Intercorp Financial Services Inc. · NYSE:IFS
Intercorp Financial Services — Q2 2020 Earnings Presentation
49 slides from Intercorp Financial Services's earnings presentation, August 2020
Slide 1: Earnings Presentation 2Q20 Results
Earnings Presentation 2Q20 Results
Slide 2: Agenda
Agenda Key Financial messages highlights 2Q20 Takeaways results 1
Slide 3: Agenda
Agenda Key Financial messages highlights 2Q20 Takeaways results 2
Slide 4: Key messages
Key messages 1 2 3 4 5 Strong liquidity and Activity recovering from Digital trends High provisions Double-digit reduction capital position COVID-19 lows continue to support following a precautionary in expenses due to cost IFS’ strategy approach in the containment measures expected loss model 3
Slide 5: Strong liquidity levels in 2Q20 with market share gains in deposits at Interbank
Strong liquidity levels in 2Q20 with market share 1 gains in deposits at Interbank Interbank - Loan to deposit ratio (LDR) Interbank - Total deposits % as of June 30th, 2020 S/ million Total LDR Market 12.9% 12.5% 13.2% Share 104% 107% 97% 99% System: 102% +25.5% 40,846 32,548 34,502 Interbank BBVA
Slide 6: Solid capital ratios at all IFS' segments
1 Solid capital ratios at all IFS’ segments 143.8% 138.5% 144.5% Banking System 14.8% 14.3% 14.8% 100.0% regulatory TCR minimum 16.7%(1) 12.0% 16.1% 16.1% 2Q19 1Q20 2Q20 11.1% 10.6% Solvency ratio 10.7% regulatory minimum 24.4% 22.5% 21.1% 2Q19 1Q20 2Q20 2Q19 1Q20 2Q20 8.0% Total capital ratio (TCR)
Slide 7: Economic activity in Peru recovering from low levels due to lockdown
Economic activity in Peru recovering from low 2 levels due to lockdown GDP growth Mining and fuel GDP Electricity subsector (YoY % Chg) (YoY % Chg) index (YoY % Chg) 3.8% 4.0% 6.0% 2.4% 11.5% -14.4% -21.8% -12.6% -12.1% 3.1% 3.9% TB -42.3% -45.8% -25.1% -29.5% U Jan Feb Mar Apr May Jun Jan Feb Mar A
Slide 8: Monthly operating trends indicate positive developments in activity for 3Q20
Monthly operating trends indicate positive 2 developments in activity for 3Q20 Credit and debit cards turnover Payroll deduction loans disbursements Gross premiums plus collections (Index; 100 = Feb20) (Index; 100 = Feb20) (Index; 100 = Feb20) 100 100 100 87 92 69 76 67 50 52 39 8 Feb20 Apr20 Jun20
Slide 9: Digital KPIs continue to show positive trends
3 Digital KPIs continue to show positive trends Interbank - Digital users Interbank - 100% digital customers Interbank - Business accounts % of digital users 100% digital customers N° and % of business accounts opened digitally (thousand) 44% 70% 81% 74% 52% 69% 42% 5 60% 31% 3 1 Jun19 Mar20 Jun20 J
Slide 10: 3.7 mm retail customers and 1 mm 100% digital customers with improving NPS at Interbank
3.7 mm retail customers and 1 mm 100% digital 3 customers with improving NPS at Interbank Retail customers Net promoter score (NPS) Thousand Score +15.1% +8p 3,590 3,724 39 36 3,236 31 Jun19 Mar20 Jun20 Jun19 Mar20 Jun20 100% digital customers NPS 100% digital customers Thousand Score +87.1% +12p 1,
Slide 11: We have rescheduled ~30% of our loan portfolio at Interbank
We have rescheduled ~30% of our loan portfolio 4 at Interbank Interbank - Performing loans Interbank – Loan rescheduling S/ billion S/ billion Clients 343 459 31% Most 39.1 (Thousand) at System 2.4% Small businesses Rescheduled Level(1) exposed 8.3% (0.9) balance (%) 29% 31% (3.3) Self-employed work
Slide 12: High provisions following a precautionary approach in the expected loss model
High provisions following a precautionary 4 approach in the expected loss model Interbank - Cost of risk Interbank - Non-performing exposure NPL 127.9% 182.7% coverage ratio After adjustments to the expected 13.4% 8.5% 13.4% loss model: (S2+S3) ratio: 23.3% 9.6% 9.7% NPL ratio: 6.2% 3.4% 2.5%(1) 3.4
Slide 13: Double-digit reduction in expenses due to cost containment measures
Double-digit reduction in expenses due to cost 5 containment measures Interbank - Other expenses bridge from 2Q19 to 2Q20 IFS & subsidiaries - Other expenses YoY growth by line 2Q20 YoY growth Efficiency ratio(1) +1.0% -22.2% -43.1% -7.0% -15.0% 1Q20 2Q20 +1 IFS -14% 36.4% 29.9% -36 -15 -9 Interbank
Slide 14: Agenda
Agenda Key Financial messages highlights 2Q20 Takeaways results 13
Slide 15: Highlights
Highlights 2Q20 earnings affected by higher provisions from COVID-19 and low activity during lockdown • Loans outgrowing the system, market share up to 12.6% boosted by our participation in Reactiva Peru Program Banking • Strong growth in deposits drove market share up to 13.2%, cost of funds down 5
Slide 16: 2Q20 earnings affected by higher provisions, partially offset by positive results from investments
2Q20 earnings affected by higher provisions, partially offset by positive results from investments Intercorp Financial Services Banking Net profit in S/ million Net profit in S/ million ROAE 18.5% 6.6% n.m. ROAE 21.7% 13.8% n.m. 350 Negative 300 Negative Impact of Impact of provisions: 221 provision
Slide 17: IFS key indicators 2Q20
IFS key indicators 2Q20 S/ million 2Q19 1Q20 2Q20 %chg QoQ %chg YoY (1) Total revenues 1,304.9 1,292.8 1,315.2 1.7% 0.8% (1) Net interest and similar income 856.4 908.7 870.5 -4.2% 1.6% (1) Efficiency ratio 35.0% 36.4% 29.9% -650 bps -510 bps Profit for the period 350.1 144.9 -457.3 n.m. n.m. IFS (1
Slide 18: 1H20 earnings affected by higher provisions
1H20 earnings affected by higher provisions Intercorp Financial Services Banking Net profit in S/ million Net profit in S/ million ROAE 18.9% n.m. ROAE 20.7%(2) n.m. 703 600 32 Negative Negative Impact of Impact of provisions: provisions: S/ -1.6bn 567(2) S/ -1.6bn -216(1) -250(1) -96 -96 -312 -346
Slide 19: IFS key indicators 1H20
IFS key indicators 1H20 S/ million 1H19 1H20 %chg YoY Total revenues (1) 2,588.9 2,608.0 0.7% (1) Net interest and similar income 1,680.6 1,779.2 5.9% (1) Efficiency ratio 34.4% 33.1% -130 bps Profit for the period 702.8 -312.4 n.m. IFS (1) Adjusted profit for the period 702.8 -216.1 n.m. ROAE 18.9%
Slide 20: Agenda
Agenda Key Financial messages highlights 2Q20 Takeaways results 19
Slide 21: COVID-19 impacts reflected in 2Q20 key banking indicators
COVID-19 impacts reflected in 2Q20 key banking Banking indicators Net interest and similar income Loan provision expense S/ million S/ million Including one- NIM(1) 5.8% 5.6% 5.0% off impact on NII: Cost of risk(2) 2.8% 3.4% 13.4% 4.0% Adj. NIM after 3.9% 3.2% n.m. Negative impact on provisions(2) p
Slide 22: 30 bps QoQ gain in market share in loans, to 12.6%
Banking 30 bps QoQ gain in market share in loans, to 12.6% Performing loans Breakdown of loans S/ million S/ million %chg %chg 2Q19 1Q20 2Q20 QoQ YoY System’s growth(1) Consumer loans Credit cards 5,396.9 5,800.4 5,285.0 -8.9% -2.1% Other consumer 6,016.6 6,486.1 6,360.5 -1.9% 5.7% +18.9% Total cons
Slide 23: We have helped our customers through the Reactiva Peru Program
We have helped our customers through the Banking Reactiva Peru Program Commercial loans Corporate loans S/ million, Local GAAP S/ million, Local GAAP +28.4% +20.3% 20,545 20,545 10,286 742 16,000 3,833 3,8338,549 16,000 9,544 16,713 Mar20 Jun20 Mar20 Jun20 Mid-sized loans SME loans S/ million, Local
Slide 24: Strong growth in deposits with cost of funds down 50 bps QoQ
Strong growth in deposits with cost of funds Banking down 50 bps QoQ Funding structure Funding breakdown S/ million S/ million %chg %chg 2Q19 1Q20 2Q20 QoQ YoY LDR(2) 102.3% 103.4% 97.2% Deposits 33,112.4 35,062.1 41,449.4 18.2% 25.2% Retail 14,878.8 16,816.6 18,834.4 12.0% 26.6% System’s Commercial
Slide 25: We continued to take measures to strengthen our capital levels
We continued to take measures to strengthen Banking our capital levels Tier I Tier II CET1 Banking system 14.8% 14.9% 14.6% 14.3% 14.8% Total Capital Proforma(1): Ratio 16.7% 16.1% 16.1% • Interbank’s capital ratio of 14.7%, above 15.4% 15.2% 14.7% regulatory risk-adjusted minimum capital 4.0% ratio
Slide 26: Premiums show a recovering trend
Insurance Premiums show a recovering trend Gross premiums plus collections – Quarterly evolution Gross premiums plus collections – Monthly evolution S/ million S/ million Annuities market 32.1% 27.9% 25.5% YoY %Chg. -14.9% share(1) -38.3% 70 220 1 208 64 57 22 53 69 19 33 135 19 11 36 12 34 49 52 11
Slide 27: Investment portfolio increased 7.5% QoQ, ROIP at 6.3%
Investment portfolio increased 7.5% QoQ, ROIP Insurance at 6.3% Investment portfolio Results from investments(1) S/ million S/ million ROIP(2) 6.0% 4.2% 6.3% Impact on investments: 2Q19: S/ -20 mm +4.5% +6.5% 1Q20: S/ -56 mm 2Q20: S/ +5 mm 12,650 191 12,100 179 11,770 1,031 1,000 985 1,049 801 921 1
Slide 28: Strong revenues in 2Q20, positively affected by M2M
Strong revenues in 2Q20, positively affected Wealth Management by M2M Net interest and similar income Fees from financial services S/ million S/ million Fees / Avg. 0.8% 1.0% 0.8% AUM(1) -15.3% +9.0% 25 26 43 21 40 37 2Q19 1Q20 2Q20 2Q19 1Q20 2Q20 Other income Revenues S/ million S/ million Positive
Slide 29: AUM and loans grew 7.2% and 3.2% QoQ, respectively
AUM and loans grew 7.2% and 3.2% QoQ, Wealth Management respectively AUM Loans S/ million S/ million +4.5% +9.5% 19,302 1,611 1,662 18,479 18,006 1,518 2Q19 1Q20 2Q20 2Q19 1Q20 2Q20 Other expenses Net profit S/ million S/ million ROAE 16.8% n.m. 17.2% Positive -7.2% -2.3% 35 impact on 29 33 investme
Slide 30: Agenda
Agenda Key Financial messages highlights 2Q20 Takeaways results 29
Slide 31: We foresee positive trends in 2H20 vs. 1H20
We foresee positive trends in 2H20 vs. 1H20 Overall activity Capital and liquidity should continue to recover to remain at sound NIM will continue to be levels and well above Reactiva 2 loans impacted despite regulatory requirements to continue to lower cost of funds boost commercial loans Strict co
Slide 32: Summary
Summary 1 2 3 4 5 Strong liquidity and Activity recovering from Digital trends High provisions Double-digit reduction capital position COVID-19 lows continue to support following a precautionary in expenses due to cost IFS’ strategy approach in the containment measures expected loss model 31
Slide 33: Appendix
Cd Intercorp Financial Services Appendix
Slide 34: Relevant net income of S/ 254 million in 1H20
Relevant net income of S/ 254 million in 1H20 Local GAAP & IFRS Interbank – Local GAAP Interseguro – Local GAAP Inteligo – IFRS Net profit in S/ million Net profit in S/ million Net profit in S/ million ROAE 21.5% 7.9% 42.7% 12.8% 27.9% n.m. 572 261 112 239 88 (1) 138 (2) 37 1H19 1H20 1H19 1H20 -22
Slide 35: IFS 2Q20 statement of financial position
IFS 2Q20 statement of financial position Intercorp Financial Services' Statement of financial position S/ million %chg %chg 2Q19 1Q20 2Q20 QoQ YoY Assets Cash and due from banks and inter-bank funds 10,823.0 11,733.3 15,156.3 29.2% 40.0% Financial investments 17,835.5 18,634.9 21,198.7 13.8% 18.9% L
Slide 36: IFS 2Q20 P&L
IFS 2Q20 P&L Intercorp Financial Services' P&L statement S/ million %chg %chg 2Q19 1Q20 2Q20 QoQ YoY Interest and similar income 1,201.7 1,248.2 1,043.5 -16.4% -13.2% Interest and similar expenses -345.4 -339.5 -309.7 -8.8% -10.3% Net interest and similar income 856.4 908.7 733.8 -19.2% -14.3% Impai
Slide 37: Banking segment's 2Q20 statement of financial position
Banking segment’s 2Q20 statement of financial position Banking Segment' Statement of financial position S/ million %chg %chg 2Q19 1Q20 2Q20 QoQ YoY Assets Cash and due from banks and inter-bank funds 10,131.0 10,295.8 13,830.4 34.3% 36.5% Financial investments 5,254.5 6,052.4 7,605.2 25.7% 44.7% Loa
Slide 38: Banking segment's 2Q20 P&L
Banking segment’s 2Q20 P&L Banking Segment's P&L statement S/ million %chg %chg 2Q19 1Q20 2Q20 QoQ YoY Interest and similar income 1,019.1 1,037.1 853.1 -17.7% -16.3% Interest and similar expense -314.9 -302.8 -273.8 -9.6% -13.0% Net interest and similar income 704.3 734.3 579.3 -21.1% -17.7% Impair
Slide 39: Banking segment's net profit IFRS vs. Local GAAP
Banking segment’s net profit IFRS vs. Local GAAP Net profit – IFRS Net profit bridge from Local GAAP to IFRS (2Q20) S/ million S/ million 300 221 Includes Reclassification of fees on loans, S/ 1.7 mm from interest adjustment due income to fee to adoption of income IFRS 16 -471(1) 161 -96 -568 8 4 6
Slide 40: Dollarization decreased in retail and commercial loans
Dollarization decreased in retail and commercial loans Total loans Retail loans Commercial loans % PEN 68.8% 72.5% 89.9% 91.1% 56.9% 63.7% System 6.8% 6.1% 25.9% 22.7% 38.6% 49.6% 93.2% 93.9% 74.1% 77.4% 61.5% 50.4% 2Q19 2Q20 2Q19 2Q20 2Q19 2Q20 Retail loans breakdown Commercial loans breakdown Cons
Slide 41: Insurance segment's 2Q20 statement of financial position
Insurance segment’s 2Q20 statement of financial position Insurance Segment' Statement of financial position S/ million %chg %chg 2Q19 1Q20 2Q20 QoQ YoY Assets Cash and due from banks and inter-bank funds 246.5 500.3 462.2 -7.6% 87.5% Financial investments 11,100.6 10,785.0 11,618.4 7.7% 4.7% Propert
Slide 42: Insurance segment's 2Q20 P&L
Insurance segment’s 2Q20 P&L Insurance Segment's P&L statement S/ million %chg %chg 2Q19 1Q20 2Q20 QoQ YoY Interest and similar income 152.2 167.9 150.5 -10.4% -1.1% Interest and similar expenses -15.3 -21.2 -22.1 4.3% 44.2% Net interest and similar income 136.8 146.7 128.4 -12.5% -6.2% Recovery (lo
Slide 43: Lower top line activity compensated by a reduction in adjustment of technical reserves
Lower top line activity compensated by a reduction in adjustment of technical reserves Net premiums Adjustment of technical reserves S/ million S/ million 173 164 68 56 67 118 48 32 33 48 29 76 73 3 40 2Q19 1Q20 2Q20 2Q19 1Q20 2Q20 Annuities Individual life Retail Insurance D&S Net claims and benefi
Slide 44: Insurance segment's net profit IFRS vs. Local GAAP
Insurance segment’s net profit IFRS vs. Local GAAP Net profit – IFRS Net profit bridge from Local GAAP to IFRS (2Q20) S/ million S/ million +78.1% 30 15 58 33 58 48 10 13 2 -22 5 2Q19 1Q20 2Q20 2Q19 1Q20 2Q20 Net profit – Local GAAP S/ million Net Profit Net Recurrent Net gain on Other Impairments G
Slide 45: Wealth management segment's 2Q20 statement of financial position
Wealth management segment’s 2Q20 statement of financial position Wealth Management Segment' Statement of financial position S/ million %chg %chg 2Q19 1Q20 2Q20 QoQ YoY Assets Cash and due from banks and inter-bank funds 477.7 758.8 928.9 22.4% 94.5% Financial investments 1,466.7 1,395.1 1,523.5 9.2%
Slide 46: Wealth management segment's 2Q20 P&L
Wealth management segment’s 2Q20 P&L Wealth Management's P&L statement S/ million %chg %chg 2Q19 1Q20 2Q20 QoQ YoY Interest and similar income 38.9 41.1 33.3 -19.0% -14.6% Interest and similar expenses -14.4 -15.5 -12.5 -19.5% -13.3% Net interest and similar income 24.5 25.5 20.8 -18.7% -15.3% Impai
Slide 47: Definitions
Definitions Concept Definition Net interest and similar income + Fee income from financial services + Other income + Net Total revenues premiums earned (Salaries and employee benefits + Administrative expenses + Depreciation and amortization) Efficiency ratio / (Net interest and similar income + Fee
Slide 48: 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
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Intercorp Financial Services — Q2 2020 Earnings Presentation on 6ix