Buried within Credicorp's Q1 2024 earnings call lies a tantalizing hint at a potential future where their digital wallet, Yape, might become a key driver of profitability, perhaps even eclipsing the traditional banking segments. While analysts focused on NIM, loan growth, and the familiar metrics of traditional banking, a subtle shift in Yape's revenue composition suggests a silent, yet potentially seismic, shift in Credicorp's trajectory.

Yape has been lauded for its impressive user base growth, reaching a staggering 11.5 million monthly active users in March 2024. That's roughly half of Peru's adult population. Yet, the focus, as emphasized by CEO Gianfranco Ferrari, is no longer on user acquisition. The spotlight is now firmly on usage and, crucially, monetization.

While Yape's payment business, with its mature features like mobile top-up and bill payments, continues to be the primary revenue generator, the Q1 call revealed a fascinating development. The nascent lending business, previously restricted to single-installment loans, is expanding into multi-installment loans, signifying a move towards higher-ticket, longer-tenure products. The potential here is enormous. Imagine tapping into a user base already comfortable with Yape for day-to-day transactions and extending them credit directly through the wallet.

Furthermore, the integration of Yape's data into BCP's risk models hints at a future where lending decisions are driven by a holistic view of user behavior, not just traditional credit scores. This could be a game-changer, especially in a market with a significant unbanked population. Yape's unique insights into user spending, savings, and transactional patterns could unlock a new frontier of creditworthy individuals previously overlooked by traditional banking.

Now, let's crunch some numbers. Yape's income per active user has grown by 35% quarter-over-quarter, reaching 3.7 soles. While expenses per active user saw a seasonal increase, the company is confident in its trajectory towards breakeven in the coming months. The Q1 call hinted at this breakeven point being reached in the first half of the year.

Yape's Income and Expenses per Active User (PEN)

Source: Credicorp Ltd. Q1 2024 Earnings Call Transcript

Let's hypothesize. Imagine if Yape's lending business successfully scales, driving its income per user to, say, 5 soles by 2025. With an active user base approaching 15 million (considering their current growth rate), this could translate to a potential revenue stream of 75 million soles per month from lending alone. This excludes revenue from the payment and marketplace businesses, which are also expected to contribute significantly.

Consider this alongside Credicorp's traditional core business. Their loan growth is projected to be at the lower end of the guidance range (3-5%) due to subdued demand. Even with stable NIM, the sluggish loan growth limits the potential for significant expansion in net interest income.

The question arises: could Yape, with its high-growth, low-cost digital model, become a larger contributor to Credicorp's bottom line than their traditional banking segments in the medium to long term? While still hypothetical, the signs are certainly compelling.

Remember, Yape is not just another digital wallet. It's a platform with the potential to disrupt the very core of how financial services are accessed and consumed in Peru. As Yape evolves, so too might Credicorp's identity, potentially transforming them from a traditional financial institution into a digital ecosystem, with Yape at its pulsating heart.

"Fun Fact: Yape's name is a play on the Spanish word "yape," which is a colloquial term for "right now" or "immediately." This reflects the app's focus on providing fast and convenient financial services."

"Infographic Idea: A visual representation of Yape's ecosystem, showcasing its various features and services, such as payments, lending, marketplace, and insurance. The infographic could highlight the growth in active users and transactions, as well as the potential for future expansion."