Intercorp Financial Services Inc. · NYSE:IFS
Intercorp Financial Services — Investor Presentation (December 2023)
54 slides from Intercorp Financial Services's investor presentation, December 2023
Slide 1: Investor Presentation December 2023
Investor Presentation December 2023
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: Intercorp Group: striving to make Peru the best place to raise a family
Intercorp Group: striving to make Peru the best place to raise a family in Latin America Financial services Retail US$ 8.4bn Revenues in 2022 ~4.0% of Peru 2022 GDP Education Other (1) Source: Company information and BCRP 2 1) Related companies excluding Aviva and Urbi
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 Sep23 S/ mn | US$ mn retail annuities wealthy Total assets (1) 89,359 | 23,559 Con
Slide 5: Consistently delivering strong return to our shareholders
Consistently delivering strong return to our shareholders (S/ mn) (S/ mn) Net profit (2) 902 1,040 1,222 265 1,201 1,172 Net profit (2) 104 361 436 257 304 203 Payout Ratio 45% 45% 25% n.m. 50% 50% Payout Ratio 96% 68% 46% 78% 66% 49% Dividends declared(1) 600 586 245 467 200 200 202 406 302 100 100
Slide 6: Sound capitalization levels
Sound capitalization levels Banking 128.6% 136.1% 127.1% System 14.6% 16.2% 16.3% TCR Insurance 100.0% Reg. min. 3Q22 2Q23 3Q23 15.2% 15.2% 15.0% 11.6% 11.4% 11.2% Solvency ratio Banking 10.8% Reg. 6.4% management min. Reg. min. 19.1% 16.7% 16.0% Wealth 12.0% Reg. min. 3Q22 2Q23 3Q23 3Q22 2Q23 3Q23
Slide 7: Macro outlook
1 Macro outlook 2 Profitable growth 3 Digital performance 4 Key businesses
Slide 8: Decrease in GDP and inflation trigger first cuts in soles reference rate
Decrease in GDP and inflation trigger first 1 cuts in soles reference rate Quarterly GDP growth YoY (%) Interest rates (%) 3.9% 3.4% Soles reference rate (BCRP) Dollar reference rate (FED) Nov23 7.50 7.75 7.50 7.00 2.0% 1.7% 5.50 Nov23 2.50 5.25 5.50 5.50 4.50 0.25 -0.4% -0.5% 1.75 -1.0% 0.25 0.25 1
Slide 9: We have further moderated banking activity by tightening credit standards
We have further moderated banking 1 activity by tightening credit standards 7.0 7.0 559 5.9 0% QoQ 428 427 0% QoQ +18% YoY -24% YoY 3Q22 2Q23 3Q23 3Q22 2Q23 3Q23 Credit & debit cards purchases (S/ bn) Mortgage disbursements (S/ mn) 867 254 271 750 722 229 -17% QoQ -16% QoQ -4% YoY -10% YoY 3Q22 2Q23
Slide 10: 9M23 operating trends
1 9M23 operating trends Capital Profitability Loan growth 2023 9M23 2023 9M23 High single digit growth in IBK TCR ∼ 15% 15.0% IFS ROE ∼ 14.0% 11.8%(1) total loans(2) led by low double digit growth in consumer loans IBK CET1 ∼ 11% 11.2% Revised: 8% - 10% Impacted by CoR and investment Total loans +10
Slide 11: Profitable growth
1 Macro outlook 2 Profitable growth 3 Digital performance 4 Key businesses
Slide 12: Customer base growth continues across businesses
Customer base growth continues 2 across businesses 5.9 2.6 5.2 +13% YoY 2.3 +11% YoY Sep22 Sep23 Sep22 Sep23 Banking – customers (mn) Insurance – customers (mn) 71 1.3 65 +9% YoY 0.9 +38% YoY Sep22 Sep23 Sep22 Sep23 Wealth management – customers (th) Payments – merchants (mn) 11
Slide 13: Growth in total revenues driven by NIM recovery
Growth in total revenues driven by NIM 2 recovery Total revenues (1) (S/ mn) NIM (%) +4% YoY 5.5%(3) 6,557 5.0% 4.9% 5,488 5,922 (2) 5,581(3) 4.5% 5,381 4.1% 2020 2021 2022 9M22 9M23 2020 2021 2022 9M22 9M23 Net profit (S/ mn) ROE (%) 1,800 1,671 19.6%(2) 19.3% (2) 17.7% 1,270 835(3) 11.8%(3) 384 4.
Slide 14: Sustained assets growth supported by appropriate funding
Sustained assets growth supported by 2 appropriate funding Total gross loans (S/ mn) Total deposits (S/ mn) 47,025 46,647 48,749 48,898 48,531 49,280 49,075 43,082 44,688 47,149 2020 2021 2022 Sep22 Sep23 2020 2021 2022 Sep22 Sep23 AUM evolution (S/ mn) Net shareholders’ equity (S/ mn) 22,981 9,555
Slide 15: Continuous focus on efficiency
2 Continuous focus on efficiency Optimizing our distribution channels (Units) Variable expenses drive costs higher – Other expenses (S/ mn) 2020 9M23 % Change +5% Financial stores 215 153 -29% 2,684 YoY 2,263 1,911 1.959(5) 2,059 ATMs 1,640 1,642 0% Correspondent 5,529 6,736 +22% agents(1) Sales for
Slide 16: Asset quality deterioration in retail banking due to adverse macro variables
Asset quality deterioration in retail banking 2 due to adverse macro variables Credit cards & personal loans Payroll deduction loans Mortgages Commercial Reactiva NPL coverage ratio Cost of risk 6% 2% Banking Retail Commercial 43% 42% 8.1% 221% 258% 6.0% 161% 232% 3.1% 5.0% 21% 3.6% 173% 21% 182% 1.
Slide 17: Digital performance
1 Macro outlook 2 Profitable growth 3 Digital performance 4 Key businesses
Slide 18: Our transformation path to a digitally-driven organization
Our transformation path to a digitally- 3 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 dig
Slide 19: Our two-tier digital strategy to foster profitable & sustainable growth
Our two-tier digital strategy to foster 3 profitable & sustainable growth 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: Building a scalable digital proposition
Building a scalable digital proposition Izipay IzipayYa Digital bank Investments Insurance Marketplace Loyalty & promotions Digital My financing Piggy Payments finances 2.5 mn 6.0 mn 0.9 mn bank IBK app users Plin users IBK piggy bank users 100% digital >100 th 1.5 mn account Shopstar customers Izip
Slide 21: Consolidating digital achievements in banking
Consolidating digital achievements in 3 banking 75% 86% 75% 70% Sep22 Sep23 Sep22 Sep23 Digital customers Digital self-service (% of digital self-service) (% of digital customers – Retail banking) 63% 46 60% 39 Sep22 Sep23 Sep22 Sep23 NPS – digital customers Digital sales (Points – Retail Banking) (
Slide 22: Working towards digital innovation in insurance & wealth management
Working towards digital innovation in 3 insurance & wealth management Insurance 57% 39% Wealth management 43% 39% 3Q22 3Q23 Digital self-service (% of digital self-service) 9% 10% Sep22 Sep23 Digital transactions Interfondos (% of digital transactions) 3Q22 3Q23 Digital premiums (% of total premiums
Slide 23: Key businesses
1 Macro outlook 2 Profitable growth 3 Digital performance 4 Key businesses
Slide 24: Increasing market shares in banking with moderation in consumer loans
Increasing market shares in banking 4 with moderation in consumer loans Banking 22.7 22.7 18.6 19.4 19.4 13.3 14.0 21.5 3Q22 2Q23 3Q23 3Q22 2Q23 3Q23 Sep22 Sep23 Consumer banking loans (%) Retail banking loans (%) Payroll inflow (%) 14.8 15.1 15.2 9.4 9.6 14.7 9.1 10.0 3Q22 2Q23 3Q23 3Q22 2Q23 3Q23
Slide 25: Net interest income driving growth in revenues
Net interest income driving growth in 4 revenues Banking % YoY +20% +5% +8% +16% +465 +27 +29 3,832 3,312 (1) 9M22 Net interest income Fee income Other income 9M23 Revenue bridge from 9M22 to 9M23 (S/ mn) 24 1) Net interest and similar income, and total revenues grew 17% and 14%, respectively, when
Slide 26: NIM remains flat at 5.6% despite increasing yields
NIM remains flat at 5.6% despite increasing 4 yields... Banking NIM Risk-adjusted NIM Retail loans Commercial loans Yield on loans Return on interest-earning assets Financial investments Cash and banks 66,346 66,570 11.5% 11.6% 10.9% 10.5% 17% 15% 9.8% 9.1% 9.3% 8.7% 17% 8.3% 18% 7.5% 30% 5.4% 5.5%
Slide 27: … due to rising funding costs
… due to rising funding costs 4 Banking LDR(1) 98% 103% System’s 104% 104% LDR(1) Ref. rate YoY (2) +50 bps (S/) 60,210 58,572 +225 bps (US$) Cost of funds Cost of deposits 11% 8% 13% 13% 36% 39% 4.0% 4.2% 3.6% 3.2% 79% 2.8% 3.6% 3.8% 3.3% 39% 40% 2.8% 2.4% 3Q22 3Q23 Retail deposits Commercial depos
Slide 28: Increased contribution of individual life & retail insurance to total premiums
Increased contribution of individual life & retail insurance to total premiums 4 Insurance Annuities market 28.8% 33.0% 28.0% 30.5% (1) share 314 314 %chg %chg 38 266 35 QoQ YoY 37 -5% -8% 212 90 133 44 78 +15% -33% 70 71 59 67 34 60% +4% +18% 46% 119 61 84 84 +42% +42% (2) 2019 3Q22 2Q23 3Q23 Quart
Slide 29: Insurance investment portfolio delivers sound returns
Insurance investment portfolio delivers sound returns 4 Insurance Insurance - ROIP (%) Insurance - Portfolio breakdown 7.9% 6.0% 11% 10% 5% 7% 82% 85% 3Q22 3Q23 3Q22 3Q23 Fixed Income Equity and Mutual Funds Real Estate 28
Slide 30: 8% YoY growth in AUM
8% YoY growth in AUM 4 WM AUM (US$ mn) Deposits (US$ mn) Loans (US$ mn) 5,930 5,990 1,010 484 5,524 926 958 436 422 3Q22 2Q23 3Q23 3Q22 2Q23 3Q23 3Q22 2Q23 3Q23 +1% QoQ | +8% YoY +3% QoQ | -5% YoY -3% QoQ | -13% YoY 29
Slide 31: Solid YoY growth in key business drivers
Solid YoY growth in key business drivers 4 Payments 1.3 287.3 0.9 +38% YoY +6% YoY 271.0 Sep22 Sep23 9M22 9M23 Merchants (mn) Revenues (S/ mn) E-commerce 15% 16% 87.7 89.1 (%) 41.8 36.2 +16% YoY +2% YoY 9M22 9M23 9M22 9M23 30 Transactional volumes in payments acquirer (S/ bn) EBITDA (S/ mn)
Slide 32: Over 13 million users in Plin and 660 thousand merchants in IzipayYa
Over 13 million users in Plin and 4 660 thousand merchants in IzipayYa Payments +51% YoY +2x YoY 13.0 9.5 8.6 4.2 Sep22 Sep23 3Q22 3Q23 Users (mn) Volume (S/ bn) +42% YoY +2x YoY 667 1.4 470 0.8 Sep22 Sep23 3Q22 3Q23 Merchants (th) Volume (S/ bn) 31
Slide 33: ESG highlights
ESG highlights
Slide 34: ESG focus updates: building a sustainable business
ESGon Focus updates building a sustainable business Environmental Social Governance & Economic Sustainability Report 2022 aligned with GRI Standard 50.3K users Interbank’s 346.2K sessions Updated Diversity and Sustainable 6 webinars Sustainability Policies Financing 5 courses Framework CSO member
Slide 35: Our way of working will enable us to achieve our goals
Our way of working will enable us to achieve our goals Top 20 in Peru Top 10 in Peru for the past 21 years 2011 - 2023 #3 in Latin America #3 in Peru in 2022 in 2023 #4 in Peru #8 for work from home in Peru in 2023 in 2023 #9 for sustainable management #2 for work from home in Peru in 2023 in 2023 #
Slide 36: Strong corporate governance
Strong corporate governance Board of directors BOD with independent members Carlos Rodríguez-Pastor Chairman IFS: 4 out of 7 Felipe Morris Fernando Zavala Director Director Strong corporate governance Highly supervised related party Alfonso Bustamante Cayetana Aljovín exposure, well below regulatory
Slide 37: Appendix
Appendix
Slide 38: Overview of Peruvian financial system
Banking Overview of Peruvian financial system Decreasing loan growth – Banking system gross loans (S/ bn) Profitability stabilizing – Banking system net profit (S/ mn) ROE 4.0% 13.3% 17.3% 18.0% 15.9% CAGR +4.6% CAGR 350 357 362 353 2020-22 10,119 326 7,218 7,776 7,542 1.2% 238 228 236 217 222 2,112
Slide 39: Strategic focus on consumer loans
Banking Strategic focus on consumer loans Distinctive loan breakdown… …when compared to the banking system Banking System Commercial Commercial 44% 61% Mortgages Consumer Mortgages Consumer 37% loans Retail 46% loans Retail 63% 39% 54% 56% S/ 47.2BN S/ 26.4BN S/ 353.0BN S/ 136.4BN Leading position i
Slide 40: 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 2017: 12.6% MS Sep23: 15.2% MS 2022: 14.9% Other 6% Bonds Demand Savings 13.3% 8% 23% 37% 9.6% Due to banks Deposits 16% 76% 1.5% Time -0.8% 34% CAGR 2017-22 3Q
Slide 41: 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 4.3% 3.8% 3.8% 3.9% 4.0% BBVA BBVA 5.9% 2.6% BBVA 4.7% BCP BCP 5.0% 3.1% B
Slide 42: Contained NPLs despite growth in provisions
Contained NPLs despite growth in Banking provisions (S2+S3) ratio & S3 NPL ratio (%) Impairment loss on loans, net (S/ mn) & Cost of risk (%) 13.3% 16.0% 1,291 12.8% 12.7% 14.0% 581 12.0% 13.4% 463 10.0% 417 368 8.0% 313 328 278 6.0% 189 199 (1) 193 210 2.5% 2.7% 3.1% 178 152 4.0% 110 4.5% 5.0% 2.0%
Slide 43: Reactiva loan balances down 68% YoY, representing 2% of total portfolio
Reactiva loan balances down 68% YoY, Banking representing 2% of total portfolio Reactiva Peru loan balances by segment (S/ bn) 2.9 3Q23 Segment YoY Corporate -84% Corporate: n.m. Mid-sized -70% Mid-sized: S/ 0.6 bn 1.2 SME: S/ 0.3 bn 0.9 SME -62% Total -68% 3Q22 2Q23 3Q23 42 SME Mid-sized Corporate
Slide 44: Manageable dollarization levels
Banking Manageable dollarization levels Total loans Retail loans Commercial loans % PEN 68% 71% 89% 93% 57% 58% System 7% 5% 28% 27% 51% 57% 93% 95% 72% 73% 49% 43% 3Q18 3Q23 3Q18 3Q23 3Q18 3Q23 Retail loans breakdown Commercial loans breakdown Consumer Mortgages Corporate Medium Small & Micro 96% 9
Slide 45: Manageable dollarization levels
Banking Manageable dollarization levels Gross Loans by segment & percentage in S/ Currency mix Sep23 94% 94% 94% 95% 95% 92% 92% 93% Gross Loans Total Assets 89% 85% 78% 76% 73% 74% 73% 74% 74% 73% USD USD 71% 27% 30% 63% 64% 58% 52% 52% 52% 51% 50% 49% 43% 41% S/ 73% S/ 2014 2015 2016 2017 2018 201
Slide 46: 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) Insurance System Other life Regulated 23% annuities Regulated 11% D&S annuiti
Slide 47: Annuities market contraction offset by growth in life insurance
Annuities market contraction offset by Insurance growth in life insurance Normalizing market dynamics Outgrowing the industry with digital innovation (Gross premiums and collections by business unit - S/ mn) (9M23 YoY growth in Individual Life premiums) Interseguro System 1,271 8 1,209 109 9 133 YoY
Slide 48: Resilient wealth management business
Wealth management Resilient wealth management business AUM growth – Inteligo Group AUM (S/ mn) Fee origination – Fee/Avg. AUM (%) 22,981 21,992 22,721 20,989 21,317 0.8% 0.8% 0.8% 0.7% 0.7% 2020 2021 2022 9M22 9M23 2020 2021 2022 9M22 9M23 Diversified revenue generation (S/ mn) Recovering profitabil
Slide 49: Izipay, pillar for building our payments ecosystem
Izipay, pillar for building our payments Payments ecosystem Our business lines and main clients Payments Correspondent Credit cards acquirer banking processor 91% 5% 4% Fee income share 9M23 Fee income share 9M23 Fee income share 9M23 48
Slide 50: IFS income statement
IFS income statement % chg Income Statement (S/ mm) 2022 9M22 9M23 9M23/ 9M22 Interest and similar income 5,871.3 4,187.3 5,315.4 26.9% Interest and similar expenses (1,661.7) (1,126.2) (1,910.8) 69.7% = N et i nteres t and s i mi l ar i ncome 4,209.6 3,061.1 3,404.5 11.2% Impairment loss on loans,
Slide 51: IFS balance sheet
IFS balance sheet % chg Bal ance Sheet (S/ mm) 20 22 9M22 9M23 9M23/ 9M22 Cash and due from banks 13,193.4 12,941.6 10,980.5 (15.2%) Inter-bank funds 296.1 0.0 125.9 n.m. Financial investments 22,787.6 24,899.4 25,484.2 2.3% Loans, net of unearned interest 47,530.9 47,128.8 49,379.8 4.8% Impairment
Slide 52: 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 53: 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 54: [J Intercorp
[J Intercorp Financial rVviC
Intercorp Financial Services — Investor Presentation (December 2023) on 6ix