Credicorp Ltd (BAP) 2018 Q1 法說會逐字稿

(Operator Instructions) With us today is Walter Bayly, Chief Executive Officer; Alvaro Correa, Deputy Chief Executive Officer; Gianfranco Ferrari, Deputy Chief Executive Officer; Reynaldo Llosa, Chief Risk Officer.

And now it is my pleasure to turn the conference over to Credicorp's Chief Financial Officer, César Ríos.

Mr. Ríos, you may begin.

Good morning, and welcome to Credicorp's conference call on our earnings results for the first quarter for 2018.

Before we review Credicorp's performance, I would like to take a few minutes to give you some background about the political environment in Peru.

On March 21, former President Pedro Pablo Kuczynski, presented his resignation.

On March 23, Martin Vizcarra took office as President until July 28, 2021, in a democratic process.

We believe that the change in government does not imply a change in the economic model.

Mr. Vizcarra has publicly stated that his government, in economic terms, will be focused mainly on; first, increasing tax revenues without changing income and value-added taxes but reviewing tax exemptions and increasing the excise tax for specific products such as alcohol and tobacco; second, reducing government expenditure; third, adjustment in El Niño reconstruction initiative to speed up project execution.

Moreover, the government has announced that it will soon publish [Law 24-0], which dictates that civil reparations that companies involved in the Lava Jato case must be paid; and four promoting private investment but reducing red tape.

On May 2, the Congress granted a vote of confidence to the cabinet.

Next page please.

Slide #2.

Here, I would like to discuss the international environment and the evolution of the local economy in this context.

In Chart #1, the figure show a positive international environment.

IMF forecast suggested that the global economy may expand at the highest rate in 7 years.

In Chart #2, you can see that commodity prices has performed well, in particular, copper and zinc, which accounts for 36% of our exports.

In Chart #3, you can see that Peru's GDP growth as well as domestic demand has been improving slightly.

However, growth may sustain below our initial estimates for 2018.

In Chart #4, you can see that our trade balance also shows some improvement.

Finally, the quota for the fish anchovy fishing season of this year is the highest seen in the last 7 years.

And this is scenario in the fishing sector, is seeing an effect in -- which affect and primary manufacturing and services, will account for 0.4% points of the 3.5% real growth expected in GDP this year.

Fishing exports are expected to grow for $1.5 billion to around $2 billion this year.

Next page, please.

Let me comment on the evolution of the key interest rate that affect our businesses.

First, in the 2 charts at the top, we see the evolution of the 3 non-LIBOR rate and the yield curve for the Peruvian sovereign bonds.

These rates are important for our short and long-term funding, respectively.

At the bottom of the page, in Chart #3, you can see that the central bank took its reference rate 100 basis points during 2017 and another 50 basis points in the first quarter of 2018.

Finally, the orange line in the Chart #4 shows that loans expanded 7.6% year-over-year in the Peruvian financial system while quarter end loan balances for Credicorp grew 8.8% year-over-year.

Next slide, please.

Regarding to our lines of businesses, I would like to mention some important aspects.

In the case of universal banking: first, it has been -- faced pressure on margins due to aggressive competition, in particular, our corporate banking segment; second, the decision to improve the risk quality of our retail banking loan book has translated into risk-adjusted pricing that put downward pressure on margins but allow us to improve risk-adjusted NIM; third, we adopted the new requirements of IFRS 9, which among other things, set new guidance for measurements of allowances for loan losses.

From January 1, 2018, onwards, we use a forward-looking expected loss model instead of the incurred loss models required under IAS 39, which represent an increase of PEN 320.7 million in the allowance for loan losses.

All the aforementioned resulted in an increase of PEN 94.6 million in deferred income tax and a reduction of PEN 226.1 million in retained earnings.

Four, we sold about PEN 177 million of nonperforming loans under a judiciary process that were provisioned and has real estate collateral.

With regard to microfinance, Mibanco posted year-over-year improvement in several performance metrics such as loan growth, efficiency ratio and cost of risk.

An important driver of such performance is improvement in productivity of loan officer, which is in turn associated with the strategic project, Cliente Soy, that is focused on client segmentation and branch efficiency.

In the case of insurance and pension funds, life insurance keeps posting good levels of profitability.

In particular, after the pension fund reform hit our Annuities business, it is recovering due to a product, Renta Flex, that allows clients to personalize monthly coverage maturity, initial date of disbursement and other key features of the product.

Medical services continues improving its profitability.

Property and casualty faces challenges monthly -- mostly, sorry, in its current insurance business, which operate in a market that is contracting.

In terms of our pension fund management business, our subsidiary, Prima AFP, registers a level of new affiliates that is above our expectations due to the tender for new affiliates that we won in December 2016, which implied a reduction of fees.

This show their full effect throughout 2018.

Furthermore, due to changes in the accounting rule IFRS 9, there is an impact related to the recognition to the P&L of the profitability generated with the resale requirement.

Before that, the profitability was booked against equity.

Next slide, please.

Sorry, in investment banking, sorry, it's not a turn of page.

In investment banking, we still faces challenges in corporate finance and capital markets due to market conditions, particularly in Chile and Colombia.

Private banking offshore was negatively affected by the amnesty for repatriation of capital, where BCP captured around 80% of the total capital that was repatriated at the country levels.

Now another page, please.

Slide #5.

Let's review the most important figures and indicators that show Credicorp performance in the first quarter.

Credicorp reported net income of PEN 1,038 million, which represented a 2.4% reduction quarter-over-quarter but a 16.7% increase year-over-year.

All this imply our return on average equity and average assets of 19.3% and 2.4%, respectively.

Loan growth of 2.8% quarter-over-quarter and 7% year-over-year in average daily balances, which represents our recovery in loan growth considering the evolution posted through our 2017.

Loan expansion quarter-over-quarter and year-over-year was due to better dynamics in retail banking in Mibanco, an increase in Wholesale Banking market share although at lower rates; second, net provisions for loan losses decreased 15.9% quarter-over-quarter and 30.8% year-over-year, mainly as a result of improvement in risk quality achieved in SMEs, Mibanco and consumer financing business segments in the last 3 years.

The aforementioned has been captured in the methodology of forward-looking expected loss required by IFRS 9 as we will briefly explain later.

Furthermore, the first quarter of 2017 posted a high level of provisions for loan losses due to the effect of El Niño phenomenon and Lava Jato cases.

As a result, the cost of risk decreased 28 basis points quarter-over-quarter and 84 basis points year-over-year.

Third, net interest income decreased quarter-over-quarter due to a contraction in interest income of loans, which was partially offset by the reduction in interest expenses.

On a year-over-year basis, net interest income increased slightly due to loan growth of 7% in average daily balances.

In this context, net interest margin contracted 11 basis points quarter-over-quarter and 28 basis points year-over-year.

This was mainly due to the significant reduction in Wholesale Banking spreads and our decision to improve risk quality of retail banking that we mentioned earlier.

All of the aforementioned, together with the reduction cost of risk translated in an increase of 8 basis points quarter-over-quarter and 23 basis points year-over-year in the risk-adjusted net interest margin.

Fourth, efficiency ratio decreased 250 basis points quarter-over-quarter due to seasonality in operating expenses every 4 quarters but increased 100 basis points year-over-year due to low growth in income generation.

Finally, in terms of capital ratios, our BCP Stand-alone, BIS and Tier 1 ratios increased quarter-over-quarter after the Annual General Meeting of Shareholders approved the capitalization of earnings as well as the increase in legal reserves in March 2018.

In the other hand, the common equity Tier 1 ratio, consider the most rigorous capital ratio, dropped to 11.22% due to the effects of the declaration of dividends in the last quarter.

Slide 6, please.

As you can see in the chart on the top left-hand side, average daily loan balances expanded 3% quarter-over-quarter.

This expansion was mainly driven by growth in Wholesale Banking loan book, both in Corporate Banking and Middle Market Banking, which are segment with low margins and accounted for 68% of growth in loan volumes.

It is awarded the year-over-year expansion of 7% in average daily balances.

Nevertheless, market conditions represent a significant challenge in particular for Wholesale Banking.

Next page, please.

At the end of first quarter '18 -- 2018, Credicorp's financing structure continue to reflect higher growth in deposits as a funding source, which had a positive impact in funding because given that the expansion in deposits was mainly attributable to non-interest-bearing, demand deposits and savings deposits.

Additionally, this funding source has replaced central bank instruments, which continued to decline in this quarter as these mature.

In this context, Credicorp's funding cost contracted 9 basis points quarter-over-quarter and 7 basis points year-over-year.

This reduction was primarily attributable to BCP Stand-alone, whose funding cost in local currency fell and offset the increase in funding cost in foreign currency.

Finally, Credicorp's loan-to-deposit ratio decreased quarter-over-quarter and year-over-year to situate at 102.4% given the deposits expanded at a faster pace and total loans.

Slide 8, please.

In terms of portfolio risk quality.

As you can see in the chart at the top of this page, coverage ratios of internal overview and nonperforming loans have increased quarter-over-quarter and year-over-year.

The improvement in coverage ratio was mainly due to: first, the one effect related to the adoption of IFRS 9 requirements in January 1, 2018, which we explained earlier; second, the provision for loan losses net of recoveries made in the first quarter of 2018; third, the sale of $177 million of nonperforming loans.

Moreover, as you can see at on chart at the bottom of this page, Credicorp's cost of risk at 1.48%.

This level represent a contraction of 28 basis points quarter-over-quarter and 84 basis points year-over-year, which was due to the contraction quarter-over-quarter and year-over-year in provisions for loan losses.

This was, in turn, achieved due to: first, the enhancement of our risk adjustment pricing methodologies and risk rating model as well as some specific changes to credit policies in micro segments of our retail portfolio has led to significant improvements in risk quality of new vintages, all aforementioned has gradually shown at portfolio level.

In some cases, these measures imply that we reduce interest rates in order to improve risks and level of collateral; second, the improvement of risk quality in Mibanco Colombo based on our improved risk-adjusted pricing, which we deployed with precise client segmentation.

All aforementioned, together with a slight and gradual recovery of several macroeconomic scenarios was also captured by the IFRS methodology.

Next page, please.

With regard to net interest income, quarter-over-quarter analysis show that it contracted 0.8% due to the reduction of 1.3% in interest income, which was in turn driven mainly by a decrease in interest income and loans and dividends on investment.

The aforementioned was attenuated by the contraction of 2.6% in interest expenses, which reflect the reduction of funding cost as we explained earlier.

Although, average daily loans balances expanded quarter-over-quarter, interest income on loans contracted because loan growth was mainly driven by Wholesale Banking, whose margin has been under pressure due to aggressive competition in Corporate Banking.

In the year-over-year analysis, net interest income grew 1.8% due to an increase of 2.3% in interest income on loans, which offset the expansion of 2.7% interest expenses.

All of the aforementioned translated in a drop of 11 basis points quarter-over-quarter and 28 basis points year-over-year in net interest margin.

However, the decrease in cost of risk allowed posting an improvement in risk-adjusted net interest margin on a quarter-over-quarter and year-over-year basis.

Next page, please.

Slide 10.

Credicorp's efficiency ratio decreased 250 basis points quarter-over-quarter, mainly due to the seasonality on the operating expenses every 4 quarters.

This level usually represents the lowest level of each year on a quarterly basis.

On year-over-year basis, the efficiency ratio increased 100 basis points and situated a 42.8%.

This was due to lower growth in operating income than the operating expenses.

The drop in operating income growth was due mainly in the low expansion in net interest income while increasing operating expenses was the result of increasing salaries and employee benefits.

It is important to note that year-over-year reduction in Mibanco's cost-to-income ratio was attributable to improvement in productivity of loan officers, which is in turn associated with the strategic project, Cliente Soy that we explained earlier.

I think that we can go to the guidance.

As you can see for the full year 2018, we presented the guidance in the previous conference call.

And now we are maintaining the guidance that continues facing challenges due to the competition and low economic growth, which we have compensated with improvement in efficiency and risk management.

With these comments, I would like to open the Q&A please.

(Operator Instructions) Our first question comes from Ernesto Gabilondo with Bank of America Merrill Lynch.

Three questions from my side.

The first one is in terms of your loan growth.

I just wanted to understand if the acceleration we saw in wholesale during the quarter was explained by offering lower rates to be more competitive in the market.

And I appreciate how you see competition.

My second question is related to NIM.

If loan growth continues to be driven by low-margin segments, what should we expect for the NIM in the next quarters?

And the last question is about this implementation if IFRS 9. What should we see in terms of provision charges in the P&L?

I think the cost of risk was 1.5% in the quarter with the new accounting changes.

So I just want to know if this ratio is sustainable going forward.

This is Gianfranco Ferrari.

In terms of your first question, loan growth.

As you mentioned, we grew importantly, last quarter, basically focused in Corporate Banking.

We feel we are comfortable with where we are today.

We don't foresee being as aggressive in terms of pricing in that segment.

And we are basically focusing in being much more intelligent in terms of pricing across all segments.

Not only corporate and middle market but also in retail.

So we might expect slower growth over next quarter -- quarters but sustaining NIM.

And that gets me to your second question, which is we're really focusing on NIM after provision rather than by NIM itself.

As you can see, it was in page, in Slide 9. As you can see, even though NIM has been going down over -- if you compare quarter-over-quarter and year-over-year, risk-adjusted NIM has been increasing.

And that's -- in the end, that's what matters really.

So we expect risk-adjusted NIM to improve slightly and/or to be stable in the near future.

I will ask Cesar to answer the last question.

Regarding to provisions, actually, I would link my answer to Gianfranco's.

We are very focused on our risk adjustment and pricing methodologies.

And in this methodology, we, case-by-case, segment-by-segment, try to maximize bottom line profitability, making conscious changes between return -- excuse me, based on margins, risk and volume with the objective to maximize bottom line.

In some cases, we are going to reduce functions with the risk level.

For example, last year, we focused mainly on consumer loans because the risk was above our expectations.

But in other segments, we can increase volume because we think we can make a profitable offset.

As a result, we expect a better risk-adjusted NIM.

Just a follow-up in the last question.

So is it reasonable that the cost of risk should be maintained in 1.5% in the next quarters?

This is Reynaldo Llosa, I would say, we should be stable cost of risk for the following months since the portfolio's performing quite well in the last few months and we see that continuing in the next quarters and the rest of the year.

And having said that, there is also some things we're doing trying to gain new segments that might offset the positive results but marginally offset the positive results we are getting today.

So in general, I would expect the cost of risk to be stable in the rest of the year.

Our next question comes from Carlos Macedo with Goldman Sachs.

A couple of questions.

Actually, just one question on a couple of parts on your guidance.

You just mentioned that you expect that cost of risk remain stable.

Obviously, the margin started out the year slower than your guiding would suggest.

So but your risk-adjusted margins are higher.

Your loan growth is already at the top of your guidance and you talk about accelerating growth in the consumer book, and hopefully, gaining some acceleration there.

ROE for the quarter was above 19%.

You're guiding 17.5% to 18.5%.

Do you -- is it time, would you already revise guidance this early in the year?

I mean, it looks from the quarter that you're going to beat it quite handily.

Or maybe that the next 3 quarters won't be as good as the first quarter was.

How should we think about that?

Yes.

I would say that we are at the peak of the ROE.

We're maintaining our guidance.

And the first quarter, due to seasonality effects, we usually have lower expenses.

And in particular, in relation to the transformation efforts, we are starting to accelerate, and we don't capture these costs at the beginning of the year.

In terms of risk adjusted, Reynaldo mentioned we are talking about narrow range at the end, between 150 basis points and 160 basis points.

I will say this is a narrow range in relation to the bottom line.

Okay.

But would you say that there is more -- that you would be closer to the upper end of the range of your ROE given where you started?

Or would the bottom end of the range still very much in play given where you started?

That's what guidances are for.

We provide a range.

As a matter of fact, we're at the upper part of the range.

But it's too early in the year to tell.

There is seasonality in terms of expenses and also seasonality in terms of the effort we're doing in the transformation process within BCP.

And so we keep our guidance in terms of ROE for the year.

Our next question comes from Jason Mollin with Scotiabank.

So that is one of the questions I had was that the change in methodology for provisions resulting in this 1.5% cost of risk.

And the fact that you made some provisions or some allowances for loan losses and book value.

If they would remain stable at 1.5%, that would be lower than the guidance that you're providing at 1.6% to 1.7%.

I understand the expense side given the implementation of your digitalization strategy.

So maybe if you can comment for me on the outlook for provisions.

If it seems like the guidance there, from the statements that we just heard, 1.5%, was stable would be below the cost of risk and in the guidance under new IFRS 9 methodology.

And in the case of a -- if maybe you could give us an update on the implementation of the digitalization strategy and investments you're doing on that front?

I would like to emphasize that improvement is not only due to the change in methodology.

I would say this is the second effect.

The most important underlying effect is a change in policies, the new methodology and pricing and risk measurement that has been improvement, the quality of our new vintages and as these new vintages are starting to weigh more heavily in the portfolio, we start to see better results.

The change in methodology was significant at allowance levels, in which we charge PEN 220 million at the end of January 1. But the methodology is only capturing the underlying improvement of the risk profile of our portfolio.

(inaudible)

All right.

Maybe a follow-up there.

What would the cost of risk have been if you haven't changed the methodology?

We don't have that number, but if you compare our results to the -- to local accounting practices, you would see that they are very much aligned, and you would see an increment there that the portfolio is performing as well.

So in general, I would say that we have -- we are seeing a very good quarter, this first quarter, in terms of the results of the new business as what was mentioned.

Okay.

And maybe an update on the implementation of the digitalization strategy and investments that you're making.

Yes.

General comments or a specific question.

General comments?

Okay.

We started -- yes, go ahead.

You mentioned expenses yet in the first quarter, so we should start to see them, and maybe some color on just general comments on what's going on there and how that's evolving, that would be great.

Yes, yes.

I would say that we have had some conversations regarding this issue in the past.

What we foresee is that in the near future, we might have a belief in terms of cost-to-efficiency ratio.

But in the long run, that cost-to-efficiency ratio should be reduced.

As a matter of fact, our guidance is to keep the efficiency ratio stable over the year.

And we're pretty sure that -- that's achievable for the year.

So we might expect that 2019 onwards to start getting the benefits of the transformation.

That's our view today.

That's great.

And maybe just an update.

Walter, are you -- is Walter back, resuming fully his responsibilities?

He's alive and kicking.

Yes, I'm here.

Thank you very much.

I was just going to do my usual closing comments.

Thank you very much for asking.

Yes, I'm back.

But I'm trying to take it slowly recovering and getting into the old pace.

But yes, I'm back.

Thank you.

Our next question comes from Carlos Rivera with Citi.

My first question is related to the sale of the nonperforming loan portfolio.

I wanted to understand a little bit better that transaction.

So first, just to confirm if due to this sale, if you released any provisions or if in any way the cost of risk at 1.48% was benefited from this?

And if you booked any gains when you sold this portfolio, was this provision probably 100%, and then you were able to gain a little bit from this.

And my second question probably also related there were any gains on the sale of this portfolio, is if there were any other elements that might be nonrecurring or difficult to repeat.

You mentioned the sale of proprietary investment, mainly sovereign bonds from Peru.

Any gains that you can disclose there that would be very helpful.

Yes.

When we sold the portfolio was for PEN 177 million face value.

We actually booked again.

That is not registered in the cost of risk.

It's registered in other income line due to the accounting nature because it was previous year and previous year account.

It's recorded as an extraordinary income.

But the effect is reflected in the nonperforming loans level.

You capture this effect in the NPL level, and it's around 15 basis points.

Okay.

And can you disclose the amount of this gain that was reflected in other income?

Yes.

It's around PEN 29 million.

Okay.

And what about the second question, the sale of proprietary portfolio there?

Sorry.

Can you repeat the question please?

I think sovereign loans.

Yes.

As part of the strategy last year, in which we sold a low-growing loan portfolio, we increased our investment portfolio.

And now we are starting to sell this portfolio and realize gains.

But that's part of the current business.

That's part of the current business not extraordinary transaction whatsoever.

Based on the situation, we can do the same.

Any time.

Any time.

Our next question comes from Marcelo Telles with Crédit Suisse.

Most of my questions have been answered.

But if you could elaborate a little bit how you see the competitive environment.

It seems that in some segments, you are still growing below your competitors.

So if you can describe a little bit how things are in -- that would be great.

Actually, we don't -- there might be some slower growth in our portfolio, specifically in the consumer finance business.

I'm talking this quarter -- last quarter.

But besides that, we've gain either -- maintained or gained market share this quarter.

So even though we see there's harsh competition in -- across all segments, we're gaining market share -- we're not gaining market share in consumer finance.

But we're keep all gaining market share in the rest of the businesses.

Only to complement, we don't have the figures of March.

But as of February, we have a total market share in BCP Stand-alone of 29.2%.

In first quarter 2017, we have 29.1%.

That's the same.

But can you comment on the consumer segment specifically?

I mean what is -- what the competition has been like?

If you had been raising the bar a bit more than your competitors?

If you could operate in that, that would be great.

Yes, sure.

The reasoning behind is what I mentioned before.

We are rather looking for NIM after provisions rather than NIM by itself.

Therefore, maybe 2 years ago, due to since our vintages were -- weren't where we want them to be in terms of risk appetite, we started to -- we raised the bar, as you mentioned.

Nowadays, the vintages are much better.

We feel much more comfortable.

And as a matter of fact, where we are reentering with better risk models -- segments as we put out a few months ago.

So that's the main reason why we slightly lost market share in consumer finance business.

And just one final question.

When you look at in terms of your sustainable ROE, right, expectations of around 19%, how do you -- do you think that number could be maybe too conservative in light of everything you guys have been doing on the risk side, on the efficiency side?

Because when you look in the first quarter, I think one of the questions is kind of addressed that as well, we know there's an element of costs and so on.

But you are slightly above 19%, right?

And given that you have opportunities to grow loan portfolio, have more operating leverage, wouldn't it be reasonable to -- with further with the digitalization of the bank, would it be reasonable to expect a high ROE in the long term than this 19%?

The issue -- which we keep our guidance.

And the issue is that there is a counterforce and I agree with you that we might be more efficient and so on.

But there's a counterforce that, due to competition, there might be a reduction in -- further reduction in NIM.

So in the long run, we expect a stable ROE around 19%.

Our next question comes from Domingos Falavina with JPMorgan.

My question, I think, it's been widely explained.

The outlook for provision, in fact, in reference IFRS 9, I guess, in the future.

I guess I have a little bit of a theoretical question at what exactly happened.

Because my understanding is that IFRS 9 basically forces you to provision on your securities portfolio debentures, and that you changed from into an expected loss model.

So the part I'm having difficulty here is that, you made a statement saying that it's helped your provisions because your improvement in models, basically, you have a lower expected loss in the future and that drove some benefits in your lower provision during your credit costs.

My question is like when you think about that IFRS 9 is that you should keep the same old provisions on existed the loss incurred losses and add for the future expected ones.

So you should add not only one-off in your book value, but at least some pressure in your credit costs.

So my question is really a theoretical, what exactly of the IFRS 9 supported your lower provision expense?

Probably I will split the answer in 2 parts.

In terms of investments, the most significant impact of the change in methodology was the reclassification of portfolios from available-for-sale to trading for around PEN 1.6 billion, and was already a charge of around PEN 68 million in terms of allowances.

In terms of foreign provisions, I will say that the impact in investment is, at this point, negligible.

We have not seen any significant impact.

In terms of loans, the fundamental change, as we already mentioned, is the change in the profile of the portfolio.

What happened with the new methodology is due to the forward-looking, and expected nature of the methodology, you capture the improvement probably a little bit quicker than the old methodology of incurred loss.

But this is only a timely-effect.

But nothing significantly different happens in the medium term of the risk portfolio due to the methodology by itself.

Now it's super clear.

But if I have -- if you have already incurred losses, let's assume PEN 1 billion in already provisioned for incurred loss.

When you change methodology and you go into forecast losses, you don't remove the PEN 1 billion you have on already incurred loss, but you do add something in future.

So to me, it would actually occur a one time off of adding provision expense.

So this is a part I'm having difficulty understanding.

Or did you actually reverse provision that you had on incurred losses?

No.

I think probably -- I understand your question a little bit better.

When the new methodology, you have 3 different stages.

Probably the most significant difference is in the second stage.

In the second stage, with the new methodology, you don't have only an expected loss, for example, very early delinquency but an expected loss for the entire life of the loan.

So if you cross certain threshold, you -- in the methodology, have a present value calculation of the whole life expected value of the loss in this specific loan, so you book onetime.

And in the case of our adjustment, you have realigned all expected losses that was not captured in the old methodology.

But once you are set up this new and higher bar, you only have the marginal effects as in the old methodology.

So you basically use whatever allowances you already have as a credit for this new methodology.

Yes.

I think there are 2 difference.

One is in the current methodology and the change in allowance, you make a onetime realignment.

In our case, the loan portfolio was PEN 320 million additional allowance.

(Operator Instructions) At this time, there are no further questions in the queue.

I would like to turn it over to Walter Bayly, CEO.

Sir, go ahead.

Thank you.

After a very disappointing growth for the country and for the financial system last year, it seems that this year, both the country and the system, again, are poised for a more robust growth.

This, of course, on the back of a very positive international environment and a more stable political environment domestically.

This first quarter, all of our businesses have performed well, clearly, with microfinance, particularly Mibanco being -- having the most outstanding results.

Bright spots on the Corporation, again, microfinance Mibanco and at BCP risk and volumes.

The weak spots, of course, the pressure on margins due to the intense competition on the domestic market.

But as Gianfranco mentioned, we've been very cautious in managing the risk, the NIM after risk.

So we are focusing a lot in maintaining profitability of our businesses.

The overall result for the quarter was a very healthy 19.3% return on equity, which was not impacted as was mentioned by any nonrecurring results.

We expect and hope that this sets the tone for the rest of the year.

But particularly, I think the topics that have been discussed are the ones that will be recurring throughout the year: risk, volume and growth.

Again, we are very satisfied with this first quarter, and hope that the remaining quarters of the year will prove to be equally as good.

With this, we conclude the conference call, and thank you all very much for attending this call and for your questions.

Thank you, and goodbye.

Ladies and gentlemen, this concludes today's teleconference.

You may now disconnect.