Breaking Down Credicorp Ltd. (BAP) Financial Health: Key Insights for Investors

You're looking at Credicorp Ltd. (BAP) and wondering if the recent earnings momentum has legs, especially with the stock climbing over 38% year-to-date through Q3 2025. The direct takeaway is that their core financial health is robust, but you need to watch the efficiency trade-off. For the third quarter of 2025, the company delivered a strong Return on Equity (ROE) of 19.6%, well above the full-year guidance of roughly 19%, driven by net income of S/1,738.7 million (or $492 million). This performance is defintely anchored by a 7% year-over-year loan growth on an FX-neutral basis and an improved Non-Performing Loan (NPL) ratio down to 4.8%. Still, while their digital platform, Yape, is a huge opportunity, operating expenses grew by 12.8%, so we need to see if the cost of growth is worth the continued expansion in a market where Peru's 2025 GDP is projected to grow by 3.4%.

Revenue Analysis

You need to know where the money is coming from, and for Credicorp Ltd. (BAP), the story in 2025 is one of solid growth anchored in its core banking business but with a defintely accelerating digital shift. The company's total revenue for the twelve months ending June 30, 2025, was approximately $7.2 billion, representing a year-over-year increase of 6.67%. That's a healthy, steady climb for a financial giant in a complex region.

Here's the quick math: that 6.67% growth rate, while lower than the massive surges seen in 2022 and 2023, shows a stable, maturing business that is still expanding. The primary revenue engine remains interest income from loans, fees from banking services, and insurance premiums, but the mix is changing, which is the real opportunity.

Breakdown of Primary Revenue Sources

Credicorp Ltd. (BAP) is a diversified financial services holding company, so its revenue streams are split across four major segments. The lion's share still comes from its traditional banking arm, though the strength of its other businesses provides a crucial buffer against market volatility.

For a clear picture, here is the approximate segment contribution to overall revenue, which remains consistent into 2025, with Universal Banking driving the bulk of the top line:

Universal Banking, primarily through Banco de Crédito del Perú (BCP), is the backbone, generating over two-thirds of the revenue. In Q3 2025, this segment, along with Insurance and Pensions, was the main driver of a 14.1% year-over-year increase in net income, showing the core is strong.

Analysis of Significant Revenue Changes

The most important near-term trend is the acceleration of non-traditional, digital revenue. The company is actively executing a strategy to diversify its income away from pure interest-based lending-what they call their decoupling strategy.

• Digital Ecosystem Growth: The innovation portfolio, which includes digital platforms like Yape, Tenpo, and Warda, contributed 7.4% of the risk-adjusted revenue in Q3 2025.
• Fee and Transactional Income: Fee-based and transactional income is growing, reinforcing the strength of their diversified platform, which is a sign of successful cross-selling and digital adoption.
• Net Interest Margin (NIM) Record: The risk-adjusted Net Interest Margin-the difference between interest income and interest expense-hit a record high of 5.53% in Q3 2025, reflecting improved loan portfolio quality and effective risk management.

The goal is to get that innovation portfolio contribution to 10% by 2026, so you can see the clear trajectory toward a more technology-driven financial service model. This focus on digital scalability is clearly outlined in their Mission Statement, Vision, & Core Values of Credicorp Ltd. (BAP).

Microfinance, which provides services to small businesses, is also seeing a sustained recovery, which is a great sign for the quality of their loan book and the underlying regional economy. This recovery, combined with the digital push, suggests a well-managed transition that is balancing traditional strength with future-proofing.

Profitability Metrics

You're looking for a clear read on Credicorp Ltd. (BAP)'s financial engine, and the 2025 numbers show a performance that is both strong and strategically diversified. The direct takeaway is that Credicorp is outperforming its industry peers in key metrics like Return on Equity (ROE) and Operating Margin, but you should keep an eye on the slight lag in Net Profit Margin compared to the industry average.

For a financial services holding company, the core profitability story is in the Net Interest Margin (NIM) and operational efficiency. Credicorp's TTM (Trailing Twelve Months) figures up to the most recent reporting periods in 2025 paint a picture of solid execution, particularly in managing the core banking spread and controlling costs.

Here's the quick math on the key profitability margins based on TTM data ending in 2025, which provides a clearer annual view:

The company's Gross Profit for the twelve months ending June 30, 2025, was a substantial $5.833 billion, reflecting a strong top-line performance. This is defintely a high-margin business, and the operating efficiency is what really stands out.

Trends and Industry Comparison

Credicorp's profitability trends are pointing upward, a clear sign of successful strategic maneuvers. The company's Net Income jumped by a significant 36.1% year-over-year in Q2 2025 and continued to grow by 14.1% year-over-year in Q3 2025. This momentum led the company to raise its full-year Return on Equity (ROE) guidance to 19%, up from earlier estimates.

When you stack Credicorp against the industry, the results are compelling. The TTM ROE of 18.55% is far superior to the industry average of 11.79%, meaning Credicorp is generating significantly more profit for every dollar of shareholder equity. Also, the Operating Margin of 47.7% beats the industry's 43.06%, which tells you they are managing their core business costs very well. The Net Profit Margin of 31.62% is just slightly below the industry's 33.26%, but the overall picture is one of above-average financial health.

Operational Efficiency and Cost Management

Operational efficiency is the bedrock of a bank's profitability, and Credicorp is showing discipline. The Net Interest Margin (NIM) is a critical measure here, and it stood at a robust 6.6% in Q3 2025, with full-year guidance projected to be at the high end of the 6.2% to 6.5% range. This strength comes from a favorable funding mix and a higher-yield loan portfolio, particularly in retail lending.

The push into digital is also paying dividends in efficiency and revenue diversification:

• The innovation portfolio contributed 7.4% of risk-adjusted revenue in Q3 2025, moving toward a 10% target by 2026.
• The digital platform, Yape, has reached profitability and is a key driver of fee income growth.
• The Cost of Risk-the cost of potential loan losses-improved, falling to 1.7% in Q3 2025, supported by better risk management.

Still, you should note that higher operating expenses, partially due to investments in these very disruptive digital initiatives, have offset some net income gains. That's a necessary trade-off for future growth, but it's a cost line to monitor. For a deeper look at the long-term vision driving these investments, you can check out the Mission Statement, Vision, & Core Values of Credicorp Ltd. (BAP).

Finance: Track the Q4 2025 Net Profit Margin release against the 31.62% TTM figure to confirm the margin trend is improving.

Debt vs. Equity Structure

You're looking at Credicorp Ltd. (BAP)'s balance sheet, and the first question is always: how is this growth actually financed? For a financial holding company, the debt-to-equity picture is a little different than for, say, a tech startup, but the core principle is the same-managing risk while funding expansion. The short answer is Credicorp is very well-capitalized, relying heavily on its core business funding sources.

As of the most recent reporting in late 2025, Credicorp Ltd. (BAP) maintains a strong, conservative capital structure. Their Debt-to-Equity (D/E) ratio stands at a healthy 0.49. This means for every dollar of shareholder equity, the company uses less than fifty cents of financial debt. That's a very comfortable cushion.

Here's the quick math on the debt side: The company's total debt (including both short-term and long-term financial obligations, but generally excluding customer deposits which are their primary funding) was approximately $6.62 billion USD as of mid-2025. This low leverage ratio is a clear signal of financial stability, especially when you consider their robust liquidity position-liquid assets cover outstanding financial liabilities by 1.2x. That's a defintely solid buffer against any near-term market shocks.

• Total Debt (Q2 2025, financial): $\sim$$6.62 billion USD.
• Debt-to-Equity Ratio (Q3 2025): 0.49.
• S&P Global Ratings: Affirmed 'BBB-' with a stable outlook (May 2025).

Debt vs. Peers and Funding Mix

To put that 0.49 D/E ratio into perspective, let's look at a major peer. For instance, Itau Unibanco Holding S.A., another large Latin American financial institution, reported a D/E ratio of 2.39 for the quarter ending June 30, 2025. Credicorp Ltd. (BAP)'s significantly lower ratio suggests a much more conservative approach to financial leverage, which is a huge plus in a region with occasional economic volatility. It means less interest expense risk if rates rise.

But how do they fund their growth without piling on debt? The answer for a bank is simple: deposits. For the third quarter of 2025, Credicorp Ltd. (BAP) saw a 5.9% year-over-year increase in total deposits, which directly fuels their loan portfolio, which grew 4.4% year-over-year. Deposits are a stable, lower-cost form of funding that acts like equity in the bank's operational model, keeping the traditional debt ratio low. This is the core of their balance between debt financing and equity funding.

Recent Debt Activity and Outlook

On the debt management front, the company is proactive. They had an outstanding debt issuance that came due in June 2025, which was covered by their substantial liquid assets. This shows a routine, well-managed maturity schedule, not a scramble for refinancing. The current 'BBB-' rating with a stable outlook from S&P Global Ratings, affirmed in May 2025, reinforces this view. The stable outlook for the next 12-24 months is tied to Peru's sovereign rating, which is the main ceiling on their credit fundamentals.

The takeaway for you is that Credicorp Ltd. (BAP) isn't taking on excessive financial risk to chase growth; they are funding their expansion-which you can read more about in their Mission Statement, Vision, & Core Values of Credicorp Ltd. (BAP)-primarily through retained earnings and a growing, sticky deposit base. This low-leverage, deposit-funded model is a key reason for their strong Return on Equity (ROE) of 19.6% in Q3 2025. It's a quality-over-quantity approach to the balance sheet.

Liquidity and Solvency

You need to know if Credicorp Ltd. (BAP) has the cash on hand to cover its near-term obligations, and the quick answer is yes, their liquidity position is solid. For a financial holding company like Credicorp, which operates primarily as a bank, liquidity is less about inventory and more about the quality of their loan portfolio and the stability of their funding base (deposits). The numbers for the 2025 fiscal year show strength, but it's defintely worth watching the broader cash flow picture.

The company's short-term financial health, measured by its ability to pay off current liabilities with current assets, is strong. As of the most recent data, both the Current Ratio and the Quick Ratio stand at 1.08. Here's the quick math: a ratio above 1.0 means current assets exceed current liabilities, which is exactly what we want to see. Since the Quick Ratio (which strips out less liquid assets like inventory) is the same as the Current Ratio at 1.08, it tells you that Credicorp Ltd. (BAP)'s assets are highly liquid-a key trait for a bank.

Working Capital and Cash Flow Dynamics

Instead of traditional working capital (Current Assets minus Current Liabilities), which isn't a primary metric for a bank, we focus on the cash flow statement to understand the true liquidity engine. The company's ability to generate cash from its core banking and insurance operations is robust, driven by strong earnings in 2025.

The third quarter of 2025 was particularly strong, with net income attributable to the company increasing 14.1% year-over-year to S/1,738.7 million (Peruvian Soles). This strong net income is the primary indicator of powerful Operating Cash Flow (CFO) generation. The risk-adjusted Net Interest Margin (NIM)-the profit from lending after accounting for risk-reached a record high of 5.53%, which is a significant tailwind for future cash generation. The non-performing loan (NPL) ratio also improved to 4.8%, meaning fewer loans are going bad, which directly protects future cash flow.

Looking at the full cash flow picture gives us a clearer action map:

• Operating Cash Flow (CFO): Strong, inferred from the Q3 2025 net income of S/1,738.7 million. This is the lifeblood of the organization.
• Investing Cash Flow (CFI): The 2024 annual cash flow from investing activities was $0.141 billion. This positive figure suggests the company is generating cash from its investment portfolio, a good sign of asset management.
• Financing Cash Flow (CFF): This is the cash generated or spent on debt, equity, and dividends. While a specific 2025 annual figure isn't available, the strong 2024 Free Cash Flow (FCF) of $3.814 billion provides a massive cushion for future dividend payments or strategic debt reduction.

The overall liquidity position is a clear strength, supported by a significant year-over-year increase in total loans (4.4%) and total deposits (5.9%). Still, one analyst report flagged 'cash flow challenges' as a risk to monitor, likely referring to the impact of broader political uncertainties on the regional economy, not an immediate operational failure. You can dive deeper into the market's perception of these risks by Exploring Credicorp Ltd. (BAP) Investor Profile: Who's Buying and Why?

Here is a quick summary of the key liquidity metrics:

Action Item: Monitor the next quarterly report for a detailed breakdown of the 2025 full-year Free Cash Flow to confirm the trend started by the $3.814 billion FCF in 2024.

Valuation Analysis

You're looking at Credicorp Ltd. (BAP) and asking the core question: is the market pricing this financial powerhouse correctly? The short answer is that, based on near-term earnings projections and sector comparables, Credicorp Ltd. appears to be trading at a slight discount to its growth potential, leaning toward undervalued right now.

As of late 2025, the key valuation multiples tell a clear story, especially when you consider their forward-looking nature. Here's the quick math: the estimated Forward Price-to-Earnings (P/E) ratio for 2025 sits at about 10.64. This is a healthy multiple for a regional financial leader, particularly one with a strong return on equity (ROE) of around 17.94%.

For a bank, Price-to-Book (P/B) is often a better gauge of value than P/E, and Credicorp Ltd.'s P/B ratio is currently at 1.87. This means investors are paying $1.87 for every dollar of the company's book value (assets minus liabilities). This is a reasonable premium, but it's not the stretched valuation you see in high-growth tech or overhyped sectors. Enterprise Value-to-EBITDA (EV/EBITDA) is less applicable here-it's not a standard metric for banks, which carry significant debt as part of their core business model, but for context, the firm's Enterprise Value is approximately $13.09 billion.

The stock has seen a defintely strong run over the last year, reflecting the market's positive view on its regional stability and earnings beats. The stock price has climbed by over +35.71% in the last 52 weeks alone. This move took the stock from a 52-week low of $165.51 to a high of $280.88, with the price hovering around $253.80 in mid-November 2025.

The dividend picture is also compelling for income-focused investors. Credicorp Ltd. offers a forward annual dividend payout of $11.01 per share, translating to a dividend yield of approximately 4.34%. The Payout Ratio, which is the percentage of earnings paid out as dividends, is sustainable at around 50.69% of this year's earnings estimates. This shows the dividend is well-covered, leaving plenty of capital for reinvestment or building reserves.

When you look at the Wall Street consensus, the view is a Moderate Buy. Out of the analysts covering the stock, there are four hold ratings, four buy ratings, and one strong buy rating. The average 12-month price target is set at $256.20, which suggests a small upside from the current trading price. This tight range between the current price and the target signals that the market has largely priced in the near-term good news, but the fundamental value metrics suggest there's still a margin of safety.

Here is a snapshot of the core valuation metrics for Credicorp Ltd. (BAP) based on 2025 estimates:

The analyst consensus points to a belief that the company's strong operational performance, which you can read more about in their Mission Statement, Vision, & Core Values of Credicorp Ltd. (BAP)., will continue to drive value.

• Monitor the P/E ratio for any creep above 13.0x.
• Watch for dividend announcements; a payout ratio over 60% would signal less reinvestment.
• The current Moderate Buy rating suggests holding if you own it, or a measured entry.

Risk Factors

You're looking at Credicorp Ltd. (BAP)'s strong Q3 2025 results-a 19.6% Return on Equity (ROE) is defintely compelling-but a seasoned investor knows to flip the coin. The core risks for Credicorp aren't about their day-to-day execution, which is solid, but about the macro environment and their aggressive digital growth strategy.

The biggest external risk is the ongoing political uncertainty in Peru, where Credicorp has its highest exposure. This volatility can stall domestic loan growth, which is a key driver for a bank. Plus, while they had a win in August 2025 when several tax assessments totaling S/1.6 billion were canceled by SUNAT (Peru's tax authority), regulatory disputes are a constant theme and can quickly disrupt cash flow or the dividend policy. That's a serious headwind you can't fully diversify away from.

On the operational and financial side, the Q3 2025 earnings call highlighted a revenue miss, which warrants attention. The company reported revenue of $1.53 billion, which fell short of the consensus estimate of $1.62 billion. Here's the quick math: a nearly $90 million miss, even with an EPS beat, suggests competitive pressure or economic conditions are still weighing on top-line growth. Also, as they push into higher-yield lending, particularly through their microfinance arm, Mibanco, the risk profile shifts.

The strategic risk is a classic growth-vs-quality trade-off. Credicorp is aggressively expanding its digital ecosystem, like its payment platform Yape, which is great for future growth. But the pace of expanding in higher-risk lending, even with a focus on digital, could pressure asset quality. It's a key challenge for any bank in an emerging market, still.

Mitigation strategies are clear and centered on risk control and innovation. The management team is focused on structural improvements that directly counter these risks. They've done a good job: the Non-Performing Loan (NPL) ratio improved to 4.8% in Q3 2025, and provisions for credit losses decreased by 30.5% year-over-year. That's a strong sign of improved risk management and a recovering economy.

• External Risk: Political instability in Peru.
• Regulatory Risk: Ongoing tax and compliance disputes.
• Strategic/Financial Risk: Asset quality pressure from higher-risk lending expansion.

Their target of a medium-term ROE of 19.5% and a cost-to-income ratio near 42% shows they are betting on efficiency and digital scale to offset market uncertainty. For a deeper dive into the valuation and strategic frameworks, you can read the full post: Breaking Down Credicorp Ltd. (BAP) Financial Health: Key Insights for Investors.

Growth Opportunities

You're looking for a clear path to growth, not just a hope, and for Credicorp Ltd. (BAP), that path is paved with digital innovation and strategic regional expansion. The company is actively decoupling its performance from Peru's macroeconomic cycle, with net income growing 3x faster than nominal GDP between 2021 and 2025. This isn't just a Peruvian banking play anymore; it's a high-impact digital ecosystem for Latin America.

The core of their future lies in the digital platform, Yape. This is their self-disruptive innovation, moving from a simple payments app to a full financial services provider. In Q3 2025, Yape contributed 6.6% of Credicorp's risk-adjusted revenue, a significant step toward the goal of having their innovation portfolio contribute 10% of risk-adjusted revenue by 2026. They are scaling profitable inclusion, not just reach. Plus, the revenue per monthly active user (MAU) on Yape has already jumped 3x since the start of 2023.

Here's the quick math on near-term expectations for the 2025 fiscal year, which looks defintely strong:

Credicorp's growth drivers are highly specific and actionable, focusing on both digital penetration and market white spaces. This is a disciplined approach to growth, balancing innovation with prudent risk controls.

• Digital Ecosystem Monetization: Scaling Yape's lending, insurance, and remittance services.
• Bancassurance Expansion: Aiming to increase Bancassurance's share of net income from 8% to 10% by 2027. This follows the March 2025 completion of the acquisition of the remaining 50% stake in the Empresas Banmédica joint venture.
• Regional Capital Markets: Leveraging Credicorp Capital to capture the boom in Latin America's capital markets, especially in underpenetrated countries like Chile and Colombia.
• Supply Chain Finance: Growing BCP's Supply Chain Finance, where outstanding balances are only 4% of Peru's GDP, leaving significant room for growth compared to other regional markets.

The competitive advantage is clear: Credicorp is the undisputed financial leader in Peru, with its Universal Banking division (BCP) holding a 23% market share of loans. This market dominance, coupled with the massive digital moat created by Yape's 14 million monthly active users, allows for powerful cross-selling and economies of scale. They're using this scale to build a truly diversified revenue engine. For a deeper dive into the risks and valuation, check out our full report Breaking Down Credicorp Ltd. (BAP) Financial Health: Key Insights for Investors.