54 slides from Intercorp Financial Services's investor presentation, September 2022
Slide 1: Investor Presentation September 2022
Investor Presentation September 2022
Slide 2: Four key businesses
Universal bank Insurance company with strategic focus on focused on retail life & annuities Advisory firm for the Pillar for building our emerging payments wealthy ecosystem
Slide 3: Our transformation path to a digitally-driven organization
Our transformation path to a digitally- driven organization Prior to 2014 2015 - 2018 2019 - 2021 2022 onwards 1 2 3 4 Store-centric Omnichannel Digital Two-tier model platform first digital strategy focused on physical with strong focus with growth to foster profitable convenience on building digit
Slide 4: Building a leading digital financial platform
Building a leading digital financial platform Financial highlights Four key businesses 99.3% 99.8% 100.0% Universal bank with Insurance company Advisory firm for strategic focus on focused on life & the emerging As of Jun22 S/ mn | US$ mn retail annuities wealthy Total assets (1) 85,702 | 22,406 Con
Slide 5: 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. 4 1) Related companies excluding Aviva and Urbi.
Slide 6: Consistently delivering strong return to our shareholders
Consistently delivering strong return to our shareholders (S/ mn) (S/ mn) Net profit (2) 875 902 1,040 1,222 265 1,201 Net profit (2) 86 104 361 436 257 304 Payout Ratio 45% 45% 45% 25% n.m. 50% Payout Ratio 50% 96% 68% 46% 78% 66% Dividends declared(1) 600 245 467 200 200 202 394 406 302 100 43 n.m
Slide 7: Solid capitalization levels
Solid capitalization levels Banking System 15.4% 15.1% 14.7% 160.8% 152.2% 131.1% TCR Insurance 100.0% Reg. min. Considering dividends distributed in 16.5% Mar22 2Q21 1Q22 2Q22 15.5% 15.2% 11.5% 10.9% 11.1% Solvency ratio Banking 9.0% Reg. 26.3% management min. 22.6% 19.4% Wealth 8.0% Reg. min. 2Q21
Slide 8: Key messages
Key messages 1 Challenging macro scenario 2 Strong core banking activity 3 Solid risk management capabilities 4 Positive development in digital indicators 5 Our payments business 6 Developments on sustainability
Slide 9: Challenging macro scenario
1 Challenging macro scenario Interest rates Inflation YoY USD/PEN (%) (%) Aug22 4.13 Soles reference rate (BCRP) 8.4 Dollar reference rate (FED) 8.8 Aug22 Sep22 3.84 6.75 5.50 6.4 3.83 2.50 Aug22 3.63 2.50 3.3 0.25 0.25 1.75 2.7 0.25 0.25 0.25 Jan21 Jun21 Dec21 Jun22 Jan21 Jun21 Dec21 Jun22 Jan21 Ju
Slide 10: Key messages
Key messages 1 Challenging macro scenario 2 Strong core banking activity 3 Solid risk management capabilities 4 Positive development in digital indicators 5 Our payments business 6 Developments on sustainability
Slide 11: Banking activity still strong
2 Banking activity still strong +65% YoY +50% YoY +46% YoY 3.5 3.8 89 86 8,146 8,774 2.3 58 5,992 2Q21 1Q22 2Q22 2Q21 1Q22 2Q22 2Q21 1Q22 2Q22 Credit cards & personal loans balances Credit cards turnover (S/ bn) Credit cards sales (th units) (S/ mn) +38% YoY +44% YoY +72% YoY 2.1 2.1 884 784 301 1.5
Slide 12: Double-digit growth in banking NII and fees
Double-digit growth in banking NII 2 and fees % YoY +18% +17% -14% +13% +27 +120 -18 1,095 965 2Q21 Net interest and Fee income from Other income 2Q22 similar income financial services, net Banking – Revenue bridge from 2Q21 to 2Q22 (S/ mn) 11
Slide 13: Shift in loan mix and repricing of new loan disbursements boosts NIM
Shift in loan mix and repricing of new 2 loan disbursements boosts NIM Reactiva Commercial Mortgages Payroll deduction loans Yield on loans NIM Risk-adjusted NIM Credit cards & personal loans 8% 9.1% 15% 8.3% 8.3% 7.7% 7.9% 40% 39% 4.9% 4.4% 4.5% 20% 3.9% 4.0% 20% 46% 11% 52% 3.6% 3.7% 11% Retail 3.
Slide 14: Rising funding costs with best LDR among peers
Rising funding costs with best LDR 2 among peers Jun19 Jun21 Jun22 Cost of funds Cost of deposits Interbank 102% 93% 101% 2.2% Bank 1 107% 95% 104% 1.8% 1.5% 1.6% 1.4% 1.7% Bank 2 106% 110% 114% 1.2% 0.8% 0.9% 0.7% Ref. rate YoY Bank 3 111% 114% 129% +525 bps (S/) +150 bps (US$) System 106% System 1
Slide 15: Key messages
Key messages 1 Challenging macro scenario 2 Strong core banking activity 3 Solid risk management capabilities 4 Positive development in digital indicators 5 Our payments business 6 Developments on sustainability
Slide 16: Increasing levels of CoR in line with shift in loan mix
Increasing levels of CoR in line with 3 shift in loan mix NPL coverage 210% 169% 186% FY19: 158% FY19: 10.0% (1) ratio (S2+S3) ratio S3 NPL ratio 1.7% 1.8% FY19: 2.2% 12.8% FY19: 2.5% 1.4% 10.2% 10.8% 2.9% 2.9% 2.6% 2Q21 1Q22 2Q22 2Q21 1Q22 2Q22 Banking – Cost of risk Banking – Non perfoming loans N
Slide 17: Manageable dollarization levels
Manageable dollarization levels 3 Gross Loans by segment & percentage in S/ Currency mix Jun22 93% 94% 94% 94% 95% 89% 92% 92% Gross Loans Total Assets 85% 78% 76% 76% USD 73% 74% 73% 74% USD 71% 24% 31% 63% 64% 58% 56% 52% 52% 52% 51% 49% 41% S/ S/ 76% 69% 2014 2015 2016 2017 2018 2019 2020 2021 Ju
Slide 18: Key messages
Key messages 1 Challenging macro scenario 2 Strong core banking activity 3 Solid risk management capabilities 4 Positive development in digital indicators 5 Our payments business 6 Developments on sustainability
Slide 19: Our two-tier digital strategy to foster profitable & sustainable growth
Our two-tier digital strategy to foster profitable & sustainable growth 4 1. Digitalization 2. Accelerated growth Focus on growing and allowing Focus on increasing velocity customers to fulfill their of new sources of revenues financial needs 100% digitally & sustainable profitability Digital Paymen
Slide 20: Digitalization: building 100% digital solutions for the customer journey
Digitalization: building 100% digital solutions for the customer journey 4 Digital bank ERNI Digital Loyalty insurance program My finances Payments Piggy Digital Bank 100% digital financing account
Slide 21: Positive development in all banking digital indicators
Positive development in all banking digital indicators… 4 68% 56% 67% 65% 43% 48% 61% 63% 58% Jun21 Mar22 Jun22 Jun21 Mar22 Jun22 Jun21 Mar22 Jun22 Digital customers Digital acquisition Digital sales (% of digital customers) (% of monthly retail customers “born digitally” ) (% of products sold digit
Slide 22: … as well as in insurance
… as well as in insurance 4 80% 81% 80% 33% 34% 22% 2Q21 1Q21 2Q22 2Q21 1Q22 2Q22 SOAT digital sales Vida cash life premiums (% of products sold digitally) (% of total life premiums)
Slide 23: ~20% growth in banking customer base, reaching 5 million
~20% growth in banking customer base, reaching 5 million 4 +18% YoY +28% YoY +19% YoY 4.7 4.9 1.8 1.9 138 132 4.1 1.5 116 2Q21 1Q22 2Q22 2Q21 1Q22 2Q22 2Q21 1Q22 2Q22 Banking – retail customers (mn) Banking – digital customers (mn) Banking – commercial customers (th) 22
Slide 24: Key messages
Key messages 1 Challenging macro scenario 2 Strong core banking activity 3 Solid risk management capabilities 4 Positive development in digital indicators 5 Our payments business 6 Developments on sustainability
Slide 25: Our payments business
Our payments business 5 1 Izipay, fast growing and profitable business Banking Insurance 2 Carlos Tori appointed as EVP of Payments at IFS, formerly EVP of Retail Banking Wealth management Payments 3 New business segment, focused on creating the largest payments ecosystem 24
Slide 26: Izipay, pillar for building our payments ecosystem
Izipay, pillar for building our payments ecosystem 5 Our business lines and main clients Payments Correspondent Credit cards acquirer banking processor 89% 7% 4% Fee income share 1H22 Fee income share 1H22 Fee income share 1H22 25
Slide 27: Strong growth in number of merchants and transactional volumes
Strong growth in number of merchants and transactional volumes 5 799 693 521 +53% YoY +33% YoY 2Q21 1Q22 2Q22 80 81 Merchants (th) 60 E-commerce 12% 15% 16% (%) 10.9 12.0 +66% YoY 7.2 2Q21 1Q22 2Q22 2Q21 1Q22 2Q22 Transactions in payments acquirer (S/ bn) Revenues(1) (S/ mn) 26 1) Proforma for 2Q21
Slide 28: More than 8 million users in Plin and 2 million in Tunki
More than 8 million users in Plin and 2 million in Tunki 5 +88% YoY +2x YoY +3x YoY Aug22 7.5 8.3 779 10.9 6.6 672 8.5 4.0 351 3.4 Jun21 Mar22 Jun22 Jun21 Mar22 Jun22 Jun21 Mar22 Jun22 Users (mn) Merchants (th) Transactions (units in mn) +56% YoY +3x YoY +4x YoY Aug22 2.0 2.2 425 2.2 1.8 368 1.3 1.5
Slide 29: Key messages
Key messages 1 Challenging macro scenario 2 Strong core banking activity 3 Solid risk management capabilities 4 Positive development in digital indicators 5 Our payments business 6 Developments on sustainability
Slide 30: 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 #17 Inteligo Bank #37 Inteligo Group #49 Intersegu
Slide 31: Increasingly involved in green & sustainable financing
Increasingly involved in green & sustainable financing 6 160(US$ mn) 60 (US$ mn) 20 (US$ mn) Syndicated Green medium Syndicated sustainability loan term loan sustainability loan (Lead arranger) (Structurer) (Structurer) We help our customers grow their businesses in a sustainable way 30
Slide 32: Our way of working will enable us to achieve our goals
Our way of working will enable us to achieve our goals 6 Top 20 in Peru Top 10 in Peru for the past 20 years 2011 - 2022 #3 in Latin America #5 in Peru in 2022 in 2022 #1 in Peru #6 for work from home in Peru in 2022 in 2022 #13 for women in Peru in 2022 #2 for millennials in Peru Top 15 in Peru in
Slide 33: Strong corporate governance
Strong corporate governance 6 Board of directors BOD with majority of independent members Carlos Rodríguez-Pastor Chairman IFS: 3 out of 7 Felipe Morris Fernando Zavala Director Director Strong corporate governance Highly supervised related party Alfonso Bustamante Cayetana Aljovín exposure, well be
Slide 34: Takeaways
Takeaways 1 Challenging macro scenario 2 Strong core banking activity 3 Solid risk management capabilities 4 Positive development in digital indicators 5 Our payments business 6 Developments on sustainability
Slide 35: Operating trends 1H22
Operating trends 1H22 Capital Profitability Loan growth 2022 1H22 2022 1H22 High single digit growth in IBK TCR >15% 15.2% total loans led by double IFS ROE >16% 14.2% digit growth in consumer loans(1) IBK CET1 >11% 11.1% 2Q22 growth YoY To remain at sound levels Continued path to recovery Total loa
Slide 36: Appendix
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Slide 37: Expense growth driven by recovery in activity and digital investments
Expense growth driven by recovery in activity and digital investments Optimizing our distribution channels (Units) Variable expenses drive costs higher – Other expenses (S/ mn) 2019 Jul22 % Change Financial stores 255 171 -33% 2,263 1,978 1,911 ATMs 1,598 1,562 -2% 1,243 1,038 Correspondent 4,183 5,
Slide 38: Sustained assets growth supported by appropriate funding
Sustained assets growth supported by appropriate funding Total gross loans (S/ mn) Total deposits (S/ mn) 43,082 44,688 43,502 45,600 47,149 48,898 49,492 47,278 38,257 38,093 2019 2020 2021 2Q21 2Q22 2019 2020 2021 2Q21 2Q22 AUM evolution (S/ mn) Net shareholders’ equity (S/ mn) 22,981 22,558 21,42
Slide 39: Growth in total revenues driven by NIM recovery
Growth in total revenues driven by NIM recovery Total revenues (1) (S/ mn) NIM (%) 5.3% 5,922 4.5% 4.7% 5,362 5,488 4.1% 3.9% 3,061 2,901 2019 2020 2021 1H21 1H22 2019 2020 2021 1H21 1H22 Net profit (S/ mn) ROE (%) 1,504 21.7% 1,450 19.3% 18.3% 14.2% 897 655 384 4.5% 2019 2020 2021 1H21 1H22 2019 20
Slide 40: Overview of Peruvian financial system
Overview of Peruvian financial 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% 9.5% 17.8% CAGR +10.6% CAGR 359 2019-21 326 350 340 9,082 286 7,218 14.8% 222 238 234 237 5,043 181
Slide 41: Strategic focus on consumer loans
Banking Strategic focus on consumer loans Distinctive loan breakdown… …when compared to the banking system Banking System Commercial Commercial 48% Mortgages 66% Consumer Mortgages Consumer 39% loans Retail 48% loans Retail 61% 34% 52% 52% S/ 43.9BN S/ 22.9BN S/ 359.3BN S/ 122.7BN Leading position i
Slide 42: Diversified funding base with strength in retail deposits
Diversified funding base with strength Banking in retail deposits Significant deposits base A growing retail deposit-gathering franchise MS 2016 12.8% MS Jun22 14.5% Time 23% Bonds Savings 14.3% 11% 47% 10.9% Deposits Due to banks 76% 13% 3.5% 3.6% Demand 30% CAGR 2016-21 2Q22 YoY Interbank System S
Slide 43: Solid risk management capabilities
Banking 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% 3.6% 3.8% BBVA BBVA 4.7% 2.7% 4.0% 3.0% BCP BCP 4.5% 2.6% 4.0% 3
Slide 44: Reactiva loan balances down 42% YoY, representing 9% of total portfolio
Reactiva loan balances down 42% YoY, Banking representing 9% of total portfolio Reactiva Peru loan balances by segment (S/ bn) 2Q22 Segment YoY 6.1 0.5 Corporate -56% 4.2 Mid-sized -36% 0.3 3.5 3.5 0.2 2.4 SME -33% 2.2 2.1 Total -42% 1.5 1.2 2Q21 1Q22 2Q22 43 SME Mid-sized Corporate
Slide 45: Rescheduled loans decreased 57%
Banking Rescheduled loans decreased 57% Banking – Rescheduled loans (S/ bn) Clients 343 459 237 8.6 (Thousand) 6.9 Rescheduled 30% 31% 13% 4.1 Retail balance (%) 12.7 Apr20 Jun20 Jun22 10.9 Commercial Total 5.5 4.0 4.1 1.4 Apr20 Jun20 Jun22 Apr20 Jun20 Jun22 44
Slide 46: Manageable dollarization levels
Banking Manageable dollarization levels Total loans Retail loans Commercial loans % PEN 68% 73% 87% 92% 57% 63% System 8% 5% 26% 24% 47% 44% 92% 95% 74% 76% 53% 56% 2Q17 2Q22 2Q17 2Q22 2Q17 2Q22 Retail loans breakdown Commercial loans breakdown Consumer Mortgages Corporate Medium Small & Micro 94% 9
Slide 47: Key player in Peru's life insurance business
Key player in Peru’s life insurance Insurance business Strategic focus on life insurance… …when compared to the insurance system (Insurance premiums and collections breakdown) (Insurance premiums and collections breakdown) Other life Insurance System Regulated 15% annuities D&S 18% 1% P&C Regulated
Slide 48: Annuities leading recovery in premiums
Annuities leading recovery in Insurance premiums Strong performance in most products Outgrowing the overall insurance industry (Gross premiums and collections by business unit - S/ mn) (YoY growth in premiums) Regulated annuities Private annuities Individual Life Other Life P&C D&S YoY 14.0% 1271 +1
Slide 49: Resilient wealth management business
Wealth management Resilient wealth management business Positive trend in AUM growth – Inteligo Group AUM (S/ mn) Solid fee generation due to client mix – Fee/Avg. Aum (%) 22,981 22,558 0.9% 0.9% 20,989 21,424 0.8% 0.8% 0.8% 18,293 2019 2020 2021 1H21 1H22 2019 2020 2021 1H21 1H22 Diversified revenue
Slide 50: IFS income statement – IFRS
IFS income statement – IFRS % chg % chg % chg % chg Incom e S t a t e m e nt ( S / m m ) 2019 2020 2021 1H21 1H22 '19 / '18 '20/ '19 '21/ '20 1H22/ 1H21 Interest and similar income 4,847.2 4,665.0 4,605.6 2,198.0 2,640.2 12.2% (3.8%) (1.3%) 20.1% Interest and similar expenses (1,424.0) (1,192.3) (1,
Slide 51: IFS balance sheet – IFRS
IFS balance sheet – IFRS % chg % chg % chg % chg Ba la nce S he e t ( S / m m ) 2019 2020 2021 1H21 1H22 '19 / '18 '20/ '19 '21/ '20 1H22/ 1H21 Cash and due from banks 11,128.9 18,765.5 17,104.5 19,410.4 12,304.0 32.8% 68.6% (8.9%) (36.6%) Inter-bank funds 85.0 18.1 30.0 0.0 200.0 (82.8%) (78.7%) 65
Slide 52: 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 53: Important disclosure
Important disclosure Acquisition of Procesos de Medios de Pago S.A. and Subsidiary (Izipay) In April 2022, IFS acquired 50 percent of the capital stock of Procesos de Medios de Pago S.A. and its subsidiary Izipay S.A.C. (henceforth “Izipay Group”, “Izipay” or "acquired entities"). The amount paid fo
Slide 54: Intercorp Financial Services
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