Intercorp Financial Services Inc. · NYSE:IFS
Intercorp Financial Services — Q4 2023 Earnings Presentation
59 slides from Intercorp Financial Services's earnings presentation, Feb 13, 2024
Slide 1: Earnings Presentation 4Q23 & FY23 results
Earnings Presentation 4Q23 & FY23 results
Slide 2: Macro outlook, Profitable growth, Digital performance, Key businesses, Guidance & takeaways
1 2 Macro Profitable outlook growth 3 4 5 Digital Key Guidance & performance businesses takeaways
Slide 3: The Central Bank continues to cut rates in line with decreased inflation
The Central Bank continues to cut rates 1 in line with decreased inflation (1) Quarterly GDP growth YoY (%) Interest rates (%) 3.9% 3.4% Soles reference rate (BCRP) Dollar reference rate (FED) 7.50 7.75 7.50 2.0% 2024(E) 6.75 Feb24 1.7% 5.50 3.0% 6.25% 2.50 5.25 5.50 5.50 4.50 0.25 -0.4% -0.5% -0.3%
Slide 4: Forward-looking probability of a coastal El Niño predominantly none/weak
Forward-looking probability of a coastal 1 “El Niño” predominantly none/weak Forward-looking probability of a coastal “El Niño” Monthly forward-looking probability of a coastal “El Niño” None/Weak Moderate Strong None/Weak Moderate Strong 62% 80% 82% 83% 54% 58% 47% 55% 62% 41% 38% 52% 54% 51% 49% 4
Slide 5: Operating trends FY23
1 Operating trends FY23 Capital Profitability Loan growth 2023 FY23 2023 FY23 Guidance Actual Guidance Actual High single digit growth in IBK TCR ∼ 15% 15.5% IFS ROE 8% - 10% 11.3%(1) total loans(2) led by low double digit growth in consumer loans IBK CET1 ∼ 11% 11.8% Impacted by CoR and Total loans
Slide 6: Profitable growth
1 2 Macro Profitable outlook growth 3 4 5 Digital Key Guidance & performance businesses takeaways
Slide 7: Customer base growth continues across businesses
Customer base growth continues 2 across businesses 6.1 2.6 5.5 +11% YoY 2.4 +6% YoY Dec22 Dec23 Dec22 Dec23 Banking – customers (mn) Insurance – customers (mn) 1.3 73 67 +9% YoY 1.1 +25% YoY Dec22 Dec23 Dec22 Dec23 Wealth management – customers (th) Payments – merchants (mn) 7
Slide 8: Soft banking activity after tightening of credit standards & weak economic trends
Soft banking activity after tightening of 2 credit standards & weak economic trends 7.0 7.0 6.9 449 -1% QoQ 427 437 +2% QoQ -2% YoY -3% YoY 4Q22 3Q23 4Q23 4Q22 3Q23 4Q23 Credit & debit cards purchases (S/ bn) Mortgage disbursements (S/ mn) 1,077 296 229 722 -46% QoQ 187 -18% QoQ 389 -64% YoY -37% Yo
Slide 9: IFS' 4Q23 earnings
2 IFS’ 4Q23 earnings +47% QoQ IFS net profit (S/ mn) ROE 19.5% 8.2% 11.6% ROE 20.2% 10.2% 6.8% 89.9% 48.1% 138.9% 365 137 Banking(2) Insurance 196 78(1) 135 36 (1) 449 286 4Q22 3Q23 4Q23 4Q22 3Q23 4Q23 -31% QoQ | -63% YoY +3.8x QoQ | +76% YoY 195 ROE 7.6% n.m. 10.9% 22.3% 12.3% 6.6% management 12 Pa
Slide 10: IFS' FY23 earnings of S/ 1,079 mm
2 IFS’ FY23 earnings of S/ 1,079 mm IFS net profit (S/ mn) (1) (3) ROE 16.8% 11.3% ROE 19.8% 11.2%(5) 92.4% 86.2% 1,374 292 (5) 255(2) 856 Banking(4) Insurance (1)(2) 1,456 FY22 FY23 FY22 FY23 1,079(3) -38% YoY +14% YoY ROE n.m. 4.0% 26.7% 14.0% management 36 51 Payments(6) 33 Wealth -141 FY22 FY23
Slide 11: 4% QoQ growth in revenues at IFS
2 4% QoQ growth in revenues at IFS IFS quarterly revenues (S/ mn) NIM 5.4% 5.5% 5.2% NIM 5.4% 5.6% 5.5% 1,259 1,282 1,258 390(1) 418 373 Insurance Banking 1,777 (1) 1,817 1,745 4Q22 3Q23 4Q23 4Q22 3Q23 4Q23 -2% QoQ | 0% YoY +12% QoQ | +7% YoY management 107 108 Payments 56 70 96 Wealth 18 4Q22 3Q23
Slide 12: IFS' FY23 revenues up 10% YoY, growth across all businesses
IFS’ FY23 revenues up 10% YoY, growth 2 across all businesses IFS revenues (S/ mn) (3) NIM 5.0% 5.3% NIM 4.9% 5.5%(5) 4,571 5,020(5) 1,523(2) 1,545 Banking(4) Insurance 6,975(3) (1)(2) 6,341 FY22 FY23 FY22 FY23 +10% YoY +1% YoY management 192 378 396 Payments(6) Wealth 24 FY22 FY23 FY22 FY23 FY22 FY
Slide 13: CoR at 5.2% in 4Q23, strong coverage
2 CoR at 5.2% in 4Q23, strong coverage Credit cards & personal loans Payroll deduction loans Banking Retail Commercial Mortgages Commercial NPL coverage ratio Cost of risk Reactiva 194% FY22: 3.8% 5% 1% 221% FY23: 7.0% 8.1% 8.3% 41% 43% 157% FY22: 1.9% 161% FY23: 4.3% 5.2% 21% 22% 5.0% 3.1% 11% 54%
Slide 14: Monitoring payment behavior on unsecured consumer loans
Monitoring payment behavior on 2 unsecured consumer loans Non-rescheduled Rescheduled (2) Payment of non-rescheduled loans (S/ mn) 10,057 11,100 11,129 10,660 Collected Not paid 9% 14% 18% 20% 97.9% 98.0% 2.1% 2.0% Sep23 Dec23 Sep23 Dec23 (2) Payment of rescheduled loans 91% 86% Collected Not paid 8
Slide 15: Tight management of costs with 5% YoY decrease in 4Q23
Tight management of costs with 2 5% YoY decrease in 4Q23 IFS expenses (S/ mn) Banking expenses (S/ mn) C/I 35.6% 36.6% 36.2% C/I 37.9% 36.5% 36.2% 730(1) 688 691 508 491 475 4Q22 3Q23 4Q23 4Q22 3Q23 4Q23 0% QoQ | -5% YoY -3% QoQ | -6% YoY C/I 36.4% 36.8% C/I 40.4% 37.3% 2,689(1) 2,750 1,931 1,950 FY
Slide 16: Digital performance
1 2 Macro Profitable outlook growth 3 4 5 Digital Key Guidance & performance businesses takeaways
Slide 17: Consolidating digital achievements in banking
Consolidating digital achievements in 3 banking 75% 82% 77% 71% Dec22 Dec23 Dec22 Dec23 Digital customers Digital self-service (% of digital customers – Retail banking) (% of digital self-service) 64% 63% 49 36 Dec22 Dec23 Dec22 Dec23 Digital sales NPS – digital customers (% of products sold digital
Slide 18: Working towards digital innovation in insurance & wealth management
Working towards digital innovation in 3 insurance & wealth management 59% 80% 82% Insurance Insurance 44% Dec22 Dec23 Dec22 Dec23 Digital self-service SOAT digital sales (% of products sold digitally) (% of digital self-service) 10% 10% 48% 42% Insurance WM Dec22 Dec23 Dec22 Dec23 Digital premiums D
Slide 19: Key businesses
1 2 Macro Profitable outlook growth 3 4 5 Digital Key Guidance & performance businesses takeaways
Slide 20: Increasing market relevance in targeted banking products
Increasing market relevance in targeted 4 banking products 22.2 18.8 19.1 14.7 21.8 13.6 Dec22 Dec23 Dec22 Dec23 Dec22 Dec23 MS Consumer banking loans (%) MS Retail banking loans (%) MS Payroll inflow (%) 14.9 15.1 9.6 17.7 9.2 11.7 Dec22 Dec23 Dec22 Dec23 Dec22 Dec23 MS Retail banking deposits (%)
Slide 21: Net interest income driving growth in FY23 revenues
Net interest income driving growth in 4 FY23 revenues % YoY +13% +2% +4% +10% +415 +16 +19 5,020 4,571 (1) FY22 Net interest income Fee income Other income FY23 Banking – Revenue bridge from FY22 to FY23 (S/ mn) 21 1) Banking revenues in FY23 and YoY growth were S/ 5,090 mn and 11%, respectively, wh
Slide 22: Stable NIM throughout the year
Stable NIM throughout the year 4 NIM Risk-adjusted NIM Retail loans Commercial loans Yield on loans Return on interest-earning assets Financial investments Cash and banks 64,660 66,092 11.5% 11.6% 11.3% 10.9% 10.5% 14% 18% 9.3% 9.1% 9.1% 8.7% 18% 8.3% 15% 30% 5.4% 5.5% 5.6% 5.6% 5.5% 31% 3.8% 3.3% 3
Slide 23: … with cost of funds stabilizing on rates outlook
… with cost of funds stabilizing on 4 rates outlook LDR(1) 101% 102% System’s 107% 102% LDR(1) Cost of funds Cost of deposits Ref. rate YoY (2) -75 bps (S/) 57,926 59,096 +100 bps (US$) 11% 8% 13% 12% 4.2% 4.2% 4.0% 36% 39% 3.6% 3.2% 3.8% 3.8% 79% 3.6% 3.3% 41% 40% 2.8% 4Q22 4Q23 Retail deposits Com
Slide 24: Increased contribution of individual life & retail insurance to total premiums
Increased contribution of individual life & retail insurance to total premiums 4 Annuities market 28.8% 27.7% 30.5% 26.4% (1) (3) share 285 314 300 %chg %chg 35 QoQ YoY 49 45 +40% +9% 212 90 85 44 93 -6% -9% 70 71 74 62 +6% +19% 34 52% 55% 119 85 92 61 -23% +8% (2) 2019 4Q22 3Q23 4Q23 Quarterly gros
Slide 25: Insurance investment portfolio delivers sound returns
Insurance investment portfolio delivers sound returns 4 Insurance - ROIP (%) Insurance - Portfolio breakdown 7.5% 7.2% 10% 9% 6% 5% 84% 86% 4Q22 4Q23 4Q22 4Q23 Fixed Income Equity and Mutual Funds Real Estate 25
Slide 26: 12% YoY growth in Wealth Management's AUM
12% YoY growth in Wealth Management’s 4 AUM AUM (US$ mn) Deposits (US$ mn) Loans (US$ mn) 5,990 6,250 1,075 468 422 410 5,589 958 893 4Q22 3Q23 4Q23 4Q22 3Q23 4Q23 4Q22 3Q23 4Q23 +4% QoQ | +12% YoY -7% QoQ | -17% YoY -3% QoQ | -12% YoY 26
Slide 27: Consolidating our presence in payments
Consolidating our presence in payments 4 +25% YoY +3% YoY +35% YoY +70% YoY 1.3 14.6 15.5 747 1.7 1.1 554 1.0 Dec22 Dec23 4Q22 4Q23 Dec22 Dec23 4Q22 4Q23 Merchants (mn) Volume (S/ bn) Merchants (th) Volume (S/ bn) E-commerce share of volume 16% 16% (%) 27
Slide 28: Izipay top line continues to grow
Izipay top line continues to grow 4 107 109 96 +13% QoQ Additional cash flow Increased float in merchants’ coming to IBK accounts +1% YoY IBK accounts +21% YoY +48% YoY 4Q22 3Q23 4Q23 Izipay - Revenues (S/ mn) 32.9 -6% QoQ Greater transactional volumes New model tested 26.5 24.9 -24% YoY from micro
Slide 29: Strengthening our digital positioning & presence in payments
Strengthening our digital positioning & presence in payments 4 +46% YoY +2.4x YoY +3.3x 14.2 11.9 29.1 9.8 4.9 8.8 Dec22 Dec23 4Q22 4Q23 Pre-interop. Post-interop. Users (mn) Volume (S/ bn) IBK Transactions (mn)(1) IBK Share (%) 45% 46% 32% 40% 29 1) Monthly data | Pre-interoperability: Apr23, post-
Slide 30: ESG focus updates: building a sustainable business
ESGon Focus updates building a sustainable business 4 CSA results 2023 Social +963.8K users 1,8K micro credits disbursed +1,2MM sessions 758K micro merchants +2.2MM visits +30 entities free of commission payments Awarded initiative by 61 pts Interbank & Interseguro Best Places for LGBTIQ+ Talent Per
Slide 31: Guidance & takeaways
1 2 Macro Profitable outlook growth 3 4 5 Digital Key Guidance & performance businesses takeaways
Slide 32: Operating trends 2024
Operating trends 2024 5 Capital Profitability Loan growth To remain at sound levels Still below midterm range Mid single digit growth IBK TCR > 14% in total loans(1) IFS ROE > 12% IBK CET1 ∼ 11% Revenues Cost of risk Efficiency Stable NIM Improving cost of risk Continued focus on efficiency IBK NIM
Slide 33: Takeaways
Takeaways 5 Good performance in 1 2 3 After weak 2023, macro insurance business, Retail CoR remains sentiment for 2024 is positive investment high, strong coverage relatively positive results in WM 4 5 6 Tight management of Strengthening our Cost of funds stabilizing costs reflected in solid digital
Slide 34: Appendix
Appendix
Slide 35: IFS key indicators 4Q23
IFS key indicators 4Q23 19.5% 11.6% 5.4% 5.6% 5.5% 8.2% ROE NIM 4Q22 3Q23 4Q23 4Q22 3Q23 4Q23 5.0% 5.2% 2.0% 2.5% 1.3% Banking 0.9% ROA CoR 4Q22 3Q23 4Q23 4Q22 3Q23 4Q23 IFS 5.4% 5.5% 5.2% 37.9% 36.5% 36.2% NIM C/I ratio 4Q22 3Q23 4Q23 4Q22 3Q23 4Q23 management 5.6 6.0 6.3 35.6% 36.6% 36.2% Wealth C
Slide 36: IFS key indicators FY23
IFS key indicators FY23 16.8% 19.1%(1) (2) 4.9% 5.5%(3) 11.3% ROE NIM FY22 FY23 FY22 FY23 1.7% 1.9%(1) 1.2%(2) 4.3% 1.9% Banking ROA CoR FY22 FY23 FY22 FY23 IFS 5.0% 5.3%(2) 40.4% 37.3%(3) NIM C/I ratio FY22 FY23 FY22 FY23 management 37.6% 36.4%(1) 36.8%(2) 5.6 6.3 Wealth C/I ratio AUM (US$ bn) FY22
Slide 37: Sound capitalization levels
Sound capitalization levels Banking 128.6% 136.1% 127.1% System 14.5% 16.3% 16.4%(1) TCR Insurance 100.0% Reg. min. 4Q23 3Q23 4Q23 15.1% 15.0% 15.5% 12.0% 11.8% 11.2% Solvency ratio Banking 11.0% Reg. 6.5% management min. Reg. 20.4% min. 16.0% 17.4% Wealth 12.0% Reg. min. 4Q22 3Q23 4Q23 4Q22 3Q23 4Q
Slide 38: Focusing on low-risk loans & retail deposits
Focusing on low-risk loans & retail deposits Breakdown of loans (S/ mn) Funding structure (S/ mn) %chg %chg %chg %chg 4Q22 3Q23 4Q23 QoQ YoY 4Q22 3Q23 4Q23 QoQ YoY Consumer loans Credit cards & other loans 9,689.5 10,599.6 9,951.0 -6.1% 2.7% Deposits 44,597.9 45,652.6 46,053.6 0.9% 3.3% (1) Payroll
Slide 39: Contained banking NPLs despite growth in provisions, S2 reflects rescheduling
Contained banking NPLs despite growth in provisions, S2 reflects rescheduling (S2+S3) ratio & S3 NPL ratio (%) Impairment loss on loans, net (S/ mn) & Cost of risk (%) 16.0% 1,291 1 13.3% 14.1% 14.0% 9 12.0% 8 10.8% 13.4% 581 616 7 10.0% 6 463 417 8.0% 368 5 6.0% 313 328 278 4 2.6% 3.1% 3.2% 4.0% 18
Slide 40: Reactiva loan balances down 66% YoY, representing 1% of Interbank's portfolio
Reactiva loan balances down 66% YoY, representing 1% of Interbank’s portfolio Reactiva Peru loan balances by segment (S/ bn) 4Q23 Segment YoY 2.3 Corporate -79% Corporate: n.m. Mid-sized -67% Mid-sized: S/ 0.5 bn SME: S/ 0.2 bn 0.9 SME -63% 0.8 Total -66% 4Q22 3Q23 4Q23 40 SME Mid-sized Corporate
Slide 41: Manageable dollarization levels at Interbank
Manageable dollarization levels at Interbank Total loans Retail loans Commercial loans % PEN 68% 72% 89% 93% 57% 58% System 7% 4% 27% 27% 49% 56% 93% 96% 73% 73% 51% 44% 4Q18 4Q23 4Q18 4Q23 4Q18 4Q23 Retail loans breakdown Commercial loans breakdown Consumer Mortgages Corporate Medium Small & Micro
Slide 42: IFS' 4Q23 statement of financial position
IFS’ 4Q23 statement of financial position (1) Intercorp Financial Services' Statement of financial position S/ million %chg %chg 12.31.22 09.30.23 12.31.23 12.31.23 12.31.23 09.30.23 12.31.22 Assets Cash and due from banks and inter-bank 13,489.5 11,106.4 10,343.6 -6.9% -23.3% funds Financial invest
Slide 43: IFS' FY23 P&L
IFS’ FY23 P&L (1) Intercorp Financial Services' P&L statement S/ million %chg 2022 2023 23/22 Interest and similar income 5,871.3 7,120.4 21.3% Interest and similar expenses -1,661.7 -2,592.4 56.0% Net interest and similar income 4,209.6 4,528.0 7.6% Impairment loss on loans, net of recoveries -830.
Slide 44: IFS' 4Q23 P&L
IFS’ 4Q23 P&L (1) Intercorp Financial Services' P&L statement S/ million %chg %chg 4Q22 3Q23 4Q23 QoQ YoY Interest and similar income 1,684.0 1,849.0 1,805.0 -2.4% 7.2% Interest and similar expenses -535.4 -681.2 -681.5 0.0% 27.3% Net interest and similar income 1,148.5 1,167.8 1,123.5 -3.8% -2.2% I
Slide 45: Banking segment's 4Q23 statement of financial position
Banking segment’s 4Q23 statement of financial position Banking Segment' Statement of financial position S/ million %chg %chg 12.31.22 09.30.23 12.31.23 12.31.23 12.31.23 09.30.23 12.31.22 Assets Cash and due from banks and inter-bank 11,348.4 9,579.5 9,123.4 -4.8% -19.6% funds Financial investments
Slide 46: Banking segment's FY23 P&L
Banking segment’s FY23 P&L Banking Segment's P&L statement S/ million %chg 2022 2023 23/22 Interest and similar income 4,774.4 6,076.0 27.3% Interest and similar expenses -1,476.9 -2,363.8 60.0% Net interest and similar income 3,297.4 3,712.2 12.6% Impairment loss on loans, net of recoveries -832.9
Slide 47: Banking segment's 4Q23 P&L
Banking segment’s 4Q23 P&L Banking Segment's P&L statement S/ million %chg %chg 4Q22 3Q23 4Q23 QoQ YoY Interest and similar income 1,396.4 1,590.9 1,556.0 -2.2% 11.4% Interest and similar expenses -479.5 -627.3 -619.0 -1.3% 29.1% Net interest and similar income 916.9 963.5 937.0 -2.8% 2.2% Impairmen
Slide 48: Insurance segment's 4Q23 statement of financial position
Insurance segment’s 4Q23 statement of financial position (1) Insurance Segment' Statement of financial position S/ million %chg %chg 12.31.22 09.30.23 12.31.23 12.31.23 12.31.23 09.30.23 12.31.22 Assets Cash and due from banks and inter-bank 631.2 378.7 266.3 -29.7% -57.8% funds Financial investment
Slide 49: Insurance segment's FY23 P&L
Insurance segment’s FY23 P&L Insurance Segment's P&L statement (1) S/ million %chg 2022 2023 23/22 Interest and similar income 940.9 851.6 -9.5% Interest and similar expenses -130.0 -126.7 -2.6% Net interest and similar income 810.8 724.9 -10.6% Recovery (loss) due to impairment of financial -0.0 -7
Slide 50: Insurance segment's 4Q23 P&L
Insurance segment’s 4Q23 P&L Insurance Segment's P&L statement (1) S/ million %chg %chg 4Q22 3Q23 4Q23 QoQ YoY Interest and similar income 245.1 212.5 196.9 -7.3% -19.7% Interest and similar expenses -37.0 -28.7 -32.6 13.3% -12.0% Net interest and similar income 208.1 183.8 164.4 -10.6% -21.0% Recov
Slide 51: Wealth management segment's 4Q23 statement of financial position
Wealth management segment’s 4Q23 statement of financial position Wealth Management Segment' Statement of financial position S/ million %chg %chg 12.31.22 09.30.23 12.31.23 12.31.23 12.31.23 09.30.23 12.31.22 Assets Cash and due from banks and inter-bank 1,457.4 1,061.6 845.0 -20.4% -42.0% funds Fina
Slide 52: Wealth management segment's FY23 P&L
Wealth management segment’s FY23 P&L Wealth Management's P&L statement S/ million %chg 2022 2023 23/22 Interest and similar income 155.1 183.9 18.6% Interest and similar expenses -50.3 -98.4 95.5% Net interest and similar income 104.8 85.6 -18.4% Impairment loss of loans, net of recoveries 2.4 0.2 -
Slide 53: Wealth management segment's 4Q23 P&L
Wealth management segment’s 4Q23 P&L Wealth Management Segment's P&L statement S/ million %chg %chg 4Q22 3Q23 4Q23 QoQ YoY Interest and similar income 41.9 43.6 49.0 12.4% 16.9% Interest and similar expenses -18.0 -24.8 -29.0 17.0% 60.9% Net interest and similar income 23.9 18.7 20.0 6.4% -16.4% Imp
Slide 54: Payments segment's 4Q23 statement of financial position
Payments segment’s 4Q23 statement of financial position Payments Segment' Statement of financial position S/ million %chg %chg 12.31.22 09.30.23 12.31.23 12.31.23 12.31.23 09.30.23 12.31.22 Assets Cash and due from banks and inter-bank 111.1 104.0 130.1 25.2% 17.2% funds Financial investments - 55.4
Slide 55: Payments segment's FY23 P&L
Payments segment’s FY23 P&L Payments' P&L statement (1) S/ million %chg 2022 2023 23/22 Interest and similar income 1.6 9.3 n.m. Interest and similar expenses -1.8 -4.9 n.m. Net interest and similar income -0.2 4.3 n.m. Fee income from financial services, net 338.9 345.6 2.0% Payments acquirer 636.9
Slide 56: Payments segment's 4Q23 P&L
Payments segment’s 4Q23 P&L Payments Segment's P&L statement S/ million %chg %chg 4Q22 3Q23 4Q23 QoQ YoY Interest and similar income 0.9 2.5 3.0 20.9% n.m. Interest and similar expenses -0.4 -1.3 -1.2 -3.0% n.m. Net interest and similar income 0.5 1.2 1.8 46.3% n.m. Fee income from financial service
Slide 57: Definitions
Definitions Concept Definition Net interest and similar income + Net fee income from financial services + Other income Total revenues + Income from insurance results (Salaries and employee benefits + Administrative expenses + Depreciation and amortization) / (Net Efficiency ratio interest and simila
Slide 58: 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 IFS’ busin
Slide 59: Intercorp Financial Services
[J Intercorp Financial rVviC
Intercorp Financial Services Inc. Common Shares — Q4 2023 Earnings Presentation on 6ix