BAP Q3 2025: YAPE Revenue Doubles, Now 6.6% of Group Income as Digital Monetization Accelerates
BAP’s digital ecosystem, led by YAPE, doubled revenue and now comprises 6.6% of group risk-adjusted revenue, signaling a structural shift toward scalable digital monetization and fee income diversification. Core banking and insurance delivered robust results, while microfinance rebounded sharply, offsetting regional macro and political volatility. Management’s discipline and digital-first strategy underpin a raised mid-term ROE target, with YAPE’s monetization and microfinance trajectory set to drive future earnings accretion.
Summary
- Digital Ecosystem Expansion: YAPE’s rapid monetization and user growth are reshaping BAP’s income mix.
- Resilient Core Operations: Banking and insurance units delivered strong underlying returns despite regional political transitions.
- Profitability Targets Raised: Mid-term ROE ambitions increased, with management emphasizing efficiency and risk discipline.
Performance Analysis
Grupo Crédito’s Q3 2025 results highlight a business model increasingly insulated from macro volatility through digital monetization, diversified revenue streams, and disciplined risk management. Group ROE reached 19.6%, driven by robust banking, insurance, and a surging innovation portfolio. FX-neutral loan growth accelerated to 7% year-over-year, with BCP, the universal banking arm, and MiBanco, the microfinance leader, both contributing meaningfully. Asset quality improved, with the NPL ratio falling to 4.8% and cost of risk dropping to 1.7%, aided by improved payment performance and economic tailwinds in Peru.
Net interest income rose 2.7% on a stronger funding mix and higher-yield retail lending, while other core income jumped 11.9%, benefiting from YAPE’s fee momentum and increased transactional volumes. Insurance underwriting surged 33.1% year-over-year, offsetting investment portfolio drag. The efficiency ratio landed at 46.4%, within guidance, as ongoing digital investments were balanced by tight cost controls. Innovation contributed 7.4% of risk-adjusted revenue, on track for a 10% target by 2026.
- YAPE Monetization Momentum: Revenue per monthly active user reached 7.4 soles, while expenses per user fell, supporting profitability at scale.
- Microfinance Rebound: MiBanco’s ROE climbed to 18.8%, with loan growth at 8% and risk-adjusted NIM at a four-year high.
- Insurance Outperformance: Underwriting results rose sharply, with life and P&C lines both contributing despite isolated investment losses.
Group performance signals a turning point: digital and transactional income are now core profit engines, and asset quality improvements are enabling a controlled push into higher-yield retail and microfinance segments.
Executive Commentary
"Our strategy is anchored in three key pillars. First, we are accelerating the scalability and monetization of our digital ecosystem by financially including more people and expanding the formal cashless economy. Platforms like YAPE, Tempo, and Warba are playing a bigger role across payments, credit, and savings, and are already generating new revenue streams."
Gianfranco Ferrari, Chief Executive Officer
"Net interest income increased 2.7%, spurred by a contraction in interest expenses after interest rates fell and low-cost deposits expanded and accounted for 58.1% of the funding base. In this context, NIM increased to stand at 6.6%... Our innovation portfolio contributed 7.4% of our risk-adjusted revenues, keeping us firmly on track to our 10% target for 2026."
Alejandro Perez Reyes, Chief Financial Officer
Strategic Positioning
1. Digital Monetization and Ecosystem Scale
YAPE, BAP’s digital payments and lending platform, now serves 15.5 million monthly active users, representing 82% of Peru’s economically active population. Just 12% of transactions are currently monetized, providing significant runway for future revenue growth. Lending via YAPE has reached over three million clients, with one million receiving their first-ever formal loan, underscoring BAP’s financial inclusion strategy.
2. Diversification Across Core and Disruptive Businesses
BAP’s business model now leans on multiple engines: universal banking (BCP), microfinance (MiBanco), insurance (Grupo Pacifico), and digital innovation. Fee and transactional income are outpacing traditional spread income, with digital initiatives like YAPE, Tempo, and Kulki comprising the majority of disruptive investment and income growth.
3. Asset Quality and Risk Management as Competitive Advantages
Risk-adjusted NIM hit a record 5.5%, reflecting improved asset quality and disciplined origination. Cost of risk is trending at the low end of guidance, with management signaling a gradual increase as higher-yielding, higher-risk retail and microfinance lending expands. Low-cost funding and strong capital positions provide resilience against macro and political shocks.
4. Microfinance and Insurance as Structural Growth Levers
MiBanco’s turnaround is accelerating, with improved loan growth, lower risk, and a strategic pivot toward increasing fee and transactional income. Insurance remains underpenetrated in Peru, offering long-term growth potential as BAP deploys new products and channels to reach the underinsured population.
5. Capital Allocation and Shareholder Returns
Dividend payout is set to rise into the high 60% range, with management signaling room for ordinary and extraordinary dividends as capital accumulates. No major M&A is planned, but option value remains in markets like Bolivia if macro conditions improve further.
Key Considerations
BAP’s Q3 results reflect a business at an inflection point, leveraging its digital ecosystem and core banking strength to drive resilient and diversified profitability. Management’s raised ROE target to 19.5% signals confidence in digital monetization and operational leverage, but execution risk remains in scaling new income streams and managing asset quality as lending shifts to higher-yield segments.
Key Considerations:
- YAPE’s Monetization Runway: Only 12% of YAPE transactions are currently revenue-generating, providing significant upside as new features and credit products scale.
- Microfinance Fee Income Pivot: MiBanco’s strategy to grow transactional and fee income could structurally lower funding costs and boost ROE.
- Asset Quality Inflection: Cost of risk is at cyclical lows but expected to rise as loan growth targets higher-yielding segments; risk-adjusted NIM should compensate.
- Political Volatility vs. Economic Resilience: Peru’s macro institutions remain stable, but recurring political transitions could dampen investment or loan growth in election quarters.
- Dividend Upside: Capital build and lack of M&A create room for higher payouts, with management signaling flexibility based on growth needs.
Risks
Political uncertainty across Peru, Bolivia, and the region remains a persistent risk, potentially impacting business sentiment and loan origination. Asset quality could deteriorate as BAP accelerates growth in higher-risk segments, even as risk-adjusted NIM rises. Pension fund withdrawals may temporarily depress loan growth and fee income, while structural challenges in the Peruvian pension system could have longer-term implications for financial sector stability.
Forward Outlook
For Q4 2025, BAP guided to:
- Loan growth acceleration, led by retail banking and MiBanco
- NIM expected to remain within guidance as retail lending mix rises
For full-year 2025, management maintained guidance:
- ROE around 19%
- Loan book growth near 6.5% (excluding Bolivia restatement)
- Efficiency ratio within guidance range
Management highlighted:
- Cost of risk to close at lower end of range, with risk-adjusted NIM at upper end
- Fee and insurance income growth in low double digits, supported by digital and transactional expansion
Takeaways
Investors should focus on BAP’s digital revenue scaling, the sustainability of asset quality as lending shifts, and the ability to maintain operational leverage as innovation spend rises.
- YAPE’s rapid monetization is shifting BAP’s income mix, with runway for outsized earnings growth if user engagement and lending scale as planned.
- Core banking and insurance remain profit anchors, but microfinance and digital are emerging as the next growth engines, especially as Peru’s economy outperforms regional peers.
- Political and pension system volatility are watchpoints, but BAP’s risk management and capital strength provide a buffer; dividend upside is a likely near-term theme if growth needs remain moderate.
Conclusion
BAP’s Q3 2025 results confirm the group’s digital transformation and operational resilience, with YAPE and MiBanco now core to future earnings growth. Execution on digital monetization and fee income diversification will be critical to sustaining raised ROE targets and delivering shareholder value amid ongoing regional volatility.
Industry Read-Through
BAP’s success in scaling digital monetization and transactional income via YAPE sets a new standard for Latin American financials, showing that digital platforms can drive both financial inclusion and profit growth. Microfinance’s rebound and insurance under-penetration signal long-term opportunity for peers willing to invest in risk management and product innovation. The group’s ability to maintain asset quality and efficiency amid political volatility offers a template for regional banks navigating similar macro environments, while BAP’s capital discipline and dividend flexibility highlight the importance of shareholder-aligned capital allocation in emerging markets.