Credicorp Ltd.

good morning everyone i would like to welcome all of you to the credit corp limited second quarter 2024 conference call a slide presentation will accompany today's webcast which is available in the investor section of credit corp's website today's conference call is being recorded as a reminder all participants will be in a listen-only mode there will be an opportunity for you to ask questions at the end of today's presentation if you would like to ask a question please signal by pressing star 1 on your telephone keypad. If you have connected to the call using the HD web phone on your computer, please use the keypad on your computer screen. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Now, it is my pleasure to turn the conference over to Credit Corp's IRO, Milagros Siguenes. You may begin.

Thank you, and good morning, everyone. Speaking on today's call will be Gianfranco Ferrari, our Chief Executive Officer, and Alejandro Perez Reyes, our Chief Financial Officer. Participating in the Q&A session will also be Francesca Raffo, Chief Innovation Officer, Cesar Rios, Chief Risk Officer, Diego Cabrero, Head of Universal Banking, Cesar Rivera, Head of Insurance and Pensions, and Carlos Otelo, MiBanco's Chief Financial Officer. 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, current expectations and beliefs, and are subject to a number of risks and uncertainties. And I refer you to the forward-looking statement 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 with opening remarks about our improved macro environment and brief comments on our digital strategy execution, followed by Alejandro Perez-Reyes, who will present in more detail the evolution of key macro figures, our financial performance, and revised outlook for 2024. Gianfranco, please go ahead.

Thank you, Milagros. Good morning, everyone. Thank you for joining us today. During the quarter, we made significant progress in executing our strategic initiatives across most of our operations, resulting in a sound first half of the year. Our financial results were robust, ending the quarter with resumed loan growth, a resilient risk-adjusted NIMH, and a solid budget. Importantly, as the economy improves, we are well positioned to continue to leverage additional opportunities and advance on our mission to efficiently provide products and services that meet our clients' needs while promoting financial inclusion. Before I turn to discussing several specific areas of our focus at Credit Corp, I'd like to comment on the context in which we are operating, particularly in Peru. GDP growth projections from local economies have been revised upwards and now align with our expectations of GDP growth of 3% for 2024. Improved weather conditions have broadly benefited the economy, especially the fishing, agriculture, and textile industries. Despite the ongoing government fragility, inflation remains among the lowest in the Latin American region. With improved purchasing power paving the way for the central bank to further reduce its benchmark interest rate. With this, our team is expecting the consumer segment to improve in this second half of the year. These factors, combined with increased public investment and high copper and gold prices, underscore expectations for economic growth, highlighting Peru's resilience. Turning now to our second quarter results. We delivered a sound ROE of 16.2%, driven mainly by universal banking, insurance, and investment management and advisory. supported by improved loan growth and high transactional activity in a recovering economy. Risk-adjusted NIN remains resilient, reflecting strengthened balance sheet dynamics, a disciplined interest rate management strategy, and our leading low-cost funding position, which together compensate for our control, although still high, level of provisions. Additionally, Having declared our dividend last quarter, we maintain a strong solvency and balance sheet position, both of which are crucial to navigating the current credit cycle headwinds. We continue to see significant benefits from investing in innovation and enhancing our digital capabilities, which are fortifying our competitive modes, elevating our relationships with current clients, and expanding financial inclusion. Looking ahead, we maintain our GDP growth expectation of 3% for this year and expect a similar outlook for 2025. I'd like to take a few moments to address the performance of Mibanco Peru. We believe we have the right hybrid business model strategy, which combines high-touch in-person visits from relationship managers with digital tools, including centralized risk assessment and an expert team in place. we're currently working on extraordinary circumstances. Systemic issues are affecting the Peruvian microfinance industry, characterized by a high complex credit cycle, where delinquencies and cost of risk are at the highest level since 2008. Although we're seeing a rebound in consumer behavior, the most vulnerable segment served by microfinance will be the last to recover. In this context, While Nibanco is performing better than it fears, we fell short of our expectations and we still do not feel comfortable with respect to the risk assessment of our portfolio. We're currently conducting a thorough review of our risk capabilities while keeping a strong focus on efficiency and expect to have a much better assessment in the upcoming quarter. Since launching our microfinance business in 2009, We have navigated various market cycles, generating good returns for the period. I am confident that our profitability will recover, although gradually than anticipated. We remain the industry leader in supporting the significant and essential population segment that Nibanco serves in Peru. In Nibanco, Colombia, we implemented a strategy last year to put our business back on course, which included management changes. While there is Still much work to be done, this business is now performing better in relative terms and is in line with our expectations. To sum up, we remain fully committed to the long-term potential of Mivanco and believe that it offers a valuable contribution to Credit Corp's portfolio of businesses. Turning to the next slide. We're proud to have a premier disruptive financial franchise in Latin America, underpinned by a well-defined strategy and clear goals. Our strategy is geared towards delivering the best experience in the most efficient way to remain competitive while investing in long-term sustainable growth. Since 2022, we have ramped up our investments in innovative and disruptive initiatives to improve our digital and analytical capabilities, positioning us to become an omnichannel financial services company with a deep understanding of our customer needs. We are now seeing tangible results in both our core businesses like BCP and our disruptive ones like YAPI. These initiatives are delivering more digital customers. Digital clients and digital monetary transactions have increased nine percentile points and third percentile points respectively year over year, with digital clients growing more than 21 percent points in the last two years. We have greater customer engagement, increased primary banking relationships, and expanded deposits, which provide access to highly competitive funding. At PCP, enhanced customer insights, increased client touchpoints, and strengthened digital analytical capabilities are delivering positive results. We can now offer our customers tailor-made products, leading to increased engagement and higher satisfaction. as reflected in the 11 percentile points improvement in our consumer clients' NPS in the last two years. Our development of digital distribution ecosystem has boosted income while reducing unit costs. As a result of these initiatives, BCP's efficiency ratio has fallen 190 basis points in the last five years. Leveraging our digital capabilities, we are meeting banking needs anytime, anywhere, and creating a positive network effect, driving sustainable growth. Our aim is to develop world-class solutions and features that bring the unbanked into the financial system and attract and retain customers. Additionally, we are committed to continuing our investment in technology and digital transformation, providing it continues to drive growth develop efficiencies, and optimizes our businesses in the long run. This strategic approach to investing ensures that we not only lead today, but also secure our success for tomorrow. Finally, I'd like to give you a brief update on YAPE. Alejandro will go into more detail shortly, and we'll take a deeper dive during our credit card strategic update event on September 26th. With over 15.9 million customers and income per user of 4.1 soles up from 3.7 soles in Q1, I am proud to announce that in Q2, YAPE reached a surprise break-even, ahead of our expectations. Income growth accelerated and diversified with the continued addition of functionality in all three lines of business. Our investment in YAPE is clearly paying off, According to Cantar Studio, IAPE is now the top of mind brand in Peru across any industry. Now, let me welcome Alejandro to his first results call as our CFO. He will discuss in more detail the macro environment and the operational and financial performance of our business units. Alejandro, go ahead. Thank you, Gianfranco, and good morning, everyone.