Carlos Gomez

Carlos Gomez asked about Credicorp's exposure to Rutas de Lima, including potential recovery and current provisioning levels, and the impact of pension fund withdrawals on Peru's economic activity and Credicorp's business in both the short and long term.

Answer

Head of Insurance and Pensions Eduardo Montero stated that Pacífico's exposure to Rutas de Lima is less than 1% of its portfolio, 80% provisioned, and not accruing interest, with an expected 5-10% payment soon and ongoing arbitration. CEO Gianfranco Ferrari clarified that only Pacífico has this exposure. CFO Alejandro Pérez-Reyes explained that pension fund withdrawals ($25 billion total, BCP captured $11 billion) could boost GDP by 0.4% and positively impact Credicorp's low-cost deposits by 0.5% in the short term, but potentially negatively affect credit by 0.4% in 2026. He noted the main concern is the long-term impact on the pension system.

Carlos Gomez asked about Credicorp's exposure to Rutas de Lima, including potential for recovery, and the impact of pension fund withdrawals on the economy and Credicorp's business, specifically whether a slowdown in activity is expected once withdrawals conclude.

Answer

Alejandro Pérez-Reyes, CFO, initially addressed the Rutas de Lima exposure, stating it was less than 1% of Pacífico's portfolio, 80% provisioned, and not accruing interest, with arbitration processes offering long-term recovery potential and a near-term 5-10% payment expected. Gianfranco Ferrari, CEO, clarified that only Pacífico (insurance subsidiary) had this exposure. Regarding pension withdrawals, Alejandro Pérez-Reyes noted that BCP captured over $11 billion of the $25 billion withdrawn, with payments continuing until March. He estimated a potential 0.4% GDP impact if all went to consumption, and for Credicorp in 2026, a 0.5% positive impact on low-cost deposits and a 0.4% negative impact on credit. Cesar Rios, Chief Risk Officer, added that withdrawals also led to a reduction in the cost of raising for specific individual segments. Overall, short-term effects were positive or not material, with long-term pension system effects being the main concern.

Carlos Gomez congratulated Credicorp on Yape and Bolivia, then asked if the "target-rich environment" for investment across the region (Bolivia, Chile, Peru) due to political changes and commodity prices would incline Credicorp to invest more and distribute less, and if there were any particular geographical preferences. He also asked for an update on Credicorp's sensitivity to interest rates in both USD and Soles.

Answer

CEO Gianfranco Ferrari affirmed a positive outlook for Bolivia, Chile, and Peru, driven by pro-market governments and high commodity prices (copper, lithium, gold). He emphasized that Credicorp's vision extends beyond political cycles, seeing a much more positive environment for the upcoming years compared to the last four or five. CFO Alejandro Perez-Reyes stated the theoretical sensitivity to a 100 basis points parallel rate decrease is 17 basis points, with 15 from USD and 2 from Soles, but noted that in practice, NIM has grown despite rate cuts.

Carlos Gomez asked about the sustainability of the current upswing in retail and demand, questioning if it's temporary due to pension fund releases or a permanent trend. He also inquired about the market share of Plin and Interbank's share within Plin, and how this market is evolving.

Answer

Luis Felipe Castellanos, CEO of Intercorp Financial Services, noted that pension fund releases can temporarily curb loan growth but highlighted structural improvements in Peru's macro front. He expressed optimism for continued growth, contingent on political stability during the election year. Carlos Tori, CEO of Interbank, estimated Plin's market share at around 15% of the P2P and P2M market, with Interbank holding slightly over half of that, and confirmed continued healthy growth in users and transactions.

Carlos Gomez questioned whether the current upswing in retail and demand is a temporary effect of pension fund releases or a more permanent trend. He also asked for details on Plin's market share and Interbank's share within the Plin ecosystem.

Answer

Luis Felipe Castellanos (CEO, Intercorp Financial Services) clarified that pension fund and severance releases can actually slow loan growth as people repay debt, but highlighted a structural improvement in Peru's macro front (positive sentiment, labor, consumption, commodity prices). He identified political risk during the election year as the main uncertainty. Carlos Tori (CEO, Interbank) estimated Plin's market share at around 15% of the P2P and P2M market, with Interbank accounting for slightly over half of that, noting that Plin is growing 40-50% annually in users and transactions. He also mentioned that Plin users show higher activity, NPS, and lower churn for Interbank.

Carlos Gomez asked whether M&A is a consideration for Santander Brasil's growth strategy, particularly in light of the parent company's recent significant acquisitions in the U.S. and U.K.

Answer

CEO Mario Roberto Opice Leão stated that while M&A is always an option to accelerate growth, it's unlikely for Santander Brasil to pursue a large M&A in the near future. He believes the franchise is mature enough to achieve desired organic growth in targeted segments. He applauded the group's strategic acquisitions in the U.S. and U.K., seeing them as reinforcing key markets and ultimately benefiting the entire ecosystem, including Brazil.

Carlos Gomez inquired whether M&A is a consideration for Santander Brasil's strategy, especially given the parent company's recent large acquisition in the U.S. and buybacks, or if the focus remains exclusively on organic growth.

Answer

CEO Mario Roberto Opice Leão stated that M&A is always an option to accelerate growth in target segments but considers it 'unlikely' for a large M&A within Brazil. He believes Santander Brasil's franchise is mature enough to achieve desired growth organically. He applauded the group's U.S. acquisition, seeing it as a strategic move to reinforce key markets and ultimately benefiting the entire ecosystem, including Brazil, but reiterated that Santander Brasil's plans for disciplined, resilient, and return-focused growth do not require M&A.

Carlos Gomez asked about the double-digit decline in the payroll portfolio and the bank's view on the agricultural portfolio. He also inquired about the government's intention to be tougher on the use of deferred tax assets (DTAs) and its potential impact on Santander and the broader banking industry.

Answer

CEO Mario Leão explained that the payroll loan portfolio's decline was due to macro factors and government-imposed interest rate caps on INSS (retirees) loans, making them less profitable. Origination in correspondent channels was significantly reduced, with focus shifting to more profitable bank-owned channels and private payroll loans where the bank expects growth as a selective niche player. He stated that the agricultural portfolio is not large for the bank. Regarding DTAs, he confirmed that starting next year, the entire system will begin amortizing legacy DTAs through the P&L, in addition to current marginal provisions. This will create pressure on the taxable income of all banks, likely affecting the effective tax paid, and the bank is proactively managing this anticipated flow.

Carlos Gomez asked about the declining payroll loan portfolio and the bank's view on the agricultural portfolio. He also inquired about the government's intention to be tougher on deferred tax assets (DTAs) and its potential impact on Santander and the broader banking industry.

Answer

CEO Mario Leão explained that the payroll loan portfolio's decline is due to disciplined capital allocation. Origination in INSS (retirees) decreased significantly due to government-imposed interest rate caps making net spreads unattractive, especially through correspondent channels. Private payroll loans are expected to grow selectively within a larger market pie. Regarding DTAs, Leão confirmed that starting next year, the entire system will begin amortizing legacy DTAs through the P&L over 10 years, in addition to current marginal provisions. This will create pressure on the taxable income for all banks, likely challenging the effective tax paid. He emphasized proactive management to absorb these DTAs efficiently.

Carlos Gomez from HSBC asked for details on the COP 266 million reversal of reserves from model recalibration, including its geographical scope (Colombia vs. Panama) and the tax rates applied. He also questioned Grupo Bancolombia's stance on M&A opportunities given its new flexible corporate structure, asking if the company is a willing buyer or seller of assets.

Answer

CEO Juan Carlos Mora explained that model recalibration is a regular, annual process across all banks in Grupo Bancolombia, reflecting improved credit risk. He noted the tax effect of provision expenses is marginal. CFO Mauricio Botero Wolff provided approximate effective tax rates for different countries (Colombia ~30%, El Salvador ~22%, Guatemala ~10%, Banistmo ~16%), with an overall Grupo Bancolombia rate of ~28%. He confirmed that 75 million of the 266 million reversal came from Central American countries. Regarding M&A, the CEO stated the new structure provides flexibility to continuously assess opportunities and be both buyers and sellers to optimize capital and grow.

Carlos Gomez inquired about the COP 266 billion reversal of reserves from model recalibration, specifically its geographical split and applicable tax rates, and Grupo Cibest's strategic stance on M&A (buyer or seller) given its new flexible structure.

Answer

Juan Carlos Mora (CEO) explained that model recalibration is a regular, annual process across all Cibest banks, reflecting improved credit risk. Mauricio Botero Wolff (CFO) provided approximate effective tax rates for various countries (e.g., Colombia ~30%, El Salvador ~22%) and clarified that ~COP 75 billion of the reversal came from Central America. He stated that the new flexible structure allows Grupo Cibest to continuously assess M&A opportunities as both a buyer and seller.

Carlo Gomez from HSBC inquired about how Grupo Supervielle is managing the current volatility and high levels of interest rates in Argentina and how long this situation might last. He also sought clarification on the capital ratio, confirming the decline in Q2 was not related to the Basel III rule changes implemented in Q1.

Answer

CFO Mariano Viglia confirmed the operational risk capital requirement change was implemented in Q1, and the Q2 CET1 ratio decline was due to loan growth and dividend payments. Chairman and CEO Patricio Supervielle stated that the high real interest rates are harmful but transitory, expecting them to relax after the elections. Mr. Viglia added that the government is prioritizing exchange rate stability over interest rate stability ahead of elections.

The analyst asked about the timeline and terms of the Itau acquisition and sought confirmation on the bank's confidence in its full-year ROE guidance, considering political and economic uncertainties.

Answer

The CFO expects the Itau deal to receive regulatory approval before the end of 2023, but acknowledges potential delays due to elections. He reaffirmed the ~20% real ROE guidance for 2023, noting that Q3 performance is strong but Q4's outlook is uncertain due to the election, which is why the forecast is cautious.

Asked about the bank's strategic positioning for the end of the year regarding liquidity, risk appetite, and hedging against inflation and currency movements. Also questioned the sustainability of the strong Q2 results and the factors driving them.

Answer

The outlook is highly uncertain due to macroeconomic and political volatility, with year-end inflation projected between 175-200%. The bank is focused on protecting its balance sheet from inflation, maintaining good liquidity, and improving efficiency. The strong Q2 results were primarily driven by the increase in the monetary policy rate and the bank's significant exposure to public sector assets like CER and LELIQ.

Carlos Gomez from HSBC followed up on the MXN2 billion loss from debt reprofiling, asking if the bank would consider legal recourse. He also inquired about the expected income tax rate for 2020.

Answer

Pablo Firvida, Institutional Relations Manager, responded that taking legal action regarding the reprofiling was not discussed, as it was viewed as a very short-term payment postponement. He confirmed that the income tax rate for the following year (2020) is expected to be 25% on inflation-adjusted earnings.