8/11/2023

speaker
Operator
Conference Specialist

Good morning and welcome to the Credit Corp second quarter 2023 conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then on your touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Milagro Sionia. Please go ahead.

speaker
Milagros Sionia
Investor Relations Officer

Thank you, and good morning, everyone. Speaking on today's call will be Gianfranco Ferrari, our Chief Executive Officer, and Cesar Rios, our Chief Financial Officer. Participating in the Q&A session will also be Francesca Raffo, Chief Innovation Officer, Reynaldo Llosa, Chief Risk Officer, Cesar Rivera, Head of Insurance and Pensions, I'm Carlos Sotelo, CFO at MiBank. And Diego Cabrera, CEO or Head of Universal Banking. Before we proceed, I would like to make the following safe harbor statement. Today's call will contain forward-looking statements which are based on management's current expectations and beliefs and are subject to a number of risks and identities. and I refer to you to the forward-looking statements section of our earnings release and recent filings with the SEC. We assume no obligation to update or revise any forward-looking statements to reflect new or changed events or circumstances. Gianfranco Ferrari will start the call commenting on the highlights of our strategy, followed by Cesar Rios, who will comment on the macro environment in which we work our financial performance and provide on an update of our outlook for 2023. Gianfranco, please go ahead.

speaker
Gianfranco Ferrari
Chief Executive Officer

Thank you, Milagros.

speaker
Gianfranco Ferrari
Chief Executive Officer

Good morning, everyone. Thanks to all of you who were able to join us during our June 20th Investor Day, where you heard directly from our leadership team on the progress of our businesses. It was also a highly valuable opportunity for us to hear from you. I'd like to take a few moments before discussing our Q2 results to recap some of the key takeaways First, we're taking a disciplined approach to investing in businesses that we expect will begin in the mid-term to further decouple our performance from that of the macro context. Two undertakings include expanding the share of retail business across our portfolio, as well as increasing our non-interest income through adjacent businesses. While generally our disruptive initiatives have a long-term orientation, YAPE stands out as a venture that plays a pivotal role in this strategy in the shorter term. It has already shown very promising results with income approaching cash cost and is on track to reach breakeven by 2024. Thus, we intend to further invest in expansion as well as in other disruptive initiatives with the potential to generate value across our businesses. We heard our request your request to provide more information on YAPE's trajectory and have increased our disclosure on the business. Our goal is to provide you with meaningful updates as YAPE continues to evolve. Second, while we're proud to be the market leader, we don't take that position for granted. We're strengthening our competitive modes by becoming increasingly digital and harnessing the power of data. Our top priority is and will continue to be attracting and retaining the best talent so that we maintain our competitive edge. Finally, we're committed to enhancing our governance and transparency while continuing to pursue social impact initiatives. We aim to exert a progressively greater influence on our clients and communities to strengthen their sustainability efforts while playing a crucial role in financing the energy transition. Now, let's turn to this quarter's results. While the political scenario in the second quarter improved, the impact from the social unrest, the disruption from Cyclone Yaku, as well as the added effects from the coastal El Niño, resulted in a stagnant first half of the year in Peru. Despite this backdrop, Credit Corp turned in favorable results this quarter. Net income expanded 22.6% year-on-year, with ROE for the quarter at 18.6, driven by strong results in the universal banking and insurance businesses, as well as a modest recovery in the microfinance business. Loan volumes, however, experienced a slight drop as we managed on the retail side, and wholesale demand showed reflecting the economic climate. And even though we saw a decrease in low-cost deposits along with a system-wide contraction, we continued our market leadership in capturing these deposits thanks to our long-term standing client relationship, trusted brand, and extensive reach. Our strong balance sheet provides us sustained resilience to navigate the current weak macro backdrop as we continue to execute our value creation strategy. Cost of risk has increased primarily due to SME PME and the most vulnerable subsegment in individuals. Mibanko's cost of risk is still high, but diminished this quarter. This evolution reflects the impact of an environment of lower internal demand, high inflation, and high interest rates on payment capacity of clients. We have strengthened credit risk management and remain focused on maintaining stringent origination standards and disciplined loan pricing. Our disruption initiatives continue to gain traction during the quarter, driving the inclusion of a growing number of Peruvians. Nonetheless, having registered strong income at BCP and Pacific on this quarter, we have managed our cost-to-income ratio. Regarding macro perspectives for this year, Cesar will elaborate further, but social and climate events resulted in a tougher first half than we expected. At this time, our GDP growth forecast for 2023 is 1%. Even though we foresee a rebound of around 2% growth in the second half, driven by stimulus measures taken by the government. During the second quarter, sea surface temperature anomalies associated with El Niño-Costero motivated the cancellation of the industrial anchovy fishing session and also impacted the agricultural sector. El Niño-Costero phenomenon is expected to continue until the summer of 2024 as a consequence of the high probability of development of El Niño in El Pacifico Central. For the summer of 2024, the highest probability scenario today is that El Niño-Costero will have a week to moderate magnitudes. As the situation unfolds, we will keep you up to date on the experts' outlook and its potential impact on our businesses. It is important to remember that Peru's macroeconomic fundamentals remain strong. After El Nino-Costero transitory shock, Peru will be in a favorable position to converge to Latin America average income per capita level. The speed of catch-up will depend on Peru's ability to promote and unlock private investment, which has been the most important growth driver in the past. Thank you, and let me now turn the call over to Cesar.

speaker
Cesar Rios
Chief Financial Officer

Thanks, Gianfranco, and good morning, everyone. As Gianfranco mentioned, We delivered favorable or low financial results. I will start with a brief comment on quarter-over-quarter dynamics, but will focus on the year-over-year evolution. On a sequential basis, a structural loan growth in retail banking at BCP and Nibangu was offset by a contraction in wholesale banking. On the funding side, the deposit mix continued shifting towards higher-yield deposits. Low-cost deposits fell across the system and at credit core. Nonetheless, we maintained our indisputable leadership position in this funding source with 41% market share. Asset quality metrics deteriorated, reflecting the impact of challenging macro dynamics in the first half of the year. From a year-over-year perspective, NII grew 21.5%, driven by raising interest rates and structural loan dynamics and partially offset by higher funding costs. Structural loans rose 5.5% measuring average daily balances, fueled primarily by retail banking at BCP and MiBanco. We are managing our asset quality metrics with a challenging backdrop. The structural cost of risk increased 127 basis points to 2.3%, driven mainly by SME premium individuals at BCP and by MiBanco. Allowances for loan losses were equivalent to 5.7% of the structural loan book. The insurers and the writers' results rose 53%, which reflected increased profitability in the live business and a stable year-over-year result for property and casualty. Operating expenses increased 9.1%, driven mainly by core expenses at PCP and disruptive initiatives, while operating income increased 16.6% fuel by BCP and Pacifico. The efficiency ratio improved 310 basis points and stood at 44.6%. In summary, this quarter, positive results and an ROE of 18.6% over a sound capital base were driven mainly by universal banking and insurance businesses. Having said this, a note of caution is in As I will explain when I present our updated guidance, we expect softer results in the second half of the year. Next slide, please. For the second quarter, the Peruvian economy is expected to have registered a slight contraction impacted by El Niño-Costero, which pushed growth rates in the agricultural, fishing, and manufacturing sectors into negative terrain. growth in the mining sector attributable to increased copper production at Quellabeco and the recovery of production at Las Bambas after temporary shoot-downs last year partially offset this decline. These dynamics, coupled with the impact of the first quarter marked by social unrest and climate events, could lead to a 0.5 decline year-over-year in economic activity in the first semester of 2023. This represents the most significant reported decline in 22 years, excluding the pandemic period. Domestic demand fell 2% year-over-year in the first half of 2023, driven by a sharp 10% decline in private investments and a sluggish 0.6% growth in private consumption. Price pressures are finally easing, and inflation expectations have dropped materially in Latam. Central banks in Chile and Brazil have already started their rate-cutting cycles and Peru's central bank is expected to follow suit in the last quarter of this year. Regarding our outlook, Peru's GDP is expected to grow around 1% this year. GDP growth in Colombia is expected to slow to 1.6% while Chile's GDP growth is expected to be flat. As you know, We are closely monitoring the evolution of El Nino Costero weather phenomenon and its impact in our businesses. In its last official statement on July 21 and then assigned a 40% probability that El Nino Costero will be weak during the summer of 2024, 36% it will moderate and 11% that it will be strong. In his last speech of July 28, President Buluarte communicated the importance of private investment as a tool for economic growth and development, moving apart from the previous government stance. She announced, for instance, that $1.8 billion worth of infrastructure projects will be awarded in the second semester through ProInversión, the investment promotion agency. Peru's macroeconomic fundamentals remain robust. with low public debt and net international reserves equivalent to 33% of GDP and 29% respectively. This government's ability to unlock and mobilize private and public investments will be key moving forward. Next slide, please. BCP results were favorable despite this context. Regarding the key quarter dynamics, NII increased 0.9% despite a slight 1% drop in loan volumes. This drop reflects a downturn in economic activity, primarily in wholesale banking and more conservative origination guidelines in retail. Our NNI reflects a disciplined approach to pass-throughs and our ability to leverage a transactional funding base to mitigate raising funding costs. BCP fee income rose on the back of higher transactional levels particularly through digital channels and POS. Provisions in consumer loans and credit cards remained at high levels as a recessive, high-inflation environment in the first half of the year affected the payment capacity of vulnerable subsegments, which are more leveraged and have unstable jumps. Additionally, SME payment segments drove the uptick in provisions. On a year-over-year basis, growth in net income was as pure by a 29.6% increase in NII. This evolution was driven by raising interest rates and 5.2% increase in structural loans, which was driven primarily by a 10.9% uptick in retail banking loans through SMEP-made credit cards and mortgages. Loan loss provisions increased 177.8% over a low base. Additionally, Grow was driven by an increase in provisions of consumer loans, credit cards, and SME payments, which were affected by macroeconomic conditions. Operating expenses grew 8.3%, driven mainly by IT and marketing expenses and investment in disruptive initiatives. This increase was partially offset by a non-recurrent tax expense reversal. Consequently, BCP's efficiency ratio dropped 420 basis points and stood at 37%, while ROE reached 24.2%. At BCP Bolivia, our risk appetite remains low. Since the beginning of the year, U.S. dollar reserves in Bolivia's central bank has dropped materially, and banks have daily limits in U.S. withdrawals. Regardless, BCP Bolivia net income remains stable. Next slide, please. IAPE continues to progress towards monetization by pursuing its medium-term targets. One, to be the main payment network in Peru. Second, be present in the daily life of IAPEROS. And finally, meet the financial needs of IAPEROS. Features launched in the last 18 months have allowed IAPE to continuously grow its active use base, engagement, and income generation. Monthly active users reached the 9 million mark At the average monthly transaction level for this group has risen from 14.9 to 23.5 in just one year. Currently, 5.2 million users generate income. Our main monetization drivers continue to be fruit. In the past six months, monthly mobile top-up transactions grew 20% to total 11 million transactions at the end of June. In just three months, Utilities payments have grown 4.8 times and stand at the end of June and 2.2 million transactions. Through IAPE promos, the gross merchant volume grew 4.8 times to stand at 25 million soles at the end of June. Notably, in the last six months, monthly discoursements of microloans rose 18%. In the aforementioned context, unit economics are moving towards break-even. The revenue per active user per month is growing and stands at 2.5 soles, while the cash cost per active user per month stood at 4.4 soles at the end of June. Next slide, please. MiBanco's profitability began to recover this quarter after a challenging start early this year. On a quarter-over-quarter basis, net interest income rose 4.6% after a structurally long disbursement recovered from a difficult first quarter. Disciplined loan pricing bolstered PII and offset the impact of an uptick in the funding cost. Consequently, NIM increased 80 basis points and stood at 13.5%. Other income rose 3.5% after the bank assurance fee level rose alongside growth in disbursement. MiBanco's provision expense dropped slightly after risk models were fine-tuned to better reflect client payment behavior but remain high due to a deterioration in payment capacity. From year-over-year perspective, NII rose 1% to an uptick in structural loans and interest rate pass-through, which mitigated the impact of raising funding costs. Non-interest income rose 26.6%, due to the same factors as those outlined in the quarter-over-quarter analysis. Bibanco's provision rose fueled by a downturn in payment performance and a more challenging macroeconomic outlook. Operating expenses rose 5.9% and the efficiency ratio stands at 52.4%. Finally, ROE rebounded to 9.5% in the quarter. Bibanco Colombia is facing high inflation high funding costs, lower interest rate ceilings, and a deterioration in economic expectations. We have adopted our strategy accordingly, and we believe that untapped potential exists in the Colombian microfinance market. Next slide, please. ROE, a group of Pacifico, was high this quarter and stood at 32.1% driven by the live business. Regarding quarter-over-quarter dynamics, net income deteriorated on the back of a lower net gain from associates. This evolution reflected a downturn in results for corporate health insurance over a particularly high base last quarter. Year-over-year, profitability was up, driven primarily by the live business and secondarily by property and cash flow. In the live business, the insurance and the writing results improved due to an upswing in income from insurance service through pensions, life, group, and credit life, which benefited from better prices and more favorable volume dynamics. Reduced expenses for claims also contributed to this improvement. In the property and casualty business, the insurance underwriting results rose 5.1% through an improvement in medical assistance results, which was partially offset by a downturn in the result for cars. Next slide, please. As you know, our strategy is to focus on recurring businesses to improve ROE in the medium term. Nonetheless, the uptick in profitability in recent quarters has mainly been driven by non-recurring income. On a quarter-over-quarter basis, income was boosted primarily by the Treasury Department, which managed ASB cash surplus via structural portfolios and short-term investments. In terms of recurring businesses, Assets under management, wealth management grew 4.2% and dropped income growth, while the assets under management level in the asset management business remained stable. Year over year, income increased 32%, driven mainly by the capital market business, which reported gains on the proprietary fixed income portfolio in Colombia and by the Treasury Department, which generated earnings via the same dynamics seen quarter over quarter. Regarding recurring businesses, Wealth management, assets under management, grew 9% and drop income growth, while assets under management contracted 17% driven by outflows in third-party funds, and income decreased slightly as these outflows generated lower fees. Next slide, please. Now we will look at credit cards consolidated dynamics. On a quarter-over-quarter basis, Our structural loans measuring average daily balances fell 0.6% or increased 0.2% with FX neutral. Growth in BCP retail banking and MiBanco was offset by a contraction in wholesale banking at BCP. Our deposit base constructed 3.5% or 1.8% with FX neutral. This evolution was driven by a drop in low-cost deposits which was partially offset by growth in time deposits. On a structural year basis, structural loans increased 5.5% measured in average daily balances, fueled primarily by retail banking at BCP and Nibanku. Deposit balances dropped 2.7% or 0.2% with FX neutral. Low-cost deposits have fallen system-wide But our market share has risen to 40.6% and currently represents 65.1% of our total deposits. Next slide, please. Now let me explain core income dynamics. Core income rose 3.3% quarter over quarter and 15% year over year on the back of NII. NII grew 2.3% quarter over quarter and 21.5% year over year. was attributable to volume dynamics discussed early and to discipline and pass-throughs. In this context, the net interest margin rose 18 basis points quarter over quarter and 110 basis points year over year to stand at 6.02%. Risk-adjusted need increased marginally to 4.56%. We are analyzing the results for fee income and tax transaction. It is important to note that both lines have been affected by our strategy at BCPB Olivia in which we have adjusted our fee framework for foreign transfers to offset the impact of SX transactions due to restrictions on foreign currency availability. If we exclude this impact, fee income increase 4.1% quarter over quarter and are achieving transactions while the result of SX transactions remain flat. On a year-over-year basis, excluding Bolivia, FinCon contracted 3.3% driven by lower fees in the pension business and the elimination of intercity fees. Next slide, please. Let's look at the dynamics of structurally non-performing loans. As indicated earlier, adverse events in the first quarter of the year coupled with a contraction in internal demand, high inflation, and high interest rates have notably impacted client payment performance and consequently portfolio quality this quarter. In this scenario, on a quarter-over-quarter basis, growth in structurally non-performing loans was driven by Mibango after loans reprogrammed in the first quarter fell delinquent. By SMA-PIME, where low-ticket riskier subsegments reported poorer payment performance, and credit cards and consumer loans where the debt service capacity of vulnerable segments fell due to over-indebtedness and unstable employment. The aforementioned was partially offset by a sale of a delinquent portfolio in the energy sector in hotel banking, which had been previously probationed. On a year-over-year basis, structurally non-performing loan volumes increased due to an uptick in refinanced collateralized loans in the retail estate and tourist sectors served by wholesale banking. The evolution of non-performing loans in retail banking and MiBanco was driven by the same factors as those seen in the quarter analysis and was partially offset by the sale of a delinquent retail banking portfolio during the first quarter of the year. In this context, the structural coverage ratio stood at 108%. To analyze our structural coverage ratio, it's important to review the NPL portfolio mix in terms of unsecured and collateralized products. Please refer to Appendix 2 for more details. Next slide, please. Moving on the provisions and the cost of risk, we have consistently indicated that our cost of risk will increase as we shift our long portfolio mix towards more reading. Additionally, cost of risk have further increased as client payment capacity has been impacted by macroeconomic conditions. Provisions in consumer loans and credit cards at BCP and MiBanco remained at high levels as a recessive, high-inflation environment in the first half of the year affected the payment capacity of clients. At BCP, vulnerable subsegments, which are more leveraged and have unstable jobs, were the most impacted, while at MiBanco, clients were severely hit by the first quarter events. Additionally, SME-team segments at BCP drove the uptick in provisions quarter over quarter. In this context, The structural cost of risk stood at 2.3%. We are closely monitoring our asset quality metrics, have refined our client segmentation by risk profile, and have gradually implemented a stricter origination guidelines for individuals, SME, PIME, and MIBANK. Nonetheless, the impact of recent measures on asset quality metrics will take some time to fully materialize. We will review In this page, the evolution of efficiency on an accumulated basis to isolate the impact of seasonal effects. Operating expenses grew 11.2% in the first half of the year, driven primarily by core businesses at BCP and disruptive initiatives at credit core level. At BCP, core businesses fueled growth in expenses through. And at T&IT expenses related to an increasing usage of cloud and client become more digital, more usage of IT applications, licenses, and other software to enhance capacities and improve cybersecurity, and move to attract more specialized digital talent. Marketing expenses mainly driven by advertisement to boost deposit and digital sales and growth in loyalty program expenses. The aforementioned dynamics were partially offset by a non-recurring tax expense reversal. Expenses by disruptive initiatives at credit card level increased 70% to ensure market leadership in the long term. Operating leverage remained strong, but DCP stand alone. At MiBank, operating expenses remained under control, but income grew at a slightly lower pace. Our efficiency ratio stood at 44.4% this first half down 310 basis points compared to last year and driven by high income at bcp and pacifico next slide please similar to the previous quarter record quarter profitability was driven by strong results in our universal banking and insurance businesses roe this quarter expanded by 130 basis points year over year and stand at 18.6%. Meanwhile, ROE for the semester was 18.9%. Note that we have benefited from relative low effective tax rate this semester due to the strong performance of our insurance business and due to the fact that tax-exempt interest income accounted for a larger share of the revenue mix at BCP. All in all, these results are a testament to our resilience and ability to adapt to challenging circumstances. Now, I will move to our updated guidance. Next slide, please. Our updated macro scenario for 2023 is now a GDP growth of around 1%, which incorporates the scenario of a week to moderate El Nino-Costero at year-end. Regarding loan growth, the social and climate events of the first part of the year, coupled with a sluggish internal demand, are taking a toll on our client borrowing capacity, particularly in our consumer loans, credit card, and SME segments at BCP. Accordingly, we adopted a stringent origination guidelines in those segments. In addition, demand for loans in wholesale banking has weakened, which reflects a downturn in business activity. These dynamics led to lower expected structural loan growth, which now stands at between 1% and 4% measured in average daily balances. Our NIN guidance remains unchanged between 5.8% and 6.2% as we think higher than initially expected cost of funds will offset the positive impact of a higher yield from the loan portfolio, which was triggered by a reduction in wholesale loan share in the total mix. We expect the cost of risk to stand between 2.1% and 2.5%, largely driven by the impact of the macro conditions on BCP performance. Note that BCP and Nibanco are likely to have divergent dynamics on this front during the second semester as Nibanco started its cycle of loan deterioration and credit restrictions before BCP. We achieved solid efficiency levels in a context marked by an acceleration in investment to develop future businesses. Our ongoing efforts to bend the expense curve are expected to partially offset the aforementioned income headwinds and results in an efficiency ratio between 45% and 47%. Finally, we maintain our ROE guidance of around 17.5%, but now acknowledge downside risks associated with asset quality deterioration and El Nino-Costello. With these comments, I would like to start the Q&A session.

speaker
Operator
Conference Specialist

We will now begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. If you use your speakerphone, please pick up your hands up before pressing the keys. To answer your question, please press star then two. At this time, we'll pause momentarily to assemble our roster. Our first question will come from Ernesto Gabilondo with Bank of America. You may now go ahead.

speaker
Ernesto Gabilondo
Analyst, Bank of America

Thank you. Hi, good morning, Gianfranco, Francesca, and Cesar, and good morning, everyone. Congrats in your second quarter results. My first question is on your ROE guidance for the year. As you mentioned, it was maintained at 17.5%, although anticipating a softer long road and a higher cost to risk. So can you elaborate on which would be the other lines that can help to compensate the softer long road and higher cost to risk? And what are the trends that you're expecting for long road and cost of risk next year? Thank you.

speaker
Gianfranco Ferrari
Chief Executive Officer

Good morning, Ernesto. This is Gianfranco. I'll ask Cesar to go into the details for the answer.

speaker
Cesar Rios
Chief Financial Officer

Okay. Thank you, Ernesto. First, effectively, we are maintaining our guidance of around 17.5%. At the beginning of the year, we have probably A conservative approach mentioned in 17.5%. Now I have already mentioned that we have some downside risk due to potential credit deterioration. This is a general framework. It's important to note that we already have gone through half of the year with very positive results with an ROE north of 18%, around 18.6%. Down the road, what we are expecting is effectively a softer loan growth with a composition that is going to be tilted to retail but with lower yields than previously expected because we are being more conservative in our origination approach. This is going to be accompanied by higher cost of risk and the usual acceleration of non-income sources, effects and transactional activity that is usually higher during the second part of the year And finally, by the seasonal increase in expenses, that has two main components, the normal seasonality of the last part of the year that I previously mentioned, and the trend in the acceleration of IT and disruptive initiatives. All in all, we think that with these elements, we can be around the 17.5% previously mentioned.

speaker
Gianfranco Ferrari
Chief Executive Officer

Maybe just to add on what Cesar mentioned, Ernesto, also when we provided the original guidance, the expected results at Pacifico were not the results we're getting. So as we mentioned in the previous call and at the investor day, due to some specific events, Pacific is having an outstanding year this year, and that is going to offset in part what Cesar just mentioned.

speaker
Ernesto Gabilondo
Analyst, Bank of America

Perfect. Thank you. Just to follow up in terms of the cost to risk, you are getting between 2.1 and 2.5, so looking into next year, would that be the same trend that we should expect, or do you think most of the worst part will happen in 2023 and probably should be normalizing when thinking about next year.

speaker
Reynaldo Llosa
Chief Risk Officer

Reynaldo? Yes, Ernesto. This is Reynaldo Ollosa. We, as you know, we don't provide guidance for next year, and we will do it during the first quarter of 2024. Having said that, there's a lot of uncertainty in terms of the impact of El Niño, so we need to confirm that information in order to have a a better projection of the number, but also we expect next year to have much better results due to all the things we are doing in terms of managing the risk in the consumer and SME portfolios, both in BTP and in Ivanko. So there are headwinds and tailwinds, and we will have more information on that regard by the first month of 2024.

speaker
Ernesto Gabilondo
Analyst, Bank of America

Perfect. Thank you very much. And just a second question related to the ROE of your subsidiaries. You have a nice chart in your report showing all the ROEs per subsidiary. And we can see that BCP, Standalone, Grupo Pacifico, Prima, ASB Bank, all of them continue to deliver ROEs above 20%. But on the other side, when looking to BCP Bolivia, MiBanco, Credit Corp Capital, we continue to see ROEs at most at 10%. So what are the strategies that you're implementing to improve the ROEs across the subsidiaries? And I don't know if you have like a medium target in each of them.

speaker
Gianfranco Ferrari
Chief Executive Officer

Yes. Thank you for your question, Ernesto. Let me go one by one. Actually, how we manage credit card capital and ASB is we manage them as a business unit. And Correct me if I'm wrong, Cesar, but that business is with an ROE of 17%. So it is close to what the ROEs were expecting for that business. Having said that, this first half, we have had some non-recurrent positive impact that helps, obviously, the ROE. But going forward, we have established a transformation plan for that business, aiming to have an ROE of between 16% to 17% by 2025. Regarding Mi Banco, both Mi Banco Peru and Mi Banco Colombia, the microfinance business is a much more volatile business, and we're definitely in the downturn of the business. But we're working... both in the short run and the long run. The short run basically focus on risk and the long run we need to revisit the whole business model so as to go back to the ROEs of over 20% we have had in the past in that business. And finally, Bolivia. Bolivia is Bolivia. That's my answer. We're doing whatever the best we can do in Bolivia The ROEs are, if you compare our ROEs to the banking system in Bolivia, they're quite good. There's not much more to do in that business.

speaker
Ernesto Gabilondo
Analyst, Bank of America

Excellent. Now, thank you very much.

speaker
Operator
Conference Specialist

Our next question will come from Juan Ricaldi, of Scotiabank. You may now go ahead.

speaker
Juan Ricaldi
Analyst, Scotiabank

Hi, good morning. Congrats on the strong results and thank you for the opportunity. My questions are related to JAPE. So first, the fee income generated in monthly active users have been increasing as a percentage of total users. So I was wondering if you can provide some colors on what are the drivers here and how you are increasing monetization. And the second question is related to the strong growth in payment volumes that we saw in JAPE and also related to the growth in the services payments so my question there is how much of the tpv growth has been driven by the service payments and what are the other drivers of tpv growth francesca are you there yes hi thank you for the question the yape as mentioned in the in the investor day

speaker
Francesca Raffo
Chief Innovation Officer

has plans on many monetization-like businesses. So the growth in terms of CPV is growth basically around P2P transactions, QR transactions in POSs and merchants, and also online transactions. So that's the main volume in terms of frequency, fertility, and engagement. On the monetization side, growth is mainly around focus, QR usage, where we see an NDRC, utility payments that is beginning to grow. This is one of the newest transactions that we have, and also the online payments around the digital measure. Having said that, we will finally exploring lending, which is growing. We see an increase in number of transactions and also on average amount of lending per customer. The promotions that Raymundo mentioned as an engagement tool, there's also a take rate that is also growing. And we are actually exploring ticket sales, gaming, and different venues for growth that are coherent with IAPE's super in terms of whatever gains, whatever we can gain on activity and engagement.

speaker
Juan Ricaldi
Analyst, Scotiabank

Thank you, Francesca. That's helpful. And then I had another question related to fee income, which was quite strong this quarter held by the Bolivian operations. So how much of the fees in Bolivia are a one-off and how sustainable are these levels?

speaker
Cesar Rios
Chief Financial Officer

Cesar? Yes. I wouldn't consider that one-off. I would consider more than temporarily. And the distortion is an accounting thing, let's say. what you are doing is charging a fee and recognizing in the other part of the equation higher FX exchange. For that reason, I will say we have a positive margin, but it's reflected in an abnormally high fee and an abnormally loss in FX. So it's a structural business that in this moment has more volume and a wider spread in these two variables. But it's part of the business in Bolivia.

speaker
Gianfranco Ferrari
Chief Executive Officer

Maybe on top of that one, what we're seeing in the fee income business is that what we've been investing for, I would say, decades now. When I say we, it's basically BCP, Peru, one transactional hub in Peru. That's obviously paying off. What we're also seeing, and maybe Jape is part of it, is the amount transacted in non-cash alternatives is constantly increasing, beyond your payment, debit, credit, and things like that. And obviously, that is also an important driver for free income generation.

speaker
Juan Ricaldi
Analyst, Scotiabank

Thank you for the comments.

speaker
Operator
Conference Specialist

Our next question will come from Yuri Fernandez with JP Morgan. You may now go ahead.

speaker
Yuri Fernandez
Analyst, JP Morgan

Hi, guys. Thank you. Good morning. I have a question regarding your cost of risk. I understand you have expected losses, so now you are calling for a challenging outlook, lower GDP. My call is regarding 2024. I guess the scenario is still a little uncertain here, but in this 2.1 to 2.5 cost of risk, the level we should expect for 2024, or basically you are going to build those anticipatory provisions for the tough environment now, and maybe for the next year we should see, you know, cost of risk running at a more normalized level. So just trying to understand if this is somewhat a new normal for the short term, or maybe no. Maybe you're just doing this now because you're seeing challenging environment, and given you do expected losses, things will improve at some point. That's the first one. And I would like to check the box on the portfolio sale. I guess you put out that some of the wholesale NPL improvement was regarding a portfolio sale. How big was that, just to understand how that affected your new NFL formation? Thank you.

speaker
Reynaldo Llosa
Chief Risk Officer

Luis Aldo? In terms of the guidance for next year, what I can mention as of today, Yuri, is that our estimations, our levels of provisions today include the impact of El Nino with a probability between weak and moderate. That is reflected on our provision level today. and that's included in the guidance for the year end between 2.1 and 2.5. Regarding next year, as I mentioned before, it's too soon to tell, and we would be able to provide you more information in the following months, in the next two quarters probably. And in terms of the sale of that specific case in the wholesale banking, It's around $30 million.

speaker
Gianfranco Ferrari
Chief Executive Officer

That's a sovereign bond exchange we made.

speaker
Reynaldo Llosa
Chief Risk Officer

We're talking about the sale of Thermogeek. Okay, sorry. It was a loan we had in our books, and we had an impact in terms of the NPL or the wholesale book of around $30 million.

speaker
Yuri Fernandez
Analyst, JP Morgan

But did you recognize any gain on that? Did you need to provision and sell at face value, or did you have an economic gain on that sale? Just trying to understand the information, right? Because if this was a non-performing loan, probably you had some amount of provisions. So just try to understand the moving parts on the economic future.

speaker
Reynaldo Llosa
Chief Risk Officer

Yes. I mean, as compared to the provision level, we had a profit. So we estimated a higher loss than what we finally obtained by the sale. So it had a positive impact on our levels of provisions in the world.

speaker
Yuri Fernandez
Analyst, JP Morgan

Okay. Thank you.

speaker
Operator
Conference Specialist

Our next question will come from Jeffrey Elliott with Autonomous. You may now go ahead.

speaker
Jeffrey Elliott
Analyst, Autonomous Research

Hello. Thanks very much for taking the question. So the cost of risk has been 2.1% in the first half and you're guiding to 2.1 to 2.5. for the full year so that seems to capture particularly at the 2.5 end of the range quite a big step up in provisions in the second half I'm just trying to understand what sort of scenario it would take to get that big step up and get you to the high end of the range and how cautious you feel like you're being now with that 2.1 to 2.5

speaker
Reynaldo Llosa
Chief Risk Officer

Yes. What I can mention is remember that we haven't finished digesting all the impact that we've had in the first semester in our cut level of provision. So that's incorporated in the projection of the second semester. All those loans that are at default but are not fully provisioned by the end of the first semester. And it included what I just mentioned in the forecast of of the impact that Nino would have under current information in terms of the portfolio looking forward. So that's why we have increased the guidance in the cost of risk expected for the year as a whole.

speaker
Jeffrey Elliott
Analyst, Autonomous Research

Okay, so if El Nino ends up being more severe, then there's some further risk that it could go even higher. Is that fair?

speaker
Reynaldo Llosa
Chief Risk Officer

Yeah, that's our first statement, yes. Thank you.

speaker
Operator
Conference Specialist

Our next question will come from Tito Labarta with Goldman Sachs. You may now go ahead.

speaker
Tito Labarta
Analyst, Goldman Sachs

Hi, good morning. Thanks for the question. Thanks for the call and taking my question. Two questions. One is on your insurance results, you know, continue to deliver, you know, good results there. Just to understand, how do you think about the sustainability of that going forward? Should that, you know, we saw a bit of a decline this quarter. Should that normalize or can it remain, you know, above historical levels for some time? And, Nicola, you can comment on that. It would be helpful. And my second question, just if you can remind us the sensitivity of your margin to a lower rate environment? You know, your margin has been doing well so far, but do you think how much pressure could there be as rates go down? And you also show there the risk-adjusted margin, which has been relatively stable. Do you think that can continue to be stable as we've seen recently? Thank you.

speaker
Gianfranco Ferrari
Chief Executive Officer

Hi, Tito. I'll ask Cesar Rivera to answer the first question.

speaker
Cesar Rivera
Head of Insurance and Pensions

Hello, Tito. Thank you. Well, maybe it's important to explain or to comment something about the important results in the interest business for these first two quarters. Maybe one of the is the higher investment results we obtained because the reinvestment rates we obtained in our investment portfolio. and because the good performance of our investment portfolio in general. The second reason of these higher results is the higher profits we have obtained in the disability and survivorship insurance. This is the insurance that is related of the affiliates to the AFP, the IPP, sorry, because in the last bidding contest, we obtained an important portion for this contract and with an interest increase in the rates. So we have obtained an interest increase in premiums without the COVID claims that we expected some part of COVID claims for these years. So this has generated a high profit for this business. And the third explanation is related with the high profits that we have obtained in the group life and medical life business. Due to the repricing we made in the previous years, considering the bad results we have obtained during the COVID pandemic. So considering that and following the market trends and the competitive situation in the market, We expect some reductions in the collective group life business in the next month, and we will obtain good results for this year, but we expect to have a sustainable ROI around the low 20s for the next and the following years.

speaker
Gianfranco Ferrari
Chief Executive Officer

Yes, and Cesar, could you answer the second question?

speaker
Cesar Rios
Chief Financial Officer

Yes. With an instant adjustment, I think our sensibility is around 25 basis points the first year of the adjustment, a little bit higher than we mentioned probably a couple of years ago when the interest rates started rising because the portfolio has shortened. And our expectation is that we can maintain an... margin, a NIM similar to the actual one, with a combination of reduced rates and a change in the profile of the portfolio that moves towards a more retail product of the increase in retail banking in BCP and a more accelerated growth in NIVAC.

speaker
Tito Labarta
Analyst, Goldman Sachs

Okay, so the stable-ish NIM, but you meant 25 BIPs, that's for about 100 BIPs? cut in rates? Is that the right sensitivity? And also, you can comment on the risk-adjusted NIM also, particularly as you go in retail.

speaker
Cesar Rios
Chief Financial Officer

Yes. And I will emphasize your ish because it's around. We are not talking about fine decimals.

speaker
Tito Labarta
Analyst, Goldman Sachs

Sure. Okay. And on the risk-adjusted NIM and any comments, particularly as you go in retail?

speaker
Cesar Rios
Chief Financial Officer

Yes. The risk-adjusted NIM is should improve the short-term level when we adjust accordingly the cost of risk down the road. But this is not a precise guide, and this is a trend, what I have mentioned at this point.

speaker
Tito Labarta
Analyst, Goldman Sachs

Okay, yes, as the quality normalizes, you can see some improvements, but a bit more medium-term, it sounds.

speaker
Jeffrey Elliott
Analyst, Autonomous Research

Yes.

speaker
Tito Labarta
Analyst, Goldman Sachs

Okay, great. Thank you.

speaker
Operator
Conference Specialist

Our next question will come from Carlos Gomez with HSBC. You may now go ahead.

speaker
Carlos Gomez
Analyst, HSBC

Hello, good morning. First of all, thanks again for your improved disclosure on capital and on the digital initiatives. You started last quarter, but it continues to improve, and we really appreciate that. It gives us a better insight about how things are going. Two questions. One is different from what you want to hear. You emphasized your detachment from the macro, but we would like to know what you think that growth can be in Peru in the long term and your credit growth can be in Peru in the long term. The second one is on the digital initiatives. If you can tell us more about Tempo and EO at this point.

speaker
Gianfranco Ferrari
Chief Executive Officer

Thank you. Sure. Hi, Carlos. As of today, and again, correct me if I'm wrong, our Chief Economist expects Peru to grow 2.5% 2024. Is that correct?

speaker
Cesar Rios
Chief Financial Officer

2024, at this point, I think it's more around 2.1% because we are considering a basic scenario with a combination of weak and moderate El Nino at the beginning of the year. The number of Gianfranco mentioned is more representative without the impact of the pandemic.

speaker
Gianfranco Ferrari
Chief Executive Officer

So anything between 2% to 2.5% growth, Carlos. Just a quick comment on that. Peru needs to grow much faster. This comment goes beyond the impact on our business. If the level of poverty in Peru was reduced dramatically over the last 20 years until COVID, We went back in a couple of years, like 10 years, in terms of that ratio. To go back, we need to grow as a country at least 4%. That's a challenge we have. Again, this goes beyond our business. Regarding Tempo and EO, let me start with EO. EO is actually in a friends and family... proof of concept with very good results, and we're gonna launch it I believe in a couple of weeks. So we could talk much more about initial results in next call, but the initial results are quite good in terms of user experience. That's the only indicator we have today. Regarding tempo, It's performing quite well, again, in operating indicators. Tempo recently got the approval from the Chilean superintendency to issue credit cards. We're in that process. That's the next relevant stage in the Tempo original business case. As soon as we start to get more relevant information, we plan to, and the tempo business becomes more relevant for QueryCorp, we plan to do something similar to what we're doing with IAPE regarding information disclosure.

speaker
Carlos Gomez
Analyst, HSBC

Thank you. In fact, I will go back to the beginning. You mentioned, yes, this is what Peru needs to grow. One could agree. To answer my question, in the medium term, what is your realistic expectation running the business about what Peru can do over the next three to five years? And also, how does that translate into credit growth for you? Thank you.

speaker
Gianfranco Ferrari
Chief Executive Officer

Yes, so long-term in Peru is much less than three to five years. We have had six presidents in six years, so it's quite difficult. I don't think, and this is a personal opinion, I don't think with the current scenario, political, social, and economic, a microeconomic scenario, I don't think that it is achievable for Peru to grow 4% over the next few years. We need to do a lot of structural reforms that we don't see them being done in the near future. Regarding growth, portfolio growth, I rather don't provide an answer in that because There's a lot of variables regarding the multiple of portfolio growth related to GDP growth. That's the main reason why, or one of the main reasons why we started to try to decouple from GDP growth so as to keep growing at a much faster multiple.

speaker
Carlos Gomez
Analyst, HSBC

Very clear. Thank you so much.

speaker
Operator
Conference Specialist

Our next question will be a follow-up from Yuri Fernandez with JP Morgan.

speaker
Yuri Fernandez
Analyst, JP Morgan

Hey, guys, it's me again. Hello, it's me again. I have a follow-up regarding costs here. Let's put the worst case scenario, right? This is not a moderate anemia. This is a strong anemia. You need to revise your cost of risk. You need to accelerate your low growth, and this impacts your profitability. Can you cut your expenses on the investment plan like the famous 150 bits on ROE headwind? I'm just trying to understand what you can do. If there is a worst case scenario, what can you do on all your digital initiatives or if the bank would prefer to say, no, hey Yuri, we prefer to have ROEs below 16, below 15, whatever, but keep investing in technology and keep expenses high. Just trying to understand if expenses could be involved for the company In the case, there is an ice cream event. That's one. And regarding also El Nino, I remember in 2017, you had extraordinary provisions for the event and later, I guess, reverted. It was not as bad as you expected. So in the case, things get clear that this is a moderate to a strong El Nino if the company could do voluntary, anticipatory provisions as you did, I guess, in 2017. Thank you.

speaker
Gianfranco Ferrari
Chief Executive Officer

Yeah. Regarding your first question, Yuri, maybe a quick previous comment which we shared on the investor day also. Most of the investments we're doing in the digital ventures and the digital transformations, we registered them as expenses rather than as investments. The main reason there is that obviously there's a high risk in these investments. We'd rather be conservative, and if something goes south, we don't want to surprise the market. So going to your question, your specific question, there's some room. We're not planning to do that whatsoever. Because of the results we're having in the digital ventures and the discipline we're pursuing in the investment we're making, we don't plan to cut, as of today, obviously, we don't plan to cut any investments in that sense. Obviously, if there's a major dramatic scenario which we don't see today, there's some room to cut expenses. I don't think, having said that, I don't think that the expenses we can cut will offset all the negative impact we may have in a dramatic scenario. But again, I highlighted the word dramatic scenario. Yeah, and I'll ask Reynaldo to answer the second question.

speaker
Reynaldo Llosa
Chief Risk Officer

In terms of our level of provisions, if we have information by that last quarter that we have a niño coming, that it's a higher impact of the moderate level, that that's what we have already considered in our projections, of course we would start increasing our level of provisions. Having said that, comparing to what we had in 2017 We have totally different situations. Companies are more prepared in the wholesale segments, more exposed to the niño phenomenon. And we have learned a lot during the last crisis, the COVID situations and the social unrest and the political situation we had to provide assistance and help to those clients in the retail banking that are exposed to these kinds of events. So in terms of the level of deteriorations in those portfolios, we expect to have a relatively lesser impact than what we had in 2017, where the situation was totally different. So that's in general our strategy, but we will have more information in the following months.

speaker
Gianfranco Ferrari
Chief Executive Officer

Maybe to complement Yuri, I would say that as a country, we're better prepared than we were in 2017. And on top of that, and this is a spoiler to my closing remarks, almost all of the subsidiaries at Credit Corp were closely working with our clients, both at the corporate level and at the retail level, in educating them and helping them to be much better prepared if an El Nino major effect will come.

speaker
Yuri Fernandez
Analyst, JP Morgan

no thank you john franco and i don't want to sound super bearish here and just you know check in the box what would be you know like if this happens what would be your message and and thank you for for being candid and animation that you know you don't want to cut expenses but if there is a a need uh you may you may do so so thank you for for the clarification great our next question will come from sergey dubin with

speaker
Operator
Conference Specialist

Harding Loebner. I mean, I'll go ahead.

speaker
Sergey Dubin
Analyst, Harding Loevner

Yes. Good morning, gentlemen. Thanks for the call. Three questions, actually. So the first one, there was some news about some ongoing or resurfacing political unrest again in Peru in July. Has that died down? Is it continuing? And kind of how do you see the trend there? Maybe that's the first question.

speaker
Gianfranco Ferrari
Chief Executive Officer

I'll take that one. Hi, CJ. Good to hear from you. I don't want to downplay the social noise that there was in July. As we mentioned in the investor day, what we see is that we have a fragile stability today in Peru. A fragile political stability, I mean. But the noise, the social noise we had in July, it was very little. There's nothing going on, basically nothing going on today. And obviously nothing compared to what we saw last year by year end and in January and February of this year. So today we're, again, going through a fragile stability. And we hope that that stability improves as we move forward.

speaker
Sergey Dubin
Analyst, Harding Loevner

Okay, great. And then my second question is regarding cost of risk. So I'm a little confused about this El Nino. It looks like from the presentation, it's going to be a summer 2024 event. if I understood this correctly, but you also talked about how your cost of risk for 2023 is already incorporating that. So can you help me with the timing of, are you expecting anything in 2023 or is that entirely 24 event? That's first part of this question. And the second part is you mentioned that you expect cost of risk grants to diverge in the second half with Mibanko kind of going down and perhaps BCP going up. Can you help explain why that is? Is that related to the steps that you've taken in terms of curbing the risk of appetite? Any color around that would be helpful.

speaker
Reynaldo Llosa
Chief Risk Officer

Yes, in terms of 2023 closing June numbers, we included everything that we expect for the year. incorporating some outlook of the level of growth that is impacted for 2024. That, in general, includes all the events that are under our control and that we foresee for the remaining of the year. And in terms of MiBanco and BTP, as Cesar mentioned, MiBanco started with some specific measures before BTP. So the remaining provisions left for both institutions vary. I mean, the need for MiBanco provisions for the rest of the year are relatively lower than we will see in BTP. That's what Cesar specifically mentioned.

speaker
Sergey Dubin
Analyst, Harding Loevner

Okay, and this steps that you're talking about, that relates to what? I mean, are you curbing, are you like, curtailing risk or curtailing loans to more risky segments? Could you explain what it is that your bank has already did and BCP hasn't done yet?

speaker
Reynaldo Llosa
Chief Risk Officer

You are totally right. I mean, the things we have done in both banks have limited the growth of the portfolios. As you've seen, it hasn't been very good years in terms of loan growth in terms of the first six months of the year, and that's a reflection of our stringent more stringent credit policies in both banks. So that's what we've seen, and that's what we expect to have a better outlook in terms of the new loans, but we still have in our portfolio some loans that were impacted by the macro trends and the specific events that happened in Peru in the first quarter.

speaker
Sergey Dubin
Analyst, Harding Loevner

Okay.

speaker
Reynaldo Llosa
Chief Risk Officer

Okay.

speaker
Sergey Dubin
Analyst, Harding Loevner

And the third question is regarding NIM trajectory. So I believe you mentioned in the beginning of the call that, you know, a bunch of Latin American central banks already cut interest rates, and you expect Peruvian central bank to cut their rates in Q4 of this year. So could you remind me what is, again, what is the sensitivity of NIM to, I don't know, let's say 25 dips? of rate cuts, and then how would you expect MIM to sort of shape up if you see successive rate cuts in 2024?

speaker
Cesar Rios
Chief Financial Officer

Yes. First, as I mentioned previously, the sensitivity of an instantaneous 100 basis points reduction in the portfolio is around 25 basis points the first following year. That's the sensitivity. Our guidance is to remain in the same level that we previously mentioned, but a combination of factors. We are going to grow the retail portfolio less than was previously expected, but at the same time, the wholesale portfolio has already reduced in some degree, so the combination of these factors lead us to maintain our guidance in terms of NIM. The expected result of our decreased... in reference rates is a gradual compression of the NIM that is going to be offset for the relative faster growth of the retail segments and Nibanco, as I already mentioned previously. At this point, we are not providing guidance for 2024.

speaker
Sergey Dubin
Analyst, Harding Loevner

Okay. Just to make sure I understand clearly, 100 basis point cut in interest rate leads to 25 basis point NIM compression with a 12-month lag, or next year, essentially, right? Is that correct?

speaker
Cesar Rios
Chief Financial Officer

The instantaneous effect, without changing the composition of the portfolio, is that if you have the entire portfolio and you reduce at once 100 basis points, the impact through the year is 25 basis points with a combination of maturities, sensitivity, and so forth and so on.

speaker
Sergey Dubin
Analyst, Harding Loevner

Okay. I understand. Okay. That's fine. Thank you.

speaker
Operator
Conference Specialist

Again, if you have a question, please press star then 1. Our next question will come from Andres Soto with Santender. You may now go ahead.

speaker
Andres Soto
Analyst, Santander

Good morning, Gianfranco and team. Thank you so much for the presentation. Most of my questions have already been answered, but I would like to take the opportunity to ask for an update regarding the strategic plan for investment banking and wealth management. In the past, you commented that you wanted to implement a plan to increase scale, specifically in the wealth management business. that may potentially include M&A activity. I would like to get a sense of how that's shaping up and when can we expect news about that.

speaker
Gianfranco Ferrari
Chief Executive Officer

Sure, Andres. And we shared, Eduardo Montero, actually, who runs our business, shared in detail the investor day. Basically, the plan is to focus in wealth and asset management. We're in that process. We're pulling off most of the investment banking business Part of it, we're closing basically the M&A businesses in Colombia and Chile. Obviously, it's not a one-time thing. You have to pull off as we finish the mandates we have. And we already transferred the lending business that we had in Peru to BCP. So today... I would say that by year end, we will have positive results in terms of, we will have finished all the cost reductions we expected and be very in shape to start growing both organically and if there are opportunities, inorganically in that business going forward.

speaker
Andres Soto
Analyst, Santander

Understood. Thanks again and congratulations on the strong result despite the challenging environment.

speaker
Gianfranco Ferrari
Chief Executive Officer

Thank you.

speaker
Operator
Conference Specialist

This concludes your question and answer session. I would like to turn the conference back over to Gianfranco Ferrari for any closing remarks.

speaker
Gianfranco Ferrari
Chief Executive Officer

Thank you all for your questions. As Cesar noted, our GDP growth expectations consider scenarios of weak to moderate El Niño-Costero, as well as announced government reactivation plans. Additionally, while the macro scenario will likely improve in the second half, we still expect to see a lag effect, which is reflected in our great risk management approach and expectations for full-year structural loan growth and cost of risk. Importantly, we've been managing efficiency better than initially expected, despite accelerated investments to strengthen our future businesses. All in all, We maintain our ROE guidance at around 17.5%, while noting potential downside risk mainly associated to asset quality deterioration and El Nino Costello. Looking ahead, we remain confident in delivering a longer-term ROE of approximately 18%. This is underpinned by Peru's strong fundamentals and our emphasis on broadening non-interest income via disruptive investments to decouple from the macro, complemented by our potential to leverage our brand strength, expand our client network, and seize structural growth opportunities as they reemerge. These efforts are fortified by our strategic advantage in acquiring low-cost deposits and realizing efficiency improvements through transformational investments. Now, I'd like to give you a better understanding of how we are currently helping our clients and investing in a more prosperous future for Peru. We're working across our organization and leveraging synergies to develop and deliver educational content and support in the face of climatic threats through both mass distribution channels and targeted individualized actions. Examples include Pacifico Seguro's Comunidad Segura program aimed at promoting a culture of risk prevention through workshops and conferences for families, microentrepreneurs, and community leaders. Additionally, Pacifico and BCP are sharing recommendations on how to manage climatic events through their financial education podcast and popular webcast. While Mi Banco is distributing educational content on privation across multiple channels. We are implementing a strategic approach driven by the need to safeguard our portfolio and, more importantly, minimize the adverse effects on the lives and businesses of individuals in Peru. We firmly believe that these are the crucial investments that will yield long-term benefits and unlock the vast opportunities in Peru. Thank you all for your continued support. Have a great weekend.

speaker
Operator
Conference Specialist

The conference is now concluded. Thanks for attending today's presentation. You may now disconnect.

Disclaimer

This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.

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