Andres Soto: Good morning to all and thank you for the presentation. I have a couple of questions. The first one is follow-up on your NIM. I would like to understand if you can remind us what is the percentage of your loan book that is variable rate and how that compares with – on your liability side on your deposits. How much of that is variable rate?
Cesar Rios: Okay, first as we have commented previously, we have no variable rates or no relevant variable rates proportional portfolio. The explanation of the NIM performance is the composition of the balance sheet that is going to change and the positioning that we have engineered during 2023 to shorten the duration of the liability site that is going to benefit the cost of funds through 2024 as the reference rate decreases.
Andres Soto: Thank you, Cesar. So it’s a matter of also duration, I imagine, right?
Cesar Rios: Yes.
Andres Soto: You don’t have variable rate. It’s a matter of how long are you around your assets versus your liability. Can you help us a sense of what is the gap at this point?
Cesar Rios: Yes, exactly. It’s a matter of durations. And I will say pass through sensibility of different kind of instruments.
Andres Soto: Right. And can you give us some numbers in terms of what is the duration on your assets versus your liabilities?
Cesar Rios: At this point, the duration of the assets is a little bit more than two years and the liability is slightly shorter.
Andres Soto: Perfect. Thank you so much. My second question is regarding the loan growth guidance. The tone that you are setting for the country sounds quite optimistic. However, when I see the multiplier that you are assuming for loan growth is just a multiplier of one to nominal GDP, what are the factors preventing you to have a more bullish, best of loan growth?
Cesar Rios: I mean, again I think it’s a very valuable question because if you think in an inflation of 2.53%, and GDP grow 2.5%, you can think in a nominal GDP of around 5.5% or something about that. And the usual multiplier has been around 1.5%. But this 1.5% is not a clock that is perfect every year. But we have now. And another factor that is relevant is that when we provide guidance, we are talking about average daily balances and we have a decrease in the balances through the year during 2023. So we have at the beginning of the year have a lower amounts, sorry, higher amounts at the end of the year and we need to rebuild the portfolio is starting in a lower base. And another factor that was mentioned probably very briefly during my presentation is that we are still going to have some impact of Reactiva.
We are not longer providing the guidance based on a structured portfolio, but in total portfolio. But we are going to still have an impact that is slightly less than 2% due to the payment of the remaining Reactiva loans that we already have on books.
Andres Soto: Perfect. That’s very clear. Thank you so much.
Operator: And ladies and gentlemen, it appears there are no further questions at this time. Now I’d like to turn the floor back over to Mr. Gianfranco Ferrari, Chief Executive Officer, for closing remarks.
Gianfranco Ferrari: Thanks to everyone for joining us today and for your questions. The journey we’ve undertaken over the past year has been both challenging and transformative. Our resilient full year results underscore the strengths of our organization and our ability to adapt to an evolving landscape. This outcome is grounded in a solid foundation, including a diverse portfolio, integrated digital capabilities and a prudent approach to risk management. Our success span various lines of businesses, including universal banking and insurance, as well as asset and wealth management, where our turnaround plan is delivering expected results. While acknowledging the process, we are aware of the work needed to strengthen and revitalize our microfinance business for sustainable growth.
Looking forward to 2024, we anticipate an improvement in macroeconomic conditions with anticipating an El Nino phenomenon, a more favorable GDP outlook, a reduced local reference rate and controlled inflation. We are more optimistic than three months ago about the opportunities that lie ahead. Cesar shared with you our detailed 2024 guidance, which reflects a year in transition. For the medium term, we expect to maintain a resilient NIM as the sensitivity of our margins to decrease in interest rates has diminished year-over-year and we continue to shift our loan portfolio towards retail. Our cost of risk should maintain a downward trend as we finalize digesting the current credit cycle. We also see some room for efficiency optimization as our disruptive initiatives mature.
Taken together, we should be back on track to deliver our sustainable ROE of around 18% as we move forward, our commitment to talent, innovation, sustainability and shareholder value creation remains unwavering. The investments we’re making today are paving the way for a more resilient and sustainable future for Credicorp. Before closing, I want to comment on some management changes announced at the end of the year. We bid farewell to Reynaldo Llosa, who will retire from his roles as the Corporate and BCP CRO after an impeccable 30 year career. I extend my personal gratitude to Reynaldo for leaving us in a stronger position. Cesar Rios will be transitioning into the CRO role for Credicorp and BCP. With more than 30 years of diverse organizational experience and exceptional capabilities, I am confident that he will guide us into a new era of risk management.
This would empower us to adaptive leverage, developing technologies to expand our reach into new segments and markets. Finally, I look forward to collaborating closely with Alejandro Perez-Reyes who steps into the role of Chief Financial Officer at both Credicorp and BCP, leveraging his 25 years of diverse experience within the company. Thank you to all of you for participating in the call and see you or talk to you in next quarter. Have a nice weekend.
Operator: Thank you. Ladies and gentlemen, this concludes today’s presentation. You may now disconnect your lines.
