you for the question. Actually, we have been growing the participation of the retail book in BCP and Credicorp. In general, over the last years, if you go back several years ago, it was more below 50% retail and now, as you say, is a little bit above 55%. We expect to continue to change this composition as we gradually grow faster in retail than in wholesale. In wholesale, we are going to grow mostly aligned with the growth of the economy. In retail, we have two, I will say, two opportunities to improve our capacity to lend better to our more traditional segments and to go further in new segments using new technology, cheaper distribution channels as Yape, for example. Gradually, we are probably going to go around 1% displacement per year until some point in which probably more, given for risk appetite frameworks.
We are going to frame a share in the market that we consider reasonable to do that with confidence. We are building a lot of tools, as I mentioned previously, in terms of modeling, monitoring, portfolio management tools that allow us to have a more comprehensive vision of what we are originating and a very Credicorp vision also. For example, in SME business, as was explained previously, we are integrating the capabilities of Yape, Mibanco, BCP to have a coordinated approach to tackle this segment.
The impact on risk-adjusted NIM, the vision of risk-adjusted NIM, is very, very important.
Very important because it is very important. Yes, because actually what we manage the business is not by line, but I will say profitability for segments, and our main goals are number of clients, volumes, and the expectation is as this gradually, the cost of risk is going to grow. The risk-adjusted NIM is going to grow a little bit faster. Even in an environment of reducing reference rate, our expectation is to grow the risk-adjusted NIM probably 10 bps per year as we adjust the portfolio.
I think we have a question from Andres. Carlos.
Also.
Carlos.
Thank you, Carlos.
HSBC, first, thank you once again for organizing this event, and we look forward.
To the 40th anniversary.
In the year.
You will miss me.
Two questions. One, on the technology side, could you give us an update on how much.
You intend to invest in Tempo?
Because after all, that is a full bank. That seems like a big project.
We have not heard about EO before.
A while, and that was launched. I
Think two years ago, and it was a new replacement. We wanted to know where that stands.
Second, more at the macro level, in your projections and your expectation for 19.5% ROE, how sensitive is that to the.
Level of interest rates?
Thank you.
Yeah, you can answer the last one, and then we'll go with Tempo and sure.
There's a theoretical exercise and then I'll explain what we expect in reality. The theoretical exercise, which is 100 basis points of rates coming down both in soles and dollars in a parallel way, has a lot of assumptions there. It's a 17 basis points impact on margin, which basically 15 of those 17 come from the dollar portfolio based on maturity and repricing. In reality, we've been able to actually improve NIM in this cycle of rates coming down. Just to give you a number, in 2023, which was the height of rates, we had a 6% NIM and we are targeting to close this year with a higher NIM than that number. How have we done it basically?
As you know, there are a lot of forces at play, if you will, but this increase in low-cost deposit and this shift that Cesar Rios was mentioning towards the retail portfolio has allowed us to maintain a resilient NIM, actually grow it a little bit from 2023 and probably maintain it in the coming years as we improve the risk-adjusted.
Yeah, I'll take the Tempo question and then pass it to RAI for the EO question. Tempo is the largest investment at the Credicorp portfolio. We may have invested so far $200 million, $250 million, mostly to cover losses, some of it because we're in the process of getting the banking license and some capital requirements going forward. We expect to reach break even by 2028. 2028, we're on track, but I would argue that we're going faster than what we expected. Especially what has surprised us a lot is that it's a complex structure. I don't want to get into the details, but the level of deposits we're getting because at some point in time, basically till World Bank, we're funding the growth by equity, which is not sustainable. Even though on the lending side, which is basically credit cards, it's performing quite well.
At some point we slowed down that growth because we weren't sure how the deposit traction was going to be and it has surprised us in a positive way. So far so good. $250 million roughly. Investment Tempo, 2 million clients, over a million active clients going at a better pace than the original business case. Really?
Yeah.
Regarding EO, EO is a different play, significantly different play than Yape or Tempo in terms of scale and size. It is a niche play, but focused on the young affluent segment if you want. Getting that right takes time. We've been working in the past two years to kind of crack what's the value proposition that really generates engagement, significantly higher NPS. Our bar is very high on when to really accelerate and scale, and we've been doing a lot of testing in terms of product and also to make sure we can get the unit economics positive. That is the work we've been doing. The results currently are very positive, in a positive spot track. We would expect if things continue going this way to do an acceleration probably next year.
We didn't want to just grow for the sake of it because this is a segment where we really want to reach a segment that is high demanding. It's not the first card. I mean, it's already digitized and banked.
Client, maybe Carlos, that's an example. Going back to my conversation with Francesca, we always talk about the successes. EU is one example. I wouldn't say it's a failure, but we've struggled a lot. It cost us more money than what we expected. It's not at the level where we expected originally. As Raimundo said, we're correcting the business. Again, that's a great example of some things don't work.
Right.
Yeah.
Andres, we will switch for a moment to the webpack question. Go ahead.
Andres, thank you.
Thank you, Jeffrey and Quantim, for the presentation.
My question is, it's clear that you.
Have a huge opportunity in Peru ahead of you. When you reflect upon what has.
Been the history of Credicorp recently.
The expansion into other countries.
At some point you thought Mibanco, the microfinance lending business, was going to be the spearhead to international expansion. How do you see your portfolio of.
Assets, how you envision the next 30.
Years in terms of is it going.
To be still Peru?
It's going to be a Latin American platform. How do you see the different business playing in that space? I would argue that we've been victims of our own success. As the first slide I showed, Peru has been the economy or the country whose economy has performed the best along Latin America. When the country, the economy that is growing the most among the reasonable markets for us is your stadium, your country. You'd rather play local than visitant, right? Going to soccer or whatever sport. The story for the last 15, 20, 25 years in Peru has been a story of success for the country. That's one. I would say that's one of the most important reasons why we're still a Peruvian company. 95+% of whatever indicator you have, you can measure, is Peru.
Having said that, going forward and part of the decoupling strategy is how to increase—it's not reduce, it's increase—our presence or the relevance of other countries in our businesses. The logic behind that is how to leverage on the ecosystem we built both in Peru, but we have some assets or some pieces of the ecosystem mostly in Bolivia, Colombia, and Chile where we can add, through some add-ons, start growing at a faster pace. That's where we stand. Going forward to your question, we expect nothing concrete whatsoever, but our vision is that we should have a stronger presence in other countries in the next 10 years.
Perfect.
If I may follow up on.
The strategy for Yape and your thoughts.
On whether it makes sense to keep it inside Banco de Crédito del Perú or do a spin off and in terms of the international.
Expansion of Yape, you are already in Bolivia.
Are you considering entering any other? Yes, there are two questions there. We've discussed a lot internally with some of you regarding whether to spin off Yape from BCP or not. In the end, it's a matter of generating value versus unlocking value, right? Where we stand today, and nothing is carved in stone, but today the decision is we're not going to spin off Yape because there are a lot of synergies. Having Yape within BCP, we're going to work in disclosing more information so that the market can understand the potential of Yape and value Yape within Credicorp correctly. On top of that, Yape is strategic for Credicorp's growth for the next 10, 15 years. That's where we stand today regarding what to do with Yape internally. As we speak, we're evaluating other countries in Latin America. Let me go a step back.
When we decided to go to Bolivia, it wasn't because Bolivia is the sexiest country in Latin America, but it was because we wanted to prove the hypothesis that Yape could be successful without leveraging on the largest bank or the most relevant bank in that market. We've been quite successful in Bolivia. In relative terms, we've been more successful in Bolivia than in Peru. Bolivia already has 3 million active users. When we launched Yape, BCP Bolivia had a small app there. We had like 4 or 5% of the market. Today we have 32 and 25, 25. It's performing quite well. The hypothesis has been proven. What we're doing today is evaluating what countries are similar to what Peru was in terms of cash usage 10 years ago. We have had some very interesting surprises, positive surprises.
There is a large country at the north part of Sardon.
Okay, I will switch for a moment to the webcast questions. We have a question from Ernesto Lavilondo from Bank of America. For many years we have not seen fintech competition in Peru like in Brazil or Mexico. Recently we noted Revolut is applying for a digital banking license in Peru. Given Revolut's experience in other countries, where do you see they will be more aggressive in the Peruvian market and what would be Credicorp's advantages that has been preparing for that.
I mentioned the paranoia and the humility at the beginning, and I think this is exactly it. We're very aware of what's going on in the markets, and we've talked about the innovation strategy around business domains and horizons in time. We do look at this in terms of what businesses we're at, whether it's SME, retail, banking, insurance, et cetera, and also the horizon in time of how radical the innovation is. If you look at our portfolio, we're doing things Alejandro mentioned, the cross-border, we're aggressively pursuing five or six initiatives, whether it's receiving the remittances, whether it's originating the remittances around Yape, whether it's investing through Creallo in Remedy Technology partner around this business. That's one part. The other part is the lending piece, which is huge, huge.
We mentioned Warda, the savings piece, and all these pieces are what we see different competitors or different startups or fintechs actually pursuing innovation around. What we're trying to do is have the pieces there with the distribution power of Credicorp. Yes, we're attentively looking at this, and we think we're pursuing all the right paths to be able to gain the principality of our customers, which is what we want in the long term.
Okay. I will follow up with another question about innovation, also from Ernesto. In the past, you have mentioned disruptive initiatives should represent 10% of risk-adjusted revenues by 2026. How do you see this evolving by 2028?
The graphic that Alejandro Perez-Reyes mentioned didn't have a timeline. No, exactly. It was just a concept. What I said in the beginning is that the maturity and the profitability of this investment take time. We have a disciplined governance and method to do it. What we expect is maybe the next three or four years. We still have to clarify this. Get again that 10% with the most mature initiatives in the portfolio. I wouldn't say 2028, but close to 2029 or 2030. We will be looking at the Tempos and the Tivas, the most mature ones.
Maybe just to complement that. I would love to have a Yape every year, but this is hard. Going forward, I believe that it's achievable that when Yape graduates from the disruptive portfolio, we don't have another Yape. Tempo might be relevant, but I don't think it's going to be as large as Yape. From a portfolio point of view, it's much better to have, I don't know, six initiatives that when you'd add them up, reach 10% than having one that adds 10%. Philosophically, we're in a much better position for the upcoming years.
Great. Now we have a question from Andrew Stobar from Bailiff. Are you being ambitious enough with your long-term targets for ROE and cost-to-income and loan growth? I think you have commented already about ROE. Maybe we can comment a little bit on cost-to-income and loan growth.
Great question on loan growth because one of the charts Alejandro Perez-Reyes presented is going to help my point. We have had this conversation with several of you. If you see our loan book over the last five years, it has been flattish. Basically, profits have doubled. Obviously, lending is a core part of our business. NIM is. NII is critical to our business. We're not only a bank, and we're not only a bank that lends money. We have other sources, other relevant sources of income. The fee income business in general has been growing at close to double digits over the last four or five years. The appetite for loan growth is there. Alejandro, you're going to help me with that. I would like to take advantage of this question to highlight that the business is not only about lending; it goes beyond that.
Yeah.
I would just add that we agree completely with what Gianfranco is saying. We do see loan growth picking up in the coming years. We've had a few years of really subdued loan growth in Peru due to a lot of events starting with COVID and a lot of precedents, et cetera, et cetera.
But.
Things I believe have changed. We see more activity and in our numbers we are including a reasonable number in loan growth for the next couple of years. I'm not going to give you the number, but I can tell you that we're talking about low double-digit growth potentially in the coming years when we look forward, especially thanks to the retail. Retail part growing a little bit faster or actually, yeah, growing faster and wholesale we mentioned very much tied to the economy. As for the cost-to-income, again this might be a timeframe issue. When I showed the 42%, this is a number we're aiming for in the next three years. We'll have to see how we capture more efficiencies. I did want to mention something and it's that 42% is the cost-to-income for Credicorp.
The reason why I mention this is because a lot of people compare that number with banks and we're not just a bank. If you look at the number for Banco de Crédito del Perú today, it is 39%, very competitive in the Peruvian market and we have aspirations to bring it down in the coming years. It is a good cost-to-income. The thing is that we have other businesses that operate at higher cost-to-incomes. Microfinance can be closer to 50%. The asset and wealth management business can be closer to 60% as an industry. My point is that blend takes us to the 42% in the not so distant future. Of course, we're always looking at opportunities to keep improving on that.
Okay, now I'll go with a question from Mark Lien from Lazard. Mibanco continues to leverage on the wider Credicorp ecosystem. However, Mibanco's ROE to date still lags versus itself in 2019, unlike Credicorp's other business units. Given a spate of restructuring at Mibanco over the past years, could the panel comment if Mibanco's addressable OPTI may have been raised, resized, or even cannibalized by the strong franchise growth in Yape.
Yeah. Peru has gone through a perfect storm over the last, since 2019 or whatever. Covid, Castillo, I don't recall how many presidents in the last five years. Seven or six presidents. Six presidents in the last five years and so on. The most volatile segment or sector is the micro entrepreneurs. It's not only a story about Mibanco. The ROE of Mibanco, the ROE at Mibanco, for Mibanco competitors, has been in the single digits or even losing money. As Alejandro mentioned in his presentation, Mibanco's ROE is coming back. We're positive, confident that the low 20s, we're on track to reaching the low 20s ROE, which were the ones we had in the past, by the way. We had this conversation among ourselves a few months ago. The ROE of the microfinance business since we got into the microfinance business in 2009, the average ROE has been 17%.
So far, so good, I don't think. Let me go a step back on top of that, and I always criticize the Mibanco team, is that we've been doing half the business of banking at Mibanco, which is lending. When you compare the Mibanco lending business, overall business, sorry, which represents 95%, 94% of its total income, to BCP's SME lending business, Mibanco performs better during this last five years. The issue is that for BCP lending, SME lending at BCP is 35%, 40%, and the other 60% is deposits and fee income. Mibanco has no value proposition in terms of fee income and deposits, and we're working on that. Going forward, we're not only building a company that's going to be back at the low 20s ROEs, but also a more resilient company. Regarding the question on Yape, Yape is playing around SME today. It's very tiny.
However, if we project ourselves, I don't know, two, three years down the road, you could argue that we're going to end up with three different business models or three different channels serving the same, quote unquote, segment. Yape, Mibanco, and BCP SME. Today, we don't care. It might not be the most efficient way of doing business, but it's definitely the most effective way of doing business today. Mibanco is an expensive model, but it's a proven model. Yape is much cheaper, but it's unprofessional. We need to figure out what's the best model to the best clients at the best segments. That's going to take two, three years.
Down the road and also just to complain. We're also experimenting between, hey, if we disburse Mibanco loans through Yape because of the relationships, is there a way to get the best of both worlds together? There's going to be a lot of experimentation and exploring in the next couple of years around that world.
If you may add sharing capabilities so each one can improve.
Okay, yeah, we will switch back. Monica has a question.
Hi, Monica from Lazar.
My question is, as you increase this cooperation between the different divisions, which in some ways you have deliberately placed to focus on certain industries and certain segments, how do you incentivize the people working across correctly so that you as a Credicorp entity can benefit?
That's question one. Second, as you.
Target these, this microfinance lending segment, et cetera, are we facing any regulatory headwinds from rates being captured?
Yeah. Regarding question number one, our compensation packages, we have different compensation packages but are very variable oriented. A bulk of our compensation is variable and based on, as you mentioned, indicators. We've been evolving, I believe we're not there yet on how to have shared indicators not only at this level, but 2, 3, 4 levels below. A great example is bancassurance. That's another story of us sharing the success. That has taken us, I don't know, 10 years of fighting among the different subsidiaries because we didn't have what you just mentioned, we didn't have common indicators. Today the bancassurance teams across Yape, Mibanco, Pacifico, and Banco de Crédito del Perú, they all share exactly the same indicators regardless of what company they're working in. I don't know if I answered your first question. Regarding the second question. Regulators, technical regulators.
The central bank and the superintendency were against rate caps because they're technical and they realized that rate caps generate financial exclusion, not financial inclusion. Unfortunately, political regulators are not as savvy. Therefore, somehow they came up with a solution that even though it's not perfect, is suitable, which is we have rate caps, but they're very high. Actually, we operate obviously below, but not only below the rate cap, but below that maximum. We don't see, again, politicians are politicians, but we don't see any headwinds, as you mentioned, in terms of reducing those rate caps in the near future. As a matter of fact, we operate a microfinance institution in Colombia. Colombia's GDP is 40% larger than Peru's GDP. The informal economy is quite similar. The whole microfinance system in Colombia is smaller than Mibanco Peru. Makes no sense.
The main reason is rate caps, which are lower, much lower.
Okay, we have one more question.
Hi, Renato from Autonomous Research. Thanks for the presentation.
You showed that your average transaction revenue-generating transaction at Yape is about $7.3 per average user, right.
Where do you expect to get.
By 2028 and in the long term?
If you could break down how you're getting there. Second, just a quick follow-up on the international expansion. When should we expect any announcements on that? Is this something that's more the long term or something that's more imminent? Thank you. On the first one.
It's tough to.
Predict, but you see per transaction or revenue-generating volume today is around 11% or 12% of our total payments volume. We expect or we aspire to have that number at least twice as big percentage wise. Our total payments volume is also a moving target, right? It is increasing 1.8x year on year or 2x. It is an exponential growth. If we translate that to transactions, maybe it's probably more than double. We don't know the exact number today, but we're bringing more and more functionalities. I mean, if we think of the, we have 15 million MAUs, right? Our top functionalities have like 7 million.
Mouse.
Top ups, maybe bill payments. You have the QR codes that are between $5 million and $6 million, and the rest are below $1 million. In terms of payment, as those start increasing frequency, we will see significant uplift. Also, the QR POS payments, et cetera, are going to have frequency within each user. We are seeing significant uplift potential there.
On your second question regarding M&A tomorrow. The serious answer is, and we were talking about with some of you before, we shifted the strategy. We've done a lot of, I don't know if a lot, we've done M&A transactions throughout the last 10, 20 years, but we've been very reactive, waiting for the transactions to show up. Two years ago, we shifted that, and today we have a team that is constantly looking at what's going on in Latin America in the businesses that are either core to us or adjacent to our business. There's nothing relevant on the table, but obviously we cannot provide any additional information.
Yeah, does it imply that you would?
Do that via M&A or.
You can just expand?
Actually, it's both. Yes, it's both.
Okay, thank you.
Thanks.
Okay, I will go back to the webcast. There's a question from Alice Pupesco from Altrinsic for Pacifico and product factory distribution via Monokera. Please elaborate on the speed and breadth of rollout plan. All distribution channels, platforms at once. What are biggest execution risks do you foresee?
Monica please.
Yes, about the speed with Monokera. As an example, the last product that we have just launched with Monokera.
Took about.
Two sprints. That's about a month to make the whole product configured on the platform, and to launch it through a channel it's almost three months. If you put it from the beginning of the process till it's on the market, it's about four months to launch a new product. That's very, very fast. Right. For example, in Yape, we now have almost six products on production in Yape, and we have launched these six products in a year. You can see how speed is really getting faster with Monokera.
Yeah, maybe to complement Monica's answer, the challenge Pacifico has is not about distribution channels today because we've been talking about the Peruvian, sorry, the Credicorp ecosystem, which has, if we add up all the clients, is like two times Peru, something like that. Pacifico also signed an exclusivity agreement with Falabella, which is the largest retailer in Peru. Pacifico today, in terms of channel, has the largest bank, the largest microfinance institution, the largest digital wallet, and the largest retailer. The challenge Pacifico has is how to not only develop and launch, as Monica mentioned, the product factory and be quite fast, but also to kill products fast that don't work. Work on adoption and somehow we're going to, by testing and learning, come up with the right value proposition for different segments and through different channels.
One more point, I think Monokera is a Latin America company, it's not a Peruvian company. This gives us optionality to operate in a different part of the business in the region as well. Testing the markets in Peru, how to connect to mobile banking, to Yape, to different channels. This goes to the point of the investments that we have are looking at a regional view, not only a Peruvian view.
Okay, last question because we are running out of time. Also from Alice, today you have continued to emphasize the message about growth, growing growth coming both from lending, but also other elements. To that extent, what is the normalized capital level? Seat one, would you optimize from here across the long term, Alejandro?
Sure.
Basically, I'll explain the philosophy that we follow when it comes to capital. The main subsidiaries that have restrictions on capital, BCP and Mibanco, we have a minimum level of CET1 in which we want to operate in each one, being 11% at BCP and 15% at Mibanco. All the excess capital at those companies, as well as in the other companies in Credicorp, go up to the holding company once a year. We distribute everything that's not going to be needed as a dividend, we retain a little bit. Depending on the year, if there's no strange or unexpected situation, positive or negative, we pay a second extraordinary dividend. That's just depending on the year. The last few years we've been paying increasing regular dividend. Last year we paid an extraordinary dividend. This year, as we mentioned in the call, we won't.
Again, we optimize for capital all the time, take it up to the Credicorp level and pay out everything that's not needed for the growth of the business.
Aren't there any questions? No, because I want to address one point, one issue that surprisingly, no one has asked. Because whenever we're in a private conversation, it always pops up, which is elections. A couple of messages, or maybe three messages, one today, unless we have a crystal ball, we have no clue who's going to be president. 37 candidates, too soon to tell. Most importantly, the second message is the country is going back to two chambers. We're going to have Congress and Senate, and for any party to reach either chamber, they need to get at least 5% of the votes. Mathematically, no party may reach. Actually, if we divide 100 by 37, it's less than 3%. Jokes aside, the experts say that anything between four to seven parties should be at the chambers.
We expect much less volatility in terms of political issues going forward after the elections, regardless of who becomes president and so on. The third message, which is, for me, the most relevant message of all, is Credicorp's performance. Over the last 30 years, we've navigated leftist governments, rightist governments, dictatorship, quasi-dictatorships, long tenures, short tenures and so on. We've performed, I would say, quite good. We're used to navigating. I don't want to look arrogant whatsoever, but we're used to navigating in those choppy waters. We feel quite comfortable that, as Lucho mentioned before, the best of Credicorp is yet to come. Thank you so much for joining us. I have a speech.
Thank you everybody for your questions, and also I would really appreciate the feedback. You are having some handouts around, so please do it. Thank you.
Thank you all for joining us today. Celebrating 30 years on the New York Stock Exchange is a big milestone. It's really about the people, our teams, our clients, and you, our fellow shareholders, who have been part of this journey. We've shown you today how far we've come, but what excites us the most is what's ahead. We have the scale, the digital edge, and the purpose to capture the next decade of growth. We're doing it while bringing more people and small businesses into the financial system than ever before. If there's one message I want to leave you with, it's Credicorp's ecosystem today is strong, stronger, faster, and more focused than ever before. We're not just ready for the next chapter. We have the playbook, the talent, the capabilities to lead it.
I hope our presentations today helped you understand how Credicorp is greater than the sum of its parts. Let me close by echoing the words of our Chairman at the start of this Investor Day. The best of Credicorp is yet to come. Thank you for your trust in us.
Us.
Now please join us for a toast, to be followed by a Peruvian lunch. Our team will be available to answer any further questions. Enjoy and thank you very much.