Credicorp (BAP) Q1 2026 earnings review
Record Profits as Asset Quality Accelerates, Despite Rising Political Noise
Credicorp delivered a stellar 26Q1, achieving record Net Income of S/2,063 million (+16.1% YoY) and a phenomenal 21.1% ROE. The beat was driven by a robust acceleration in both Wholesale and Microfinance loan growth, combined with a steeply falling Cost of Risk as prior vintages destock and bad debts are repaid. Structural funding advantages widened as low-cost deposits reached 74.9% of the total base. Management formally maintained its full-year ROE guidance of 'around 19.5%' but explicitly noted they are tracking toward the 'upper side' of that target. Despite elevated macroeconomic uncertainty surrounding Peru's presidential runoff and early El Niño impacts, core operations are thriving, allowing the board to declare a record ordinary dividend of S/50 per share.
🐂 Bull Case
The NPL ratio dropped 83 bps YoY to 4.3%, falling below pre-2023 recession levels. Repayments have been heavily boosted by pension fund withdrawals and corporate sector regularizations, pushing Risk-Adjusted NIM to a record high of 5.81%.
Yape is evolving from a payment app to a profit engine. With 16.4 million MAU, Revenue per MAU surged 65% YoY to S/10.3, far outpacing expense growth. It now represents 17% of group fee income and 8% of risk-adjusted revenues.
🐻 Bear Case
Peru is heading into a polarized presidential runoff. Concurrently, an early 'moderate' El Niño is already restricting the fishing harvest. Both factors create a downside risk to the 3.5% GDP growth estimate for 2026.
Operating expenses grew 13.1% YoY to S/2,762 million. While driven by strategic IT investments and Yape cloud costs, the efficiency ratio has stalled at 45.8%. Sustained OpEx inflation could pressure margins if revenue growth moderates.
⚖️ Verdict: 🟢
Bullish. The underlying banking engine is firing on all cylinders: cheap deposit capture is expanding, lending volumes are accelerating, and default rates are plummeting. The market may discount the stock due to political noise, but the fundamental operating leverage is undeniable.
Key Themes
Asset Quality Fortification Drives Margins
Accelerating. Credicorp's NPL ratio compressed sharply to 4.3% (down 83 bps YoY and 28 bps QoQ). This drop is multi-faceted: retail clients utilized pension fund withdrawals to amortize debt, while Wholesale banking saw recoveries from corporate real estate and commercial sectors. Consequently, the Cost of Risk plunged to just 1.3%. This dramatic asset quality improvement pushed Risk-Adjusted NIM up 57 bps YoY to a record 5.81%.
Yape's Unit Economics Expand Rapidly
Accelerating. Yape reached 16.4 million Monthly Active Users (MAU). Crucially, monetization is taking off: Revenue per MAU skyrocketed 65% YoY to S/10.3, completely decoupling from Expense per MAU which only rose 26% YoY to S/5.9. Lending is scaling aggressively, with 5.7 million loans disbursed in Q1. Yape is transitioning from a customer acquisition tool to a highly profitable super-app, closing in on management's target of contributing 10% of total risk-adjusted revenues by year-end (currently at 9%).
Wholesale and Microfinance Lending Rebound
Reversing. After quarters of stagnant corporate growth due to macro volatility, Wholesale Banking saw an FX-neutral YoY loan expansion of 10.2%, driven heavily by long-term corporate disbursements in Energy and Agriculture. Mibanco also accelerated, with disbursements hitting an all-time high in March (Total Mibanco loans +12.4% YoY FX-neutral). Peru's domestic demand, growing at >5%, is fueling this credit appetite.
Operating Expense Inflation Pressures Efficiency
Stable but elevated. Total Operating Expenses grew 13.1% YoY to S/2.76B. While Net Interest Income grew 10.9% and total Operating Income grew 12.9%, OpEx is running slightly hotter. The company attributes this to a 40.2% YoY increase in 'Innovation Portfolio' expenses (largely Yape cloud usage infrastructure) and higher BCP headcount for tech initiatives. The efficiency ratio stands at 45.8%, up 10 bps YoY. While within the 2026 guidance range, this structural cost inflation warrants close monitoring.
Insurance and Wealth Management Laggards
Decelerating. Not all segments participated in the Q1 beat. The Insurance Underwriting Result fell 9.1% YoY to S/299M, heavily impacted by lower premiums in Commercial Lines and Auto (due to exchange rate depreciation), alongside higher inflation-linked claims in the Life segment. Concurrently, Investment Management & Advisory net income fell 8% YoY, dragged down by an increase in operating expenses associated with base effects, despite AUM growth.
Macroeconomic Shocks: Elections and El Niño
Peru is currently navigating twin shocks. First, a polarized presidential runoff introduces significant policy uncertainty, which could stall corporate investment in Q2/Q3. Second, an active coastal El Niño ('El Niño Costero') is already severely hampering the primary fishing season (only 1/4th of usual harvest expected). Management warned that a severe El Niño convergence later in the year could shave up to 1.0% off Peru's GDP.
Other KPIs
Accelerating. Low-cost deposits surged 17.4% YoY. They now represent 74.9% of total deposits (up 286 bps YoY). This mix shift, bolstered by massive inflows from recent national pension fund withdrawals, has slashed Credicorp's funding cost by 31 bps YoY down to 2.11%. This cheap funding moat is a primary driver of the company's margin resilience.
Accelerating. Hitting a historic high with 19.5% YoY growth. Comprised primarily of Fee Income (+15.6% YoY) and FX Transactions (+30.6% YoY). The growth illustrates the success of Credicorp's decoupling strategy, shifting reliance away from traditional net interest income toward capital-light transactional fees via Yape and core banking operations.
Stable. The ratio dropped 33 bps YoY (and 270 bps QoQ), driven by the explicit strategic decision to upstream capital and issue a massive S/50 per share dividend. It remains comfortably above the 11.0% internal target and the 8.38% regulatory minimum.
Guidance
Stable. Management maintained the official 'around 19.5%' guidance but explicitly stated during the call that they expect to finish on the 'upper side' of this range due to the massive 21.1% Q1 print and structural macro tailwinds.
Accelerating vs current consolidated trends. Management projects that loan book growth will accelerate over the remainder of the year. Adjusted for FX neutrality, the guidance implies ~10.5% underlying growth, driven by Retail Banking at BCP and Mibanco origination.
Stable. Q1 came in at 6.58%. The anticipated acceleration in higher-yield retail loan origination will defend the yield side of the equation, while the flush low-cost deposit base will cap funding expenses.
Reversing slightly upwards. While Q1 printed an exceptionally low 1.3%, management guided that as they accelerate origination into 'higher-yielding, higher-risk' segments (Retail, SME), the cost of risk will gradually normalize upward through the rest of the year, though remaining near the bottom of their internal comfort range.
Key Questions
Pacing the Risk-Shift in Origination
You plan to accelerate loan origination in higher-yield, higher-risk retail segments which will push up the Cost of Risk later this year. Given the macroeconomic uncertainty (El Niño, elections), how are you calibrating the pace of this risk-shift to avoid sudden NPL spikes?
Yape's Terminal Efficiency Ratio
Yape's expenses grew 26% per MAU, and overall Innovation Portfolio expenses rose 40.2% YoY. At what stage of scaling do you expect Yape's infrastructure and cloud costs to stabilize, and what is the long-term target cost-to-income ratio for the Neobank unit?
Corporate Loan Demand Durability
Wholesale banking showed an impressive 10.2% YoY FX-neutral growth, breaking a multi-year stagnation trend. How much of this was front-loaded capital expenditure ahead of the polarized presidential elections, and do you expect corporate demand to stall in Q2/Q3?
Insurance Margin Recovery
With the Insurance Underwriting Result down 9.1% YoY due to lower P&C premiums and inflation-linked Life claims, what specific pricing or cost actions are being taken to stabilize this segment's margins going into Q2?