Credicorp Ltd. (BAP) Earnings Call Transcript & Summary

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 you that 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 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. And now let me go through a couple of logistics here. After the management comments, we will have a 5-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 tableau text box below the broadcast screen at any time during the presentation. You can also click on question mark icon located on the side bar 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 tent card or by completing the printed handout. Now I will pass 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 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 Secretive Chairman, Luis Romero.

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, all group like ours, anniversaries are not just moments to celebrate. There are moments to reflect on the vision that has carried us forward and to renew our commitment to the future. 5 years ago, I addressed you, for the first time as Chairman during the 25th anniversary, I had assumed this role amid challenging circumstances brought on by the pandemic. At that time, I emphasize 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 enhance our organization strength, demonstrating notable resilience through disciplined execution and a strategic long-term planning. These resilience enabled us to further distance ourselves from our peers and emerge stronger than ever. In 30 years, we have navigated multiple crisis 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 in Credicorp 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, patient becomes almost revolutionary. Our ability to focus on the long term and to remain steady has allowed us to decouple from the macroeconomic 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, 4 priorities will remain at the heart at our strategy. Pillars that I believe explain not only credit cost longevity, but that of every institution that induced beyond a century. First, purpose. At Credicorp, our purpose is clear: 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 onetime 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. And 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. And finally, governance. Governance is essential. Good governance reduces the risk of errors, strengthening trust with our shareholders and ensure 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 ensures accountability, discipline and alignment with the interest of all our stakeholders. These 4 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 a conviction on finance can be a driver of progress. In communities like the ones in which we operate, where urging needs persist, the private sector has a moral duty not just to describe problems, but to act and drive change. We embraced our 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 leverage AI to deliver greater experiences through hyperpersonalization while enhancing productivity and efficiency. Our proven ability to decouple from the macroeconomic cycle sets us apart. Even in challenging environments, we have consistently created value, expanding -- expanded inclusion and fortify 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 a region and beyond. I want to close with gratitude to our investors. Thank you for your trust and patience to our employees, more than 43,000 across the region. Thank you for your dedication and commitment with our purpose and to our clients. Thank you for challenging us every day to improve. And let me leave you with this final remark. The best of Credicorp is yet to come. Thank you.

As we mark our 30-year leasing 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, will share how we are building the next chapter of transformation at Credicorp. Thank you. [Presentation]

So let me start by saying that 30 years have gone by and your English has improved drastically.

It's not only my English. [indiscernible] English has been better. I didn't know he has this posh accent. I'm talking about it's incredible. Actually, this -- the interview was only in Spanish, and obviously, we used AI for translation, something that was impossible 30 years ago, and 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. So for me, the most relevant part rather than being here today is what we've done through the last 30 years. And basically, it's not only a story about Credicorp, it's also a story about Peru. Peru has outperformed the -- 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. But if you measure debt to GDP fiscal deficit, as of today, trade balance, you name it. It's been really, really good to the country. Some of you have visited us. And the country you visited -- if you visited the country 30 years ago, you compare where -- how the countries today is 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 it was a poor "area." As I mentioned before, poverty has been reducing by 50%. The involvement of economic active population has risen by close to 50%. So whatever indicator or macro indicator we can do -- 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 lead that way. As you can see, the 30-year TSR -- average TSR has been over 14%. We grew not only organically but also inorganically through different acquisitions in micro finance insurance in banking and so on. Well, and here we are. Here we are with a lot of expectations on what's coming up next. But I will like to have your vision about your experience during these 30 years within Credicorp.

So definitely, I think 1 of the boldest changes we see is the focus on innovation, been very explicit on that. But if you look at 3 years ago when we communicated our disruptive innovation strategy, we also reflected on -- this hasn't only happened 3 years ago. 10 years ago, we started a digital transformation for BCP. And we actually really changed the way consumers not only the landscape that you mentioned, but also the way consumers transact it. So we've been working hard around digitizing the country. 24% of our transactions used to be cashless. Now 84% of the transactions are cashless. So that is a huge change. But if you look further back, Credicorp has been innovating for the past 20 years. We created a different net -- physical network called correspondent banking, which actually changed the convenience factor in the country. And we also entered the SME segment, which was very innovative at the time. So this is something that's been going on for the 100 years that Credicorp has been operating in the country. So what do you think is the main ambition? Where do you think that this...

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 a 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. And we had a lot of our 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. And this is an example about -- in BCP, but it's across all of the companies, but the cost to serve per client has been reduced by close to 20%. NPS has skyrocketed among different -- 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. So we really I'm very proud of it. We really achieved this objective of being -- or providing the best experience regardless of the industry, but at the same time of being much more efficient in serving our clients.

I agree. And 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. And this is the approach that we're taking in many of the other lines of business of Credicorp. And 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 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. But also if you look at BCP, BCP now has 8 million customers using their mobile app with 20 log-ins 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 investment to make 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. So I think this -- the real change of approaching the whole thing in a much more customer-centric way is really connecting with our customers and our markets. But 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. [Presentation]

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 know. So for you Gianfranco, what has remained constant over time?

Yes. One of 1 million histories, right, of stories. Well, first of all, culture. I'm sure to every single company presentation, you go, everything single company mentions culture. But I really believe that -- even though we've been flexible enough to adapt our culture to the -- 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. Different from the culture we have at Credicorp Capital. But it makes sense. One serves the micro entrepreneurs, the other one serve wealthy clients, we have a large asset management business. So the cultures need to be different, but some commonalities have to stay in place. So we -- the culture is there, our culture -- Credicrop's culture, I mean, trickles down to all of the subsidiaries. But 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 the Credicorp for over 30 years now, for 30 years at Credicorp, but we got employed even before that. And it's real. So 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. And that's the reason why we -- 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 up 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. So again, this keep investing in talent. And as Luis mentioned before, people -- 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 have -- we build longer relationships. And maybe the fourth one is 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.

And 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, the 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 designed value offerings for our customers. And the talent landscape is completely different to when I started at Credicorp. So 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?

So let me go -- start with the 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, the macro specifically -- especially in Peru, but it's across mostly Chile and somehow Colombia. The macro indicators are very solid. So that's number -- reason number 1 for being positive. The second reason is commodity prices, specifically copper. And copper because of the AI, 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 5, 10 years, that means energy and energy means copper. And Chile is the largest producer of copper in the world, Peru has the largest reserves in the world. I believe it's the second or third producer. So -- and actually, a couple of research report -- recent research report say, the copper price should be anything between $5.50 and $6 per pound. That's a huge benefit for both countries. So that's reason number 2. Reason number 3 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, it's not the case. That's more on the macro. On the financial businesses, still the banking penetration, insurance penetration, health penetration in the businesses in which we operate are still very low. Even though we've advanced a lot and we're going to share some of those -- some of that progress in the upcoming presentations. There's still a lot of room for growth. And finally, I really believe that in our case, I would argue that our success in the past -- in the physical world was built on being -- having the largest network of physical presence, either branches, ATM, correspondent banks and so on. So the key was how to -- how to be -- again, the largest network. And that's -- in the end, it's convenience. So 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. Today, that convenience is here, right? It's my app, my banking app, my Yape app or whatever. So the play is UX, in my opinion, is how someone as a client can solve its daily needs in the best -- with the best UX in his or her phone. And that's the investments we're doing for the last 10 years, but even investing more and with a much more appetite nowadays.

So definitely distribution is going to continue to be disruption. The innovation portfolio really focuses on finding new businesses and using the distribution capability that we've developed through Yape, of course, and BCP and the other lines of business. And 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. So 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 neo bank in Chile. But we're also working around other capabilities, such as [indiscernible], the automatic saving capability that has daily rules for people to be able to save. And we're seeing good traction over almost 1 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. So 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. But maybe this innovations and everything that you've been talking about, you mentioned talent require the right people. So 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 are shifting philosophically from hiring the best MBAs because you have an MBA, which is still relevant, but 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 behind those success stories, there are a lot of failures. My way of seeing businesses and the future is, it's like playing baseball and 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? So I really believe that by having -- 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. So overall, the results, the positive results are much larger than the negative results. So on average, we're going to be keep being successful. And as Luis mentioned, the next 30 years are going to be even much more interesting.

Much better. So I do think that, that Credicorp is in a privileged position to continue to innovate in LatAm. We have a proven track record. We have the experience and the ambition -- and 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.

You told me -- yesterday, you told me that there were some paranoids at Credicorp. Now you're telling me I am the paranoid. We'll have a conversation after. Thank you, Francesca, so much, and thank you all for being here. [Presentation]

Okay. So we've been hearing about the opportunity in LatAm, in Peru as well, not just as significant, but transformational and it's grounded on Credicorp strategy and its evolutions and capabilities. So 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. And 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. So I think since 2020, we've included 6 million people into the financial system. We have a goal to include 8 million by 2028, 15 million customers in Yape, going to Bolivia, 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 3 leaders, Monica, responsible for Bancassurance in Pacifico and BCP; Raimundo, that I think you've met CEO for Yape and Giovanni is responsible of products and channels, digital channels for the wholesale for the business division. So let's start with you Monica. Insurance has been historically underpenetrated underserved. This is not new, bancassurance is something that we're doing in the past. But how is Pacifico leveraging the ecosystem to capture growth?

Thank you, Francesca. Well, bancassurance opportunity is very clear. Thanks to our strategic partnerships with BCP, Mibanco and since 2024 with Yape. We now have the opportunity to protect more than 18 million clients. And 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. But we don't see this as a barrier -- this is an opportunity for us for growth and also for innovation. And 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. And this represents to double our current client base from $7.5 million to $15 million. And we truly believe that this positions us to become a driver of inclusion, but also are driving -- a driver for margin growth for Credicorp. In fact, bancassurance 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. So the question is -- how are we going to achieve all these ambitions and all these goals? And the answer is by strengthening 2 main capabilities we have been working on for the last 2 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 under different life stages. This has been really hard work because we don't only have to change our technical cores, but also our mindsets. And the second capability is mass distribution. And what we do in this point is, our strategy is to leverage on all the wide reach and all the transaction activity that our partners in Credicorp already have developed. So by embedding insurance in the journeys of BCP, Mibanco and Yape, we turn all those daily transactions into protection opportunities. So that's how we turn insurance in something engaging and part of the daily business of our clients.

Super interesting. And we've talked about Yape being the digital cornerstone of Credicorp's digital strategy. And we've seen the importance in insurance and distribution. What's your view on the growth opportunity for Yape?

We're very optimistic. I'm 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 distribution -- digital distribution channel of the country, right? And 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, right, especially all around informality. And in Peru, 70% of the economy is informal. And we started to fully serve these new segments, reaching at -- reaching them at a very low cost with a very high-touch proposition and a very strong connection with our brand, right? And 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 3 years ago. We've gone from 0 revenue-generating transactions to around to more than 7 revenue-generating transactions per mile per month, right? Even though that's a huge growth and a potential or Yaperos do 57 transactions a month. So the space for growth when we see our penetration relative to TAM is still very, very big. We have 1 product that's closer or above the 60% of the time, but most of our products are still around 10% to 20%. So growing very fast, 2, 3, 4x year-on-year, and I think with a huge potential of growth. In lending, I think we -- we broke a paradigm that it is very difficult to -- or it was impossible to serve the informal segment, right? And 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. And 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. And I think that's a huge potential. Also when we start thinking of other products, right, insurance, working with Mibanco, there's a space to continue growing. And if we think of Yape on how we're doing this -- it's becoming kind of a virtuous cycle, right? We started with P2P, generally a lot of engagement, then launched payments products, which generate more and more engagement. So Yape users more, we get them to know better, then we started with lending, distributing Mibanco insurance, we do the retail offering and then they use us more. So it's more powerful -- so we've gone into a very positive cycle while leveraging all of our strong capabilities from Credicorp in terms of infrastructure, risk management, et cetera. So that -- I mean we're 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 BCP 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 on their unified leadership in order for us to gain focus. However, this integration since -- while this integration is recent, we started transforming factoring 3 years ago. And since then, we have made huge, huge progress. To illustrate the market potential, well, I don't know if you see a graph, but 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. So there is huge, huge room to grow in this market. In 2022, we identified this potential, so we start mobilizing a team that was going to be dedicated to transform the factoring business. And since then, huge progress has been made. So if we see a factoring business since 2022 until now, this segment has grown by 5x. With integration of confirming and factoring, what we expect is this momentum to accelerate and continue growing. And what we see is in the next 5 years to grow by 6x this -- this our outstanding balances in this segment. How do we plan to capture the opportunity? That's the question that we are solving right now. And we have been leveraging Credicorp's spending advantage to access fintechs at provide us critical external data. And this data has been used for us to build more robust credit risk models and unlocking access to previously underserved businesses. So that's the way that we are approaching this opportunity right now. And simultaneously, we have been building broader technological connectivities for our clients. So 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. So 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. And finally, we are also paying attention to a payer experience. So -- in this segment, the payer is a critical part of the value chain, and we are embedding a portal into our clients' office banking. And what we are looking here is to provide them access to consolidate in one unified view all their invoices in our office banking. So what we are looking forward here is to optimize their treasury management for our customers. So that's the way that we are approaching the opportunity.

So let's dive a little deeper on how you are leveraging on start-up technologies, different technologies before, maybe insurance and you, Giovanni as well.

Okay. Well, for us, it would have been impossible to even dream of a product factory or mass distribution without technology. And that's where Moquegua comes as our technological enabler. Who is Moquegua? Moquegua is Credit Cards InsurTech, which was acquired in 2022 by Krealo, our corporate venture capital. And as I said, Moquegua has been instrumental for us and has led us growth 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, but also Moquegua is an API-driven platform, and it has allowed us to connect very quickly. It's like a digital highway that connects Pacifico within the companies in Credicorp, so it has been really, really a game changer. But it's also important to say that Moquegua is unlocking opportunities beyond CreditCorp. Yes, they are already taking part of new partnerships with very important retailers in the region like Falabella. And they are using the same technology they are using in Credicorp. so Moquegua is really helping us to expand our boundaries expand our limits.

Giovanni?

For us, it's also been a game changer, especially to gain scalability of our product offering. So what we currently have partnered with 2 fintechs that were presented to us by Krealo. Krealo is our venture capital arm, and they hold a minority investment on those fintechs. So for example, one of them is data mart. We started a partnership with them in 2024. And this -- this has been a key milestone for a factoring business. That year, we integrated via API connections. Our -- within BCP data mart and the Peruvian tax regulator. And this integration will provide us was to capture data from SMEs in order to allow them to self-evaluate their financing capacity. And for us to enable the bank to preapprove a credit line and to disperse a loan within 24 hours. So we gained momentum. We gained velocity with this integration. And in less than a year, we already have more than 120,000 clients affiliated to the solution. With a customer base of our 2 million SMEs, we expect this solution to continue growing in the future. Another example is what we are working with Shinkansen. It's another venture of where Krealo has invested in. They provide ERP integration and with a solution that we are working with them is to integrate our services in the ERP of our customers and be part or become part of the -- since the purchase order is created, become part of their solution. And this will allow us to anticipate the financing needs of our clients. So it's -- I would say it's -- it's the way that we are gaining the scalability of our product offering and for reaching a higher and broader market.

So a lot of opportunities, great opportunities and new capabilities as well to achieve them. So What have we achieved so far? Where are we right now?

In our case, well, 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. And they have grown from $950 million in 2021 to $1.5 billion in 2024. But it's very important to notice that the optional premiums that are the focus of our strategy have more than doubled in the same period. And by the end of 2024, they represented more than 50% of total premium. Another interesting results are, for example, our digital issuances. They have multiplied 10x from 200,000 to almost 2 million digital policies issued in 2024 and the number of products that we have launched. In 2024, we launched almost 30 new products and that's 15x if you compare it with the only 2 products that we launch in 2021. And finally, the number of clients that we are protecting through bancassurance channel have also grown from 2.9 million to 4 million by the end of 2024. So there's 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 MAU for the last 3 years or a bit over 3 years since we started launching the business. While maintaining a very disciplined approach of in the cost to serve or the total cost of Yape per MAU around [indiscernible]. Those lines intersected last year, and we're continuing that positive trajectory, which is starting to generate very positive results. If we go to the specifics in payments, we are -- last year, we already represented almost like 20% of the consolidated fee income of BCP, of fee and transactional income. And we've launched multiple products, right? We started with top-ups, then with the bill payments and paying POS, remittances, exchange rate, et cetera, et cetera. And we've continued growing the portfolio, and we have a full portfolio of products, disbursements, et cetera, that are -- 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. 2 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, PEN 200 is very short term. We experimented a lot, expanded the population, and we accelerate that a lot. Right now, we are finalizing the testing of multi installments so the better payments to go to higher loans of longer duration and entering the payments segment. So 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 Yaperos are using all of our promotions, et cetera, that generate a lot of engagement for our other businesses.

I would know if you can see a graph here, but let me show you a couple of numbers. Since we began this transformational factoring the SME with the focus that we created to this product, it has grown by 5x 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. But what we are expecting is to grow the overall segment by 6x in the next 5 years. So with the technological solutions that we are investing in, we are convinced that they will allow them to gain a scalability of our product offering, scalability in the market and reach a broader market. So what we expect to see in the next 5 years is those around PEN 5 billion to be nearly PEN 30 million outstanding for BCP.

Super. So we've heard from BCP, from Yape and from Pacifico. And now we're going to hear from Mibanco, and I'm especially -- I like client video. So a client video to also demonstrate how the client perceives the ecosystem and how we are actually giving that value proposition. So if we could put the video. [Presentation]

So Raimundo, could you briefly share how the coordinated approach for SME is working?

So I think we believe that SME, I mean, going from the very, very small merchant to the small, medium companies, it's kind of a space with a huge potential in Peru, right? And we've defined kind of roles for each of our brands or our companies. So 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 and it's an integrated approach, right? And then when they start growing, they start using office banking or a more sophisticated solution, but 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 independent, starting on our experimentation and going there. Mibanco brings world-class microfinance capabilities with advisers, with proximity and typically serves all those bigger micro companies, if you want, until they start growing, until they start needing more sophisticated needs, and that's what BCP comes in with a full offering. In parallel, we leverage Pacifico 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 overlap because we want to give different offerings. So clients can decide what's the best solution for them, right? But we kind of look at this integrated approach. We have kind of natural spaces with significant overlap, 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're convinced that the 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. [Presentation]

So good morning, everyone. Thanks for being here. So far, we've been hearing about the opportunities we have as Credicorp going forward, both to expand our TAM, sorry. I'll start again. So far, we've been hearing from our team, from our leaders, the opportunities we have going forward both by slimming down, improving experience. Okay. Now it works. Okay. Thanks. So I'm not going to repeat the whole thing for the third time. But basically, we see a lot of opportunities going forward. And in this panel, the idea is to have a conversation about the enablers for that growth. So I'm joined here by Andre Rezende, Credicorp Chief Technology Officer; Cesar Rios, Credicorp's Chief Risk Officer. And we're going to have a conversation around what we're building to sustain this growth. So I'm going to begin with a broad question for both of you. And it's basically talking about the why. So why are we doing these investments? So 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. And Cesar, we might start with you.

Thank you, Alejandro. The opportunity is clear. We have much reach. We have as a Credicorp 18.8 million clients out of them 15.3 million are very active Yape users, but only 2.7 million have a credit. And if we take out the only Yape originated loans, we only have 1.9 million clients with credits in BCP, for example. So 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 BCP, Mibanco, BCP, Pacifico. And we have been also developing analytical capabilities and a solid relationship with the clients. So the opportunity is to continue expanding our reach. We have a very solid market position in Peru, particularly in the wholesale segment and the affluent segments, but we have tremendous opportunity at the base of the pyramid. There is a lot of opportunity to include the bank, the under bank clients using the capabilities that we have building on over the last years. And the idea, the ambition is to convert these opportunities to include financial clients into a resilient engine of growth. But to do that, we need a very solid technological foundation.

Yes. Okay. So I mean, in terms of technology, we need to support all of these. And we knew that since the last, I mean, 30 years, the financial institutions are had a big challenge on how to grow and how to scale without risk, okay? And we, at a certain point, did our home work. If you look at our digital transactions, they went up from 36% to 97% in the last years, and the number of transactions like multiplied by 50, while the cost per transaction have been divided by 10. So 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 cloud, 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. And 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, we're going to -- in 5 years, we're going to be discussing 10x that, hopefully, and with the same resilience and the same security that nowadays our clients' experience.

Thank you, Andre. And continuing with you, let's move on to the how. So 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.

Absolutely. Can you move to the next slide, please? Okay. We have like 5 major points in our strategy here. So 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, okay? So less complexity, less platforms, less technologies. And 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. I mean, we have nowadays like 8,500 people somehow involved in software production, product, services, whatever, in credit card. So we are streamlining the way these people work. I mean, same components, same architectures same way of thinking. We know that there is a difference between the way a fintech works and the way a traditional company works. But we are streamlining whatever it's possible without harming the individual features of each company and bringing this to a reusable approach. I mean to -- if we're doing things right once, can we -- we should copy instead of redoing it. Third point, business in a box model. This is one of the thing that excites me the most. I mean, we are moving to what we call regional approaches. I mean we can have for several business that we want to expand further even outside Peru, other countries, et cetera. One single platform in one single infrastructure we have one single architecture, one single ERP and from Peru or the country serving 3, 4, 5, 6 countries with the same team and the same platforms. This is in terms of scale and costs, I think the most effective way to do it. And 4 and 5, 4 centralized functions. I mean, 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. So we see that we can centralize in the parenting level, things like administrative systems, procurement, HR, communications. So we are building platforms that will provide this in as-a-service mode for all the companies and allow them to focus on the business, all their energy on developing new business. And in terms of tapping into start-up technologies, I mean, here is the partnership with Krealo, our venture capital arm, and I was delighted to see the previous examples on the previous panels like Monokera, [indiscernible] and Tempo. And we have a lot of very interesting things, very interesting technologies that will leverage solutions for our business. I think it's the -- 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 the way that is very disruptive and winner. So the key point at the end is the ambition of technology here is to move from a 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. So clearly, we're building strong foundations. But what's really powerful is when this technology meets data and AI. So we have a short video from our leaders to tell us how we're integrating data, AI, cybersecurity with the technology in order to better serve our clients. [Presentation]

So we're clearly building important capabilities. So Andre, 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. I mean 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 capability to deliver AI engines to help our security to deliver risk models. I mean this is all connected -- and in terms of AI, just to mention here, I mean, we are -- AI is a hype, I mean, everybody is talking about it, and there are several ways to do it. And every Monday, I receive a mail about new model or way to code something, which is exciting and nervous at the same time. But 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 starting coding everything because this is maybe not cost effective. So we are creating a common architecture in terms of AI with a library of predefined models that have already worked in one company to replicating the others and to leverage everything we have that is good and all the experience between the companies. I think this is a good way to do it.

Great. Thanks. So 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 surely during this presentation, we are using technology to enhance our business capabilities and in the more risk management side as potential as Fernando has the last, we have been able to improve our cybersecurity posture with several measures and embedding best risk practices in emerging risks and nonfinancial risk, we are assuring that we capture the opportunity that this technology brings to us, at the same time, maintaining resilience and assurance a control risk through our process and products as we continue our transformation.

We double click a little bit on that and talk a little 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 a shorter period of time. We have been able to use this transactional data from BCP, 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 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 greater security. At the end, the goal of the risk transformation process that we are embarked 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 3 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 the stress testing with solid risk framework. 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.

Thanks. And I know this is a multiyear 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 their development time in almost half to 43% actually. And at the same time, improving accuracy. And that has allowed us to open up the possibility to lend 0.5 million additional clients in the consumer segments. In the payment segment, for example, what we have been able to do, integrating data and modeling capabilities is almost doubling our capacity to originate digital payment loans and we also have developed the capacity to interact digitally the client to enhance the offer and we have in Peru, the first really interactive real-time capacity to approve a credit online. So 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 2024, combining adjusting the risk appetite. These improvements in the technology and leveraging improving in the macro, significant reduce on production, almost 46% year-over-year.

Great. Thanks. Good results. This is mainly BCP. So 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 an integrated teams that we denominate the speedboats in which we combined product development, risk assessment, pricing. We have seen that working very effectively in BCP and we want to expand that, and we are starting to do that at Credicorp level, for example, with a more integrated SME strategy. And we are also sharing capabilities that we have developed in model validation, monitoring, pricing in such a way that we actually combine the capabilities of all the companies tailoring with the needs of a specific business units to grow at a faster pace with control 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. 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.

Yes. So I mean, if you look at the 5 levers that we mentioned previously, I mean, all of them have an important efficiency component -- when you find -- talk about simplify, modernize, one way of work and business in a box. I mean, we are talking about streamline, simplify, standardize our operations. in the best way possible. So it means reduce of cost several, I mean, 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 attach into one thing that Gianfranco mentioned, I mean -- if we have less platforms and software, 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 in the market. So each component that you mentioned here has an efficiency part involved on that as it grow, but observing efficiency is very -- a large focus on efficiency.

Great. Thank you. So we're finishing this panel. I think what's clear is that data risk AI, our 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 Creditcorp larger than some of these parts. So thank you. [Presentation]

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. So you saw something similar earlier with when Gianfranco showed this, this is our TSR since Credicorp, inception 30 years ago. We've had very strong results, 14.1% annualized TSR and compared with our peers -- our peer group in the region, we've actually been able to outperform in different time frames. And that is the result of innovation culture and the disruptive culture that we've been hearing the whole day. And 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. We included analytics in microfinance and then, of course, the big digital transformation at BCP, 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. And 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, and it's an exciting opportunity, as Raimundo was mentioning. Now Credicorp has changed in a lot of ways in the last 30 years. Here, some of them, you can see the number of clients since -- since the year 2000 has multiplied by 18. We have 18 million clients today. And the number of transactions has actually gone from 150 million transactions per year to almost 58 billion in this year if we annualize the result. Of course, that has come, and I don't know how much do 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 8 applications of 99 -- almost 99.9% compared to a Latin American benchmark of 98.4%. And 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 2 hours of downtime in a quarter. So 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 also earlier. And at the same time, to generate engagement and principality with clients, 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. And another one is the low-cost funding, which has also grown in an important way in 2015, it was like 44%. And Today, it's at 57% of our funding, which is a big competitive difference and advantage in the market. Going back to the different avenues of growth our risk-adjusted revenue has grown 14x since the year 2000. But what's interesting is that it hasn't been only from lending. Of course, lending has grown in an important way, 17x, which is good. But also at the same time, we've seen FX income growing 17x, fees growing 7x and insurance here is only from 2022, which is a fairly new doubling in its importance. So basically, different avenues of growth that 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 in 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. And I think we've been successful in doing it and 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 3.2x GDP. That same number in the past decade was 1.6x. So 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. So 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. And looking forward, we expect the business to remain in the -- with an ROE in the mid-20s. Microfinance looks like a different story. Of course, we had a complicated periods starting in 2020 with COVID and then Pedro Castillo, et cetera, that hurt the base of the pyramid mostly. That hurt our ROE, but 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. And I mean 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. And 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, very good returns, the year that looks really bad, it's 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 the low 20s. And finally, our Asset and Wealth Management business -- we -- a few years ago, we redefined the strategy, we integrated operations. We focused on the more scalable and stable businesses of asset and wealth. And the strategy has paid off. ROE has been increasing, and we're expecting that business line to have a high-teens ROE going forward. And 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 2 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% that basically clients are using twice a day, Yape, so high engagement, which we believe could go even higher. And if you get to see down here, and I don't know if that's possible, our revenues per mile have already crossed and continued widening the gap with our cost per monthly active user. And we think it should remain with a tendency. So that has been so far mainly due to the payments business, which was the first one of 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, 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. And the next frontier comes with from the multi-installment side of loans. We are earlier in that process, but with very positive signs of what we can do and I think this is an interesting avenue for growth for Yape, and of course, for Credicorp. Now I'm going to talk a few minutes about the avenues of growth we see going forward. We said, well, you've been hearing about them all morning, but I'm going to give you a little bit more information on those. So they come from innovation, loans, fees and other income. In innovation, we set a clear North Star of bringing 10% of risk-adjusted revenues by 2026. We think we're well on our way to achieving that goal, and we should do it. And by the way, that was with a defined appetite -- we have defined appetite of ROE, 150 basis points and cost-to-income of 350 basis points. So we are on our way to doing that. But 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 virtue of getting the banking license and allowing us to grow in the retail segment in Chile. And Tiva, our wealth company basically just surpassed 1 billion in assets under management and growing rapidly. So 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, BCP has around 16 million clients. but only 15%, a little bit over 2 million of those clients have loans with us. So we believe there's an important opportunity. These are already clients of ours. And with all the new data we're getting of them from transactional activity through Yape, we believe we can have an important uplift in the lending in that segment. And a similar story in SME loans, also a market where we are present with BCP, 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. And 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. And we think it's an area that should continue to grow in an important way going forward. There's one reference here of what Kaspi 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 doing 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. And 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. So we think it's an exciting avenue of growth for Credicorp. And one other one that we haven't mentioned today, but I just mentioned it right now, the remittances business, which has a PEN 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 it's just -- the origination part of remittances keeps 80% of the fee of the money involved. So we believe there's an opportunity to get into the origination business and increase that share of that 1.4 billion mark. So 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. And 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 time frame of 3 to 4 years. So just to finish, I'll leave you with 3 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. And we think we have the capabilities, that's the third point, the capabilities to capture those opportunities. And 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 are 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 5-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. So thank you, and we'll come back in 5 minutes. [Break]

Okay. Please take your seats, everyone. And 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 side bar to the left of your screen to submit your questions. 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 top on your screen. In person, attendees may fill out the survey online by scanning the QR code on your table tent card or by completing the printed handout. Please raise your hand, say your name and the company you are presenting. Let's open the Q&A.

Lindsey Shema representing Goldman Sachs. Thank you for this presentation today. It's been great to hear about all the disruptive initiatives in the works. 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. And then you did keep that negative 150 bps of ROE appetite understand that is an appetite, and you don't exactly have to do that. But with the portfolio breaking even, should it stay that way for the near future? Or do you expect it to kind of go back to contracting from ROE in the near term? And then one more, which is just you highlighted a lot of the closer-term disruptive initiatives, but maybe just mention a couple moonshoots, the really emerging things that you're excited about, that would be great.

Okay. So remember the last comment for Raimundo Morales saying that the world doesn't stop. It's -- you reach a point and then it's the next thing. This is the way we're looking at the innovation portfolio. So we have the discipline to get the income to really have a time frame of giving time to initiatives to mature, such as the old initiative maybe 7, 8 years. So it's taken us 7, 8 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. So 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. So that's the view around that. And 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. And 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. Tyba, the investment one is another very exciting one for growth. [indiscernible] is also maturing within BCP for the acquiring business. And early on, we have initiatives around SMEs and around HealthTech.

Yes. And maybe just to add, one of the moonshots very early stages is health. We -- this is [indiscernible]. We had a partnership with United Health. We bought them out in March of this year. The health services in Peru are terrible. So just the very upper segment can reach good quality health services. And we believe that the same vision we had with Yape, 10 years ago, defining that our main competitor was cash. Today, our main competitor is how to group the access -- the access to good quality service by leveraging technology, obviously. Very initial stages, and we are very positive on that. That's a motion.

Daniel from [indiscernible]. I was just looking at your long-term goals or long-term ambitions for ROEs -- and it seems not too much optimistic when we compare like to the great opportunities that you showed the 10 times in all the presentation. That's -- I wanted to hear and touch base on the costs, like the IT costs as a percentage of our operating income. We saw a spike since like past 15 years to 8% of your operating income. And with AI, you can probably leverage on that technologies 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 the AIs reducing opportunity and reducing times for shifts in new technologies. So 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 risk 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.

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?

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 3- to 4-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, but of course, there are new things that we're trying to build. So 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, 3 to 4 years. Well, some of these 10x opportunities that we're talking about won't necessarily have matured at that time. So I do think there's potential to keep growing. In the cost-to-income, as I put forward here, again, in that time frame, 3 to 4 years, we're talking about a reduction in cost to income from the around 46% that we guided this year to around 42%. So 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 reduce reduction in costs on the run of the business and some of them coming from AI and productivity opportunities that we see.

So 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 there. But the proportion of technology in that cost is going to grow. It's not going to reduce. And we're comfortable with that. So what we're looking at really is more on the productivity side. When you look at AI, you 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. And you've heard throughout our presentations underserved, under bank, under insured under whatnot. So this is, I think, the perspective. So the growth needs to come with that.

Yuri Fernandes from JPMorgan. I have a question -- actually 2 questions here. One, regarding your supply chain finance opportunity. 6x multiplier into 2030. What do those companies are doing today? What is the cost of risk, the ROE of this product? I'm just trying to understand the economics because they're going to move from PEN 5 billion towards PEN 30 million solid ballpark on this. So it's a big portfolio, right? So just trying to understand that 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? So that's one question. And the second question is regarding Yape, the 3x growth until 2028. You should not grow as much clients and we get it. You are already too big on Yape. It's a 20% number of clients growth, right? But you are calling for 2x revenue growth for Yape. And doing a very simplistic calculation, you are implying that RPAC will grow from maybe PEN 6 towards some PEN 16, PEN 17 like per client. So if you can talk a little bit about this on Yape, how much should be payments, how much should be credit. How should we 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 need to look at capital. So just trying to understand a little bit of the Yape growth as well.

Yes. Can you hear me well? Okay. So in terms of cost of risk, this is a product that stands between 1.5% and 2.5%. And has a low cost of risk, if you compare it to SME cost of risk, the SMEs range between 6% and 7%. So it's probably with a much lower cost of risk because you depend on the payer of the invoice, not on the client that we are lending the money to. So there's a low cost of risk. In terms of ROE. Currently, the product is around 15%, 16% of ROE. But this is a product that in the next few years, it should expand to around 18% to 20% ROE. So that's in terms of ROE. And why it's a play right now because the low change in Peru in 2022 at the end of 2022, and it mandated the invoice to be enforceable in the country. So it is a recent play. It's a play that we've been working in the past few years. But 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 here, it has grown around 20% in outstanding balances. So it has a play in the next few years of expanding market. And of those -- of that market have a relatively important market share as BCP has in any other segment.

So 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. I mean we -- and even though Yape has 8 years, we started the lending business 2 years ago. So I mean -- and if one thinks of the nuance of this world, it was like 8 or 9 years before going public and really doing that exponential growth. We've, in this past 2 years, invested significantly in experimentation, in understanding, expanding the population we're willing to lend to. And that is starting to pay off, but in our kind of first wave of product, right? 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 periods, right, and as we grow. So 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, smaller ones, are still in 10%, 15%, 20% of the addressable TAM. And what we've seen in our more mature products is that we can reach 50%, 60% of the TAM. Because again, we are replacing the cash economy, right? A lot of our payment we're doing before remittances in Peru or today, most of them are distributed through Western Union offices or I mean, in general, we go and collect. Now it's through Yape. So it's taking out that cost of the system, and we become much more efficient and you can do that for any of our different businesses. So I mean today, I would say payments is like 55%, 60% of our revenue lending is like 20 or I mean if you do full year, it's probably more in that 15 or 10 or so. And when you look at all the benchmarks, the bulk of the revenue is lending, right? So the mix, if we think of 16, 17, probably will be with a lending more in the PEN 8 or more in the 50%, 60%. We can't project exactly, but that is kind of the fundamental shift. And 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 will come from Yape, it's between 5 million and 6 million out of 20 million adults, so that's opportunity the other 15 million that are not served by the financial system.

Nicolas Riva from Bank of America. 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, the holding company and BCP. I think Credicorp earlier this year, there was a maturity in a global bond that you didn't refinance in international markets. So there's no outstanding from CrediCorp. And then at BCP, I think you're looking to price, I think, even today, maybe a Tier 2 bond -- so 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 level. And then at BCP, I have always thought of the Tier 2s in the case of the Peruvian banks as most likely to be called because you can issue the old style Tier 2s. So I wanted to ask you to confirm that, that's the idea basically to continue calling the Tier 2s and issuing the old Tier 2s to replace those and also funding needs in senior for BCP.

Let me answer the Credicorp philosophy and then you go to the details. The bond you mentioned, the one that we called Credicorp bond was issued during COVID. So it was like an insurance we bought -- a cheap insurance we bought -- actually, in the end, it had positive carry. So if you go beyond that insurance, it's 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. Philosophically, it's not like leveraging for the sake of leveraging at the holding company. I'll ask Alejandro to answer the BCP.

Sure. so 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 low-cost funding. I think we're okay. If you see the recent issuances by BCP, they've been in Tier 2 bonds, and it's more related to capital requirements as -- we go fully loaded Basel III at the end of next year and the capital buffers we want to retain because we're fully compliant with Basel III even today but we want to retain certain buffers. So that's the reason why you've seen us in the market with Tier 2 bonds. And as you mentioned, we are in a process exactly as we speak. But 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 value as capital. So going back to your call on call. But of course, each one of those has to be approved, if we call them or not at the Board level. So -- but that's the philosophy behind it. And we -- we, of course, want to have options open. So 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. But again, today, there is 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, it has like -- sorry, when you have 40% of market share, is almost "impossible" to gain market share, right? Because of the initiatives we have had around more on cash, most -- the most relevant being Yape, today, the market share is around 44%. And it's not -- 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 gone -- we've reached is maybe in the future might be slightly higher, too.

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. So -- 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 3, 5 years? And then as you do this, -- are you targeting similar risk-adjusted returns? Are you hoping for higher risk-adjusted returns with these new retail borrowers? So what is the long-term impact to the net interest margin of BCP and Credicorp from the strategy?

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, was more below 50% retail. And now, as you say, is above -- 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. But in retail, we have two, I would 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. And gradually, we are probably going to go around 1% displacing for a year until some point in which probably more given for risk appetite framework, 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.

And the impact on risk adjusted NIM, the addition of risk adjusted NIM.

Very important because actually, what we manage the business is not by line, but I will say profitability for segments, and our main goals are a number of clients' volumes and risk-adjusted NIM. And the expectation as this gradually, the cost of risk is going to grow, but the risk-adjusted NIM is going to get a little bit faster. So even in an environment of reducing reference rate, our expectation is to grow the risk-adjusted NIM, probably 10 basis points per year as we adjust the portfolio.

I think we have a question from Andres -- Carlos also. Carlos.

Carol Gomez, HSBC. So 2 questions. One, on the technology side. Could you give us an update on how much you intend to invest in Tenpo because after all, that is a full bank in Chile. That seems like a big project. And we have not heard about [ EO ] for a while, and that was launched, I think, 2 years ago and it was a new replacement, so we wanted to know where other 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?

You can answer the last one, and then we'll go with Tenpo one.

Sure. So there's a theoretical exercise and then I'll explain what we expect in reality, okay? So the theoretical exercise, which is 100 basis points of rates coming down, both in soles and dollars in a parallel way. So it has a lot of assumptions there. It's 17 basis points impact on margin, which basically 15 of those 17 come from the dollar portfolio based on maturity and repricing. Now 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, we are targeting to closing this year with a higher NIM than that number. So how have we done it? Basically, well, as you know, there are a lot of forces at play, if you will, but this increase in low-cost deposits. And the shift that Cesar 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 NIM.

Yes. I'll take the Tenpo question and then pass it to Rai for the EO question. Tenpo is the largest investment at the [ Credi ] portfolio. We may have invested so far $250 million, mostly to cover losses some of it because we're in the process of getting the banking license and some capital requirements have been called. Going forward, we expect to reach breakeven by 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, so basically, we're still -- we're a bank, we're funding the growth by equity, which is not sustainable. And 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 were unsure 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 at Tenpo, 2 million clients, over 1 million active clients going at a better pace than the original business case really.

Yes. Regarding EO, EO is a different place -- significantly different play than a Yape or a Tenpo in terms of scale and size, right? It is a niche play, but focused on the young affluent segment, if you want. And getting that right, it takes time, and we've been working in the past 2 years to kind of crack what's the value proposition that really generates engagement significantly higher NPS. So 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, right? So that is the work we've been doing. The results currently are very positive in a positive track. We would expect, if things continue going this way, to do an acceleration probably next year. But we want -- 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 demand, right? It's not the first card, it's not -- I mean it's already digitized and bank client.

Maybe Carlos, that's an example going back to my conversation with Francesca, we always talk about the successes. EO is one example. I wouldn't say it's a failure, but we've struggled a lot. It costs 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. But again, that's a great example. Some things don't work, right?

Andres, and then we will switch for a moment to the web question. Go ahead, Andres.

My question is, it's clear that you have a huge opportunity in Peru ahead of you. When you reflect about what has been the history of Credicorp recently and the expansion into other countries, at some point, you thought Mibanco, the microlending business was going to be the spearhead to international expansion. How do you see your portfolio of assets? How do 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 strategy?

I would argue that we've been victims of our own success. As we -- the first slide I showed, Peru has been the economy -- the country that -- its economy has performed the best along Latin America. So 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. So that's one -- I would say that's one of -- the most important reason why we're still a Peruvian company. And 95-plus percent 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. And by that, the logic behind is how to leverage on the ecosystem we built both in Peru, but we have some assets or some pieces of the ecosystem in -- mostly in Bolivia, Colombia and Chile, where we can add through some add-ons start growing at a faster pace. So yes, that's where we stand, going forward to your question is, we expect nothing concrete, but whatsoever, but our vision is that we should have a more -- a stronger presence in other countries in the next 10 years.

Perfect. And if I may follow up, on the Yape, the strategy for Yape and your thoughts on whether it makes sense to keep it inside BCP 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 country?

Yes, there are 2 questions there. We've discussed a lot internally and with some of you regarding whether to spin off Yape from BCP or not. And in the end, it's a matter of generating value versus unlocking value, right? So where we stand today, and nothing is carved on stone, but today, the decision is we're not going to spin off Yape because there are a lot of synergies, but having Yape within BCP, we're going to work in disclosing more information so as that the market can understand the potential of Yape and value Yape -- Yape within Credicorp correctly. So -- and on top of that, Yape's strategic for Credicorp's growth for the next 10, 15 years. So that's where we stand today regarding what to do with Yape internally. As we speak, we're evaluating other countries in Latin -- so 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. And we've been quite successful in Bolivia. Bolivia has -- 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%, 5% of the market. Today, we have 32%?

25%.

25%. It's performing quite well. So the hypothesis has been proven. So what we're doing today is evaluating what countries are similar to -- but Peru was in terms of cash usage 10 years ago. And we have had some very interesting surprises, positive for prices.

There is a large country at the north part of [indiscernible].

Okay. I will switch for a moment to the webcast questions. We have a question from [ Ernesto Gabilondo ] 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?

So 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 market. And we've talked about the innovation strategy around business domains and horizons in time. So 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 5 or 6 initiatives, whether it's receiving the remittances, whether it's originating the remittances around Yape, whether it's investing through Krealo in [ Remedy ] technology partner around this business. That's one part. The other part is the lending piece, which is huge. Then we mentioned a Warda, the savings piece. And all these pieces are what we see different competitors or different start-ups for fintechs, actually pursuing innovation around that. And what we're trying to do is have the pieces there with the distribution power of Credicorp. So yes, we're attentively looking at this, and we think we're pursuing all the right path 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?

So the graphic that Alejandro mentioned, didn't have a time line, exactly, was just a concept. So 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. So what we expect is maybe the next 3 or 4 years, we still have to clarify this, get again that 10% with the most mature initiatives in the portfolio. So I wouldn't say 2028 but close to '29 or '30, we will be looking at the Tenpo's and the Tyba's, the most mature ones.

Maybe just to complement that, I would love to have a Yape every year, but it's hard. But going forward, I believe that it's achievable that -- so when Yape graduates from the disruptive portfolio, we don't have -- I don't know Yape, Tenpo might be relevant, but I don't think it's going to be as large as Yape. But from a portfolio point of view, it's much better to have, I don't know, 6 initiatives that when you'd add them up, reach 10% that having one that adds 10%. So philosophically, we're in a much better position for the upcoming years.

Great. Now we have a question from Andrew Stobart from Baillie Gifford. 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.

Yes. A great question on loan growth because -- and one of the charts that Alejandro 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 5 years has been flattish, basically. Profits have doubled. So obviously, lending is core part of our business. NIM is -- NII is critical to our business. But 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. Fee income -- the fee income business in general have been growing at close to double digits over the last 4, 5 years. So the appetite for loan growth is there. We -- Alejandro, you can help me with that. But I would like to take advantage of this question to highlight that the business is not only about lending, goes beyond that.

Yes. I would just add that we -- agreeing completely with what Gianfranco was 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 presidents, 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. You want to -- I'm not going to give 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. So -- and especially thanks to the retail part growing a little bit faster, actually, yes, growing faster and wholesale, we mentioned very much tied to the economy. As for the cost to income, again, this might be a time frame issue. When we -- when I showed the 42%, this is a number we're aiming for in the next 3 years. We'll have to see how we capture more efficiencies. But I did want to mention something, and it's that 42% is the cost-to-income for Credicorp. The reason why I mentioned this is because a lot of people compare that number with banks, and we're not just a bank, okay? If you look at the number for BCP today is 39%, very competitive in the Peruvian market, and we have aspirations to bring it down in the coming years. So it is a good cost to income. The thing is that we have other businesses that operate at higher cost to income, like microfinance can be closer to 50%, the Asset and Wealth Management business can be closer to 60% as an industry. So my point is that blend takes us to the 42% in the not-so-distant future. And 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 is Mibanco's addressable [ opt ] may have been raised, resized or even cannibalized or the strong franchise growth in Yape by the strong franchise growth in Yape?

Yes. The -- so 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 5 years -- 7 or 6 presidents, 6 presidents in the last 5 years and so on. And the most volatile segment or sector is the micro entrepreneurs. So it's not only a story about Mibanco. The ROE of Mibanco -- for Mibanco competitors has been in the single digits or even losing money. So as Alejandro mentioned in his presentation, Mibanco's ROE is coming back. So we're positive -- confident that the low 20s -- we are 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 micro finance business in 2009, the average ROE has been 17%. So, so far, so good. I don't think -- but 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 total income to BCP's SME lending business, Mibanco performs better during the last 5 years. The issue is that for BCP lending, SME -- 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. So 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 -- we project ourselves 2, 3 years down the road, you could argue that we're going to end up with 3 different business models or 3 different channels serving the same "segment" Yape, Mibanco and BCP SME. Today, we don't care. It might not be the most effective -- sorry, efficient way of doing business, but it's definitely the most effective way of doing business today. Mibanco has an expensive model, but it's a proven model. Yape is much cheaper, but it's unproven. So we need to figure out what's the best model to the best clients and the best segment. That's going to take 2, 3 years down the road.

And also just to complement and we're also experimenting between, hey, if we disbursed Mibanco loans through Yape because of the relationships. So is there a way to get the best of both worlds together. So there's going to be a lot of experimentation and exploring in the next couple of years around that world.

And if you may add sharing capabilities, so each one can improve.

Okay. Yes, we will switch back. So Monika has a question.

Monika from Lazard. My question is, as you increase this cooperation between the different division, 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 that you as a core entity can benefit. That's question one. And second, as you target these -- this like micro lending segment, et cetera, are we facing any regulatory headwinds from rates being capped?

Yes. So regarding question number one, our compensation packages, we have different compensation packages, but they are very variable oriented. So a bulk of our compensation is variable and based on -- as you mentioned, indicators. So we've been evolving. I believe we're not there yet on how to have shared indicators, not only at this level, but I don't know, 2, 3, 4 levels below. A great example is bancassurance. That's another story of us sharing the success, but that has taken us, I don't know, 10 years of fighting because we didn't -- 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 BCP, they all share exactly the same indicators, regardless of what company they're working in. So that's -- I don't know if I answered your first question. Regarding the second question, regulators -- technical regulators, so Central Bank and Supreme Tennessee were against rate caps because they're technical. And they realize that rate caps what generate is financial exclusion, not financial inclusion. Unfortunately, political regulators are not as savvy. Therefore, they -- somehow they came up with a "solution" that even though it's not perfect, it's 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. So 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. And sorry, as a matter of fact, we operate a microfinance institution in Colombia. The Colombia's GDP is 40% larger than Peru's GPDs. The informal economy is quite similar. The whole micro finance 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.

[indiscernible] from Autonomous Research. So you showed that your average transaction -- revenue generating transaction at Yape's about 7.3% per average user, right? So where do you expect to get by 2028 in the long-term? And if you could like break down how you're getting there? And then 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?

Yes. On the first one, it's tough to predict, but you see per transaction [ or issue ] our 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. But our total payments volume is also a moving target, right? It is increasing 1.8x year-on-year or 2x. So it is an exponential growth. But again, if you 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. And I mean, if we think of the -- we have 15 million MAUs, right? Our top functionalities have like 7 million MAU, top-ups, maybe bill payments, then you have like the QR codes that are between 5 million and 6 million. And then the rest are between -- are below 1 million, so -- in terms of payments. So as those start increasing frequency, we will see significant uplift. And also like the POS payments, et cetera, there's going to be focusing within its user. So we are seeing a significant uplift potential there.

On your second question regarding M&A, tomorrow, no. No, the serious answer is -- and we were talking about some of you before is, we shifted the strategy. So we've done a lot of them -- I don't know a lot. We've done M&A transactions throughout the last 10, 20 years. But we've been very reactive, so waiting for the transactions to show up. 2 years ago, we shifted that strategy. And we -- today, we have a team that is constantly looking at what's going on in LatAm 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.

[indiscernible] international expansion, does that imply that you would do that via M&A or you can just expand more?

Actually, it's both. It's both. So yes, yes, it's both.

Okay. I will go back to the webcast. There's a question from Alice Popescu 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 risk do you foresee?

Well, about the speed with Monokera. So as an example, the last product that we have just launched with Monokera, talk about 2 sprint. So that's about a month to make the whole product configurated on the platform and to launch it through a channel. It's almost 3 months. So if you put it like from the beginning of the process until it's on the market, it's about 4 months to launch a new product. So that it's very, very fast, right? For example, in Yape, we now have almost 6 products on production in Yape, and we have launched these 6 products in a year. So you can see how speed is really getting faster with Monokera.

Yes. 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 [ Grickor ] system, which has -- if we add up all the clients, it's like 2x Peru, something like that. But with Pacifico also signed an exclusivity agreement with Falabella, which is the largest retailer in Peru. So Pacifico today in terms of channel, sorry, has the largest bank, the largest microfinance institution, the largest digital wallet and the largest retailer. So the challenge Pacifico has is how to not only develop and launch, as Monica mentioned, the factory and be quite fast, but also to kill products fast that don't work. So 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.

And one more point, I think Monokera is a LatAm company. It's not a Peruvian company. So this gives us optionality to operate in a different part of the business in the region as well. So testing the markets in Peru, how to connect to mobile banking to Yape, to different channels. So this is -- it goes to a 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 growing -- growth coming both from lending, but also other elements. To that extent, what is the normalized capital level CET1? Would you optimize from here across the long-term?

Sure. So basically, I'll say 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. And then we distribute everything that's not going to be needed as a dividend. We retain a little bit and then depending on the year, if there's no strange or unexpected situation, positive or negative, we pay a second extraordinary dividend, but that's just depending on the year. So in 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. But 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? No, because I want to address one point -- one issue that surprised me, no one has asked because whenever we are in a private conversation, it always pop up which is elections. A couple of messages or maybe 3 messages. One, today, unless we have a crystal ball, we have no clue who's going to be present, 37 candidates, too soon to tell. But most importantly, the second message is we're going -- the country is going back to 2 chambers. So 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. So mathematically, no party may reach actually. If you divide 100 by 37, it's less than 3. But jokes aside, the experts say that anything between 4 to 7 parties should be at the chambers. So we expect much less volatility in terms of political issues going -- after the elections, regardless of who becomes President and so on. And the third message, which is for me, the most relevant message of all is see Credicorp's performance over the last 30 years. We've navigated leftist government, rightist governments, dictatorships, quasi dictatorships, long tenors, short tenors and so on. And we've performed, I would say, quite good. So we're used to navigating. I don't want to look arrogant whatsoever, but we're used to navigating in those choppy waters. So we feel quite comfortable that, as [ Lucho ] mentioned before, the best of Credicorp is yet to come. Thank you so much for joining us. And I have a switch, right?

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, and 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. And 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 is this. Credicorp's ecosystem today is 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. Now please join us for a toast to be followed by a Peruvian lunch. Our entire team will be available to answer any further questions. Enjoy and thank you very much.