Credicorp Ltd (BAP) 2012 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Credicorp first quarter 2012 earnings release conference call. My name is Andrea, and I will be your coordinator for today. At this time, all participants are in a listen-only mode. Following the prepared remarks, there will be a question-and-answer session. (Operator Instructions)

And, now, I'd like to turn the presentation over to Mr. Alvaro Correa, Chief Financial Officer of Credicorp. Please proceed, sir.

Thank you, Andrea. Good morning, and welcome to Credicorp's conference call for the first quarter of 2012.

After an excellent 2011, the first quarter of the year promises to be the beginning of another good year, with interesting perspectives and tremendous potential in different fronts, which we are addressing with great enthusiasm.

Despite the uncertain markets due to a European problem that doesn't seem to be resolved yet and a slight slowdown in China and some persistent local political noise, the Peruvian market is showing an unexpected strength and dynamism, fueled by the recovered confidence which keeps people spending and investing and our business growing. This has led to the upwards correction of the expected GDP growth rate for the year to around 6% by most economists in the market.

Therefore, following the dynamic business activity, the results of Credicorp for the first quarter showed robust loan book expansion and excellent net earnings growth as we will see in the next pages.

So, move please to slide 3. These macroeconomic charts pretend only to point at the stability of Peru and the recovered business confidence, and the strength of the Peruvian currency which generates a strong sense of stability, all of which have led to the mentioned increase in expected GDP growth rates for the year.

Slide 4. Credicorp reported net earnings of $189 million, reaching again the record profit reported last quarter. Operating income however shows the real expansion of the business, with an impressive increase of 14.7% quarter over quarter, despite maintaining high levels of reserves.

This is the result of a sound loan book expansion of 3.7%, quarter over quarter, mainly concentrated in the higher margin retail business and increased volumes of liquidity invested in central bank securities. The fee income generated by our pension fund company and ASB were also strong.

The insurance business however, though having a robust premium generation expansion of 6.2% in the quarter, did have to digest an increased level of claims that led to the losses for the quarter in the property and casualty business and reduced its overall contribution to Credicorp. But, in addition to higher income generation, the administrative expenses dropped, following the seasonal pattern, improving the efficiency ratio to 40.7%.

These excellent operating results helped offset the lower translation gains for the quarter and consequently higher tax provision in local accounting, leading to the reported bottom line. We will see this better explained in the next slides.

Page 5. Following the reported strong economic activity, quarter-over-quarter loan book expansion of 3.8% was excellent for a first quarter of the year, which traditionally shows very little quarter-over-quarter growth. In fact, this seasonality, which is a result of the strong concentration of business activity at year end, is reflected in lower loan book growth and an increase of past-due loans in the first quarter of each year.

This quarter's loan growth of 3.8% compares very favorably with the growth in the first quarter of 2011, of 1.5%, and in the first quarter of 2010, of 2.4%. But, it's also accompanied by the increase in the past-due loan ratio of 17 bps this quarter, compared to 11 bps in the first quarter of 2011, and 22 bps in the first quarter of 2010. This effect is explained by the strong concentration of business activity at year end and a reduction in charge-offs in the first quarters, especially this first quarter 2012, when a more stringent internal approval process delayed charge-offs, impacting in around 8 bps the delinquencies ratios.

Furthermore, a more important evolution that also explains the stronger income generation and a trend towards higher margins and increased past-due loans is the growth of the retail business in the total portfolio, which has moved from 39% in the first quarter of 2009 all the way to 48% in this last quarter, with a stronger participation in the low income sectors where a higher delinquency ratio is also expected.

Growth was especially strong in the credit card business, consumer loans, and mortgages, where it reached quarter-over-quarter rates of 9.4%, 7.3%, and 6.3%, respectively, an evolution that also required higher levels of reserves for loan losses.

Therefore, though the seasonality does explain the increase in past-due loans in this and the previous first quarters of each year, it should be clear that there is a trend to higher past-due loan ratios which will continue in line with our strategy to further penetrate the consumer segment.

Next slide, please. Page 6. The excellent evolution we just saw in our loan book is behind the strong income generation as we move into higher risk, higher margin sectors, something reflected in the strong 5.9% increase in net interest income for the quarter.

This better income is also partially reflected in the net interest margin for our loan book, which expands from 7.97% to 8.03% in this quarter. However, part of the real NIM improvement is hidden by the margin business done by our Treasury, by which they capture expensive time deposits to invest in central bank securities which become profitable to us, the tax advantage they offer, but at the same time increases the overall calculation of funding costs, hiding the better NIM, something that comes through in the overall NIM, which drops 10 bps.

Non-financial income at BCP is also strong as it reaches the same level of the previous quarter, a typically strong one given the year-end activity.

Operating expenses on the other hand also showed a year-end seasonality in the administrative expenses and reveals a drop from $101 million to $85 million.

All of this led to the strong 18.4% growth in operating income.

Page 7. BCP Bolivia reported net income of $5.4 million, which indicates a contraction of 32% quarter over quarter. It was due primarily to higher provisions for the portfolio, due to a seasonal factor related to festivities held in the country in the early months of the year, and a drop in non-financial income due to a contraction in gains on foreign exchange transactions, drafts, and transfers.

BCP Bolivia return on equity in the first quarter dropped therefore to 19.3%, from the exceptional 30.4% reported in the fourth quarter of 2011, and 22.3% posted a year ago.

On the other hand, Edyficar had an excellent performance, with a portfolio expanding at the robust rate of 7.8% for the quarter with stable delinquencies of only 4%, and strong income generation that resulted in a return on equity of 25.7% and shows a growing trend.

Next page, please. All together, the performance of BCP shows excellent results with a sound portfolio expansion, with portfolio quality under control and in line with the evolution of its portfolio mix, and with an 18% increase in operating income explained in the previous slides, which could absorb the lower translation results and the consequent higher income taxes in local accounting, leaving still a sound 4% increase in net income for the quarter. This certainly sets us a superb rate of earnings growth for the year and reveals so the still enormous potential in the market.

Next page, please. Pacifico reported consolidated net income of $4.9 million this quarter, which represents a 58.4% decline with regards to the $11.8 million posted in the fourth quarter of last year. This result reflects seasonality in certain lines which includes the rainy season experienced in the first few months of every year. This way, the underwriting results in the first quarter fell 91% quarter over quarter, primarily attributable to the decline posted for the property and casualty business whose underwriting results contracted due to an increase in claims of $14.9 million, due to rains, floods, landslides, et cetera, plus one single large fire at the Ministry of Education's warehouse, which cost $5.9 million in repair claims, while net paid commissions increased only $3.2 million, leading to a loss in that segment.

The life insurance line also registered a drop in its underwriting result due to growth in claims, and an increase in commissions and underwriting expenses which were nonetheless more than offset by the financial income that is an integral part of the life insurance business.

Pacifico Health reported a loss equivalent to $0.5 million, due to higher claims, up 30% year over year, given that the average cost associated with certain types of diagnostics and providers have risen, a trend that reveals a significant medical inflation. For this reason, we constantly adjust rates and prices, which positively influence loss ratios in subsequent months. Furthermore, progress has been made in our vertical integration strategy to institute comprehensive health risk management, a project that will contribute to cost control and is in line with our plans.

In this context, the contribution to Credicorp was $4.8 million in the first quarter of 2012, which represents a 60% decrease with regard to the figure posted in the fourth quarter of 2011.

Though above expectations for the quarter, the casualty rates on a long-term basis are in line with the expected occurrence of events and the severity of these claims. And, the level of retention of risks follows the group's strategy to diversify its portfolio. Therefore, though a bad quarter from a claims concentration perspective, technical results on the long run should fall within Pacifico's projected numbers for the year.

Next page, please. Atlantic Security Bank reported net income of $11.6 million in the quarter. This figure represents 26.1% increase, quarter over quarter, that is attributable to an increase in income from sales of securities and no further provisions, since earnings from its core business were stable.

In contrast to the high volatility seen in the markets at the end of the second half of 2011, this year began with signs of relative stability in the US and European markets, while in the Latin American market continues to demonstrate sustained growth. In annualized terms, return on equity reached 25.8% in this first quarter of 2012.

ASB's total assets reached almost $1.6 billion, a 3% increase, quarter over quarter, primarily attributable to growth in the loan and investment portfolios following successful fund capture. These deposits are invested mainly in investment-grade instruments which reflect the bank's prudent policy and strict control over the diversification strategies and the limits set for investment types.

Atlantic's asset management business continued expanding with its assets under administration reporting a market value of $4.9 billion.

Page 11, please. Prima's net income in the first quarter of this year was up, was $9.2 million, which is 3.6% higher than the $8.9 million reported in the last quarter of 2011, and reflects an improved return on equity of 26.1%. This good earnings growth is attributable to an increase in fee income of 6.5% for the quarter and a sizeable decline in expenses associated with premiums from disabilities, survivor, and burial insurance in our affiliate's portfolio.

In the first quarter of 2012, unlike the previous quarter, no provisions were set aside for projects to improve operating efficiency. In this context, Prima operating income increased 16.7% quarter over quarter. From a commercial perspective, Prima has continued growing and positioning itself as the undisputed market leader, having achieved leading market shares in all ways of measuring this. Total funds under management topped the $10 billion mark this quarter, reporting $10.6 billion in assets in funds under management.

Next page, please. Credicorp's first quarter of 2012 results were once again in line within management's expectations. The loan growth reported in the whole financial sector is remarkable given the environment, both international and local, and reflects the local and regional economic dynamics that are making the Andean region a hot spot in the world.

In this context, the retail business seems to maintain its own very strong dynamic, and the strategies to increase bank penetration are fueling this growth. These strategies imply lowering the thresholds to credit granting, a delicate process to which we are dedicating significant resources and careful monitoring to make sure the necessary and timely fine tuning of our models is carried out. We feel confident about the process and believe this is crucial to a healthy and profitable retail business and will lead to greater margins to sustain the higher provisions required.

But, the Andean region also offers other highly profitable business expansion opportunities, which we have quickly identified and are in the process of implementing through the announced acquisition of two leading investment banking operations, each a leader in its market, which will conform the pillars together with our own operations of a top regional investment banking firm, something we would like to take this opportunity to explain to you a bit further.

Next page, please. This slide tries to synthesize the rationale and the objectives of this strategy. So, we will start by the rationale. These points summarize the reasons to develop a strategy focused on creating the best platform in the MILA region to compete with established and growing investment banks, none of which has such a strong and leading established presence in all the countries. Therefore, we decided to unite the leaders in each country to create the best platform and, with that, offer the best alternative to our clients. Those leaders were Correval in Columbia and IM Trust in Chile, which become strong additions to our own leading local investment banking activity.

The acquisitions themselves are just the first step of this venture. In fact, we went through a professional and thorough arms-length negotiation that resulted in the valuations on this slide that reflect the value of these operations on a standalone basis, without any synergies and effects of a powerful platform being created.

But, more importantly, we all focused in the mechanics of the process to create this platform and the future working strategy to achieve our goal, which is now shared by all the partners in this venture and is what will bring a significant additional value. This new platform is by itself powerful, and we strongly believe that together the value of the individual firms, including our own investment banking division, will be even a multiple of what they are today on a standalone basis, given the business development and resulting earnings contribution we expect from this venture, something we will all benefit from.

We are confident Credicorp is this way taking a lead in a business that will also contribute to the Corporation's growth story.

Thank you for listening. And, we will now be happy to answer your questions.

Thank you very much. Ladies and gentlemen, we are ready to open the lines up for your questions. (Operator Instructions) Saul Martinez, J.P. Morgan.

Hi, Alvaro. How are you? Good morning. I have two questions. One is a bit more general. One is, you know, more specific. I'll start with the more general question. It seems like everything is going very well, you know, from the economic growth expectations continue to be upgraded. You know, the policies of President Humala have surprised on the upside. You're executing on your strategy. Things seem to be going very well. I guess my question, then, is, what worries --? Is there anything that worries you? Is there --? What are the biggest risks you see? What keeps you up at night? Is it a big slowdown globally? A slowdown in China? What are the risks that you see that you have to guard against complacency about?

And, then, secondly, on the recent increases in reserve requirements, can you comment on that, in terms of what potential impact it might have on liquidity in the financial system and, obviously, on your net interest income, net interest margins going forward?

OK. Hi, Saul. Thank you. As of the worries, I think they are the same as yours, which is basically Europe. The situation in Europe is scary. We see a bad trend there. And, that would definitely affect what happens in the rest of the world and what happens here in Latin America.

I would put that in the first place, and probably that's the only one that is worth mentioning. The rest is the typical and the ones we have already mentioned before. I mean, this government is quite new. It doesn't have a year. It had to consolidate, but as you mentioned, it's following the right trend.

As of the second question, in terms of reserve requirements, yes, this puts some pressure on liquidity. It brings interest rates, especially in dollars, up. That's the idea of the central bank, but it doesn't really affect our margins. We are very successful transferring price to loans and to the asset side of the balance sheet. But, it definitely puts some pressure on liquidity.

OK. And, so, does that have any direct impact in terms of how you look at growth for your growth expectations for the year? Or, not? Or, is the demand for credit still so robust that you (multiple speakers)?

I think it won't have a direct impact on growth. I think we're maintaining the same expectations in terms of loan growth.

OK. All right. And, then, just one final. What's --? The insurance business is, you know, obviously you mentioned a number of transitory factors, flooding and what not, but it seems like the profitability has not been good over the last years. If you look at the ROE trajectory, last quarter it was 10%. A year ago, it was 13%. Obviously, there's some volatility. Is there anything going on there in terms of pricing that you're concerned about? You mentioned that you constantly monitor pricing, but do you feel like there are certain policies that were mispriced, for example? And, you're worried that, you know, you're not going to be able to hit your targeted returns there? And, if you could just remind us what the targeted ROEs are for the insurance group as a whole, as well, that would be helpful.

OK. I will pass it to Guillermo Garrido-Lecca from Pacifico.

Yes. What you said is correctly. We've had a lot of pressure on the pricing side. There's been a lot of competition, and that has somewhat hit on the pricing side. No? In spite of that, as you see, we've been growing at a tremendous rate this year, about 20%, compared to what we had first quarter of 2011. So, we are managing to grow in that side.

The average ROE that we have had in the last three or four years has been between 13% and 14%, and the projected for this year is a bit higher, is at 19%.

We have been hit this first quarter with two very large claims. One was the inundation of a mining facility, and the other was a fire in the Education Ministry here in the city of Lima. Those are, you know, isolated events that happen, especially the rainy season which is the first part of the year. The other event, obviously, could have happened at any other point in time. No?

But, what we are doing as a strategy which we continue to do and to improve the profitability and to improve the return on equity is that we have, we continue to open different channels for ourselves and concentrate in the retail business. No? To give you an example, four or five years ago, about 90% of our distribution was being done through brokers. Today, 74% of that is being done through brokers. We have, we are selling through a sales force. We are selling through alliances with retailers, with banks. And, that has two effects. One, that we reduce the volatility, because we get income with a retail and not exposed to large claims like the one I mentioned previously. And, the other thing that, and that has been accompanied with a growth of the retail side of our insurance policies, which has come from about 35% that we had, again, three or four years ago, to about 55% today.

So, that's the direction we're heading. That's our strategy in trying to not pull out but reduce the volatility of our corporate business and grow in different channels and grow where we have more price flexibility and, at the same time, we, you know, move away from large claims.

And, what is your targeted ROE?

This year, 19%. Pacifico.

For the group. For the Grupo.

Agreed. The insurance --.

OK. Thank you very much.

Tito Labarta, Deutsche Bank.

Hi. Good morning. The main question is in terms of asset quality. We did see some deterioration, but I just want to get a sense of, you know, what you expect going forward. I know you're growing more in the retail segment, and that will have some impact. But, any concerns about, you know, underlying deterioration in the specific segment? And, how much do you think the NPLs could rise this year? And, then, how do you see that impacting your provision charges, going forward? Do you think they'll remain in line with the levels we saw in the first quarter? Or, just any major movements there. Thanks.

OK. Hi, Tito. We definitely expect risk to go up, together with the fast growth in the lower income, higher yield and higher risk segments. So, what you have seen in the first quarter is probably what we will see in the following quarters. The key here is not concentrating so much in provisions alone, but in margins that should go up together with provisioning. In other words, the key in this segment is not only risk management, but also the right pricing. So, that should be the trend. I mean, the NIM on loans should go up with a change in the mix, and it will be accompanied definitely with higher provisions in the future.

Overall, I would say that the margin after provisions should be protected and should continue to grow.

Thanks. And, maybe just in terms of overall profitability for the bank, do you think the 22% we saw in the first quarter is kind of what we should expect? Or, can this increase as you continue to grow more on the retail side?

It should, you should expect more or less the same levels, at the range at which we are. That's our target, and we should be able to maintain at that.

Great. Thank you.

Daniel Abut, Citi.

Daniel Abut from Citi. A couple of questions. One, on the, as a follow-up on the reserve requirement, was, if I understand correctly, one of the things that brought the central bank to take this measure is that they were seeing or starting to get concerned that the de-dollarization continued at a rapid pace on the deposit side, which is not a bad thing per se, but it was not fully matched on the asset side, and, then, potentially, you had a mismatch where there are people switch to [sold] deposits, to take advantage of the higher rates, but were increasingly borrowing more in dollars, a company borrowing money in dollars, given that the exchange rate [on this was appreciating]. Have you seen that mismatch in Banco de Credito's balances? Is it anything that we should be aware of potential things that put you at more risk, in case of a rapid swing in the exchange rate in the future, compared to what your policies have been in the past? That would be question number one.

And, question number two, on the Andean region strategy. If I go back to the time when Credicorp was formed, and granted that was many, many years ago, I remember that one of the rationales was precisely to potentially start outside of Peru and even buy, you know, full banks, retail banks, in other countries in the region. Is it fair to say that this is a different strategy? That this is just for investment banking? Or, potentially, we could see other businesses of Credicorp, including retail banking or insurance or other areas, taking advantage of the boom in the Andean region as well, and explore opportunities outside of Peru?

OK. Hi, Daniel. Thank you for the questions. I think the main concern of the central bank behind the measures on reserve requirements was inflation. They were seeing that inflation is not going down, although it's not going up. It doesn't goes down. And, the de-dollarization process is underway. It definitely has an impact on deposits. It doesn't happen as fast in the asset side, since as you mentioned, there is a preference on dollar loans, especially short-term dollar loans, on the corporate business, because of interest rates being so much lower.

But, I don't think that the measures are focused on that process. Remember that, on one hand, we have some sort of mismatch there, but we have that very much under control. We have very stringent limits. It shouldn't be a concern. But, at the same time, this tends to self-regulate over time, because if we stop having enough funding in dollars, we will definitely raise prices, and also we will probably have less liquidity in dollars. And, that will favor loans in local currency.

So, the short answer is it shouldn't be a concern, since this is closely managed by us.

As of the Andean region and the expansion outside of Peru, we have mentioned in the past several times that we have had experiences in Colombia, in El Salvador, and we learned from experience that in order to be successful elsewhere in the retail, in the universal banking activity, we have to be relevant in that market. And, it's not easy to find a market where we can go and find a relevant player that is a size that we can afford.

Therefore, the idea now is to export, if you will, those capabilities that we think we have in place. One is the investment banking world. And, others could be micro lending, for instance, where Peru has a very good model that can be exportable to other countries. And, we don't know yet but, in the insurance business, we might find opportunities in the years to come.

But, we are definitely following a focused strategy, not a general universal banking strategy in the short run.

Thank you, Alvaro.

Jose Barria, Bank of America.

Hi. Good morning, Alvaro and team. Thank you for taking for taking my question. Just a follow-up on the international strategy with regards to the Andean region. Can you give us an idea on, with regards to timing, when do you expect that you will start to see the positive impacts of these movements that you have made in being reflected in your numbers?

Hi, Jose. I think this process will take -- the integration is not easy. It will take something between 12 and 18 months. This is a process not only of creating the vehicles, of merging operations, but especially integrating cultures, integrating people and teams, and finding where the synergies are. And, that will definitely take more, a year of more. Not three, three years or so. I would say, 12 to 18 months.

OK. Great. And, then, also a follow-up question on asset quality. We, you know, we are seeing your mix evolving and, as a result of that, the overall NPL ratio is moving up. But, we're also seeing deterioration within the individual portfolios. For example, the SME and Consumer portfolios did show an increase in NPL ratio during the quarter. Are you concerned on any trends in those particular portfolios?

There are a couple of explanations behind that. That always happens in the first quarter. There is strong activity in December and November in the SME, starting in October, for the year-end campaigns. And, we have to collect that in the first quarter. That typically raises past-due loans in that segment. And, in the retail, or consumer, that happens in December with the Christmas campaign as well. So, that's a typical trend. There is a very strong seasonality there.

The other explanation has to do with the charge-offs, as we mentioned earlier. If we don't charge off, you don't see improvements in the past-due loan ratio.

So, the answer is, we don't have a concern. We have to keep an eye on the lower income segment, for sure. We have to fine tune the models, the way we collect, the way we grant loans. That has to have a very thorough process behind in order to do it right. No concern whatsoever.

OK. Thank you very much.

Boris Molina, Santander.

Yes. Thank you very much, Alvaro, for taking my questions. I had a couple of questions. The first one, have you heard any progress in terms of news regarding pension fund regulation? What is being proposed? And, you know, when we could be beginning to see an impact, if any, from these potential changes?

And, secondly, I wanted to just get a number from you guys in terms of what is the size of your equity stakes in (inaudible) portfolio. It had a very strong performance in the quarter. And, we would just double check what is the size of your stake in ALICorp and BCI? And, what share of the mark-to-market gains versus equity are you showing (inaudible) portfolio was can be attributed to these two shareholders?

OK. As of the pension fund -- thank you, Boris. There is a commission created by the central government about six or eight months ago, I don't quite remember, with members of different sectors, and none from the private sector, that is analyzing the whole pension fund situation in the country, not only the private pension fund business but the whole pension structure.

We don't, I mean, there's a lot of news and different ideas of where to go, but there is no consensus right now of what the proposal would be. We definitely expect changes and some sort of regulation in the next, let's say, two to three months. But, so far, we don't have a clear idea of what that would be.

Of those proposals that are on the table, which one would be of more concern? And, which one would be of probably a positive impact? Just for us to have an idea when we see the final proposal what to think about it.

Hi. This is Walter Bayly. Yes, we have been monitoring very closely the evolution of the different thought process that different members of the government-formed commission have been going through. There's the issue of having a [swap off], like the Chilean model, which is something we don't particularly believe in. But, at the end of the day, I don't think it would be the end of the world.

We are fortunate enough to have the lowest commission today of all the private pension fund companies, and the one that has the most cost-link, the most efficient operations.

So, our number going forward is that we will not be earning more money. We will be earning the same amount of money. There will be some impact of this regulation on our profitability, but nothing that would change the dynamics quite dramatically.

There will be some positive effects of this regulation most likely. The size of the market will increase. Somehow, the government wants to find a mechanism through which they can incorporate the independents, or the informal side of the economy. That has the potential of creating tremendous amount of volume, and that could be offset by reduction in our revenue.

So, at the end of the day, not. The government is very concerned in preserving the value in the private pension fund system as it is, and it wants to fine tune what it is, how it operates, as to create more competition. But, I don't think it would be a dramatic change in our business.

Great. Thanks, Walter. And, (inaudible) ALICorp and BCI?

I don't have the numbers in front of me, frankly. But, usually, the largest changes in our unrealized gains come from the portfolio of the large insurance company which is almost $1 billion, $1.5 billion portfolio, which is mark-to-market directly into the equity. I'd be surprised if the valuations of BCI and ALICorp would be so substantial. They're usually not.

As far as I can recall, our equity ownership of ALICorp is closer to 4%, and of BCI, it's about 3.5% of BCI. Obviously, the amount, the dollar amount, of the BCI is much larger. It's about $300 million and something, but, again, if there's any big change in the unrealized gains, it comes from the portfolio of the life insurance company, not from these two equity investments.

Wonderful. Thank you.

Hillary Brown, [LV] Partners.

Hi. Thank you for taking my question. I wanted to get back to growth in loans to the retail segment. Right now, they're, you said, they're 40% of the portfolio? And, you know, by the end of 2012, you know, what percentage of the portfolio should they make up? And, then, as you mentioned, NIM should expand as retail loans expand. What kind of expansion are you looking at? And, also, what kind of margins are you looking at post-provisions?

We think that the trends to the end of the year should continue at the same pace that we have seen in the last few quarters, the last few years. We are now at 48% of portfolio being retail business. It should be probably closer to 50% by the end of the year, 49%, 50%. The change is slow but steady, and that should be the case in the years to come.

As of the NIMs, you should expect NIMs roughly at the same level, around 4.7%, 4.8%, probably going at that pace, at that same level, because on one hand, you have a change in mix favoring more profitable business. But, at the same time, we have a lot of pressure from competitors which presses the NIM by, in each segment constantly. Right? So, overall, we should be able to maintain NIMs, more or less, at the same levels.

OK.

At this time, there are no more questions in the queue.

Well, thank you all very much for joining us in this first quarter conference call. Just a closing comment on two topics. One is something that was mentioned at the beginning. Yes, we are worried that Europe could go through a complicated summer. There are many indications that we could expect turbulence on the short run, and those things will undoubtedly have an impact on the Peruvian economy. Don't forget that the driver of this economy is investment, and it is private sector investment, both domestic and international.

And, to the extent that the investment mood or there is a pessimism around the world, projects tend to get delayed. We have seen it quite recently in the Lehman Brothers crisis, when Peru was growing at 9%. A year after that, we were growing at practically 0%. So, yes, we are concerned that we could go through a summer with a lot of volatility and, of course, that would impact growth in the economy.

And, the second issue is credit quality. We have seen a slight uptrend particularly in the consumer and credit card delinquency rates. To a certain extent, that is to be expected because of the growth and because we are entering into new segments, but we are going to be extremely cautious on this. And, I have made a big point within our risk department to the extent that we have to be aware that we are entering into new segments, with very extensive utilization of new credit tools, risk management tools, these models, et cetera, et cetera.

Thus, we will be extremely cautious in how we go into those markets. We're constantly reviewing our practices to make sure that everything is in line. And, at this stage, with the past-due loans at the rate at which they are, we don't have any concern, but we will be extremely vigilant. And, of course, as usual with Credicorp and BCP, we will be provisioning in a rather conservative fashion, because in the good times, one should do that. We will take provisioning to levels that we will always be very comfortable.

So, you can all be reassured that we will be extremely vigilant with the quality of our credit portfolio.

Again, we think that we will be having a very good rest of the year, as long as we don't have major turbulence from Europe. Domestic situation seems to be going quite smoothly, and the economy and the bank is poised for to capture the growth that is happening domestically.

So, thank you again all very much for joining us in this first quarter conference call. And, with this, we finish the call. Thank you again.

Thank you very much for your participation in today's conference. This concludes the presentation. You may now disconnect. Have a good day. Thank you.