Intercorp Financial Services Inc. · NYSE:IFS
Intercorp Financial Services — Investor Presentation (February 2018)
43 slides from Intercorp Financial Services's investor presentation, February 2018
Slide 1: Investor Presentation February 2018
Investor Presentation February 2018
Slide 2: Disclaimer
Disclaimer The information contained herein is being provided by Intercorp Financial Services Inc. (“IFS” or the "Company") solely for informational purposes. This material is only a summary and does not contain all material information concerning the Company. Recipients of this presentation are not
Slide 3: IFS at a glance
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Slide 4: IFS is a leading provider of financial services in Peru
IFS is a leading provider of financial services in Peru with a solid balance sheet and a diversified source of dividend flows IFS overview Contribution by segment (7) – IFRS (2017) Total assets (8) Net Income (9) Dividends (8) 5% 17% 23% Market cap. US$4.5bn (1) 20% 9% 75% 68% 83% 99.3% 100.0% 99.4%
Slide 5: IFS has consolidated its leading position in the Peruvian financial system
IFS has consolidated its leading position in the Peruvian financial system Interbank issues $200 million in hybrid Tier 1 Interbank raises a $200 million IFS acquires Sura’s insurance bonds in the syndicated senior credit facility and mortgage businesses in international capital in the international
Slide 6: IFS is part of Intercorp, one of Peru's leading business groups
IFS is part of Intercorp, one of Peru’s leading business groups P Intercorp Peru is the holding company for one of Peru’s largest economic groups, whose businesses are mainly focused on: financial services, retail (including shopping malls), and education P Over US$4.2bn in annual revenues P T
Slide 7: Key Investment Highlights
Key Investment Highlights
Slide 8: IFS: Key investment highlights
IFS: Key investment highlights 1 Solid macro and Top performing economy in Latin America industry Growing middle class with potential for wealth creation fundamentals Profitable financial system with low penetration and room for growth 2 Unique platform to Leading retail banking platform ben
Slide 9: IFS: Key investment highlights
IFS: Key investment highlights 1 Solid macro and Top performing economy in Latin America industry Growing middle class with potential for wealth creation fundamentals Profitable financial system with low penetration and room for growth 2 Unique platform to Leading retail banking platform ben
Slide 10: Peru is the top performing economy in Latin America
Peru is the top performing economy in Latin America Peru has outperformed its LatAm peers since 2010 Peru is poised to grow over the next years Real GDP growth (X-axis) and average inflation (Y-axis) for the 2010-2016 period GDP & domestic demand growth (%) 8.0% GDP Domestic demand 4.4% 4.2% 6.0% 4.
Slide 11: Peru has an emerging middle class with potential for wealth creation
Peru has an emerging middle class with potential for wealth creation Peru has a young population with an emerging middle class 2016 Peruvian population by age groups Emerging middle class (1) (% of population) (% of households) Socioeconomic Segments 2004 2016 65+ A 1% 3% 6.7% 45–65 17.6% B 4% 15% O
Slide 12: Peru has a profitable financial system with low penetration
Peru has a profitable financial system with low penetration and room for additional growth Stable gross loans growth and high asset quality Sustained profitability (S/ bn) (S/ mm) 2.5% 2.5% 2.8% 3.0% 19.8% 22.3% 20.0% 18.4% ‘14-’17 CAGR 7,040 7,226 7,459 227 235 246 193 5,326 150 155 160 8.0% 127 66
Slide 13: IFS: Key investment highlights
IFS: Key investment highlights 1 Solid macro and Top performing economy in Latin America industry Growing middle class with potential for wealth creation fundamentals Profitable financial system with low penetration and room for growth 2 Unique platform to Leading retail banking platform ben
Slide 14: Banking
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Slide 15: Interbank has delivered sustained growth with a strategic focus on Retail
Interbank has delivered sustained growth with a strategic focus on Retail Diversified growth across different loan segments Leading position in credit cards and consumer loans Interbank’s gross loans (S/ bn) Market share (as of December 2017) Consumer credit cards Consumer financing ‘14-’17 27.9 CAG
Slide 16: Interbank has solid risk management capabilities
Interbank has solid risk management capabilities Good asset quality despite focus on retail business Cost of risk reflects loan mix, resulting in high coverage ratio PDL Ratio Coverage ratio and cost of risk evolution Interbank coverage ratio(1) 3.0% 167.9% 193.9% 179.8% 167.2% 2.8% 2.5% 2.5% 2.9% S
Slide 17: Interbank has a diversified funding base coupled with a growing deposit base
Interbank has a diversified funding base coupled with a growing deposit base Growing funding base with high component of deposits Well balanced deposits breakdown Interbank’s funding mix Interbank’s deposits breakdown as of December 2017 (S/ bn) 39.5 Institutional 36.7 37.1 22% 12% 28.5 13% 12% 11%
Slide 18: Interbank has a healthy and balanced currency mix
Interbank has a healthy and balanced currency mix Gross Loans by segment & percentage in S/ Currency mix 2017 Interbank’s Gross Loans Interbank’s Total Assets 100 .0% 84.7% 88.7% 91.5% 91.8% 90. 0% 80. 0% USD 26.5% 73.5% 70. 0% 73.0% USD 60. 0% 71.2% 50. 0% 63.4% 41.6% 40. 0% 51.7% 52.1% 52.3% 30. 0
Slide 19: Interbank has a convenient distribution network and a clear focus on digital banking
Interbank has a convenient distribution network and a clear focus on digital banking 6,199 2,505 2,364 2,334 2,052 1,963 2,037 967 273 424 320 212 Interbank BCP BBVA Scotiabank Financial Stores ATMs Correspondent Agents(1) 90% 90% 86% 88% 51.5% 86% 41.5% 84% 80% 40% 82% 31.5% 80% 77% 30% 78% 21.5% 7
Slide 20: Interbank has solid capitalization levels
Interbank has solid capitalization levels Interbank’s capitalization levels are above Peru’s banking system Banking System Total BIS Ratio 14.1% 14.2% 15.0% 15.2% 16.1% +1.9% 15.9% additional 15.5% 15.2% capital +1.8% requirement additional +1.6% for 2016 and capital additional 2017 requirement capi
Slide 21: Interbank has a solid and profitable profile among its peers (2016)
Interbank has a solid and profitable profile among its peers (2016) Country of Operation 5.8% 6.3 % 7.6% (1) 4.7% 4.5% 3.6% 3.0% NIM (1) 3.0% 23.2% 23.5% 18.6% 16.9% 15.0% 31.6% (2) 13.8% 14.4% ROE (2) (3) ROAA (3) 2.1% 2.4% 1.3% 1.1% 2.3% 2.1% 3.1% 1.3% 52% 55% 62% (4) 41% 41% 41% 37% Efficiency (%
Slide 22: Insurance
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Slide 23: Update of Sura acquisition and financing
Update of Sura acquisition and financing Structure Summary of terms Issuer: Intercorp Financial Services Inc. ("IFS") Format: Rule 144 A / Regulation S Ratings: BBB-/BBB (S&P/Fitch) Structure: Senior Unsecured Amount issued: US$300 million + Maturity: October 19, 2027 Coupon: 4.125% Wealth Universal
Slide 24: Interseguro is a key player in Peru's life insurance and retirement annuities market
Interseguro is a key player in Peru’s life insurance and retirement annuities market Strategic focus on life insurance Introduction of new products to continue growing Premiums breakdown (December 2017) (1) Annuity net premiums (S/ mm) (1) + Industry Market 25% 25% 23% 24% Share D&S P&C D&S 6% 12% 9
Slide 25: Insurance Segment: High profitability leading to solid core earnings generation
Insurance Segment: High profitability leading to solid core earnings generation Net profit (local GAAP) Net profit(2) (IFRS) (S/ mm) (S/ mm) ROE 48.0% 30.1% 25.6% 16.2% 28.1% 67.1% n.m. n.m. Industry 17.5% 18.7% 15.3% n.a. ROE 312 163 155 226 135 100 86 57 72 98 86 5 51 (120) (207) In 2014, Interseg
Slide 26: Wealth Management
Wealth Management EJ Intercorp Financial Services
Slide 27: Inteligo: A fast growing wealth management business
Inteligo: A fast growing wealth management business Positive trend on AUM + deposits growth… … with a diversified client portfolio (US$ mm) 6.6x 7.6x 2.9x -0.9x 16% 26% 10% 4,429 4,318 3,591 3,920 48% Fixed Income Equities 2014 2015 2016 2017 Alternative Investments Deposits GDP Growth Multiplier (1
Slide 28: IFS: Key investment highlights
IFS: Key investment highlights 1 Solid macro and Top performing economy in Latin America industry-specific Growing middle class with potential for wealth creation fundamentals Profitable financial system with low penetration and room for growth 2 Unique platform to Leading retail banking pla
Slide 29: IFS: Consistently delivering high growth & profitability
IFS: Consistently delivering high growth & profitability Net profit – IFRS (1) Dividends declared (S/ mm) (US$ mm) Adj. 23.1% 23.7% 19.8% 19.5% ROE (2) Adjusted Discount rate on technical reserves effect 181 1,239 838 150 949 834 147 146 226 57 1,045 954 892 868 (120) 2013 2014 2015 2016 (207) 2014
Slide 30: IFS has a stable dividend inflow from its subsidiaries
IFS has a stable dividend inflow from its subsidiaries Relevant Net Profit (S/ mm) Local GAAP + Local GAAP IFRS ROE 25.5% 26.6% 23.2% 20.8% 48.0% 30.1% 25.6% 16.2% 28.1% 20.0% 28.4% 27.3% Industry ROE 19.8% 22.3%. 20.0% 18.4% 17.5% 18.7% 15.3% n.a. 875 902 860 709 207 134 171 188 163 106 100 86 2014
Slide 31: IFS: Key investment highlights
IFS: Key investment highlights 1 Solid macro and Top performing economy in Latin America industry-specific Growing middle class with potential for wealth creation fundamentals Profitable financial system with low penetration and room for growth 2 Unique platform to Leading retail banking pla
Slide 32: Clear strategic priorities
Clear strategic priorities Superior experience • Frictionless digital products and services to provide the best customer experience • Customer journey and life-cycle management • Self-service solutions Smart bank Transform from Talent physical world • Deep analytics for • World-class digital • Foste
Slide 33: Experienced management team and strong corporate governance
Experienced management team and strong corporate governance Experienced and well-recognized management team Sound governance practices International Years in IFS: 2 out of 5 Company Name Position Experience Sector Board of Interbank (5): 7 out of 10 Directors with Luis Felipe Castellanos CEO / C
Slide 34: IFS: Key investment highlights
IFS: Key investment highlights 1 Solid macro and Top performing economy in Latin America industry Growing middle class with potential for significant wealth creation fundamentals Profitable financial system with low penetration and room for growth 2 Unique platform to Leading retail banking
Slide 35: Appendix
Intercorp
Slide 36: Interbank: High profitability leading to solid earnings generation
Interbank: High profitability leading to solid earnings generation Net profit (local GAAP) Net profit (lFRS) (S/ mm) (S/ mm) ROE 25.5% 26.6% 23.2% 20.8% ROE 24.9% 25.4% 21.4% 21.6% Industry 19.8% 22.3%. 20.0% 18.4% ROE 860 875 902 868 847 905 709 731 2014 2015 2016 2017 2014 2015 2016 2017 NIM (IFRS
Slide 37: Inteligo: High profitability leading to solid earnings generation
Inteligo: High profitability leading to solid earnings generation Net profit (IFRS) (S/ mm) ROE 28.1% 20.0% 28.4% 27.3% 188 171 134 106 2014 2015 2016 2017 Fees / Avg. AUM(1) Efficiency(2) 37.5% 1.3% 33.4% 30.4% 30.0% 1.1% 1.0% 0.9% 2014 2015 2016 2017 2014 2015 2016 2017 Note: IFRS. (1) Figures for
Slide 38: Recent bond issuances: IFS and Interbank
Recent bond issuances: IFS and Interbank Summary of terms Summary of terms IFS 4.125% Senior unsecured due 2027 Interbank 3.375% Senior unsecured due 2023 Banco Internacional del Peru S.A.A. Issuer: Intercorp Financial Services Inc. ("IFS") Issuer: (“Interbank”) Format: Rule 144 A / Regulation S For
Slide 39: Key financial figures – IFS (IFRS)
Key financial figures –IFS (IFRS) As and for the year ended December 31, Growth / Avg. S/ mm 2014 2015 2016 2017 2017 vs. 2016 2016 vs. 2015 Balance Sheet Total gross loans 23,197 26,758 27,907 29,189 4.6% 4.3% Total assets 40,376 50,001 51,714 60,679 17.3% 3.4% Total deposits 23,381 28,488 30,098 3
Slide 40: Key financial figures – By segment (IFRS)
Key financial figures – By segment (IFRS) As and for the year ended December 31, Growth / Avg. S/ mm 2014 2015 2016 2017 2017 vs. 2016 2016 vs. 2015 Banking Total gross loans 21,791 25,100 26,238 27,876 6.2% 4.5% Total deposits 21,124 25,881 26,899 30,559 13.6% 3.9% Total net profit 731 868 847 905
Slide 41: Interbank's net profit IFRS vs. Local GAAP
Interbank’s net profit IFRS vs. Local GAAP Net profit – IFRS Net profit bridge from Local GAAP to IFRS (2017) S/ mm S/ mm 905 868 847 8 731 7 (45) 46 (13) 2014 2015 2016 2017 902 905 Net profit – Local GAAP S/ mm 875 902 860 709 Net profit Net interest Fee income Provision for Net result on Other(1)
Slide 42: Insurance Segment's net profit IFRS vs. Local GAAP
Insurance Segment’s net profit IFRS vs. Local GAAP Net profit – IFRS(1) Net profit bridge from Local GAAP to IFRS (2017) + S/ mm S/ mm 311 146 300 Reductions Gains 200 (115) (156) 100 104 0 (123) (156) (100) (200) (212) 2 (12) (39) 22 (21) 2014 2015 2016 2017 (300) (400) Net profit Adjustment of Net
Slide 43: Intercorp Financial Services
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