Intercorp Financial Services Inc. · NYSE:IFS
Intercorp Financial Services — Investor Presentation (November 2023)
41 slides from Intercorp Financial Services's investor presentation, November 2023
Slide 1: Management Presentation
Management Presentation November 2023
Slide 2: Safe Harbor for Forward-Looking Statements
Safe Harbor for Forward-Looking Statements This corporate presentation contains “forward looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical facts included in this corporate presentation regarding Interbank’
Slide 3: Interbank in numbers (9M23)
Interbank in numbers (9M23) 745 Earnings 23% MS consumer 10% MS commercial 14% (S/ mn) loans loans ROE 40% C/I 5.8Retail 75% Digital ratio customers customers (mn) As of September 30, 2023 2
Slide 4: Interbank at a glance
Interbank at a glance 3
Slide 5: Leading bank in Peru with strong financial performance
Leading bank in Peru with strong financial performance Financial highlights Leading position in the Peruvian banking system(2) As of September 30, 2023 S/ mn | US$ mn Assets (1) 68,344 | 18,018 Gross loans (1) 47,217 | 12,448 #3 #2 #1 22.7% 21.8% Deposits (1) 13.9% Market share in Market share in 45
Slide 6: Solid capital ratios
Solid capital ratios Key initiatives Capital ratio evolution Solvency ▪ Fully capitalized 2019 earnings to strengthen Banking CET1 and TCR System 15.4% 14.9% 14.4% (1) 16.4% TCR ▪ Called US$ 200 million hybrid Tier 1 bond in April 2020 to reduce interest expense on 17.0% 12.5% 15.9% 12.0% bonds that
Slide 7: Milestones in Interbank’s capital markets history
Milestones in Interbank’s capital markets history Interbank issues $300 million in subordinated Tier 2 bonds in the international capital markets Interbank issues $200 Interbank issues $200 million in senior bonds million in hybrid Tier 1 in the international bonds in the capital markets, IFS execut
Slide 8: Intercorp Group: striving to make Peru the best place to raise a family in Latin America
Intercorp Group: striving to make Peru the best place to raise a family in Latin America Financial services Retail US$ 8.4bn Revenues in 2022 ~4.0% of Peru 2022 GDP Education Other (1) Source: Company information and Central Bank 7 1) Related companies excluding Aviva and Urbi
Slide 9: Key messages
Key messages 8
Slide 10: Key messages
Key messages 1 Challenging macro environment 2 Growing market shares & revenues 3 Solid risk management capabilities 4 Positive development in digital indicators 5 Continuous focus on efficiency 6 ESG updates
Slide 11: Decrease in GDP and inflation trigger first cuts in soles reference rate
Decrease in GDP and inflation trigger first 1 cuts in soles reference rate Quarterly GDP growth YoY (%) Interest rates (%) 3.9% 3.4% Soles reference rate (BCRP) Dollar reference rate (FED) Nov23 7.50 7.75 7.50 7.00 2.0% 1.7% 5.50 Nov23 2.50 5.25 5.50 5.50 4.50 0.25 -0.4% -0.5% 1.75 -1.0% 0.25 0.25 1
Slide 12: Key messages
Key messages 1 Challenging macro environment 2 Growing market shares & revenues 3 Solid risk management capabilities 4 Positive development in digital indicators 5 Continuous focus on efficiency 6 ESG updates
Slide 13: Increasing market shares with moderation in consumer loans
Increasing market shares with 2 moderation in consumer loans 22.7 22.7 18.6 19.4 19.4 13.3 14.0 21.5 3Q22 2Q23 3Q23 3Q22 2Q23 3Q23 Sep22 Sep23 Consumer banking loans (%) Retail banking loans (%) Payroll inflow (%) 14.8 15.1 15.2 9.4 9.6 14.7 9.1 10.0 3Q22 2Q23 3Q23 3Q22 2Q23 3Q23 Sep22 Sep23 Retail
Slide 14: We have further moderated banking activity by tightening credit standards
We have further moderated banking 2 activity by tightening credit standards 7.0 7.0 559 5.9 0% QoQ 428 427 0% QoQ +18% YoY -24% YoY 3Q22 2Q23 3Q23 3Q22 2Q23 3Q23 Credit & debit cards purchases (S/ bn) Mortgage disbursements (S/ mn) 867 254 271 750 722 229 -17% QoQ -16% QoQ -4% YoY -10% YoY 3Q22 2Q23
Slide 15: Growth across all revenue lines
2 Growth across all revenue lines % YoY +15% +3% +7% +13% +370 +16 +22 3,565 3,158 9M22 Gross financial Net fee income Gain on financial 9M23 margin transactions Banking – Revenue bridge from 9M22 to 9M23 (S/ mn) 14
Slide 16: NIM remains flat at 5.3% despite increasing yields…
NIM remains flat at 5.3% despite 2 increasing yields… Credit cards & personal loans Payroll deduction loans Mortgages Commercial Yield on loans NIM Reactiva 6% 2% 11.0% 11.1% 43% 42% 10.1% 10.4% 9.5% 21% 21% 5.2% 5.2% 5.3% 5.3% 4.8% 10% 52% 11% 55% Retail Retail 21% 23% 3Q22 3Q23 3Q22 4Q22 1Q23 2Q23
Slide 17: … due to rising funding costs
2 … due to rising funding costs LDR(1) 98% 103% System’s Cost of funds Cost of deposits LDR(1) 104% 104% 60,239 59,718 8% 3.9% 4.1% 11% 3.5% 13% 16% 3.1% 2.7% 3.6% 3.4% 3.1% 36% 36% 2.6% 2.2% 76% Ref. rate YoY (2) +50 bps (S/) 40% 40% +225 bps (US$) 3Q22 3Q23 3Q22 4Q22 1Q23 2Q23 3Q23 Retail deposits
Slide 18: Key messages
Key messages 1 Challenging macro environment 2 Growing market shares & revenues 3 Solid risk management capabilities 4 Positive development in digital indicators 5 Continuous focus on efficiency 6 ESG updates
Slide 19: Solid risk management capabilities
3 Solid risk management capabilities Better asset quality than the system despite focus on Best total PDL ratio among peers (%) retail – PDL ratio evolution (%) Interbank System Commercial loans Retail loans Total loans 4.3% 3.8% 3.8% 3.9% 4.0% BBVA BBVA 5.9% 2.6% BBVA 4.7% BCP BCP 5.0% 3.1% BCP 4.4
Slide 20: Manageable dollarization levels
3 Manageable dollarization levels Gross Loans by segment & percentage in S/ Currency mix Sep23 94% 94% 94% 95% 95% 92% 92% 93% Gross Loans Total Assets 89% 85% 78% 76% 73% 74% 73% 74% 74% 73% USD USD 71% 27% 30% 63% 64% 58% 52% 52% 52% 51% 50% 49% 43% 41% S/ 73% S/ 2014 2015 2016 2017 2018 2019 2020
Slide 21: Key messages
Key messages 1 Challenging macro environment 2 Growing market shares & revenues 3 Solid risk management capabilities 4 Positive development in digital indicators 5 Continuous focus on efficiency 6 ESG updates
Slide 22: Consolidating digital achievements
Consolidating digital achievements 4 75% 86% 75% 70% Sep22 Sep23 Sep22 Sep23 Digital customers Digital self-service (% of digital self-service) (% of digital customers – Retail banking) 63% 46 60% 39 Sep22 Sep23 Sep22 Sep23 NPS – digital customers Digital sales (Points – Retail Banking) (% of produc
Slide 23: Over 13 million users in Plin and 660 thousand merchants in IzipayYa
Over 13 million users in Plin and 660 thousand merchants in IzipayYa 4 +51% YoY +2x YoY 13.0 9.5 8.6 4.2 Sep22 Sep23 3Q22 3Q23 Users (mn) Volume (S/ bn) +42% YoY +2x YoY 667 1.4 470 0.8 Sep22 Sep23 3Q22 3Q23 Merchants (th) Volume (S/ bn) 22
Slide 24: Retail customers reached 5.8 million
Retail customers reached 5.8 million 4 +14% YoY +19% YoY +12% YoY 5.6 5.8 2.4 2.4 172 5.1 2.0 162 145 3Q22 2Q23 3Q23 3Q22 2Q23 3Q23 3Q22 2Q23 3Q23 Banking – retail customers (mn) Banking – digital customers (mn) Banking – commercial customers (th) 23
Slide 25: Key messages
Key messages 1 Challenging macro environment 2 Growing market shares & revenues 3 Solid risk management capabilities 4 Positive development in digital indicators 5 Continuous focus on efficiency 6 ESG updates
Slide 26: Continuous focus on efficiency
Continuous focus on efficiency 5 Tight management of costs – Total expenses(2) Optimizing our distribution channels (Units) (S/ mn) 2020 Sep23 % Change Financial stores 215 153 -29% 1,847 1,696 1,491 1,412 1,369 ATMs 1,640 1,642 0% Correspondent 5,529 6,736 +22% agents(1) Sales force 899 1,225 +36%
Slide 27: Key messages
Key messages 1 Challenging macro environment 2 Growing market shares & revenues 3 Solid risk management capabilities 4 Positive development in digital indicators 5 Continuous focus on efficiency 6 ESG updates
Slide 28: ESG updates
ESGon Focus updates building a sustainable business 6 Environmental Social Governance & Economic 50.3K users CSO member of Global Interbank’s 346.2K sessions Compact Peruvian Board Sustainable 6 webinars Financing Interbank as “Early mover” 5 courses of Global Compact Framework verified by S&P (S
Slide 29: Our way of working will enable us to achieve our goals
Our way of working will enable us to 6 achieve our goals Great Place to Work Our strategic values Top 20 in Peru for the past 21 years #3 in Latin America in 2022 Integrity Courage #4 in Peru in 2023 #5 for women in Peru in 2023 Innovation Collaboration #6 for sustainable management in 2023 #2 for m
Slide 30: Strong corporate governance
Strong corporate governance 6 Board of directors BOD with majority of independent members Carlos Rodríguez-Pastor Fernando Zavala Chairman Director Interbank: 6 out of 10 Ramón Barúa Felipe Morris Director Director Strong corporate governance Marcia Nogueira De Mello Cayetana Aljovín Independent Dir
Slide 31: Appendix
Appendix 30
Slide 32: Strategic focus on consumer loans
Strategic focus on consumer loans Distinctive loan breakdown… …when compared to the banking system Banking System Commercial Commercial 44% 61% Mortgages Consumer Mortgages Consumer 37% loans Retail 46% loans Retail 63% 39% 54% 56% S/ 47.2BN S/ 26.4BN S/ 353.0BN S/ 136.4BN Leading position in consum
Slide 33: Diversified funding base with strength in retail deposits
Diversified funding base with strength in retail deposits Significant deposits base A growing retail deposit-gathering franchise MS 2017: 12.6% MS Sep23: 15.2% MS 2022: 14.9% Other 6% Bonds Demand Savings 13.3% 8% 23% 37% 9.6% Due to banks Deposits 16% 76% 1.5% Time -0.8% 34% CAGR 2017-22 3Q23 YoY I
Slide 34: Expanding market share in loans & deposits
Expanding market share in loans & deposits Breakdown of loans (S/ mn) Funding structure (S/ mn) %chg %chg %chg %chg 3Q22 2Q23 3Q23 QoQ YoY 3Q22 2Q23 3Q23 QoQ YoY Consumer loans Credit cards & other loans 9,012.6 10,839.0 10,636.1 -1.9% 18.0% Deposits 45,521.7 45,637.5 45,687.1 0.1% 0.4% (1) Payroll
Slide 35: Reactiva loan balances down 68% YoY, representing 2% of total portfolio
Reactiva loan balances down 68% YoY, representing 2% of total portfolio Reactiva Peru loan balances by segment (S/ bn) 2.9 3Q23 Segment YoY Corporate -84% Corporate: n.m. Mid-sized -70% Mid-sized: S/ 0.6 bn 1.2 SME: S/ 0.3 bn 0.9 SME -62% Total -68% 3Q22 2Q23 3Q23 34 SME Mid-sized Corporate
Slide 36: Manageable dollarization levels
Manageable dollarization levels Total loans Retail loans Commercial loans % PEN 68% 71% 89% 93% 57% 58% System 7% 5% 28% 27% 51% 57% 93% 95% 72% 73% 49% 43% 3Q18 3Q23 3Q18 3Q23 3Q18 3Q23 Retail loans breakdown Commercial loans breakdown Consumer Mortgages Corporate Medium Small & Micro 96% 96% 82% 9
Slide 37: Overview of Peruvian banking system
Overview of Peruvian banking system Decreasing loan growth – Banking system gross loans (S/ bn) Profitability stabilizing – Banking system net profit (S/ mn) ROE 4.0% 13.3% 17.3% 18.0% 15.9% CAGR +4.6% CAGR 350 357 362 353 2020-22 10,119 326 7,218 7,776 7,542 1.2% 238 228 236 217 222 2,112 129 136 1
Slide 38: Interbank’s income statement
Interbank’s income statement % chg % chg % chg Income Statement (S/ mn) 20 20 20 21 20 22 9M22 9M23 ' 21/ ' 20 ' 22/ ' 21 9M23/ 9M22 Interest income 3,865.1 3,510.8 4,670.3 3,317.5 4,435.4 (9.2%) 33.0% 33.7% Interest expenses (983.9) (811.0) (1,389.8) (932.7) (1,681.0) (17.6%) 71.4% 80.2% Gros s f i
Slide 39: Interbank’s balance sheet
Interbank’s balance sheet % chg % chg % chg Bal ance Sheet (S/ mn) 20 20 20 21 20 22 9M22 9M23 ' 21/ ' 20 ' 22/ ' 21 9M23/ 9M22 A s s ets Cash and due from banks 17,716.8 14,413.6 11,340.2 11,134.5 9,572.7 (18.6%) (21.3%) (14.0%) Investments, net 8,951.2 10,047.1 9,568.4 12,010.3 11,502.3 12.2% (4.8
Slide 40: Definitions
Definitions Concept Definition Total revenues Gross financial margin + fee income from financial services, net + gain on financial transactions Efficiency ratio (Administrative expenses + Depreciation + amortization) / (total revenues) NIM (Annualized gross financial margin) / (Average interest-earn
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