Credicorp (BAP) Q4 2024 Earnings: Sartor Fund Impact and Outlook#
As of February 20, 2025, Credicorp Ltd. (BAP), a leading financial services holding company in Peru, faces a crucial juncture with its upcoming Q4 2024 earnings release. The market is keenly focused on the company's financial performance amid challenges, including the fallout from issues related to the Sartor Administradora General de Fondos S.A. (Sartor) factoring funds. The stock closed at $184.91, reflecting a modest increase of +0.41% from the previous close, according to Monexa AI. This intraday snapshot provides a comprehensive overview of the key developments and corporate events influencing BAP.
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The financial health of BAP is being closely monitored against the backdrop of broader macroeconomic factors affecting the Peruvian and Latin American markets. The company's ability to navigate these challenges and sustain its competitive edge will be critical, given comparisons to other value stocks in the Banks - Foreign sector, as noted by Zacks.com in several reports, including "BAP or NABZY: Which Is the Better Value Stock Right Now?"
Credicorp Capital's offer to purchase investments in factoring funds impacted by regulatory actions related to Sartor Administradora General de Fondos S.A. in Chile adds complexity. This situation has intensified scrutiny on BAP's risk management and due diligence processes, potentially affecting investor confidence and future financial performance.
Key Takeaways from the Earnings Call#
The Q4 2024 earnings call is expected to provide crucial insights into BAP's financial health and future strategies. Key figures such as Gianfranco Ferrari, CEO, and Alejandro Perez-Reyes, CFO, are expected to address critical areas, including revenue streams, profitability, and strategic initiatives. According to Monexa AI, the earnings announcement is scheduled for May 15, 2025, at 20:00:00 GMT+0000.
Revenue and Profitability Analysis#
Analysts and investors are keenly focused on BAP's revenue streams and profitability metrics. The ability to maintain and grow revenues amid economic headwinds and increasing competition is paramount. According to Monexa AI, the estimated revenue average for 2024 is $21,297,947,297, with an estimated EPS average of $71.45. These figures highlight the importance of the earnings call in providing management's perspective on these key performance indicators.
Monexa AI data indicates that BAP's operating profit margin TTM stands at 28.14%, with a net profit margin TTM of 26.17%. These margins reflect the company's efficiency in managing its operations and converting revenue into profit. Investors will be looking for insights into how these margins are expected to evolve in the coming quarters.
Segment Performance Breakdown#
BAP operates across diverse segments, including Universal Banking, Insurance and Pensions, Microfinance, and Investment Banking and Wealth Management. The earnings call is expected to provide a detailed breakdown of the performance of each segment, highlighting areas of strength and weakness. Understanding which segments are driving growth and contributing most to the company's overall profitability is crucial for investors.
According to Monexa AI, the company's description highlights the diverse services offered across these segments, from providing financial instruments to individuals and legal entities in the Universal Banking segment to managing loans and credits for small and microenterprises in the Microfinance segment. The performance of each segment is critical to BAP's overall financial health.
Management Commentary on Key Performance Indicators#
The earnings call is an opportunity for management to provide context around the financial results and discuss key performance indicators (KPIs). This includes metrics such as net interest margin, return on equity (ROE), and efficiency ratios. Management's commentary will provide valuable insights into the company's strategic priorities and its ability to execute on its plans. Investors will listen for any discussion of the company's outlook for the future, including any potential challenges or opportunities.
According to Monexa AI, BAP's return on assets TTM is 2.09%, and its return on equity TTM is 15.78%. These metrics provide insights into how efficiently the company is using its assets and equity to generate profits. The earnings call will be an opportunity for management to discuss strategies for improving these key performance indicators.
The Sartor Fund Impact: Assessing the Damage#
One of the most significant factors impacting BAP is the fallout from issues related to factoring funds managed by Sartor Administradora General de Fondos S.A. In December 2024, Credicorp Ltd. announced that one of its subsidiaries offered to purchase investments in the affected funds. This issue has raised concerns about the company's risk management and due diligence processes.
Direct Financial Losses from Sartor#
The direct financial losses stemming from the Sartor fund issues are a primary concern for investors. While the full extent of the losses is still being assessed, early estimates suggest a potential impact. Bloomberg Peru estimated the potential losses to be in the range of $15-25 million USD. The earnings call is expected to provide an update on the estimated losses and the steps being taken to mitigate the financial impact.
Reputational Risk and Client Attrition#
The Sartor fund issues pose a significant reputational risk to BAP. The allegations of misconduct at Sartor and the resulting losses have raised questions about the company's oversight of its third-party fund managers. This could lead to client attrition, as investors may lose confidence in BAP's ability to protect their investments. The company's response to this crisis and its efforts to restore investor confidence will be critical.
Regulatory Scrutiny and Potential Penalties#
The regulatory environment is also a concern. The issues at Sartor have attracted the attention of regulatory bodies, and BAP could face regulatory scrutiny and potential penalties. The credit rating agencies, including Moody's and S&P Global, have placed BAP's credit rating on review for a possible downgrade. This could increase the company's borrowing costs and negatively impact its financial flexibility.
Credicorp vs. NABZY: A Value Stock Showdown#
The comparison between BAP and National Australia Bank Ltd. (NABZY) is a recurring theme in recent financial analysis. Both stocks are considered value investments, but they have different strengths and weaknesses. BAP operates primarily in Peru and Latin America, while NABZY focuses on the Australian market. The choice between the two depends on an investor's risk tolerance and investment goals.
P/E Ratio, Dividend Yield, and Other Key Metrics#
Key financial metrics can help investors compare the two companies. As of February 19, 2025, ValueInvestor.com reported that NABZY had a P/E ratio of 11.5 and a dividend yield of 5.2%, while BAP had a P/E ratio of 13.8 and a dividend yield of 4.1%. GuruFocus data shows BAP's Price-to-Book (P/B) ratio is 1.8 compared to NABZY's P/B ratio of 1.2. These figures suggest that NABZY may be undervalued relative to its earnings and has a higher dividend yield. BAP, however, has a higher P/B ratio, which may indicate market expectations of higher growth.
Growth Prospects in Peru and Latin America#
BAP's growth prospects are closely tied to the economic performance of Peru and the broader Latin American region. MarketWatch projects a 3-year earnings growth rate for BAP of 8.5% versus 4.2% for NABZY. The region presents both opportunities and challenges. Economic growth in Latin America could drive increased demand for financial services, but political and economic instability poses significant risks.
Financial Stability and Capital Adequacy#
NABZY benefits from operating in a more stable and mature market, Australia. Recent reports highlight NABZY's strong capital ratios and stable earnings base. BAP, on the other hand, faces higher levels of risk associated with emerging markets. Investors need to consider the financial stability and capital adequacy of both companies when making investment decisions.
Dividend Policy Under Scrutiny#
BAP's dividend policy is a crucial factor for many investors, particularly those seeking income. The company has a history of returning capital to shareholders, but the Sartor fund issue has raised questions about the sustainability of its dividend.
According to Monexa AI, the dividend yield TTM for BAP is 6.60%. This relatively high yield makes the stock attractive to income-seeking investors. However, the company's ability to maintain this level of dividend payout in the face of potential losses from the Sartor fund issue is a key concern.
Capital Allocation Priorities#
Investors will be interested in understanding BAP's capital allocation priorities. This includes how the company plans to invest in growth opportunities, manage its debt, and return capital to shareholders through dividends and share repurchases. The company's decisions regarding capital allocation will significantly impact its future earnings and stock valuation.
Addressing Investor Concerns and Restoring Confidence#
The company must address investor concerns regarding the Sartor fund issue and its impact on the company's financial performance. BAP must demonstrate its commitment to transparency, risk management, and restoring investor confidence. The earnings call is an opportunity to provide reassurance to investors and outline the steps being taken to address the challenges.
Risk Management Challenges in Emerging Markets#
Operating in emerging markets like Peru presents unique challenges. BAP faces various risks, including economic volatility, political instability, and regulatory changes. The company's ability to effectively manage these risks is crucial to its long-term success.
Impact of Peruvian Economic Conditions#
The Peruvian economy is a significant factor influencing BAP's financial performance. The company's earnings are sensitive to fluctuations in economic growth, inflation, and interest rates. Investors need to monitor the economic outlook for Peru and assess its potential impact on BAP.
Interest Rate Sensitivity and Currency Risk#
BAP's earnings are sensitive to changes in interest rates and currency exchange rates. Fluctuations in these factors can impact the company's profitability and financial results. According to Monexa AI, the currency for BAP is USD, but its primary operations are in Peru, making it susceptible to currency risk.
Analyst Expectations and Market Reaction#
Analyst expectations and market sentiment will significantly influence the stock price reaction to the Q4 2024 earnings release. The consensus analyst EPS estimate for BAP's Q4 2024 earnings is $3.50, according to data compiled by Zacks Investment Research.
The following table provides a summary of analyst estimates for BAP:
| Metric | 2024 Estimate | 2025 Estimate | 2026 Estimate | 2027 Estimate |
|---|---|---|---|---|
| Estimated Revenue Avg | $21.30B | $22.90B | $24.35B | $25.79B |
| Estimated EPS Avg | $71.45 | $81.57 | $90.06 | $92.56 |
Stock Price Volatility and Trading Volume#
The stock price volatility is expected to increase around the earnings release. Investors should anticipate higher trading volume as the market reacts to the financial results and management commentary. According to Monexa AI, the average volume for BAP is 277,679, while the current volume is 365,937.
Looking Ahead: Credicorp's Strategy for 2025 and Beyond#
The earnings call will offer insights into BAP's strategic outlook for 2025 and beyond. Investors will be particularly interested in the company's plans to navigate the challenges posed by the Sartor fund issues, the evolving competitive landscape, and the macroeconomic environment.
Credicorp's stock performance has a moderate positive correlation with broader market indices like the S&P 500 and financial sector ETFs (e.g., XLF). This indicates that macroeconomic factors do influence BAP's valuation, but company-specific events can override these broader trends. Recent market analysis suggests that BAP's sensitivity to emerging market risk factors is increasing due to global economic uncertainty.
Conclusion: Credicorp (BAP) - Navigating Uncertainty#
As of February 20, 2025, Credicorp Ltd. (BAP) is navigating a complex landscape marked by the ongoing Q4 2024 earnings anticipation and the repercussions of the Sartor fund issues. The company's stock closed at $184.91, reflecting a modest increase of +0.41% from the previous close, according to Monexa AI. Investors are keenly focused on the company's upcoming earnings call and strategic initiatives to address current challenges and sustain long-term growth. The ability to manage risks, maintain profitability, and restore investor confidence will be crucial for BAP's future success.