39 slides from Intercorp Financial Services's investor presentation, September 2015
Slide 1: Investor Presentation
Confidential Investor Investor Presentation Presentation October 2014 September 2015
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 Overview
IFS Overview 1B POR PS finn aie, Jt - mt yee Be Yur " : fT VA Nags) a, p Saas, i » oR / ont) fae “a ie ear CJ Intercorp Financial Services } =i
Slide 4: Focus on highly attractive financial services businesses
Focus on highly attractive financial services businesses 99.3% 100.0% 100.0% Universal bank with strategic Insurance company with strategic Leading provider of wealth focus on retail banking focus on life and annuities management services #2 Credit card financing #1 Retirement annuities (4) 23.1%
Slide 5: IFS highlights (IFRS)
IFS highlights (IFRS) S/. mm YoY (%) Contribution by segment (1) Total assets 43,180 15.8% Total assets (2) Net profit (2) Gross loans 7% 25,233 11.8% 13% 12% Total deposits 23,283 6.0% 15% Total equity 4,187 12.1% 81% 72% Net Profit (2014) 962.5 (1.2%) Banking Insurance Wealth management Net Profit
Slide 6: IFS is part of one of Peru’s leading business groups
IFS is part of one of Peru’s leading business groups Intercorp Financial Services Intercorp Retail Education Department K-12 education #2 Consumer Leading private #1 Retirement #2 Supermarket #1 Pharmacy #1 Shopping stores & home and higher lending bank annuities chain chain malls improvement educat
Slide 7: IFS: Key investment highlights
IFS: Key investment highlights 1 Top performing economy in Latin America Peru: highly attractive Growing middle class with potential for significant wealth creation market Fast-growing and profitable financial system 2 Unique platform to Leading retail banking platform benefit from growth
Slide 8: IFS: Key investment highlights
IFS: Key investment highlights 1 Top performing economy in Latin America Peru: highly attractive Growing middle class with potential for significant wealth creation market Fast-growing and profitable financial system 2 Unique platform to Leading retail banking platform benefit from growth
Slide 9: Peru: highly attractive market with a bright future ahead
Peru: highly attractive market with a bright future ahead 2008-2013: A golden period of fast growth and low inflation GDP growth slowed in 2014… Avg. inflation (Y axis) and real GDP growth (X axis) for 2008-2013 period 6.0% Growth (%) 2014 Lower commodity 5.5% prices and climatic Baa3 / BB+ / BBB
Slide 10: Growing middle class with potential for wealth creation
Growing middle class with potential for wealth creation Peru has a young population with an emerging middle class Peruvian population by age groups Emerging middle class (1) (% of population) (% of households) Socioeconomic Segments 2004 2012 2016E 0–20 A 0% 3% 3% 42.6% 20–30 18.1% B 4% 12% 15% Over
Slide 11: Profitable financial system with room for further growth
Profitable financial system with room for further growth Stable gross loans growth and high asset quality High and sustained profitability (S/. bn) (S/. mm) 10 1.3% 1.6% 1..5% 1.5% 1.8% 2.1% 2.5% 2.7% 31.5% 24.8% 23.8% 24.6% 22.6% 21.4% 19.8% 18.8% 23.3% ‘08-’2Q15 211 CAGR 193 5,326 170 4,968 4,332
Slide 12: IFS: Key investment highlights
IFS: Key investment highlights 1 Top performing economy in Latin America Peru: highly attractive Growing middle class with potential for significant wealth creation market Fast-growing and profitable financial system 2 Unique platform to Leading retail banking platform benefit from growth
Slide 13: Interbank has experienced sustained healthy growth
Interbank has experienced sustained healthy growth Higher gross loans growth than the system Leading position in credit cards and consumer loans Interbank’s gross loans (S/. bn) (1) Market share ‘08-’2Q15 Credit cards Consumer loans 22.9 CAGR 21.8 Others Others 19.8 9% BCP 4.3 21.8% BBVA 17% Interba
Slide 14: Sound risk management leading to strong asset quality
Sound risk management leading to strong asset quality Superior asset quality despite focus on retail business Decreasing cost of risk while maintaining high coverage ratios PDL Ratio Coverage ratio and cost of risk evolution 2.7% 283.1% 266.6% 269.1% 274.1% 234.5% 226.6% 167.9% 178.3% 2.5% 2.1% Syst
Slide 15: Diversified funding supported by retail deposit base
Diversified funding supported by retail deposit base Growing funding base with high component of deposits… …with focus on retail-oriented deposits… Interbank’s funding mix Interbank’s deposits breakdown (S/. bn) 31 29 26 14% [NOMBRE DE 21 18% CATEGORÍA] 17 17 Retail 32% 13 14 46% 4% 22% 68% 74% 2008
Slide 16: Balanced currency mix
Balanced currency mix Loans by segment & percentage in PEN Currency mix 2Q15 100 .00% 82.1% 84.7% 87.0% 78.7% 80.0% 79.5% Interbank’s Loans Interbank’s Total Assets 90. 00% 80. 00% 70. 00% 60. 00% 63.4% 68.3% USD 50. 00% 55.8% 60.1% 31.7% 40. 00% 53.2% 55.7% 47.9% USD 30. 00% 38.6% 40.5% 33.9% 44.4%
Slide 17: Convenient and extensive distribution network
Convenient and extensive distribution network Growing distribution network Open from 9:00am to 9:00pm, Monday to Sunday 289 199 2008 Financial stores Jun-15 3,483 2,297 1,793 1,031 2008 Jun-15 Correspondent agents ATMs Strategic locations throughout Peru (1) (1) Financial stores Off-site ATMs On-sit
Slide 18: Solid capitalization levels
Solid capitalization levels BIS ratio evolution • Sound regulatory environment 11.9% 13.5% 13.6% 13.4% 14.1% 13.7% 14.1% 14.3% 16.5% SBS has adopted Basel II since 2008 15.2% 14.4% 13.7% 13.4% SBS approved implementation of Basel III 13.3% 5.8% (first set) between 2012 and 2016: 11.5% 3.2% 5.6%
Slide 19: Interseguro is the industry leader in the fastest-growing insurance product…
Interseguro is the industry leader in the fastest-growing insurance product… Strategic focus in annuities... ... the fastest growing product Premiums breakdown (Jun-15) June ’09 – June ’15 insurance industry premiums CAGR Industry Annuities 21.3% P&C Annuities Annuities 8% 61% 17% Other life D&S 17.
Slide 20: …achieving solid investment returns
…achieving solid investment returns Differentiated investment approach Strategic asset allocation Inv. portfolio by type of investment (IFRS) Inv. portfolio by currency (IFRS) • Experienced investment team and innovative approach Fund • Portfolio diversification to reduce volatility and increase i
Slide 21: Inteligo: High growth wealth management business
Inteligo: High growth wealth management business Strong AUM + deposits growth… (US$ mm) • Poised to benefit from wealth creation in Peru, driven by 2.0x 32.4x 2.4x 4.1x 3.0x 4.4x 3.5x 4.2X GDP per-capita income growth 3,591 3,771 Serves 3,000 clients with focus on high net worth 3,313 2,890 indiv
Slide 22: IFS: Key investment highlights
IFS: Key investment highlights 1 Top performing economy in Latin America Peru: highly attractive Growing middle class with potential for significant wealth creation market Fast-growing and profitable financial system 2 Unique platform to Leading retail banking platform benefit from growth
Slide 23: Interbank: High profitability leading to solid earnings generation
Interbank: High profitability leading to solid earnings generation Net profit (S/. mm) ROAE 31.3% 37.5% 32.9% 31.7% 27.1% 26.6% 25.5% 23.7% 24.9% 24.0% 24.9% Industry 31.5% 24.8% 23.8% 24.6% 22.6% 21.4% 19.8% ROAE 709 647 558 6 570 (57) 541 498 731 429 615 406 270 335 2008 2009 2010 2011 2012 2013 2
Slide 24: Interbank: High profitability leading to solid earnings generation
Interbank: High profitability leading to solid earnings generation NIM NIM net of provision expense Interbank Jun-15 (local GAAP): 8.1% Interbank Jun-15 (local GAAP): 6.4% Industry Jun-15 (local GAAP): 6.7% Industry Jun-15 (local GAAP): 5.2% 6.2% 6.3% 6.6% 6.1% 4.7% 4.8% 4.5% 4.5% 2013 2014 Jun-14 J
Slide 25: Interseguro: High profitability leading to solid earnings generation
Interseguro: High profitability leading to solid earnings generation Net profit (S/. mm) ROAE 3.1% 32.0% 26.5% 48.8% 40.1% 31.2% 42.6% 47.6% 28.1% 10.0% 54.1% Industry 4.6% 20.6% 18.1% 21.8% 12.8% 17.7% 20.0% ROAE 282 207 188 189 151 152 155 151 58 85 76 111 25 7 24 2008 2009 2010 2011 2012 2013 201
Slide 26: Inteligo: High profitability leading to solid earnings generation
Inteligo: High profitability leading to solid earnings generation Net profit (1) Fee income growth (1) (US$ mm) (US$ mm) ROAE 8.6% 25.2% 21.4% 22.4% 31.7% 29.8% 33.0% 45.8% 36.5% 31 26 20 19 47 17 15 13 9 5 40 37 34 2008 2009 2010 2011 2012 2013 2014 Jun-14 Jun-15 29 Efficiency (2) 24 23 21 36.9% 30
Slide 27: IFS consistently delivering growth and profitability
IFS consistently delivering growth and profitability Net profit (S/. mm) ROAE 18.1% 32.1% 26.2% 34.0% 28.2% 25.0% 26.8% 24.6% 22.2% 28.2% (1) (1) 975 963 151 58 706 726 699 609 507 499 111 25 249 416 2008 2009 2010 2011 2012 2013 2013 2014 Jun-14 Jun-15 Local GAAP – Excluding Inteligo IFRS – Includi
Slide 28: IFS: Key investment highlights
IFS: Key investment highlights 1 Top performing economy in Latin America Peru: highly attractive Growing middle class with potential for significant wealth creation market Fast-growing and profitable financial system 2 Unique platform to Leading retail banking platform benefit from growth
Slide 29: Clear strategy: speed, convenience and customer experience
Clear strategy: speed, convenience and customer experience Customer centric Omni-channel / Digital Strong culture World class CRM Sales and convenience GPTW Strategic imperative Driver: Low penetration Strengthen Expand retail customer base, leverage Inteligo’s platform leadership in core products
Slide 30: Experienced management team and strong corporate governance
Experienced management team and strong corporate governance Experienced and well-recognized management team Sound governance practices Int’l Years in Company Name Position Experience Sector IFS: 3 out of 5 BOD with Interbank (4): 7 out of 11 Luis Felipe Castellanos CEO / CEO 17 majority of ind
Slide 31: IFS: Key investment highlights
IFS: Key investment highlights 1 Top performing economy in Latin America Peru: highly attractive Growing middle class with potential for significant wealth creation market Fast-growing and profitable financial system 2 Unique platform to Leading retail banking platform benefit from growth
Slide 32: Appendix
Appendix CJ Intercorp Financial Services oy ea q
Slide 33: 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 2013 2014 2014 vs. 2013 2014 2015 2015 vs. 2014 Balance Sheet Total gross loans 20,947 23,197 10.7% 22,562 25,233 11.8% Total assets 36,179 40,376 11.
Slide 34: 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 2013 2014 2014 vs. 2013 2014 2015 2015 vs. 2014 Banking Total gross loans 19,841 21,791 9.8% 21,326 23,659 10.9% Total deposits 20,239 21,124 4
Slide 35: Interbank’s FY14 net profit bridge to IFRS
Interbank’s FY14 net profit bridge to IFRS Local GAAP vs. IFRS $8 00.0 (S/. mm) 12 $7 00.0 38 $6 00.0 293 287 Cross currency swap Release of loss change from generic $5 00.0 unrealized earnings provisions, lower (Local GAAP) to loss depreciation and (IFRS) lower taxes $4 00.0 709 729 $3 00.0 Mainly
Slide 36: Interbank’s 1H15 net profit bridge to IFRS
Interbank’s 1H15 net profit bridge to IFRS Local GAAP vs. IFRS (S/. mm) $500 $450 30 4 $400 13 $350 165 163 $300 Higher provision Cross currency swap Lower requirements loss change from depreciation and $250 under IFRS unrealized earnings lower taxes (Local GAAP) to loss 430 (IFRS) $200 406 Mainly r
Slide 37: Interseguro’s FY14 net profit bridge to IFRS
Interseguro’s FY14 net profit bridge to IFRS Local GAAP vs. IFRS (S/. mm) Use of different discount rates to calculate technical reserves 66 Includes gains on 131 valuation of Intercorp’s 16 real estate investment Real estate gains on valuation are recognized under IFRS but not under 14 Local GAAP 2
Slide 38: Interseguro’s 1H15 net profit bridge to IFRS
Interseguro’s 1H15 net profit bridge to IFRS Local GAAP vs. IFRS (S/. mm) Under SBS GAAP certain bonds are considered IFRS gains are measured HTM, thus gains on sales against market value, are amortized during the whereas SBS GAAP gains are life of the bonds measured against cost Use of different di
Slide 39: Fl _—_._ Financial Services
Fl _—_._ Financial Services