41 slides from Intercorp Financial Services's investor presentation, October 2018
Slide 1: Investor Presentation October 2018
Investor Presentation October 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
EJ Intercorp Financial Services
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(5) (2017) Total assets(6) Net Income(7) Dividends(6) 5% 16% 24% Market cap. US$4.5bn(1) 21% 4% 74% 16% 60% 80% 99.3% 100.0% 100.0% Bankin
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 Interbank raises a $200 IFS acquires Sura’s insurance million in hybrid Tier 1 million syndicated senior and mortgage businesses in bonds in the credit facility in the Peru international capital internat
Slide 6: IFS is part of Intercorp, one of Peru's leading business groups
IFS is part of Intercorp, one of Peru’s leading business groups P Intercorp Peru is the holding company for one of Peru’s largest economic groups, whose businesses are mainly focused on: financial services, retail, and education P Over US$ 5.5 bn in annual revenues(1) P Two listed companies wi
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 Avg. real GDP growth (X-axis) and avg. inflation (Y-axis) for the 2010-2017 period GDP & domestic demand growth (%) 8.0% GDP Domestic demand 4.4% 6.0% 4.0%
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 2017 Peruvian population by age group Peruvian households by socioeconomic segment(1) (% of population) (% of households) Socioeconomic Segments 2004 2017 65+ A 1% 2% 6.9% 4
Slide 12: Peru has a profitable financial system with low penetration and room for growth
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% 2.8% 3.0% 3.1% 3.1% 22.3% 20.0% 18.4% 17.9%(1) 18.7%(1) ‘15-’17 CAGR 256 7,040 7,226 7,459 227 235 246 234 167 3,49
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 June 2018) Consumer credit cards Consumer financing ‘15-’17 30.1 CAGR Ot
Slide 16: Interbank has solid risk management capabilities
Interbank has solid risk management capabilities Better asset quality than the system despite focus on retail 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% 3.1% 2.8% 193.9% 179.8% 167.2% 176.6% 2.
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 June 2018 (S/ bn) 39.5 Institutional 36.7 37.1 38.5 18% 12% 14% 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 2Q18 Interbank’s Gross Loans Interbank’s Total Assets 100 .0% 88.7% 91.5% 91.8% 92.4% 90. 0% 80. 0% USD 70. 0% 27.4% USD 60. 0% 71.2% 73.0% 73.5% 72.6% 38.2% 50. 0% 40. 0% 51.7% 52.1% 52.3% 50.1%
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 Digital transformation leads to efficiencies from branch rationalization Financial stores (Jun-18 vs. Jun-17) 427 417 320 320 283 272 212 218 Interbank BCP BBVA Scotiabank Jun-17 Jun-18 Digital indicators 100% 71.5%
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 14.2% 15.0% 15.2% 15.1% 16.7% 15.9% 16.1% 15.5% +1.7% additional capital 4.8% 4.8% requirement 5.2% for 2Q18 5.6% 10.1% 10.3% 10.0% total 9.4% regulatory 8.6% mi
Slide 21: Insurance
Insurance Es r i - ‘ _— EJ Intercorp Financial Services
Slide 22: Interseguro is a key player in Peru's life insurance business
Interseguro is a key player in Peru’s life insurance business Strategic focus on life insurance Introduction of new products to continue growing Premiums and collections breakdown (June 2018) Gross premiums plus collections by business unit (S/ mm) Industry Market 25% 23% 24% 22% 28% Share P&C D&S D
Slide 23: Interseguro: High profitability leading to solid core earnings generation
Interseguro: High profitability leading to solid core earnings generation Net profit (Local GAAP) Net profit (IFRS) (S/ mm) (S/ mm) ROE 30.1% 25.6% 11.5% 23.2%(1) 43.0%(1) ROE 20.2% 0.3% 7.0% 6.4%(1) 11.6%(1)(2) Industry 18.7% 15.3% 12.8% 15.9%(1) 16.5%(1) ROE 234 94 40 17 46 1 107 100 86 86 -145 54
Slide 24: Wealth Management
Wealth Management EJ Intercorp Financial Services
Slide 25: Inteligo: Solid wealth management business
Inteligo: Solid wealth management business Positive trend in AUM + deposits growth… … with a diversified client portfolio (US$ mm) 7.6x 2.9x -0.9x -0.6x 16% 28% 6% 4,429 4,318 4,371 3,920 50% Fixed Income Equities 2015 2016 2017 Jun-18 Alternative Investments Deposits GDP Growth Multiplier(1) High p
Slide 26: 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 27: IFS: Consistently delivering high growth & profitability
IFS: Consistently delivering high growth & profitability Net profit – IFRS Dividends declared(2) (S/ mm) (US$ mm) DPS ROE 23.6% 19.9% 19.3% 18.7%(1) 20.3%(1) 1.6 1.6 1.3 1.3 1.4 (US$) 1,033 1,021 181 950 158 150 147 146 482 495 2015 2016 2017 6M17 6M18 2013 2014 2015 2016 2017 Source: Company inform
Slide 28: 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 26.6% 23.2% 20.8% 20.1%(1) 22.8%(1) 30.1% 25.6% 11.5% 23.2%(1) 43.0%(1) 20.0% 28.4% 27.3% 30.8%(1) 24.7%(1) Industry 18.7% 15.3% 12.8% 15.9%(1) 16.5%(1) 22.3% 20.0% 18.4% 17.9%(1) 18.7%(
Slide 29: 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 30: 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 31: 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): 9 out of 11 Directors with Luis Felipe Castellanos CEO / CE
Slide 32: 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 33: Appendix
Intercorp
Slide 34: 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 26.6% 23.2% 20.8% 20.1%(1) 22.8%(1) ROE 25.4% 21.4% 20.1% 18.8%(1) 22.2%(1) Industry 22.3% 20.0% 18.4% 17.9%(1) 18.7%(1) ROE 902 905 860 875 868 847 534 535 415 404 2015 2
Slide 35: Inteligo: High profitability leading to solid earnings generation
Inteligo: High profitability leading to solid earnings generation Net profit (IFRS) (S/ mm) ROE 20.0% 28.4% 27.3% 30.8%(1) 24.7%(1) 188 171 106 104 86 2015 2016 2017 6M17 6M18 Fees / Avg. AUM(2) Efficiency(3) 37.5% 1.3% 33.4% 33.4% 30.0% 27.8% 1.0% 1.0% 0.9% 0.9% 2015 2016 2017 6M17 6M18 2015 2016 2
Slide 36: 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 37: Key financial figures – IFS (IFRS)
Key financial figures – IFS (IFRS) As and for the year ended December 31, Growth / Avg. As and for the six months ended June 30, Growth / Avg. S/ mm 2015 2016 2017 2017 vs. 2016 2016 vs. 2015 2017 2018 2018 vs. 2017 Balance Sheet Total gross loans 26,758 27,907 29,189 4.6% 4.3% 28,235 31,369 11.1% T
Slide 38: Key financial figures – By segment (IFRS)
Key financial figures – By segment (IFRS) As and for the year ended December 31, Growth / Avg. As and for the six months ended June 30, Growth / Avg. S/ mm 2015 2016 2017 2017 vs. 2016 2016 vs. 2015 2017 2018 2018 vs. 2017 Banking Total gross loans 25,100 26,238 27,876 6.2% 4.5% 26,612 30,124 13.2%
Slide 39: 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 7 8 868 905 45 847 46 13 2015 2016 2017 902 905 Net profit – Local GAAP S/ mm 860 875 902 Net profit Net interest Fee income Provision Net result Other (1) Net profit (SBS) and s
Slide 40: Interseguro's net profit IFRS vs. Local GAAP
Interseguro’s net profit IFRS vs. Local GAAP Net profit – IFRS(1) Net profit bridge from Local GAAP to IFRS (2017) S/ mm S/ mm 93 40 2 2015 2016 2017 39 86 29 22 40 Net profit – Local GAAP S/ mm Net profit (SBS) Net result on Adjustment of Net gain on sale of Net profit (IFRS) 2017 valuation of RE t
Slide 41: Intercorp Financial Services
[J Intercorp Financial Services