Intercorp Financial Services Inc. · NYSE:IFS
Intercorp Financial Services — Investor Presentation (January 2023)
43 slides from Intercorp Financial Services's investor presentation, January 2023
Slide 1: Management Presentation
Management Presentation January 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
Interbank in numbers 879 Earnings 22% MS consumer 9% MS commercial 18% (S/ mn) loans banking ROE 43% C/I 5.1 Customers 70% Digital ratio (mn) customers As of September 30, 2022 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, 2022 S/ mn | US$ mn Assets (1) 68,423 | 17,187 Gross loans (1) 44,770 | 11,246 #3 #2 #1 21.5% 22.4% Deposits (1) 17.9% Market share in Market share in 45
Slide 6: Solid capital ratios
Solid capital ratios Key initiatives Capital ratio evolution Solvency Banking ▪ Fully capitalized 2019 earnings to strengthen System 15.1% 15.1% 14.9% 14.5% CET1 and TCR ratio TCR ▪ Called US$ 200 million hybrid Tier 1 bond in 17.0% 12.5% 15.9% 11.6% 11.5% 11.6% April 2020 to reduce interest expense
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 $200 million in senior bonds million in hybrid Tier 1 in the international bonds in the capital markets, IFS execut
Slide 8: Intercorp Group: striving to make Peru the best place to raise a family in Latin America
Intercorp Group: striving to make Peru the best place to raise a family in Latin America Financial services Retail US$ 8.5bn Revenues in 2021 ~3.9% of Peru 2021 GDP Education Other (1) Source: Company information and BCRP. 7 1) Related companies excluding Aviva and Urbi.
Slide 9: Key messages
Key messages 8
Slide 10: Key messages
Key messages 1 Cloudy macro outlook 2 Another solid quarter in core banking activity 3 Solid risk management capabilities 4 Positive development in digital indicators 5 Continuous focus on efficiency 6 Developments on sustainability
Slide 11: Cloudy macro outlook
1 Cloudy macro outlook GDP growth YoY (%) Interest rates (%) Soles reference rate (BCRP) Jan23 Dollar reference rate (FED) 7.75% 6.75 3.8 3.2 3.3 Oct22 2.1% Dec22 2.50 4.50% 1.7 1.00 3.25 0.25 0.25 0.25 0.25 4Q21 1Q22 2Q22 3Q22 Jan21 Sep21 Dec21 Sep22 USD/PEN Inflation YoY (%) 4.13 Dec22 Dec22 8.5 8
Slide 12: Key messages
Key messages 1 Cloudy macro outlook 2 Another solid quarter in core banking activity 3 Solid risk management capabilities 4 Positive development in digital indicators 5 Continuous focus on efficiency 6 Developments on sustainability
Slide 13: Resilient banking activity, moderating consumer dynamics
Resilient banking activity, moderating 2 consumer dynamics +46% YoY +11% YoY +36% YoY 3.8 4.1 86 77 8.8 9.0 69 6.6 2.8 3Q21 2Q22 3Q22 3Q21 2Q22 3Q22 3Q21 2Q22 3Q22 Credit cards & personal loans balances Credit cards turnover (S/ bn) Credit cards sales (th units) (S/ bn) +24% YoY -7% YoY +34% YoY 2.5
Slide 14: Growth across all revenue lines in banking
Growth across all revenue lines in 2 banking % YoY +23% +30% +1% +21% +40 +1 +154 1,125 930 3Q21 Net interest and Fee income from Other income 3Q22 similar income financial services, net Banking – Revenue bridge from 3Q21 to 3Q22 (S/ mn) 13
Slide 15: Shift in loan mix and repricing expand NIM further
Shift in loan mix and repricing expand 2 NIM further Reactiva Commercial Mortgages Payroll deduction loans Yield on loans NIM Credit cards & personal loans 6% 13% 9.5% 8.9% 42% 7.9% 8.1% 39% 7.6% 4.7% 4.8% 21% 4.4% 20% 4.1% 3.8% 12% 48% 10% 52% Retail Retail 21% 16% 3Q21 3Q22 3Q21 4Q21 1Q22 2Q22 3Q2
Slide 16: Rising funding costs with best LDR among peers
Rising funding costs with best LDR 2 among peers Sep19 Sep21 Sep22 Cost of funds Cost of deposits Interbank 104% 90% 98% 2.7% Bank 1 105% 97% 101% 2.1% 1.6% 2.2% 1.3% 1.4% Bank 2 105% 106% 103% 1.5% 1.1% 0.8% 0.6% Ref. rate YoY Bank 3 110% 124% 128% +575 bps (S/) +300 bps (US$) System 105% System 10
Slide 17: Key messages
Key messages 1 Cloudy macro outlook 2 Another solid quarter in core banking activity 3 Solid risk management capabilities 4 Positive development in digital indicators 5 Continuous focus on efficiency 6 Developments on sustainability
Slide 18: 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 3.8% 3.8% 4.0% 3.7% BBVA BBVA 5.0% 2.5% 4.2% 3.0% BCP BCP 4.7% 2.6% 4.0% 3.4% 3.
Slide 19: Manageable dollarization levels
3 Manageable dollarization levels Gross Loans by segment & percentage in S/ Currency mix Sep22 93% 94% 94% 94% 95% 89% 92% 92% Gross Loans Total Assets 85% 78% 76% 73% 74% 73% 74% 73% USD USD 71% 64% 27% 32% 63% 58% 52% 52% 52% 51% 50% 49% 41% S/ S/ 73% 68% 2014 2015 2016 2017 2018 2019 2020 2021 Se
Slide 20: Key messages
Key messages 1 Cloudy macro outlook 2 Another solid quarter in core banking activity 3 Solid risk management capabilities 4 Positive development in digital indicators 5 Continuous focus on efficiency 6 Developments on sustainability
Slide 21: Positive developments in banking digital indicators
Positive developments in banking digital indicators… 4 70% 56% 53% 67% 64% 68% 39% 51% 63% Sep21 Jun22 Sep22 Sep21 Jun22 Sep22 Sep21 Jun22 Sep22 Digital customers Digital acquisition Digital sales (% of digital customers) (% of monthly retail customers “born digitally” ) (% of products sold digitall
Slide 22: 9.4 million users in Plin and 2.5 million in Tunki
9.4 million users in Plin and 2.5 million in Tunki 4 +80% YoY +95% YoY +2x YoY Nov22 779 887 14.5 8.6 9.4 7.5 10.9 4.8 455 4.7 Sep21 Jun22 Sep22 Sep21 Jun22 Sep22 Sep21 Jun22 Sep22 Users (mn) Merchants (th) Transactions (units in mn) +57% YoY +2x YoY +3x YoY Nov22 2.2 47 2.0 2.5 425 0 3.1 1.4 2.2 22
Slide 23: Continues solid growth in customer base to over 5 million
Continues solid growth in customer base to over 5 million 4 +17% YoY +29% YoY +19% YoY 4.9 5.1 1.9 2.0 145 138 4.3 1.6 122 3Q21 2Q22 3Q22 3Q21 2Q22 3Q22 3Q21 2Q22 3Q22 Banking – retail customers (mn) Banking – digital customers (mn) Banking – commercial customers (th) 22
Slide 24: Key messages
Key messages 1 Cloudy macro outlook 2 Another solid quarter in core banking activity 3 Solid risk management capabilities 4 Positive development in digital indicators 5 Continuous focus on efficiency 6 Developments on sustainability
Slide 25: Continuous focus on efficiency
Continuous focus on efficiency 5 Variable expenses drive costs higher – Total expenses(2) Optimizing our distribution channels (Units) (S/ mn) 2019 Sep22 % Change Financial stores 255 166 -35% 1,696 1,570 1,491 1,254 1,369 ATMs 1,598 1,554 -3% Correspondent 4,183 5,718 +37% agents(1) Sales force 588
Slide 26: Key messages
Key messages 1 Cloudy macro outlook 2 Another solid quarter in core banking activity 3 Solid risk management capabilities 4 Positive development in digital indicators 5 Continuous focus on efficiency 6 Developments on sustainability
Slide 27: Developments on sustainability
Developments on sustainability 6 Environmental Social Governance Focus • Eco-efficiency • Inclusion of our people • Corporate Governance • ESG finances • Financial Inclusion • Cybersecurity Areas • Climate risk • International Standards #3 Interbank +600k sessions +490k users #1 Interbank 4.8/5 scor
Slide 28: Increasingly involved in green & sustainable financing
Increasingly involved in green & sustainable financing 6 160(US$ mn) 60(US$ mn) 20(US$ mn) 100 (S/ mn) Syndicated Green Sustainability Sustainability sustainability loan loan loan loan (Lead arranger) (Arranger) (Arranger) (Arranger) We help our customers grow their businesses in a sustainable way 2
Slide 29: Our way of working will enable us to achieve our goals
Our way of working will enable us to achieve our goals 6 Great Place to Work Our strategic values Top 20 in Peru for the past 20 years #3 in Latin America in 2022 Integrity Courage #1 in Peru in 2022 #13 for women in Peru in 2022 Innovation Collaboration #2 for millennials in Peru in 2022 #1 for wor
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 48% Mortgages 65% Consumer Mortgages Consumer 39% loans Retail 48% loans Retail 61% 35% 52% 52% S/ 44.8BN S/ 23.3BN S/ 361.9BN S/ 125.6BN Leading position in consum
Slide 33: Moderating consumer dynamics
Moderating consumer dynamics Performing loans (S/ mn) Breakdown of loans (S/ mn) %chg %chg +2% QoQ | +7% YoY 3Q21 2Q22 3Q22 QoQ YoY Consumer loans Credit cards & other loans 6,619.5 8,793.0 9,012.6 2.5% 36.2% (2) Payroll deduction loans 4,611.2 4,552.2 4,529.1 -0.5% -1.8% 42,404 43,051 Total consume
Slide 34: 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 2016 12.8% MS Sep22 14.8% Other 6% Bonds Demand Savings 14.3% 11% 26% 47% 10.9% Deposits Due to banks 76% 13% 4.1% 1.9% Time 21% CAGR 2016-21 3Q22 YoY Interbank System
Slide 35: Deposits represent 75% of funding
Deposits represent 75% of funding Funding breakdown (S/ mn) Funding structure (S/ mn) %chg %chg LDR(2) 90% 101% 98% 3Q21 2Q22 3Q22 QoQ YoY Deposits 46,585.1 43,600.4 45,521.7 4.4% -2.3% System’s 100% 108% 104% Retail 23,290.7 21,686.3 23,726.1 9.4% 1.9% LDR(2) (1) Commercial 23,294.3 21,914.1 21,795
Slide 36: Reactiva loan balances down 47% YoY, representing 6% of total portfolio
Reactiva loan balances down 47% YoY, representing 6% of total portfolio Reactiva Peru loan balances by segment (S/ bn) 3Q22 5.5 Segment YoY Corporate -80% 3.5 Mid-sized -49% 2.9 SME -35% Total -47% 3Q21 2Q22 3Q22 35 SME Mid-sized Corporate
Slide 37: Rescheduled loans decreased 58%
Rescheduled loans decreased 58% Banking – Rescheduled loans (S/ bn) Clients 343 459 224 8.6 (Thousand) 6.9 Rescheduled 30% 31% 12% Retail 3.9 balance (%) 12.7 Apr20 Jun20 Sep22 10.9 Commercial Total 5.3 4.0 4.1 1.4 Apr20 Jun20 Sep22 Apr20 Jun20 Sep22 36
Slide 38: Manageable dollarization levels
Manageable dollarization levels Total loans Retail loans Commercial loans % PEN 67% 72% 87% 92% 57% 61% System 8% 5% 26% 27% 47% 50% 92% 95% 74% 73% 53% 50% 3Q17 3Q22 3Q17 3Q22 3Q17 3Q22 Retail loans breakdown Commercial loans breakdown Consumer Mortgages Corporate Medium Small & Micro 95% 96% 80% 9
Slide 39: Overview of Peruvian banking system
Overview of Peruvian banking system Profitability recovering after COVID-19 pandemic – Banking Steady loan growth – Banking system gross loans (S/ bn) system net profit (S/ mn) ROE 18.5% 4.0% 13.3% 11.6% 18.0% CAGR +10.6% CAGR 2019-21 326 350 346 362 9,082 286 7,218 7,776 14.8% 222 238 225 221 4,672
Slide 40: Interbank’s income statement
Interbank’s income statement % chg % chg % chg % chg Incom e S t a t e m e nt ( S / m n) 2019 2020 2021 9 M 21 9 M 22 '19 / '18 '20/ '19 '21/ '20 9 M 22/ 9 M 21 Interest income 4,094.8 3,865.1 3,510.8 2,568.3 3,317.5 14.1% (5.6%) (9.2%) 29.2% Interest expenses (1,231.0) (983.9) (811.0) (595.4) (932.
Slide 41: Interbank’s income statement
Interbank’s income statement % chg % chg % chg % chg Fina ncia l S t a t e m e nt s ( S / m n) 2019 2020 2021 9 M 21 9 M 22 '19 / '18 '20/ '19 '21/ '20 9 M 22/ 9 M 21 As s e t s Cash and due from banks 9,861.5 17,716.8 14,413.6 17,426.9 11,134.5 20.1% 79.7% (18.6%) (36.1%) Investments, net (1) 5,559
Slide 42: 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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