Credicorp Ltd.

Good morning, everyone. I would like to welcome all of you to Credit Corp Limited's third quarter 2020 conference call. We now have all of our speakers in conference. Please be aware that your lines is in a listen-only mode. At the conclusion of today's presentation, we will open the floor for questions. At that time, instructions will be given as to the procedure to follow if you would like to ask a question. With us today is Mr. Walter Bailey, Chief Executive Officer, Mr. Gianfranco Ferrari, Deputy Chief Executive Officer, Mr. Rinaldo Yerza, Chief Risk Officer, and Mr. Cesar Rios, Chief Financial Officer. Now it is my pleasure to turn the conference over to Credit Card's Chief Financial Officer, Mr. Cesar Rios. Mr. Rios, you may begin.

Thank you. Good morning. and welcome to Pericor's conference call on our earnings results for the third quarter of 2020. Since our previous conference call, the sanity situation in Peru has improved considerably, and the economy continues to rapidly recover. In fact, the evolution of both scenarios has exceeded expectations. Part of that from weekly debt calls has resulted in significant improvements in recent months. Nevertheless, we remain vigilant to track an eventual second wave of COVID-19. In parallel, the Peruvian economy experienced this same recovery throughout the third quarter of 2020. The economic zine has been encouraging over the past few months. According to the latest official data, economic activity in August was only 10% below the figure reported for the same time last year. This compares favorably with the minus 40% registered for the year-on-year comparison in April. This V-shaped recovery has also been observed for several economic indicators. As you can see in the charts, real estate transactions, spending dispatches, and vehicle sales have recovered significantly in recent months. Reactivation is also evident in labor market patterns, including payrolls through DCP. Next slide, please. Although Perú GDP posted its steepest decline in the second quarter of 2020, it is rapidly regaining territory in Latam. Moreover, Martin Consensus has gradually improved its expectations for Perú GDP growth in 2021. Peru is expected to lead economic recovery in the term towards 2021, as we leverage strong macroeconomic fundamentals, high commodity prices, and broad government stimulus packages. In our previous conference call, we expected GDP to drop between 11% and 15% in 2020, and that the rebound in 2021 will situate between 6% and 10%. Our latest estimates suggest that GDP will contract around 12.5% in 2020 and will rebound between 9% and 12% in 2021. It is important to note that a series of elections, referendums, and constitutional changes are underway in the countries in which Credit Corp operates. In Bolivia, Luis Arce from Evo Morales Pari won the general election and will take office on November 8th. In Chile, 78% of the population voted in favor of writing a new constitution. Next slide, please. The positive trend seen for economic data is mirrored in the evolution of data for the financial system. Transactions with debit cards at DCP have exceeded pre-COVID-19 levels, nonetheless, credit card transactions are recovering at a slower pace. During the third quarter, the Reactiva Peru program continues to contribute to loan growth's system-wide. According to data from the central bank, loan growth stood at 14.1% year-over-year at a constant exchange rate, supported by the effect of Reactiva loans. If we exclude the Reactiva loans effect, Total loans declined 2% year over year. It is important to remember that REACIVA loans established businesses of different sizes. After the first phase of REACIVA program was rolled out for $30 billion solid, a second branch auctioned an additional $25.3 billion solid. Disposings of this second phase were primary for small, micro, and medium-sized business. We would like to mention several economic policy measures and regulatory actions that are in effect or under discussion. First, there has been further debate on additional economic figures. According to its last monthly policy statement, the central bank stands ready to expand liquidity injections through a range of instruments. Second, Congress is currently discussing initiatives in several key areas. A proposal has been made by an special commission that contemplates a complete overhaul of the Peruvian pension fund system. If this bill becomes law, it could have a material impact in Prima. Given the scope and complexity of the measures, the commission has requested additional time for analysis. Third, early this week, a motion was approved to impeach the president. The President is expected to present his liberal defense on Monday, November 9th.

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