Credicorp Ltd. (NYSE: BAP) stock fell 3.8% on Feb 7th, 2019 (Source: Google finance) after the company missed the analysts’ estimates for the fourth quarter of FY 18. In 4Q18, BAP has reported net income of S/ 956.9 million, which translated into an ROAE and ROAA of 16.3% and 2.2%, respectively. This result represented a decline of 5.4% and 10% QoQ and YoY, respectively. Total investments increased slightly QoQ, which mainly reflects purchases of CDs from BCRP at BCP Stand-alone from the fair value through comprehensive income investments portfolio (formerly securities available for sale). Cash and due from banks increased 9.8% QoQ due to growth in balances held with BCRP, which in turn corresponds to an increase in the reserve requirement. The latter is mainly attributable to the expansion of FC deposits, which are subject to a higher reserve requirement than that of LC deposits.
Moreover, the total deposits expanded 7.4% QoQ, mainly through BCP Stand-alone and, to lesser extent, via Mibanco. Deposits increased QoQ and YoY to post a share of 76.7% at the end of 2018 in comparison to 76.3% at the end of 3Q18 and 72.9% at the end of 2017. The deposit mix report a significant share for savings deposits and non-interest bearing demand deposits, which continued to represent approximately 57% of total deposits at the end of 2018, compared to the 57% at the end of 3Q18 and the 55% at the end of 2017.
BAP in the fourth quarter of FY 18 has reported the adjusted earnings per share of $3.58, missing the analysts’ estimates for the adjusted earnings per share of $3.95. The company had reported the adjusted revenue of $1.01 billion in the fourth quarter of FY 18, missing the analysts’ estimates for revenue. In 4Q18 NII, increased +4.9% QoQ and +8.6% YoY, in line with loan growth. The aforementioned translated into an increase in NIM of +11 bps QoQ and +35 bps YoY. In 2018 NII rose 5.2% with regard to 2017’s level. The improvement over 2017’s result was attributable to an increase in interest on loans, which was associated with growth in average daily loan balances, and with a more favorable funding structure, where the share of deposits in total funding increased. In this context, NIM remained stable in 2018 while the risk adjusted NIM increased 20 bps.
Additionally, Credicorp’s Total Regulatory Capital registered a slight increase of 1% QoQ, mainly due to growth in provisions and subordinated debt. However, YoY growth was situated at 15.4% due to the increase in legal and other capital reserves, which grow in March in every year with the capitalization of earnings.