Credicorp Limited Delivers Record Profitability, Navigates Volatility with Ease
Credit Corp's latest financial results for Q4 2024 are nothing short of impressive, delivering record profitability of PEN 5.5 billion and a Return on Equity (ROE) of 16.5%, outperforming expectations. According to Gianfranco Ferrari, Chief Executive Officer, these achievements underscore the impact of the company's strategic initiatives, which have strengthened resilience, enhance efficiency, and reinforced competitive advantages.
The fourth quarter saw improved cost of risk at BCP and Mibanco, along with increased lending and exceptional transactional volumes at both banks. This has provided a strong foundation for sustained growth in the years ahead, allowing Credit Corp to navigate periods of volatility effectively while capitalizing on market opportunities to drive future growth.
Peru's economic recovery continued in 2024, with GDP expanding by over 3% after contracting in 2023. Inflation fell to 2.2%, its lowest level in four years, as the Central Bank lowered its policy rate to support the recovery. Improved weather conditions boosted fishing, primary manufacturing, and agriculture, while strong copper and record-high coal prices further supported economic performance.
Despite gains from increased public investment, private sector investment remains subdued. Achieving long-term sustainability growth will require political stability, responsible fiscal policies, and structural improvements in essential services to fully restore business confidence.
Credit Corp's management team expects the Peruvian economy to grow around 3% in 2025, supported by historically high trade, controlled inflation, and continued recovery in real wages. However, the onset of the electoral campaign towards the end of the year may introduce uncertainty as campaign activities intensify.
The company's results were primarily driven by strong performance at its Universal banking and insurance business, alongside continued improved performance at Mibanco. This was further supported by growth in diversified revenue streams and record-high transactional volumes, particularly in FX and digital transactions during the fourth quarter.
This shift enhances Credit Corp's revenue mix, advancing its strategy to diversify revenue income sources with the goal of achieving 10% of risk-adjusted revenues from new businesses by 2026. Risk-adjusted Net Interest Margin (NIM) continued to strengthen, underpinned by disciplined interest rate management, a leading low-cost funding position, and enhanced credit risk management.
The company's investments in innovation and digital capabilities are delivering tangible results, driving a better-than-expected efficiency ratio, reinforcing competitive advantages, and deepening client relationships. Client satisfaction also improved with a 5 percentage point increase in average Net Promoter Score (NPS) across its businesses. These efforts promote greater financial inclusion.
