Intercorp Financial Services Inc. · NYSE:IFS
Intercorp Financial Services — Investor Presentation (May 2023)
62 slides from Intercorp Financial Services's investor presentation, May 2023
Slide 1: Investor Presentation May 2023
Investor Presentation May 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: 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: Our two-tier digital strategy to foster profitable & sustainable growth
Our two-tier digital strategy to foster 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 Payments
Slide 5: Digitalization: building 100% digital solutions for the customer journey
Digitalization: building 100% digital solutions for the customer journey Digital bank Cuenta Sueldo ERNI Digital Loyalty insurance program My finances Payments Piggy Digital Bank 100% digital financing account
Slide 6: 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$ 8.4bn Revenues in 2022 ~4.0% of Peru 2022 GDP Education Other (1) Source: Company information and BCRP 5 1) Related companies excluding Aviva and Urbi
Slide 7: 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 Mar23 S/ mn | US$ mn retail annuities wealthy Total assets (1) 88,016 | 23,396 Con
Slide 8: 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 9: Solid capitalization levels after Basel III changes & dividend distribution
Solid capitalization levels after Basel III changes & dividend distribution at banking Banking System 15.1% 14.4% 15.6% 152.2% 138.7% 145.6% TCR Insurance 100.0% Reg. For 1Q23, considers dividend min. distribution & Basel III implementation 1Q22 4Q22 1Q23 15.5% 15.1% 15.2% 12.0% 10.9% 11.1% Solvency
Slide 10: Continuous focus on efficiency
Continuous focus on efficiency Optimizing our distribution channels (Units) Variable expenses drive costs higher – Other expenses (S/ mn) 2020 3M23 % Change Financial stores 215 159 -26% 2,684 2,263 ATMs 1,640 1,549 -6% 1,911 Correspondent 5,529 5,609 +1% 629(4) 695 agents(1) Sales force 899 1,147 +
Slide 11: Key messages
Key messages Challenging macro 1 2 3 Wealth management environment IFRS17 adoption results still impacted impacting banking in insurance by investments profitability 4 Positive development in digital indicators 5 Continuous growth in payments 6 ESG update
Slide 12: Challenging macro environment
1 Challenging macro environment 12 month GDP growth YoY (%) Interest rates (%) Soles reference rate (BCRP) May23 2023E 7.75 7.75% 13.6 13.3 7.50 2.5 5.50 6.5 5.6 4.95 4.00 2.7 1.9 May23 2.50 5.25% 4.50 4.75 Jan21 Jun21 Dec21 Mar22 Jun22 Dec22 Feb23 0.25 1.75 0.25 0.25 0.25 0.50 -11.2 Mar21 Jun21 Dec
Slide 13: Slowdown in banking activity with more focus on low risk segments
Slowdown in banking activity with 1 more focus on low risk segments 7.0 6.9 9.7 10.3 5.5 8.1 -1% QoQ +6% QoQ +25% YoY +27% YoY 1Q22 4Q22 1Q23 1Q22 4Q23 1Q23 Credit & debit cards purchases (S/ bn) Credit cards & personal loans balances (S/ bn) 1,077 1,048 296 884 263 -3% QoQ 233 -21% QoQ +19% YoY -11
Slide 14: Double digit growth across all recurring revenue lines in banking
Double digit growth across all 1 recurring revenue lines in banking % YoY +24% +13% +15% +21% +24 +16 +181 1,263 1,042 (1) (1) 1Q22 Net interest and Fee income from Other income 1Q23 similar income financial services, net Banking – Revenue bridge from 1Q22 to 1Q23 (S/ mn) 13 1) Banking net interest
Slide 15: Continuous expansion of NIM to 5.5% with pressure on risk-adjusted margins
Continuous expansion of NIM to 5.5% 1 with pressure on risk-adjusted margins Reactiva Commercial Mortgages Payroll deduction loans Yield on loans NIM Risk-adjusted NIM Credit cards & personal loans 10% 4% 10.9% 10.5% 9.8% 41% 9.1% 38% 8.3% 5.4% 5.5% 21% 4.9% 5.0% 21% 4.5% 11% 52% 11% 55% Retail Reta
Slide 16: Rising funding costs, one of the best LDR among peers
Rising funding costs, one of the 1 2 best LDR among peers 1Q22 4Q22 1Q23 Cost of funds Cost of deposits Interbank 99% 101% 99% 3.6% 3.2% 2.8% Bank 1 99% 102% 97% 3.3% 2.2% 2.8% 1.8% 2.4% Bank 2 117% 109% 107% 1.7% Ref. rate YoY (2) 1.2% +375 bps (S/) +450 bps (US$) Bank 3 128% 134% 124% System 106%
Slide 17: CoR at 3.2% in the quarter impacted by sustained inflation, protests and rains
CoR at 3.2% in the quarter impacted by 1 sustained inflation, protests and rains NPL 169% 173% 178% coverage ratio (1) (S2+S3) ratio S3 NPL ratio 3.2% 10.8% 11.2% 2.5% 9.6% 1.4% 2.9% 2.6% 2.6% 1Q22 4Q22 1Q23 1Q22 4Q22 1Q23 Banking – Cost of risk Banking – Non perfoming loans NPL NPL 256% 244% 252% 8
Slide 18: Key messages
Key messages Challenging macro 1 2 3 Wealth management environment IFRS17 adoption results still impacted impacting banking in insurance by investments profitability 4 Positive development in digital indicators 5 Continuous growth in payments 6 ESG update
Slide 19: 1Q23 earnings of S/ 31.3 million, ROE at 40.5% after IFRS17 adoption
1Q23 earnings of S/ 31.3 million, ROE at 2 40.5% after IFRS17 adoption Positively impacted by low ROE Impairment on Rental income, M2M, sale on Best estimate of liabilities (BEL), 40.5% equity contractual service margin (CSM), net fixed income investments premium of retail products, credit investmen
Slide 20: Decrease in annuities due to market contraction and increased competition
Decrease in annuities due to market 2 contraction and increased competition Quarterly gross premiums (S/ mn) – Local GAAP Annuities market 32.9% 27.7% 25.1% share(1) %chg YoY -6.7% QoQ -19.4% YoY 330 +17% 285 75 266 +28% 85 51 88 51 62 65 -28% 45 37 153 93 -50% 76 1Q22 4Q22 1Q23 Annuities Private an
Slide 21: Quarterly ROIP at 6.6%
2 Quarterly ROIP at 6.6% Investment portfolio (S/ mn) Results from investments (S/ mn)(1) ROIP 5.2% 7.5% 6.6% 12,707 12,582 12,927 1,200 1,287 1,276 1,007 751 771 230 211 169 10,499 10,545 10,880 1Q22 4Q22 1Q23 1Q22 4Q22 1Q23 Fixed Income Equity and Mutual Funds Real Estate +3% QoQ | +2% YoY -8% QoQ
Slide 22: Key messages
Key messages Challenging macro 1 2 3 Wealth management environment IFRS17 adoption results still impacted impacting banking in insurance by investments profitability 4 Positive development in digital indicators 5 Continuous growth in payments 6 ESG update
Slide 23: WM performance still impacted by market conditions
WM performance still impacted by market 3 conditions Fees / Avg. 0.7% 0.7% 0.7% AUM(1) 26 24 21 41 37 40 -11% QoQ +6% QoQ -18% YoY -3% YoY 1Q22 4Q22 1Q23 1Q22 4Q22 1Q23 Net interest and similar income (S/ mn) Fees from financial services (S/ mn) 56 47 43 n.m. QoQ -17% QoQ -5 -41% YoY +10% YoY -14 -2
Slide 24: Positive AUM evolution due to local mutual fund business
Positive AUM evolution due to local mutual 3 fund business AUM (S/ mn) Deposits (S/ mn) Loans (S/ mn) 1,784 1,728 1,658 21,795 4,099 21,307 21,317 3,835 3,696 1Q22 4Q22 1Q23 1Q22 4Q22 1Q23 1Q22 4Q22 1Q23 +2% QoQ | +2% YoY -10% QoQ | -4% YoY -3% QoQ | +4% YoY 23
Slide 25: Key messages
Key messages Challenging macro 1 2 3 Wealth management environment IFRS17 adoption results still impacted impacting banking in insurance by investments profitability 4 Positive development in digital indicators 5 Continuous growth in payments 6 ESG update
Slide 26: Positive development in banking digital indicators
Positive development in banking digital indicators… 4 71% 59% 60% 65% Mar22 Mar23 Mar22 Mar23 Digital customers Digital sales (% of digital customers) (% of products sold digitally) 96% 47 89% 45 Mar22 Mar23 Mar22 Mar23 Business accounts NPS – Digital customers (% of business accounts opened digital
Slide 27: … as well as in insurance and wealth management
… as well as in insurance and wealth management 4 35% 41% 33% 37% Mar22 Mar23 Mar22 Mar23 Vida cash life Digital transactions premiums Interfondos (% of total life premiums) (% of digital transactions)
Slide 28: Banking customers reached 5.5 million
Banking customers reached 5.5 million 4 +17% YoY +29% YoY +23% YoY 5.3 5.5 2.2 2.2 162 4.7 1.7 152 132 1Q22 4Q22 1Q23 1Q22 4Q22 1Q23 1Q22 4Q22 1Q23 Banking – retail customers (mn) Banking – digital customers (mn) Banking – commercial customers (th) 27
Slide 29: Key messages
Key messages Challenging macro 1 2 3 Wealth management environment IFRS17 adoption results still impacted impacting banking in insurance by investments profitability 4 Positive development in digital indicators 5 Continuous growth in payments 6 ESG update
Slide 30: Solid YoY growth in key business drivers
Solid YoY growth in key business drivers 5 693 1,159 88.2 94.4 +67% YoY +7% YoY Mar22 Mar23 Mar22 Mar23 Merchants (th) Revenues(1) (S/ mn) E-commerce 14% 16% (%) 10.9 13.5 34.1 32.4 +24% YoY -5% YoY Mar22 Mar23 Mar22 Mar23 29 Transactional volumes in payments acquirer (S/ bn) EBITDA (S/ mn) 1) Profo
Slide 31: Over 11.1 million users in Plin and 2.6 million in Tunki
Over 11.1 million users in Plin and 2.6 million in Tunki 5 +64% YoY +59% YoY Apr23 Apr23 11.1 942 917 10.7 578 6.6 Mar22 Mar23 Mar22 Mar23 Users (mn) Merchants (th) +46% YoY +56% YoY Apr23 Apr23 2.6 581 2.6 1.8 575 368 Mar22 Mar23 Mar22 Mar23 Users (mn) Merchants (th) 30
Slide 32: Continuous growth in Plin and Tunki transactions
Continuous growth in Plin and Tunki transactions 5 Transactions (units in mn) Transactions (units in mn) 21.2 5.4 19.3 19.8 5.1 4.5 14.5 3.1 10.9 8.5 2.2 1.5 Mar22 Jun22 Sep22 Dec22 Mar23 Apr23 Mar22 Jun22 Sep22 Dec22 Mar23 Apr23 +3% QoQ | +2x YoY +13% QoQ | +3x YoY 31
Slide 33: Key messages
Key messages Challenging macro 1 2 3 Wealth management environment IFRS17 adoption results still impacted impacting banking in insurance by investments profitability 4 Positive development in digital indicators 5 Continuous growth in payments 6 ESG update
Slide 34: ESG updates
ESG updates update 6 Environmental Social Governance & Economic +35K clients GHG emissions 2022 MINAM recognition measurement • Interbank •Interseguro #1 Interbank • Interbank +150K savings accounts •Inteligo +65K credit loans +6K housing access Interbank's social- +S/14K employee donations environm
Slide 35: Increasingly involved in green & sustainable financing
Increasingly involved in green & sustainable financing 6 160(US$ mn) 60 (US$ mn) 20(US$ mn) 100 (S/ mn) Sustainability-linked Green Sustainability-linked Sustainability-linked loan loan Loan loan (Lead arranger) (Arranger) (Arranger) (Arranger) We help our customers grow their businesses in a sustai
Slide 36: 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 21 years 2011 - 2023 #3 in Latin America #3 in Peru in 2022 in 2023 #4 in Peru #6 for work from home in Peru in 2023 in 2022 #5 for women in Peru in 2023 #2 for millennials in Peru Top 15 in Peru in 2
Slide 37: Strong corporate governance
Strong corporate governance 6 Board of directors BOD with 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 below regulato
Slide 38: Takeaways
Takeaways Challenging macro 1 2 3 Wealth management environment IFRS17 adoption results still impacted impacting banking in insurance by investments profitability 4 Positive development in digital indicators 5 Continuous growth in payments 6 ESG update
Slide 39: 1Q23 update on operating trends
1Q23 update on operating trends Capital Profitability Loan growth 2023 1Q23 2023 1Q23 High single digit growth in IBK TCR ∼ 15% 15.2% IFS ROE ∼ 18.0% 13.3%(1) | 11.5% total loans(2) led by low double digit growth in consumer loans IBK CET1 ∼ 11% 11.1% To remain at sound levels Continued path to reco
Slide 40: Appendix
. Appendix CJ Intercorp Financial Services
Slide 41: Sustained assets growth supported by appropriate funding
Sustained assets growth supported by appropriate funding Total gross loans (S/ mn) Total deposits (S/ mn) 44,688 47,025 47,280 47,149 48,898 48,531 46,503 49,817 43,082 43,934 2020 2021 2022 1Q22 1Q23 2020 2021 2022 1Q22 1Q23 AUM evolution (S/ mn) Net shareholders’ equity (S/ mn) 22,981 9,555 10,046
Slide 42: Growth in total revenues driven by NIM recovery
Growth in total revenues driven by NIM recovery Total revenues (1) (S/ mn) NIM (%) 5.5%(2) 6,557 5.0% 5,488 5,922 4.5% 4.5% 4.1% (2) 1,559 1,883 2020 2021 2022 1Q22 1Q23 2020 2021 2022 1Q22 1Q23 Net profit (S/ mn) ROE (%) 1,800 22.4% 1,671 19.3% 17.7% 13.3%(2) 384 478 4.5% 308(2) 2020 2021 2022 1Q22
Slide 43: Overview of Peruvian financial system
Overview of Peruvian financial system Steady loan growth – Banking system gross loans (S/ bn) Profitability recovering – Banking system net profit (S/ mn) ROE 4.0% 13.3% 17.3% 17.8% 17.7% CAGR +4.6% CAGR 350 357 349 353 2020-22 10,119 326 1.2% 7,218 238 228 232 221 222 2,112 2,506 2,720 129 132 11.4
Slide 44: Strategic focus on consumer loans
Banking Strategic focus on consumer loans Distinctive loan breakdown… …when compared to the banking system Banking System Commercial Commercial 45% 63% Mortgages Consumer Mortgages Consumer 37% loans Retail 46% loans Retail 63% 37% 54% 55% S/ 45.6BN S/ 25.3BN S/ 353.3BN S/ 132.0BN Leading position i
Slide 45: 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 Mar23: 14.9% Other MS 2022: 14.9% 5% Bonds 8% Demand Savings 13.3% 21% 42% 9.6% Due to banks Deposits 13% 79% 6.1% 5.6% Time 32% CAGR 2017-22 1Q2
Slide 46: 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% 3.9% 3.8% 4.0% BBVA BBVA 5.4% 2.4% BBVA 4.4% Scotiabank Scotiaba
Slide 47: Asset quality metrics evolving with macro outlook
Asset quality metrics evolving with Banking macro outlook Impairment loss on loans, net (S/ mn) Cost of risk (%) 1,291 13.4% 463 368 313 328 278 199(1) 193 210 4.5% 189 178 3.4% 3.1% 3.2% 148 152 2.5% 110 1.9%(1) 1.8% 1.7% 1.1% 1.4% 1.8% 1.9% 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q
Slide 48: Reactiva loan balances down 60% YoY, representing 4% of total portfolio
Reactiva loan balances down 60% YoY, Banking representing 4% of total portfolio Reactiva Peru loan balances by segment (S/ bn) 1Q23 Segment YoY Corporate -85% 4.2 Mid-sized -62% Corporate: S/ 0.4 bn Mid-sized: S/ 0.8 bn 2.3 SME: S/ 0.5 bn SME -50% 1.7 Total -60% 1Q22 4Q22 1Q23 47 SME Mid-sized Corpo
Slide 49: Manageable dollarization levels
Banking Manageable dollarization levels Total loans Retail loans Commercial loans % PEN 67% 72% 88% 93% 56% 60% System 8% 5% 26% 25% 46% 50% 92% 95% 75% 75% 54% 50% 1Q18 1Q23 1Q18 1Q23 1Q18 1Q23 Retail loans breakdown Commercial loans breakdown Consumer Mortgages Corporate Medium Small & Micro 96% 9
Slide 50: Manageable dollarization levels
Banking Manageable dollarization levels Gross Loans by segment & percentage in S/ Currency mix Mar23 93% 94% 94% 94% 95% 95% 89% 92% 92% Gross Loans Total Assets 85% 78% 76% USD 73% 74% 73% 74% 74% 75% USD 71% 25% 31% 63% 64% 58% 52% 52% 52% 51% 50% 50% 49% 41% S/ S/ 75% 69% 2014 2015 2016 2017 2018
Slide 51: 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 24% annuities 12% Regulated Private D&S
Slide 52: Annuities market contraction offset by growth in life insurance
Annuities market contraction offset Insurance by growth in life insurance Strong performance in most products Outgrowing the industry with digital innovation (Gross premiums and collections by business unit - S/ mn) (YoY growth in Individual Life premiums) Interseguro System 1,271 8 1,209 109 9 27.1
Slide 53: Key differences between IFRS4 and IFRS17
Key differences between IFRS4 and Insurance IFRS17 From IFRS4 to IFRS17 1 Profit is recognized at the beginning of the contract in IFRS4, while profit is recognized over the period of the contract in IFRS17 (early recognition of losses on onerous contracts is mandatory) No changes in: 1 2 Liabilitie
Slide 54: Resilient wealth management business
Resilient wealth management Wealth management business AUM growth – Inteligo Group AUM (S/ mn) Fee origination – Fee/Avg. AUM (%) 22,981 21,795 20,989 21,317 21,307 0.8% 0.8% 0.7% 0.7% 0.7% 2020 2021 2022 3M22 3M23 2020 2021 2022 3M22 3M23 Diversified revenue generation (S/ mn) Recovering profitabil
Slide 55: 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 1Q23 Fee income share 1Q23 Fee income share 1Q23 54
Slide 56: IFS 2019-2022 income statement – IFRS
IFS 2019-2022 income statement – IFRS % chg % chg % chg % chg Income Statement (S/ mm) 2019 2020 2021 2022 '19/'18 '20/'19 '21/'20 '22/'21 Interest and similar income 4,847.2 4,665.0 4,605.6 5,871.3 12.2% (3.8%) (1.3%) 27.5% Interest and similar expenses (1,424.0) (1,192.3) (1,057.9) (1,662.1) 21.0%
Slide 57: IFS 1Q23 income statement – IFRS17
IFS 1Q23 income statement – IFRS17 Intercorp Financial Services' P&L statement S/ million %chg %chg 1Q22 4Q22 1Q23 QoQ YoY Interest and similar income 1,248.1 1,684.0 1,658.0 -1.5% 32.8% Interest and similar expenses -303.2 -535.4 -579.9 8.3% 91.3% Net interest and similar income 945.0 1,148.5 1,078
Slide 58: IFS 2019-2022 balance sheet – IFRS
IFS 2019-2022 balance sheet – IFRS % chg % chg % chg % chg Balance Sheet (S/ mm) 2019 2020 2021 2022 '19/'18 '20/'19 '21/'20 '22/'21 Cash and due from banks 11,128.9 18,765.5 17,104.5 13,193.4 32.8% 68.6% (8.9%) (22.9%) Inter-bank funds 85.0 18.1 30.0 296.1 (82.8%) (78.7%) 65.7% n.m. Financial inves
Slide 59: IFS 1Q23 balance sheet – IFRS17
IFS 1Q23 balance sheet – IFRS17 Intercorp Financial Services' Statement of financial position S/ million %chg %chg 03.31.22 12.31.22 03.31.23 QoQ YoY Assets Cash and due from banks and inter-bank 13,690.8 13,489.5 12,448.5 -7.7% -9.1% funds Financial investments 24,306.7 22,787.6 24,447.2 7.3% 0.6%
Slide 60: 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 61: 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 62: [J Intercorp
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