Credicorp Ltd. (NYSE:BAP) Q3 2019 Earnings Conference Call - Final Transcript

Nov 08, 2019 • 09:30 am ET


Credicorp Ltd. (NYSE:BAP) Q3 2019 Earnings Conference Call - Final Transcript


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Good morning everyone, I would like to welcome all of you to the Credicorp Ltd. Third Quarter 2019 Conference Call. We now have our speakers in conference. [Operator Instructions] With us today is Mr. Walter Bayly Chief Executive Officer; Mr. Gianfranco Ferrari Deputy Chief Executive Officer; Mr. Reynaldo Llosa Chief Risk Officer; Mr. Cesar Rios Chief Financial Officer; and Mr. Guillermo Garrido Lecca CEO and Health Insurance -- of Health Insurance and Business.

Now it is my pleasure to turn the conference over to Credicorp's Chief Financial Officer Mr. Cesar Rios. Mr. Rios you may begin.

Cesar Rios Briceno

Thank you, Good morning and welcome to Credicorp's conference call on our earnings results for the third quarter of 2019. Before we review Credicorp's performance I would like to highlight some important matters regarding recent events in the local environment. As you are aware President Vizcarra dissolved the Congress on September 30 and called for parliamentary elections which will be held on January 26 2020. It is important to note that the Constitutional Court of Peru will rule on the constitutionality of the dissolution of Congress. So far the financial indicators have registered little reaction to this event PEN actually appreciated and the yield on Peru's sovereign bonds decreased. Despite these events we believe that Peru will continue to report a strong macroeconomic fundamental. These fundamentals are: prudent macroeconomic policies trade openness; integration in the global market and a mother friendly legal framework. Moreover although economic activity has decelerated in 2019 Peru will remain one of the fastest-growing economies in the region and inflation is expected to be low. We expect Peru's GDP to grow 2.5% in 2019 and 3% in 2020. Second economic activity accelerated in the third quarter of 2019.

As you can see in chart number two after a 1.7% year over year is financial including the first half of the year. Our estimate which is GDP is funded around 3.3% year over year in the third quarter of 2019. Non primary sectors actually accelerated and grew 3.3% year over year and underpin Peru's expansion of one of the most dynamic in the region. Finally the Central Bank reduced its monetary policy 25 basis points in November 7 to 2.25%. slide three please. In recent weeks the government has announced several measures through legal decrees. First the government has established a special regime to reinitiate work on public investment works that have been paralyzed by arbitration disputes. Moreover it has put together packages to bolster public spending in the last quarter of 2019. Regarding taxation income tax acceleration for operations on the local stock exchange will continue to 2022. Furthermore the government approved a Mergers and Acquisitions Law which reduced the transaction amount that triggers a review process by regulators. Lastly the Prime Minister has announced an increase in the minimum wage in the first quarter of 2020. The minimum wage currently stands at PEN 930 and was last increased in 2018. Next I would like to review recent events in the