Intercorp Financial Services Inc. · NYSE:IFS
Intercorp Financial Services — Q1 2020 Earnings Presentation
52 slides from Intercorp Financial Services's earnings presentation, May 2020
Slide 1: Earnings Presentation 1Q20 Results
Earnings Presentation 1Q20 Results
Slide 2: Agenda
Agenda Highlights 1Q20 Covid-19 update 1Q20 results Takeaways 1
Slide 3: Agenda
Agenda Highlights 1Q20 Covid-19 update 1Q20 results Takeaways 2
Slide 4: Highlights 1Q20
Highlights 1Q20 Net profit decreased 17.1% YoY mainly due to higher provisions, ROAE at 13.8% • Initial impacts of COVID-19 already reflected in 1Q20 key banking indicators • Continued growth in retail deposits and market share up to 13.7% after lockdown Banking • Deceleration of loan growth and act
Slide 5: Agenda
Agenda Highlights 1Q20 Covid-19 update 1Q20 results Takeaways 4
Slide 6: Key messages
Key messages Early and fast response Our people and We have reinforced We see an opportunity to to an unprecedented customers are our liquidity and capital accelerate digital in the situation has guaranteed our top priorities position to face new normal, supported continuity of our uncertain by our
Slide 7: Comprehensive Government support
Comprehensive Government support ~1% ~9% Emergency Continuity of measures payments chain (S/ 3 billion) (S/ 68 billion) ~15% We are actively working with MEF, Asbanc, SBS & ~2% of Peru’s GDP Financial aid deployed Central Bank to manage for companies the crisis (S/ 14 billion) ~3% Financial aid for
Slide 8: Measures taken at IFS
Measures taken at IFS Our people Operation o COVID-19 protocols & health surveillance o Guarantee critical IT employees the tools needed o Home office implementation o New protocols for business continuity under current o Daily health tracking via Farmacias Peruanas ConsultApp circumstances and post
Slide 9: Measures taken at IFS
Measures taken at IFS Home office for administrative staff, Home office for staff at Inteligo Bank customer service and part of salesforce and Inteligo SAB Continuous follow-up and supervision Frequent communication with clients of investment portfolio’s performance Preparing annuity sales force to
Slide 10: Lockdown has accelerated our digital KPIs in 1Q20
Lockdown has accelerated our digital KPIs in 1Q20 Digital users and 100% digital customers Off-branch transactions Business accounts (Cuenta Negocio) % of digital users and 100% digital customers % of total transactions performed digitally N° and % of business accounts opened digitally (thousand) Ap
Slide 11: April has seen a strong increase in digital client acquisition
April has seen a strong increase in digital client acquisition Digital savings Digital business Plin Tunki accounts accounts > 4x > 4x > 800K > 50K accounts (Apr vs Mar) (Apr vs Mar) users opened in one week 159K 12K > 40% share Only private bank delivering (Apr-20) (Apr-20) Government’s financial a
Slide 12: Agenda
Agenda Highlights 1Q20 Covid-19 update 1Q20 results Takeaways 11
Slide 13: 1Q20 earnings affected by higher provisions and market trends
1Q20 earnings affected by higher provisions and market trends Intercorp Financial Services Banking Net profit in S/ million Net profit in S/ million ROAE 19.0% 20.3%(1,3) 6.6% ROAE 19.8%(2) 23.6%(1,3) 13.8% -58.9% -17.1% Negative 442(1) Negative 366(1) impact on impact on provisions from 353 29 inve
Slide 14: IFS key indicators 1Q20
IFS key indicators 1Q20 S/ million 1Q19 4Q19 1Q20 %chg QoQ %chg YoY Total revenues (1) 1,284.1 1,439.0 1,292.8 -10.2% 0.7% Net interest and similar income (1) 824.2 900.7 908.7 0.9% 10.3% Efficiency ratio(1) 33.9% 33.3% 36.4% 310 bps 250 bps Profit for the period 352.7 412.8 144.9 -64.9% -58.9% IFS
Slide 15: Relevant net income of S/ 213 million in 1Q20
Relevant net income of S/ 213 million in 1Q20 Local GAAP & IFRS Interbank – Local GAAP Interseguro – Local GAAP Inteligo – IFRS Net profit in S/ million Net profit in S/ million Net profit in S/ million ROAE 21.9% 15.2% 22.1% 11.8% 38.1% n.m. 287 67 78 232 40 (1) 36 1Q19 1Q20 1Q19 1Q20 -55 Growth Ad
Slide 16: Banking
Cd Intercorp Financial Services Banking
Slide 17: Initial impacts of COVID-19 already reflected in 1Q20 key banking indicators
Initial impacts of COVID-19 already reflected in 1Q20 key banking indicators Net interest and similar income Loan provision expense S/ million S/ million NIM(1) 5.5% 5.8% 5.6% Cost of risk 2.3% 1.7% 3.4% Adj. NIM after Adjusted 4.0% 3.8% 3.2% 2.3% 2.8% 3.4% provisions(2) cost of risk(3) Negative imp
Slide 18: Continued growth in retail deposits and market share
Continued growth in retail deposits and market share up to 13.7% after lockdown Funding structure Funding breakdown S/ million S/ million %chg %chg 1Q19 4Q19 1Q20 QoQ YoY LDR(3) 102.2% 101.6% 103.4% Deposits 32,561.7 35,577.8 35,062.1 -1.4% 7.7% Retail 14,626.0 15,981.9 16,816.6 5.2% 15.0% System’s
Slide 19: Deceleration of growth after lockdown, especially in retail
Deceleration of growth after lockdown, especially in retail Performing loans Breakdown of loans S/ million S/ million %chg %chg 1Q19 4Q19 1Q20 QoQ YoY System’s growth(1) Consumer loans Credit cards 5,125.0 5,870.0 5,800.4 -1.2% 13.2% +10.0% Other consumer 5,769.5 6,365.2 6,486.1 1.9% 12.4% Total con
Slide 20: Reactiva Perú loans already being disbursed
Reactiva Perú loans already being disbursed 11 Repo auctions ~350 thousand Guarantees of Up to 36 12 months Loans of up (as of May 11, 2020) SME up to 98% months term grace period to S/ 10 million Total amount auctioned Total Interbank S/ 0.3 bn Reactiva Perú program S/ 1.1 bn S/ 27.2 bn 12% Disburs
Slide 21: We have rescheduled 30% of the bank's total loan book
We have rescheduled 30% of the bank’s total loan book Total loan portfolio Retail banking March 31 April 30 2020 2020 2.9 6.9 ~14% ~35% ~177 ~332 4.2 10.9 Rescheduled balance (S/ billion) Rescheduled balance Rescheduled balance (% of total retail Thousand Clients (S/ billion) balance) 116.0 at syste
Slide 22: Small businesses and self-employed individuals represent 11% of the portfolio
Small businesses and self-employed individuals represent 11% of the bank’s portfolio Performing loans S/ billion 35.0 1.8% Most exposed Small businesses (0.6) 9.6% (3.3) Credit cards (self-employed workforce) 33.2% Personal loans (self-employed workforce) (11.6) Mortgages (self-employed workforce) C
Slide 23: Risk profile shows first signs of deterioration
Risk profile shows first signs of deterioration Expected loss Expected loss – Retail banking by product Stock of provisions (% of total exposure) Stock of provisions (% of total exposure) 6.1% 10.3% 5.8% 5.8% 5.6% 5.7% 5.7% 9.8% 5.5% 9.6% 5.5% 5.5% 9.2% 9.2% 9.1% 9.0% 9.1% 9.1% 4.2% 3.9% 3.8% 3.8% 3
Slide 24: First impact on provisions from COVID-19, NPL coverage at 136%
First impact on provisions from COVID-19, NPL coverage at 136% Cost of risk Non-performing exposure NPL coverage 131.4% 117.7% 136.1% ratio 1.7% Reported 3.4% 11.3% 9.7% 2.8%(1) 8.9% 2.3% 2.9% 2.9% 2.7% 1Q19 4Q19 1Q20 1Q19 4Q19 1Q20 (S2+S3) ratio NPL ratio (S3 + refinanced loans) Cost of risk – Reta
Slide 25: We began to implement cost containment measures in March 2020
We began to implement cost containment measures in March 2020 Growth in other expenses YoY growth in other expenses by line % YoY growth +16.4% +3.9% +13.0% +3.0% +6.4% 4 4 Already executing cost 6 10 containment measures involving HR costs, general expenses, IT Services: S/ +5 mm 416 391 (+11.9%) m
Slide 26: We took measures to strengthen our capital levels
We took measures to strengthen our capital levels Capital ratio evolution Capital ratios Tier I Tier II CET1 Banking system 15.3% 14.8% 14.9% 14.6% 14.2%(1) Total Capital Ratio 16.4% 16.1% 16.1% • Interbank’s capital ratio of 16.1%, above 15.4% 15.2% regulatory risk-adjusted minimum capital ratio re
Slide 27: Insurance
Cd Intercorp Financial Services Insurance
Slide 28: Gross premiums plus collections increased 8.9% QoQ
Gross premiums plus collections increased 8.9% QoQ Gross premiums plus collections by business unit S/ million Annuities market 32.3% 25.3% 27.9% • Market share movements driving 16.5% share(1) QoQ growth and 9.9% YoY reduction in regulated annuities premiums -8.4% • Private Annuities increased 1.8%
Slide 29: Interseguro's investment portfolio decreased 5.4% QoQ
Interseguro’s investment portfolio decreased 5.4% QoQ Investment portfolio Results from investments(1) S/ million S/ million ROIP(2) 5.8% 5.8% 4.2% +0.8% -23.4% 12,436 178 11,681 11,770 972 166 990 985 Negative 1,063 impact on 912 921 investments: S/ -56 mm 127 10,401 9,780 9,864 1Q19 4Q19 1Q20 1Q19
Slide 30: Wealth Management
Cd Intercorp Financial Services Wealth Management
Slide 31: 1Q20 other income mainly impacted by market trends
1Q20 other income mainly impacted by market trends Net interest and similar income Fees from financial services S/ million S/ million Fees / Avg. 0.9% 1.0% 1.0% AUM(1) -16.9% +10.5% 31 47 43 25 26 39 1Q19 4Q19 1Q20 1Q19 4Q19 1Q20 Other income Revenues S/ million S/ million 37 106 102 30 Negative imp
Slide 32: AUM decreased due to market trends, despite growth in net new money
AUM decreased due to market trends, despite growth in net new money AUM Loans S/ million S/ million 1.3% +10.1% 17,769 18,293 18,006 1,625 1,611 1,464 1Q19 4Q19 1Q20 1Q19 4Q19 1Q20 Other expenses Net profit S/ million S/ million ROAE 38.1% 33.6% n.m. +29.7% 33 35 78 70 Negative 27 impact on investme
Slide 33: Agenda
Agenda Highlights 1Q20 Covid-19 update 1Q20 results Takeaways 32
Slide 34: Potential trends
Potential trends Solid TCR Lower growth in Lower revenues, Lower cost and CET1 volumes NII and NIM of funds From increased Due to the slowdown in the Due to lower growth and Due to decrease in rates capitalization and economy and tightening of activity, in addition to lower growth credit standards l
Slide 35: Summary
Summary Net profit and ROAE Early and fast Our people and We have reinforced We see an opportunity affected by higher response to an customers are our liquidity and to accelerate digital in provisions at Interbank unprecedented our top priorities capital position to face the new normal, and impacts
Slide 36: Appendix
Cd Intercorp Financial Services Appendix
Slide 37: COVID-19: Main Government measures
COVID-19: Main Government measures March 2020 April – May 2020 State of national emergency on March 15, affecting economic activity State of national emergency extended until May 24 Central Bank: Ref. rate at 0.25% (two 100 bps cuts); Liquidity injection ; Lower reserve Ministry of Finance: US$ 3 bi
Slide 38: IFS 1Q20 Statement of financial position
IFS 1Q20 Statement of financial position Intercorp Financial Services' Statement of financial position S/ million %chg %chg 1Q19 4Q19 1Q20 QoQ YoY Assets Cash and due from banks and inter-bank funds 9,730.6 11,213.9 11,733.3 4.6% 20.6% Financial investments 17,852.8 19,072.7 18,634.9 -2.3% 4.4% Loan
Slide 39: IFS 1Q20 P&L
IFS 1Q20 P&L Intercorp Financial Services' P&L statement S/ million %chg %chg 1Q19 4Q19 1Q20 QoQ YoY Interest and similar income 1,166.7 1,249.9 1,248.2 -0.1% 7.0% Interest and similar expenses -342.5 -391.4 -339.5 -13.3% -0.9% Net interest and similar income 824.2 858.5 908.7 5.9% 10.3% Impairment
Slide 40: Banking segment's 1Q20 Statement of financial position
Banking segment’s 1Q20 Statement of financial position Banking Segment' Statement of financial position S/ million %chg %chg 1Q19 4Q19 1Q20 QoQ YoY Assets Cash and due from banks and inter-bank funds 9,217.9 9,870.9 10,295.8 4.3% 11.7% Financial investments 5,511.4 5,574.5 6,052.4 8.6% 9.8% Loans, n
Slide 41: Banking segment's 1Q20 P&L
Banking segment’s 1Q20 P&L Banking Segment's P&L statement S/ million %chg %chg 1Q19 4Q19 1Q20 QoQ YoY Interest and similar income 965.0 1,051.7 1,037.1 -1.4% 7.5% Interest and similar expense -307.4 -353.2 -302.8 -14.3% -1.5% Net interest and similar income 657.6 698.5 734.3 5.1% 11.7% Impairment l
Slide 42: Banking segment's net profit IFRS vs. Local GAAP
Banking segment’s net profit IFRS vs. Local GAAP Net profit – IFRS Net profit bridge from Local GAAP to IFRS (1Q20) S/ million S/ million -17.1% 10 16 18 2 366 300 29 32 221 Reclassification of fees on Retail: Includes 337(2) loans, from S/ -1.5 mm 267(1) S/ -1.3 mm interest Commercial: adjustment d
Slide 43: Dollarization decreased in retail loans
Dollarization decreased in retail loans Total loans Retail loans Commercial loans % PEN 68.3% 69.4% 89.5% 91.0% 56.6% 57.3% System 7.0% 6.3% 26.6% 26.0% 49.7% 50.8% 93.0% 93.7% 73.4% 74.0% 50.3% 49.2% 1Q19 1Q20 1Q19 1Q20 1Q19 1Q20 Retail loans breakdown Commercial loans breakdown Consumer(1) Credit
Slide 44: Insurance segment's 1Q20 Statement of financial position
Insurance segment’s 1Q20 Statement of financial position Insurance Segment' Statement of financial position S/ million %chg %chg 1Q19 4Q19 1Q20 QoQ YoY Assets Cash and due from banks and inter-bank funds 156.5 459.4 500.3 8.9% 219.6% Financial investments 10,691.9 11,463.7 10,785.0 -5.9% 0.9% Proper
Slide 45: Insurance segment's 1Q20 P&L
Insurance segment’s 1Q20 P&L Insurance Segment's P&L Statement S/ million %chg %chg 1Q19 4Q19 1Q20 QoQ YoY Interest and similar income 156.8 155.6 167.9 7.9% 7.1% Interest and similar expenses -20.3 -22.3 -21.2 -4.7% 4.2% Net Interest and similar income 136.5 133.3 146.7 10.0% 7.5% Recovery (loss) d
Slide 46: Net insurance underwriting result improved 18.6% QoQ and 11.8% YoY
Net insurance underwriting result improved 18.6% QoQ and 11.8% YoY Net premiums Adjustment of technical reserves S/ million S/ million 171 173 1 156 73 57 67 59 50 48 32 33 34 81 73 63 1Q19 4Q19 1Q20 1Q19 4Q19 1Q20 Annuities Individual life Retail Insurance D&S Net claims and benefits incurred Net i
Slide 47: Insurance segment's net profit IFRS vs. Local GAAP
Insurance segment’s net profit IFRS vs. Local GAAP Net profit – IFRS Net profit bridge from Local GAAP to IFRS (1Q20) S/ million S/ million 29 35 11 13 -22 40 42 1Q19 4Q19 1Q20 15 77 Net profit – Local GAAP -22 15 S/ million Net profit Net Insurance Investments Impairments Interest and Goodwill and
Slide 48: Wealth management segment's 1Q20 Statement of financial position
Wealth management segment’s 1Q20 Statement of financial position Wealth Management Segment' Statement of financial position S/ million %chg %chg 1Q19 4Q19 1Q20 QoQ YoY Assets Cash and due from banks and inter-bank funds 470.8 697.5 758.8 8.8% 61.2% Financial investments 1,664.0 1,592.0 1,395.1 -12.4
Slide 49: Wealth management segment's 1Q20 P&L
Wealth management segment’s 1Q20 P&L Wealth Management Segment's P&L Statement S/ million %chg %chg 1Q19 4Q19 1Q20 QoQ YoY Interest and similar income 45.6 41.0 41.1 0.3% -9.9% Interest and similar expenses -14.9 -16.3 -15.5 -4.4% 4.6% Net interest and similar income 30.7 24.7 25.5 3.4% -16.9% Impai
Slide 50: Definitions
Definitions Concept Definition Net interest and similar income + Fee income from financial services + Other income + Net Total revenues premiums earned (Salaries and employee benefits + Administrative expenses + Depreciation and amortization) Efficiency ratio / (Net interest and similar income + Fee
Slide 51: 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
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Intercorp Financial Services — Q1 2020 Earnings Presentation on 6ix