Intercorp Financial Services Inc. · NYSE:IFS
Intercorp Financial Services — Interbank — Investor Presentation (May 2021)
45 slides from Intercorp Financial Services's investor presentation, May 2021
Slide 1: Management Presentation
Management Presentation May 2021
Slide 2: 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 Interbank’
Slide 3: Interbank at a glance
CJ Interbank Interbank at a glance
Slide 4: Leading bank in Peru with strong financial performance
Leading bank in Peru with strong financial performance Financial highlights Leading position in the Peruvian financial system(1) As of March 31, 2021 Assets S/ 69,521 mm 3 2 1 Gross loans S/ 41,510 mm 8.8% 22.0% 26.7% Deposits S/ 46,653 mm Market share in Market share in ROE consumer loans payroll l
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$ 7.2bn Revenues in 2020 ~3.7% of Peru 2020 GDP Education Other (1) Source: Company information and BCRP. 4 1) Related companies excluding Aviva and Urbi.
Slide 6: Milestones in Interbank's history
Milestones in Interbank’s history Interbank issues $300 million in subordinated Tier 2 bonds in the international capital markets Interbank issues $200 Interbank issues $200 million in senior bonds million in hybrid Tier 1 in the international bonds in the capital markets, IFS executes a SEC Interco
Slide 7: Strategically positioned to capture significant growth opportunities in Peru
Strategically positioned to capture significant growth opportunities in Peru What differentiates us How we do it Universal franchise Customer Ready-to-scale Deep knowledge Digital first Innovation at with strong focus centricity omnichannel of Peruvians strategy the core on retail platform through a
Slide 8: Scalable digital platform already in place
Scalable digital platform already in place 1994 - 2014 2015 - 2018 2019 - Onwards Store-centric model Omnichannel platform with Digital first, search focused on physical strong focus on digital and for exponential convenience analytics growth Physical supports growth Digital supports physical Physic
Slide 9: Key messages
Key messages 1 2 3 Macro recovery Strong liquidity, Ongoing improvement continues manageable dollarization in activity and solid capitalization 4 5 6 Digital trends Lower provisions Continued focus continue to support continue to reflect on efficiency Interbank’ strategy better payment behavior 8
Slide 10: Positive trends in GDP and public investment
1 Positive trends in GDP and public investment GDP Expectations on economic activity (YoY % Chg) (Index > 50, indicates positive sentiment) 18.2% 3 months 12 months 10.7% 3.8% 4.5% 66 65 66 0.5% 61 61 57 53 52 48 50 51 30 47 41 44 40 TB 29 U -39.1% 9 Feb20 Apr20 Dec20 Mar21 FY21(E) FY22(E) Feb20 Apr
Slide 11: Liquidity levels remain high
2 Liquidity levels remain high Loan to deposit ratio (LDR) Total deposits % as of March 31, 2021 S/ million Total LDR MS total 12.5% 13.3% 13.7% deposits Apr21 112% 91% 103% MS retail 13.7% 13.9% 14.1% 89% 90% System: deposits 95% +33.0% 46,653 44,596 35,089 Interbank BCP BBVA Scotiabank 1Q20 4Q20 1
Slide 12: Manageable dollarization levels at Interbank
2 Manageable dollarization levels at Interbank Total loans Retail loans Commercial loans % PEN 68% 74% 84% 91% 60% 66% System 10% 6% 27% 23% 45% 37% 90% 94% 73% 77% 55% 63% 1Q16 1Q21 1Q16 1Q21 1Q16 1Q21 Retail loans breakdown Commercial loans breakdown Consumer Mortgages Corporate Medium Small & Mic
Slide 13: Solid capital ratios
2 Solid capital ratios Key initiatives Capital ratio evolution Solvency Banking System 14.3% 15.5% 16.3% TCR ▪ Capitalization of 2019 earnings to strengthen CET1 and TCR ratio 17.0% 17.0% 12.0% 16.1% 11.5% 11.5% ▪ Called USD 200 million hybrid Tier 1 bond to reduce interest expense on bonds that no
Slide 14: Ongoing improvement in our core operating indicators
Ongoing improvement in our core operating 3 indicators Credit and debit cards turnover (Index; 100 = Feb20) Payroll deduction loans disbursements (Index; 100 = Feb20) 113 115 100 106 100 94 38 8 Feb20 Apr20 Dec20 Apr21 Feb20 Apr20 Dec20 Apr21 Mortgages disbursements (Index; 100 = Feb20) Net fee inco
Slide 15: Continuous improvement in our digital indicators
Continuous improvement in our digital indicators 4 Digital users 100% digital customers Digital sales % of digital users 100% digital customers % of products sold digitally Apr21 Apr21 Apr21 78% 57% 53% 76% 54% 54% 48% 69% 42% 38% 57% 27% Mar19 Mar20 Mar21 Mar19 Mar20 Mar21 Mar19 Mar20 Mar21 Retail
Slide 16: Growing customer base supported by increasing 100% digital users
Growing customer base supported by increasing 100% digital users 4 Retail customers Commercial customers Thousand Thousand CAGR: +14.4% CAGR: +38.7% 4,024 112 3,539 3,076 76 58 Mar19 Mar20 Mar21 Mar19 Mar20 Mar21 Retail 100% digital customers Tunki and Plin users Thousand N° of users (thousand) CAGR
Slide 17: Lower rescheduled loan balances
Lower rescheduled loan balances 5 Loan rescheduling Retail loans rescheduling S/ billion S/ billion Clients 332 441 335 (Thousand) Clients 343 459 348 Rescheduled 34% 43% (Thousand) 35% balance (%) Rescheduled 8.6 30% 31% 22% 6.9 6.6 balance (%) 12.7 Apr20 Jun20 Mar21 10.9 Commercial loans reschedul
Slide 18: Continued improvement in payment behavior among retail clients
Continued improvement in payment behavior among retail clients 5 Retail loan balances with payments due Payment behavior S/ billion % of retail loans with 99% 99% payments due Payments of rescheduled loans 17.1 17.3 Collected Requested relief Not paid 5.7 6.3 (37%) (38%) (33%) 96.2% 97.0% 0.5% 0.4%
Slide 19: Lower provisions continue to reflect better payment behavior
Lower provisions continue to reflect better payment behavior 5 Cost of risk Past due loans Coverage 173.6% 202.3% 205.0% ratio 5.4% 3.4% 3.3% 2.8% 4.0% 3.3% 1Q20 4Q20 1Q21 1Q20 4Q20 1Q21 Cost of risk – Retail banking Cost of risk – Commercial banking 9.8% 1.6% 1.5% 7.3% 5.6% 0.4% 1Q20 4Q2O 1Q20 1Q20
Slide 20: Continued focus on efficiency and branch rationalization
Continued focus on efficiency and branch rationalization 6 Optimizing our distribution channels Disciplined cost control helps efficiency Units Total expenses(3) (S/ mm) 2018 Apr21 % Change Financial 270 204 -24% 1,570 stores 1,444 1,491 ATMs 1,975 1,595 -19% Correspondent 2,506 3,305 +32% agents 40
Slide 21: Summary & Trends
Summary & Trends 1 2 3 Macro recovery Strong liquidity, Ongoing improvement continues manageable dollarization in activity and solid capitalization 4 5 6 Digital trends Lower provisions Continued focus continue to support continue to reflect on efficiency Interbank’ strategy better payment behavior
Slide 22: Operating trends 1Q21
Operating trends 1Q21 Capital Loan growth 2021 1Q21 TCR >15% 17.0% Slow recovery in retail, and decreasing volumes in commercial CET1 >11% 11.5% To remain at sound levels Flat YTD Revenues Cost of risk Soft top line recovery Pressure on NII and NIM despite lower cost Lower cost of risk after peak in
Slide 23: Highlights
Highlights Unique and diversified bank with ready-to-scale 01. omnichannel platform Outstanding track record of sustainable 02. growth and high profitability 03. Unique culture and corporate governance
Slide 24: Highlights
Highlights Unique and diversified bank with 01. ready-to-scale omnichannel platform Outstanding track record of sustainable 02. growth and high profitability 03. Unique culture and corporate governance
Slide 25: Rebalanced loan portfolio due to Reactiva Peru
Rebalanced loan portfolio due to Reactiva Peru Distinctive loan breakdown… …when compared to the banking system Gross loans breakdown (as of March 2021) Gross loans breakdown (as of March 2021) Banking System Commercial Commercial 68.2% 53.8% Mortgages Mortgages Consumer Consumer 41.9% loans 51.1% l
Slide 26: Solid risk management capabilities
Solid risk management capabilities Better asset quality than the system despite focus on retail Balanced asset quality among businesses PDL ratio evolution PDL ratio as of March 2021 Interbank System Commercial loans Retail loans Total loans 3.8% 3.8% 3.0% 3.0% Scotiabank Scotiabank 4.4% 5.8% Scotia
Slide 27: Diversified funding base with strength in retail deposits
Diversified funding base with strength in retail deposits Consistently delivering higher deposit growth than the system A growing retail deposit-gathering franchise Total deposits growth evolution Total retail deposits growth evolution MS 2014 11.6% MS Mar21 13.7% MS 2014 12.1% MS Mar21 14.1% 33.1%
Slide 28: Our strategy is based on digital and analytics
Our strategy is based on digital and analytics We have built an scalable digital platform… … leveraging advanced analytics More and better models • Predictive and prescriptive models to improve effectiveness Increasing levels of adoption and customer satisfaction • Machine learning and deep learning
Slide 29: Highlights
Highlights Unique and diversified bank with ready-to-scale 01. omnichannel platform Outstanding track record of sustainable 02. growth and high profitability 03. Unique culture and corporate governance
Slide 30: Sustained assets growth supported by appropriate funding
Sustained assets growth supported by appropriate funding Total gross loans Total deposits S/ mm S/ mm 41,594 41,510 46,653 44,596 36,166 36,258 32,518 35,610 35,089 31,323 2018 2019 2020 Mar20 Mar21 2018 2019 2020 Mar20 Mar21 Total assets Net shareholders’ equity S/ mm S/ mm 69,521 6,029 6,183 6,197
Slide 31: Interbank's profitability impacted by COVID-19
Interbank’s profitability impacted by COVID-19 Total revenues (1) Net interest margin (NIM) S/ mm 4,093 (2) 3,791 5.7% 5.9% 5.8% 3,614 4.8% 3.7% 1,015 945 2018 2019 2020 3M20 3M21 2018 2019 2020 3M20 3M21 Net profit evolution ROE S/ mm 1,222 21.3% 22.0% 1,040 15.2% 8.8% 265 232 4.3% 134 2018 2019 20
Slide 32: Highlights
Highlights Unique and diversified bank with ready-to-scale 01. omnichannel platform Outstanding track record of sustainable 02. growth and high profitability 03. Unique culture and corporate governance
Slide 33: Evolving cultural transformation
Evolving cultural transformation Comprehensive transformational approach New initiatives We are User side by side IT with Peruvians so they can reach their dreams, today Org More than 100 teams working with agile framework Innovation Labs Over 400 workers organized in more than 80 squads 32
Slide 34: A "Great Place to Work" with a distinctive culture
A “Great Place to Work” with a distinctive culture and strong sense of achievement for new talent Our commitment to fostering a performance-based culture is demonstrated by being ranked among the top Peruvian and Latin American companies Top 20 in Peru #6 for women in Peru for the past 19 years in 2
Slide 35: Strong corporate governance
Strong corporate governance Board of Directors BOD with majority of independent members Carlos Rodríguez-Pastor Chairman Interbank: 5 out of 9 Strong corporate Ramón Barúa Fernando Zavala governance Director Director Relevant committees: Felipe Morris Cayetana Aljovín - Audit Director Independent Di
Slide 36: Committed to a vision of sustainability
Committed to a vision of sustainability At Interbank, we published our 2020 Sustainability Report where we outlined the actions taken throughout the year in order to achieve our vision of sustainability Aspiration To be a responsible and sustainable financial platform that contributes to the country
Slide 37: Highlights
Highlights Unique and diversified bank with ready-to-scale 01. omnichannel platform Outstanding track record of sustainable 02. growth and high profitability 03. Unique culture and corporate governance
Slide 38: Appendix
CJ Interbank oom ae Appendix
Slide 39: Resilient financial system
Resilient financial system Gross loans growth Asset quality evolution Banking system gross loans (S/ bn) Banking system CoR and PDL ratio PDL 3.0% 3.0% 3.8% 3.1% 3.8% ratio CAGR 326 326 2018-20 286 295 3.9% 271 12.4% 2.7% 222 189 222 2.4% 176 181 1.9% 2.0% 4.5% 95 105 104 107 104 2018 2019 2020 3M20
Slide 40: Reactiva Peru Program as an opportunity to gain relevance in mid-sized and SME segments
Reactiva Peru Program as an opportunity to gain relevance in the mid-sized and SME segments Commercial loans Corporate loans S/ million, Local GAAP S/ million, Local GAAP +39.6% 20,545 +10.4% 22,308 22,340 9,114 9,442 8,549 485 16,000 6,617 6,348 3,833 573 16,000 8,541 8,957 15,691 15,992 Mar20 Dec2
Slide 41: 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 1Q21 92.6% 93.6% 94.0% 93.8% Gross Loans Total Assets 78.0% 77.1% USD USD 73.3% 73.8% 28.5% 22.9% 64.2% 62.8% 51.2% 49.2% S/ S/ 77.1% 2018 2019 2020 Mar21 71.5% Total Loans % in S/ Retail % in S/
Slide 42: Interbank's income statement
Interbank’s income statement % chg % chg Incom e S t a t e m e nt ( S / m m ) 2018 2019 2020 3M 20 3M 21 '20/ '19 3M 21/ 3M 20 Interest income 3,589.8 4,094.8 3,865.1 1,038.0 836.4 (5.6%) (19.4%) Interest expenses (1,040.7) (1,231.0) (983.9) (286.7) (198.9) (20.1%) (30.6%) Gr os s fina ncia l m a r
Slide 43: Interbank's balance sheet
Interbank’s balance sheet % chg % chg Fina ncia l S t a t e m e nt s 2018 2019 2020 3M 20 3M 21 '20/ '19 3M 21/ 3M 20 As s e t s Cash and due from banks 8,209.9 9,861.5 17,716.8 10,288.1 17,965.0 79.7% 74.6% Investments, net (1) 5,790.4 5,559.4 8,951.2 6,037.2 9,988.0 61.0% 65.4% Loan portfolio, net
Slide 44: Definitions
Definitions Concept Definition Total revenues Gross financial margin + fee income from financial services, net + gain on financial transactions Efficiency ratio (Administrative expenses + Depreciation + amortization) / (total revenues) NIM (Annualized gross financial margin) / (Average interest-earn
Slide 45: Slide 45