Credicorp Ltd. — FY 2022 Form 20-F
Period and basis: Annual report for the fiscal year ended December 31, 2022—not a standalone fourth-quarter filing. Credicorp is a Bermuda holding company with operations principally in Peru and other Latin American markets, across universal banking, microfinance, insurance and pensions, and investment banking and wealth management. Financial statements are audited and prepared under IFRS in Peruvian soles (S/); U.S. dollar translations are for convenience.
Financial performance and position
| Metric | FY 2022 / year-end | Comparison and context |
|---|---|---|
| Net profit attributable to Credicorp shareholders | S/4,633.1 million | Up 29.3% from S/3,584.6 million in 2021; basic EPS was S/58.26 versus S/45.09. |
| Net interest income | S/11,518.1 million | Up 23.1%; higher rates, repricing and a shift toward higher-yield assets contributed. |
| Net interest margin | 5.07% in MD&A | Up from 4.10% in 2021. The selected financial data table gives 5.09%; verify the reported figure and calculation. |
| Non-interest income | S/5,108.3 million | Up 3.6%; fee income and foreign-exchange transaction gains increased. |
| Insurance underwriting result | S/661.6 million | Compared with a S/3.7 million loss in 2021, reflecting lower life claims and higher earned premiums. |
| Net profit margin / returns | ROAA 1.92%; ROAE 16.70% | Both improved from 1.49% and 13.94%, respectively, in 2021. |
| Assets and equity | Assets S/236.8 billion; total equity S/29.6 billion | Assets declined 3.3% year over year; equity increased 9.4%. |
| Loans and deposits | Loans S/148.6 billion; deposits S/147.0 billion | Loans rose 0.7%; deposits fell about 1.7% from S/149.6 billion. Demand deposits fell 17.3%, partly offset by time-deposit growth. |
| Credit quality | Internal overdue ratio 4.00%; NPL ratio 5.41% | Both increased from 2021. Allowance for loan losses was S/8.53 billion, down 6.0%; NPL coverage fell to about 97.8% from 115.1%. |
| Cash flow | Operating cash flow: negative S/1.13 billion | Compared with positive S/3.97 billion in 2021. Investing cash flow was negative S/1.09 billion; financing cash flow was negative S/1.60 billion. |
| Debt, capital and liquidity | Bonds and notes issued: S/17.0 billion; consolidated BIS ratio: 19.31% | Bonds and notes declined 4.6%. The company reported a 19.31% regulatory capital-to-risk-weighted-assets ratio; BCP Stand-alone’s ratio was 14.43%. |
Other expenses rose 11.4%, including increased technology, digital transformation, personnel and inflation-related costs. Total liabilities were S/207.2 billion, down 4.9%. The filing describes liquidity buffers as adequate; BCP Stand-alone and Mibanco’s December average liquidity ratios exceeded regulatory minimums.
Material changes versus 2021
- Profitability strengthened, supported by higher net interest income, while loan-loss provisions increased 49.4% from the unusually low 2021 level to S/1.81 billion. Management cited inflation, higher-risk consumer and SME lending, and specific Mibanco vintages.
- Loans grew only modestly at year-end as Reactiva government-backed loans amortized; consumer lending and selected wholesale and microfinance activity provided growth.
- Funding shifted toward higher-cost time deposits as demand and savings balances declined. Interest expense increased 40.2% and the reported cost of risk rose to 1.22% from 0.82%.
- Insurance earnings recovered materially, mainly as COVID-related life claims declined. Prima AFP’s assets under management fell 20.6% to S/31.8 billion, affected by pension withdrawals and market performance.
- Investment banking and wealth management faced market pressure: asset-management AUM fell to S/67.1 billion from S/96.0 billion, and wealth-management AUM fell to S/58.2 billion from S/65.3 billion.
Outlook, risks and unusual items
- Management outlook: Credicorp expected Peru’s GDP to grow 1.8%–2.2% in 2023. It anticipated slower loan growth, an upward NIM trend through 2023, and cost of risk rising to slightly above pre-pandemic levels. It also planned continued investment in digital transformation and disruptive initiatives; Yape was expected to reach cash-flow neutrality by 2024.
- Macro and operating risks: Political instability and protests in Peru, early-2023 flooding and potential El Niño effects, inflation and high rates, weaker growth, currency movements, credit deterioration, competition, cybersecurity and regulatory change. Management said rescheduling measures related to protests had not materially affected operations as of the report, but later borrower impacts were uncertain.
- Regulatory and pension risks: Peru’s interest-rate caps may pressure loan pricing and margins. Further pension withdrawals could reduce Prima AFP’s assets under management and fee revenue. Basel III-aligned capital rules and IFRS 17 implementation are also relevant; management expected IFRS 17 adoption to have no significant impact on opening net equity, subject to estimates.
- Contingencies: ASB Bank Corp. faced the Madoff Trustee claim for approximately US$120 million; the motion to dismiss was denied in November 2022. A related Fairfield Liquidator claim seeks approximately US$115.2 million, with an appeal pending. These claims concern substantially the same underlying redemptions; management said it had recorded a provision considered reasonable, but the filing excerpt does not provide a clear provision amount.
- Other legal matters: SMV proceedings concerning disclosure of political donations were being challenged in court; Credicorp said the fines had been paid and did not pose a significant material-liability risk. The filing also describes an investigation involving incoming CEO Gianfranco Ferrari and BCP’s advisory work on the Olmos Project; Credicorp said its review found no liability for the bank or its officers.
- Dividends and audit: Credicorp paid S/15 per share in 2022 for 2021 results; no dividend for 2022 results had been declared as of the report. The auditor issued an unqualified opinion and concluded internal control over financial reporting was effective, with no material weakness identified. Critical audit matters included loan-loss allowances and annuity mathematical reserves.
Most important facts for investors to verify
- Reconcile the NIM disclosure: 5.07% in management’s discussion versus 5.09% in selected financial data.
- Review the full audited cash-flow statement and liquidity disclosures, particularly the shift to negative operating cash flow and declining demand deposits.
- Track delinquency, NPL coverage, provision trends and the performance of higher-risk consumer and SME portfolios as government-supported loans run off.
- Check subsequent court developments and the recorded provision for the Madoff and Fairfield matters, including the extent of any overlap in claims.
- Assess 2023 outcomes against management’s Peru growth, NIM and cost-of-risk expectations, and monitor political, social and weather-related effects on borrowers.
- Confirm the final effects of IFRS 17 adoption and any dividend declaration for 2022 earnings.