Credicorp Ltd (NYSE:BAP) stock rose 2.02% (As on November 14, 11:25:33 AM UTC-4, Source: Google Finance) after the company posted better than expected results for the third quarter of FY25. Risk-adjusted NIM stood at 5.5% in year-to-date figures, supported by better asset quality and the structurally efficient low-cost funding base. On the deposit side, the company has raised the share of demand and saving accounts to 39.5%, a direct reflection of the digital engagement strategy and the trust the company have earned from the clients. BAP has revalued Bolivia’s balance sheet using a more market-reflective exchange rate, which generated an accounting year-over-year contraction of 2.1% in Credicorp’s total assets this quarter. Loans measured in quarter-end balances increased 1.5%, negatively impacted by the revaluation of Bolivia’s balance sheet and the depreciation in BCP’s dollar portfolio. Excluding these effects, FX-neutral loan growth for the quarter was 7%. This increase was driven primarily by BCP, mainly through mortgages and consumer loans in retail banking, and by Milagros. Asset quality has improved materially year over year. NPLs contracted across the board and Credicorp’s NPL ratio stood at 4.8% this quarter.

Moreover, Net interest income increased 2.7%, spurred by a contraction in interest expenses after interest rates fell and low-cost deposits expanded and accounted for 58.1% of the funding base. In this context, NIM increased to stand at 6.6%. Other core income grew 11.9%. Fee income increased 8.2%, boosted by transactional activity at Yape and BCP. Gains on FX transactions rose 23.4% through higher volumes at BCP. Lastly, the insurance underwriting result grew 33.1%, reflecting a stronger insurance service result in the life business. On the efficiency front, the cost-to-income ratio stood within guidance at 46.4%. In addition, In Peru, annual inflation has remained below 2% for 11 consecutive months, which constitutes one of the lowest prints for both advanced and emerging economies. Following the 25 basis points rate cut in September, which brought the policy rate down to 4.25%, the central bank is close to what it considers the neutral rate. In Colombia, inflation recently accelerated to 5.2% year over year in September, which remains above the upper bound of the target range of 4%.

BAP in the third quarter of FY25 has reported the adjusted earnings per share of $6.17, beating the analysts’ estimates for the adjusted earnings per share of $6.05, according to the Zacks Consensus Estimate. The company had reported the adjusted revenue of $1.65 billion in the third quarter of FY25, beating the analysts’ estimates for revenue by 0.02%.

Credicorp maintains a positive outlook, with a medium-term ROE target of 19.5% and a loan book growth guidance of approximately 6.5% year-over-year. The company anticipates low double-digit growth in fee income and insurance underwriting, supported by continued investments in digital capabilities.