How will the legal challenge affect Credicorp's capital allocation and future investments?

Credicorp’s decision to contest the SUNAT tax assessment in court – even though the specific amount demanded has already been cancelled – signals that the bank will keep a sizable portion of its balance sheet earmarked for potential legal exposure. In the short‑term this means a more conservative capital‑allocation stance: the firm is likely to preserve liquidity, delay or scale‑back discretionary cap‑ex projects, and prioritize strengthening its legal and compliance reserves over aggressive expansion or higher‑return M&A activity. The immediate cash‑flow relief from the cancelled demand does free up some short‑term working capital, which could be redirected to near‑term priorities such as dividend payouts or modest organic growth initiatives, but the underlying uncertainty keeps the “head‑room” for new investments tighter than it would be in a clean‑‑legal environment.

From a market perspective the stock’s reaction has been muted, holding near a key technical support zone around the 4.30 USD level on the BAP chart, with the 20‑day SMA still providing a modest floor. The legal exposure risk premium is already baked into the pricing, reflected in a slightly elevated yield spread versus regional peers. As long as the court process does not uncover additional liabilities, the upside potential remains tied to the bank’s ability to redeploy the freed‑up cash into higher‑return assets once the dispute is fully resolved. Traders can therefore stay long or neutral with a tight stop just below the 4.30 USD support; a breakout above the 4.45 USD resistance (the 20‑day EMA) could signal that the market is pricing in a clean resolution and may open the door for a re‑allocation toward growth‑oriented projects. Conversely, any adverse legal development that resurrects a sizable tax claim would likely trigger a sell‑off, pushing the price back toward the support zone.