CREDICORP LTD (BAP): what the price assumes

Generated: 2026-07-25 · Source: https://boothcheck.com/report/BAP

Headline

Field	Value
Ticker	BAP
Company	CREDICORP LTD
Sector / Industry	Financial Services
Current price	$388.76/sh
Composition	Peru 90% / Bermuda 0% / Colombia 4% / Bolivia 2% / Panama 1% / Chile 1% / Cayman Islands 2%

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

Field	Value
Inversion basis	financials
Price-to-book	3.05x
Return on equity now	16.0%

The implied return on book is non-physical at this price-to-book and is suppressed as misleading. The price sits beyond a 15% return on equity sustained for 40 years and is not resolvable as a sustainable-ROE point. The rarity read below is the honest signal.

Solve inputs: computed at a 9.2% cost of equity; ROE searched up to the 15% ROE ceiling.

How unusual the bet is: extreme

Reference	Value
vs own history	+1.91σ
cohort percentile (of 166 peers)	99
sustained it ~10 years at this level	51%
implied end-window share	0%

Valuation X-Ray

Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Family	Median price/FV	Models	Reads
Asset	1.76x	3	expensive
Earnings	1.30x	2	expensive
Relative	1.41x	3	expensive
Growth	1.12x	1	expensive

Families that justify the price: Growth Families that call it expensive: Asset

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 6.0%); the inversion above states its own rate.

Per-Model Detail (n=9)

Model	Family	FV	Price/FV	Applicable	Methodology
DCF Perpetual Growth	Growth	—	—	no	—
Bank Fair Value (P/TBV)	—	$299.66	1.30x	yes	TBVPS $114.97 × 2.61x (ROE (TTM) 16.1% / CoE 9.3%, g=5.0% (sustainable: 65% retention × ROE, 5% cap; not the terminal-growth assumption))
Relative Valuation	Relative	$275.46	1.41x	yes	P/E 13.18x (blended: static sector reference 10x + trailing (TTM) 21x), scenarios: 11.0x / 13.2x / 15.4x (bear / base = reference held flat / bull), EV/EBITDA N/Ax
Simple DDM	Growth	—	—	no	—
Two-Stage DDM	Growth	—	—	no	—
Simple Excess Return	Asset	$204.04	1.91x	yes	BV/sh $117.40, ROE (TTM) 16.1%, ke 9.3%
Two-Stage Excess Return	Asset	$265.57	1.46x	yes	5yr excess ROE then converge to ke=9.3%
Discounted Future Market Cap	Growth	$348.05	1.12x	yes	Rev $7.3B, growth 11% (input: historical growth; tapered), Terminal P/S: 3.5x / 4.2x / 4.9x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair Value	Relative	$221.57	1.75x	yes	EPS $18.46, growth 2% (input: historical EPS growth), PEG=10.30 (Overvalued)
Margin Trajectory	Growth	—	—	no	—
Earnings Power Value	Earnings	—	—	no	—
Residual Income	Asset	—	—	no	—
Graham Number	Asset	$220.84	1.76x	yes	√(22.5 × EPS $18.46 × BVPS $117.40) — Graham's conservative floor
EV/EBITDA Relative	Relative	—	—	no	—
FCF Yield	Earnings	—	—	no	—
SBC-Adj FCF Yield	Earnings	—	—	no	—
Ben Graham Formula	Earnings	$595.77	0.65x	yes	EPS $18.46 × (8.5 + 2×15.0%) × (4.4 / 5.3%)
ROIC-Justified P/B	Asset	—	—	no	—
P/Sales Sector	Relative	—	—	no	—
PEG Fair Value	Relative	$692.40	0.56x	yes	EPS $18.46 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x
Earnings Yield	Earnings	$199.61	1.95x	yes	EPS $18.46 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations Multiple	Relative	—	—	no	—
Clinical Phase NPV	Growth	—	—	no	—
Merton	Asset	—	—	no	—
V5 Mechanical	—	—	—	no	—

Solvency

Deposit/float-funded balance sheet: debt is funding, not corporate leverage, and GAAP operating cash flow follows loan flows. Net-debt, interest-coverage, and cash-burn lenses do not apply. The solvency frame for a financial is regulatory capital and payout capacity (CET1, stress buffer, dividends plus buybacks against earnings).

Bullet Takeaways

• Nine of every ten dollars of this business sits in Peru, with small positions in Colombia, Bolivia, Chile, Panama and the Caribbean, so the group is a bet on one economy far more than its multinational structure suggests.
• The digital franchise is now doing real work rather than decorating the story: Yape produced 17 percent of group fee income and 8 percent of risk-adjusted revenues in the first quarter of 2026, with lending revenue up more than three times year over year.
• The price, at roughly 3.1 times book and the highest price-to-book in its peer group, is the risk: second-quarter results land on August 13, 2026, and Peru swears in a new president on July 28.

Bull Case

Start with the judgment the market has already made. Credicorp trades at roughly 3.1 times its book value, which is the highest price-to-book in its peer group and about triple what a typical mid-sized lender fetches. Markets do not hand a Peruvian financial holding company that multiple out of enthusiasm for Peru. They hand it over for a specific reason, and the reason is the return.

What the fundamentals show is a bank earning well above the level at which most banks plateau. The trailing return on equity for the group has been running near 16 percent, and the first quarter of 2026 came in at 21.1 percent, with management reaffirming full-year 2026 guidance of approximately 19.5 percent and noting expectations skewed toward the upper end of it. Set that against a cost of equity in the low nine percent range and the arithmetic of a bank becomes very simple: every year the return exceeds the cost of the capital, the book value compounds and takes the equity value with it. That is the entire mechanism, and Credicorp has been running it at a wide spread.

The engine behind the recent acceleration is the part of the group that looks least like a bank. Yape, the payments and lending platform, contributed 17 percent of group fee income and 8 percent of risk-adjusted revenues in the first quarter of 2026, with lending revenue up more than three times year over year and more than 5.7 million loans disbursed in the quarter alone. Distribution economics in a market where a large share of adults have historically sat outside the formal banking system are unusual: acquiring a customer through a phone costs a fraction of acquiring one through a branch, and the credit data that customer generates by transacting is proprietary to whoever holds the wallet. Credicorp holds the wallet.

Management has also stopped treating that advantage as a side project. Effective April 1, 2026, the group consolidated Yape Peru, Yape Bolivia, iO and Tenpo in Chile into a single neobank unit. Putting four digital businesses under one roof with one management line is what a company does when it intends to run them as a business rather than as an experiment attached to a bank, and it makes the Chilean and Bolivian positions a distribution channel for something already proven at home rather than four separate country bets.

The structural point underneath all of it is concentration, which cuts favourably as often as it cuts badly. Peru is roughly 90 percent of the group. In a banking market that size, the incumbent with the largest deposit franchise and the largest payments network is not competing on price with a dozen equals. It is the default, and defaults collect deposits cheaply. A high return on equity sustained for a long time is usually evidence of a structural position rather than of clever management, and the burden on the bull here is not to explain why the return is high. It is to explain why it should persist.

Bear Case

On July 28, Peru swears in its ninth president in ten years, following a runoff decided by roughly a quarter of a percentage point. That sentence is the bear case, and it is worth sitting with before any ratio appears. Ninety percent of this group's business sits inside that country. The remaining pieces, in Colombia, Bolivia, Chile and Panama, are small enough that they diversify the org chart rather than the earnings. Whatever happens to Peruvian credit demand, Peruvian deposit costs, Peruvian tax policy and the Peruvian currency happens to almost all of Credicorp.

Now the price. At $388.76 the shares change hands at roughly 3.1 times book value, and the return that multiple requires cannot be resolved into a sustainable figure at all. It sits beyond the tier of returns reserved for the most durable financial franchises in the world, and it requires that tier to hold for something on the order of four decades. This is not a demanding assumption. It is one that no standard valuation approach will resolve into a number at all. Among firms that have reached the current level of return, only about half were still holding it a decade on, and the price is underwriting a run several times that long.

The methods used to triangulate agree with unusual unanimity that the price is ahead of the evidence. Only the forward-growth approach reaches today's quote. The asset-value methods land furthest behind, with the price sitting about 76 percent above where they center; the peer-multiple methods about 41 percent below the price; the earnings-power methods about 30 percent. When three of four families say the same thing and only the one that projects growth forward disagrees, the premium is being paid for durability, and durability is precisely the variable a concentrated emerging-market franchise cannot guarantee.

There is a subtler risk inside the good news. The recent acceleration in returns has been powered by digital lending growing several times over in a single year, into a customer base that has historically been outside the formal credit system. Fast growth in unsecured consumer credit to newly banked borrowers is the most reliably profitable thing a bank can do right up to the point where it becomes the most reliably expensive. Those loans have not yet been through a full credit cycle at anything like current scale, and a portfolio that has only ever grown has not yet told anyone what its losses look like when it stops.

Currency compounds each of these. A dollar investor in a Peruvian bank owns local-currency earnings translated at a rate nobody controls, so a perfectly executed year in Lima can still arrive as a flat year in New York. At three times book, the price leaves no allowance for that translation going the wrong way, for the credit cycle turning on a young loan book, or for a new administration with a one-quarter-point mandate governing a divided congress. The bull case is that the return persists. The bear case is simply that the price already assumes it will, for longer than almost any bank ever has.

Valuation

Three times book value is not a multiple a bank arrives at by accident. At $388.76 the shares trade at roughly 3.1 times book, and the notable thing about inverting that price is that it does not invert cleanly. The return on equity required to support it lies beyond the tier of returns even the world's most durable banking franchises have sustained, and it needs roughly forty years of it. The honest statement is therefore a boundary rather than a number: the price assumes more than the most durable bank franchises have historically delivered, and it assumes it for a very long time.

Against the company's own record, the starting point is not the problem. The group has been earning around 16 percent on equity on a trailing basis, against a cost of equity near 9.2 percent, and that spread is genuinely wide. The problem is what happens after year one. Among firms that have reached this level of return, only about half were still there a decade on, which is the observed rate at which high bank returns decay toward the cost of capital. And the price is not paying for one decade of that spread. It is paying for several.

The methods used to triangulate arrange themselves accordingly. The asset-value approaches land furthest from the price, which sits about 76 percent above where they center. The peer-multiple approaches sit about 41 percent below today's quote and the earnings-power approaches about 30 percent below it. Only the forward-growth approach reaches the price, and it comes within about 12 percent of it by extrapolating the recent growth in the business and holding today's multiple flat at the end. Read as a pattern, this is the shape of a durability premium: the static frames measure what the bank is, the forward frame measures what it becomes, and the price has sided entirely with the second.

Cohort position removes any ambiguity about how the market ranks this franchise. The price-to-book sits at the very top of its peer group, not near the top. Whatever the market believes about emerging-market banking risk in general, it is not applying that belief here.

Which leaves the live question, and it is a genuine one rather than a rhetorical one. The trailing return that the multiple is measured against is around 16 percent, while the first quarter of 2026 printed 21.1 percent and management guides to approximately 19.5 percent for the full year. If that step up is the new level, the premium is smaller than it appears, because the denominator in every one of these comparisons is about to move. If it is the peak of a digital-lending cycle that has not yet met a downturn, the premium is exactly as large as it appears. Nothing in the trailing data settles which, and the August print is the next piece of evidence rather than the answer.

Catalysts

The first quarter of 2026 was the strongest the group has reported. Net profit rose 16.1 percent year over year and return on equity reached 21.1 percent, above the full-year guidance range management had set, and that guidance of approximately 19.5 percent was reaffirmed with the note that expectations now skew toward its upper end. For a franchise whose entire valuation argument rests on the durability of its return, a quarter that prints above guidance is the specific evidence that matters.

Two structural moves sit behind that number. Yape, the group's payments and lending platform, delivered 17 percent of group fee income and 8 percent of risk-adjusted revenues in the quarter, with lending revenue more than three times the year-earlier level and over 5.7 million loans disbursed in three months. Effective April 1, 2026, management folded Yape Peru, Yape Bolivia, iO and Tenpo in Chile into a single neobank unit. The consolidation gives the digital businesses one operating structure across four countries, and it also means the next few quarters will report them in a way that makes the economics visible rather than buried inside segment results.

Two dates now sit close together. Peru inaugurates a new president on July 28, 2026, after a runoff on June 7 decided by roughly a quarter of a percentage point, which leaves the incoming administration with a narrow mandate and a divided legislature. Second-quarter results follow on August 13, 2026, with the conference call the next day; the company entered its quiet period on July 23. The two together make August the first read on whether the political transition changed anything about loan demand and funding costs, and on whether the first quarter's return was a level or a peak.

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

Credicorp Q1 2026 earnings call, May 2026 · Credicorp 2Q26 quiet-period notice, July 23, 2026; Peru runoff result declared July 2026 · Credicorp Q1 2026 earnings release and call, May 2026 · Peru presidential runoff, June 7, 2026, result declared July 2026 · Credicorp 2Q26 quiet-period notice, July 23, 2026