Credicorp Ltd.: Risk Reward Update

Research evidence excerpt

Credicorp Ltd.: Risk Reward Update

UpdateM

RiskRisk RewardReward– Credicorp- CredicorpLtd. (BAP.N) Ltd. (BAP.N)

Balanced risk-reward skew informs our Equal-weight rating

PRICE TARGET US$375.00 EQUAL-WEIGHT THESIS

Our valuation work and price targets are based on residual income analysis. In our residual Top-line growth is expected to accelerate

income model, the value of the firm is mainly a function of the magnitude of the spread modestly, supported by better retail loan

between return on equity and cost of equity (performance spread) and the time period in growth dynamics and a favorable shift in

which management can generate returns in excess of the cost of equity (economic growth loan mix to higher yield products. Asset

horizon). Our valuation model uses a discount rate of 11% and long-term ROE of 19%. quality remains under control, allowing BAP

to deliver better risk-adjusted margins. We

US$327.07 also see expenses under control, growing at

Consensus Price Target Distribution US$219.94 US$409.76 a slower pace than revenues, offering

MS PT gradual improvements in efficiency. BAP

Source: Refinitiv, Morgan Stanley Research Mean Morgan Stanley Estimates remains a top-class banking franchise in

Latam, underpinned by exceptional

execution capabilities, significant scale

RISK REWARD CHART AND OPTIONS IMPLIED PROBABILITIES (12M) advantages, differentiated customer service,

innovative products, alternative distribution

channels, disciplined cost control, and a

USD robust digital and technological

infrastructure.

US$470.00(+36.63%)US$470.00US$470.00(+36.63%)(+36.63%) ProbProbProb (>470.00)~12.5%(>470.00)~12.5%(>470.00)~12.5% Consensus Rating Distribution

450 80% Overweight

US$375.00(+9.01%)US$375.00US$375.00(+9.01%)(+9.01%) 20% Equal-weight