Intercorp Financial Services Inc. · NYSE:IFS
Intercorp Financial Services — Q2 2023 Earnings Presentation
55 slides from Intercorp Financial Services's earnings presentation, Aug 10, 2023
Slide 1: Earnings Presentation 2Q23 Results
Earnings Presentation 2Q23 Results
Slide 2: Macro outlook slightly improving, but still challenging
Macro outlook slightly improving, but still challenging (1) Quarterly GDP growth YoY (%) Interest rates (%) Soles reference rate (BCRP) Dollar reference rate (FED) 2023E Jul23 1.2%-2.0% 7.50 7.75 7.75 7.75 3.9% 5.50 3.4% Jul23 2.0% 2.50 5.25 5.5 1.7% 4.50 4.75 0.25 -0.4% 1.75 -0.6% 1Q22 2Q22 3Q22 4Q
Slide 3: IFS: Continued growth, ROE impacted by CoR and investment results
IFS: Continued growth, ROE impacted by CoR and investment results Good top line growth with Further increase in CoR in Moderation in loan growth consumer lending further increase in NIM 1Q23 2Q23 1Q23 2Q23 1Q23 2Q23 Total loans 15.2% (1) 11.6%(1) IBK NIM 5.5% (2) 5.6% Banking CoR 3.2% 3.6% Revenue C
Slide 4: We continue to build on our key strategic priorities
We continue to build on our key strategic priorities 1. Growth 2. Digital 3. Focus 5.8 mn 46 21.2% Consumer loans MS (%) Banking customers NPS digital retail banking 44.0% +47% 73% (1) Acquiring MS YoY earnings Digital customers 28.0% Annuities MS 4 Data as of 2Q23 1) Market share as of June23, valu
Slide 5: Growing customer base & sustainable earnings
1 2 3 Growing Consolidating customer base Our key our digital & sustainable businesses strategy earnings
Slide 6: Continuous growth of customer base at IFS
1 Continuous growth of customer base at IFS 5.8 2.6 5.0 +15% YoY 2.2 +17% YoY Jun22 Jun23 Jun22 Jun23 Banking – customers (mn) Insurance – customers (mn) 70 1.2 64 +10% YoY 0.8 +53% YoY Jun22 Jun23 Jun22 Jun23 Wealth management – customers (th) Payments – merchants (mn) 6
Slide 7: 2Q23 earnings up 7% QoQ and 47% YoY
2Q23 earnings of S/ 331 mm, up 7% QoQ 1 and 47% YoY IFS net profit (S/ mn) Re-expressed figures for IFS & insurance in 2Q22 for comparison purposes (1) ROE 10.8% 11.5% | 13.3% 14.3% ROE 19.4% 13.6% | 15.8%(2) 14.8% 60.4% 40.5% 143.2% 88 Banking(3) Insurance 321 292(2) 274 42 77 | 51 31 331 308(1) 2Q
Slide 8: Total revenues grew 15% YoY, banking NIM reaches 5.6%
Total revenues grew 15% YoY, banking 1 NIM reaches 5.6% IFS quarterly revenues (S/ mn) Re-expressed figures for IFS & insurance in 2Q22 for comparison purposes (1) NIM 5.0% 5.4% 5.5% NIM 4.9% 5.5%(2) 5.6% 1,263(2) 1,287 521 Insurance 498 478 Banking 1,095 70 (1) 1,868 1,837 1,604 70 2Q22 1Q23 2Q23 2
Slide 9: ~10% YoY growth in fees from banking & payments
~10% YoY growth in fees from banking & 1 payments IFS quarterly net fee income (S/ mn) 190 207 208 Banking % 16% 63% revenues 18% 16% 16% (% revenues) (Fee contribution) 2Q22 1Q23 2Q23 +1% QoQ | +9% YoY 301 86 88 Payments 299 81 294 91% 27% (% revenues) (Fee contribution) 2Q22 1Q23 2Q23 +2% QoQ | +8
Slide 10: Sound efficiency levels, IFS C/I ratio at 34.9%
Sound efficiency levels, IFS C/I ratio at 1 34.9% IFS expenses (S/ mn) Banking expenses (S/ mn) Re-expressed figures for IFS & insurance in 2Q22 for comparison purposes (1) C/I 45.4% 33.6% (1) 34.9% C/I 42.3% 36.9% 37.3% 487 481 498 680 690 656 2Q22 1Q23 2Q23 +2% QoQ | +3% YoY Banking operating leve
Slide 11: Growing customer base & sustainable earnings
1 2 3 Growing Consolidating customer base Our key our digital & sustainable businesses strategy earnings
Slide 12: We are building 100% digital solutions for the customer journey
We are building 100% digital solutions for 2 the customer journey IzipayYa Digital bank Cuenta Sueldo ERNI Digital insurance Loyalty Digital program My financing Payments finances Piggy Bank 100% digital account
Slide 13: Positive development in digital indicators across banking
Positive development in digital indicators 2 across banking… 73% 47 46 83% 68% 75% Jun22 Jun23 Jun22 Jun23 Jun22 Jun23 Digital customers NPS – digital customers Digital self-service (% of digital self-service) (% of digital customers – Retail banking) (Points – Retail Banking) 63% 65% 29% 29% 92% 95
Slide 14: As well as in insurance and wealth management
… as well as in insurance and wealth 2 management Insurance Wealth management 54% 43% 9.4% 7.6% 40% 33% 2Q22 2Q23 2Q22 2Q23 Jun22 Jun23 Digital premiums Digital self-service Digital transactions Interfondos (% of digital transactions) (% of total premiums) (% of digital self-service) 14
Slide 15: Growing customer base & sustainable earnings
1 2 3 Growing Consolidating customer base Our key our digital & sustainable businesses strategy earnings
Slide 16: Increasing market shares
Banking Increasing market shares 22.7 18.6 19.4 21.7 2Q22 2Q23 2Q22 2Q23 Consumer banking loans (%) Retail banking loans (%) 15.1 9.4 14.5 8.9 2Q22 2Q23 2Q22 2Q23 Retail deposits (%) Commercial banking loans (%) 16
Slide 17: Moderation in banking activity with more focus on lower risk segments
Moderation in banking activity with Banking more focus on lower risk segments 6.9 7.0 559 5.9 +1% QoQ 386 428 +11% QoQ +18% YoY -23% YoY 2Q23 1Q23 2Q23 2Q22 1Q23 2Q23 Credit & debit cards purchases (S/ bn) Mortgage disbursements (S/ mn) 1,048 301 267 784 867 -17% QoQ 234 +14% QoQ +11% YoY -11% YoY 2
Slide 18: Sustained growth across revenue lines
Banking Sustained growth across revenue lines % YoY +20% +9% +11% +18% +18 +12 +162 1,287 1,095 2Q22 Net interest income Fee income Other income 2Q23 Banking – Revenue bridge from 2Q22 to 2Q23 (S/ mn) 18
Slide 19: Further NIM expansion at IBK to 5.6% due to increasing yield on loans
Further NIM expansion at IBK to 5.6% due Banking to increasing yield on loans… 63,420 65,895 17% 11.5% 17% 10.9% 10.5% 9.8% 16% 9.1% 9.1% 16% 8.7% 8.3% 7.5% 30% 6.8% 32% 5.4% 5.5% 5.6% 4.9% 5.0% 35% 37% 3.7% 3.8% 3.8% 3.3% 3.2% (1) 2Q22 2Q23 2Q22 3Q22 4Q22 1Q23 2Q23 Banking – Interest-earning assets
Slide 20: Partially offset by rising funding costs
Banking … partially offset by rising funding costs LDR(1) 101% 102% System’s 108% 105% LDR(1) Ref. rate YoY (2) +225 bps (S/) +350 bps (US$) 57,683 58,572 8% 11% 13% 13% 4.0% 39% 3.6% 38% 3.2% 2.8% 79% 2.2% 3.6% 3.3% 2.8% 2.4% 38% 40% 1.7% 2Q22 2Q23 2Q22 3Q22 4Q22 1Q23 2Q23 Retail deposits Commercia
Slide 21: Retail cost of risk continues to increase, strong coverage
Retail cost of risk continues to increase, Banking strong coverage Credit cards & personal loans Payroll deduction loans NPL coverage ratio Cost of risk Mortgages Commercial Reactiva 8% 2% 258% 42% 252% 40% 6.0% 5.4% 247% 173% 178% 21% 20% 3.6% 3.6% 186% 3.2% 11% 52% 11% 56% 68% Retail Retail 1.8% 7
Slide 22: Increased contribution of individual life & retail insurance to total premiums
Increased contribution of individual life & Insurance retail insurance to total premiums Annuities market 28.8% 27.2% 25.5% 28.0% (1) share %chg 285 YoY 266 266 46 37 37 -20% 212 44 109 76 78 -28% 71 65 67 53 +28% 34 57% 46% 88 84 61 77 +9% (2) 2019 2Q22 1Q23 2Q23 Quarterly gross premiums (S/ mn) –
Slide 23: Insurance investment portfolio delivers sound returns
Insurance investment portfolio delivers Insurance sound returns Insurance - ROIP (%) Insurance - Portfolio breakdown 7.8% 11% 9% 6% 6.4% 7% 82% 85% 2Q22 2Q23 Fixed Income Equity and Mutual Funds Real Estate 2Q22 2Q23 23
Slide 24: 6% YoY growth in AUM
Wealth Management 6% YoY growth in AUM AUM (US$ mn) Deposits (US$ mn) Loans (US$ mn) 5,793 5,930 1,037 983 448 459 436 5,601 926 2Q22 1Q23 2Q23 2Q22 1Q23 2Q23 1Q22 1Q23 2Q23 +2% QoQ | +6% YoY -6% QoQ | -10% YoY -5% QoQ | -6% YoY 24
Slide 25: We continue to strengthen our payments ecosystem
We continue to strengthen our payments Payments ecosystem Merchant financing Interoperability MVPs Phase 1 Launching of Izipay and Niubiz QRs May 2023 Apr 2022 Tunki+ Izipay Apr combine to launch IzipayYa 2022 Izipay’s value added service Leading player offering Jan Jan in the acquiring 2020 busines
Slide 26: Growth in merchants and volumes continue
Growth in merchants and volumes Payments continue +53% YoY +16% YoY +43% YoY +2x YoY E-commerce (%) 15% 16% 1.2 13.9 607 1.3 12.0 0.8 425 0.5 Jun22 Jun23 2Q22 2Q23 Jun22 Jun23 2Q22 2Q23 Merchants (mn) Volume (S/ bn) Merchants (th) Volume (S/ bn) 26
Slide 27: Izipay represents a growing and profitable operation
Izipay represents a growing and profitable Payments operation… 94 97 +3% QoQ 32 -7% QoQ 30 89 +8% YoY 28 +9% YoY 2Q22 1Q23 2Q23 2Q22 1Q23 2Q23 Revenues (S/ mn) EBITDA (S/ mn) 27
Slide 28: Providing new income streams
Payments … providing new income streams Increased customer engagement Float Fee income • Fee income • Net interest income Synergies from Izipay cash Greater transactional volumes flow coming to IBK accounts from micro merchants +32% YoY +2x YoY cash in flow 28
Slide 29: Plin accelerates on new interoperable P2P system
Plin accelerates on new interoperable Payments P2P system +57% YoY +84% YoY +2x YoY +82% 11.9 1.8 6.5 16.0 7.5 1.0 8.8 3.0 Jun22 Jun23 Jun22 Jun23 2Q22 2Q23 Pre-interop. Post-interop. Users (mn) Merchants (mn) Volume (S/ bn) IBK Transactions (mn)(1) IBK Share (%) 46% 56% 38% 29 1) Monthly data | Pre
Slide 30: Takeaways
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Slide 31: 1H23 update on operating trends
1H23 update on operating trends Capital Profitability Loan growth 2023 1H23 2023 1H23 High single digit growth in IBK TCR ∼ 15% 15.2% IFS ROE ∼ 18.0% 13.7%(1) total loans(2) led by low double digit growth in consumer loans IBK CET1 ∼ 11% 11.4% Revised: ∼ 14.0% To remain at sound levels Continued pat
Slide 32: ESG focus updates
ESGon Focus updates building a sustainable business Environmental Social Governance & Economic 180k new users 16k new clients 8 new webinars 3 new courses Inteligo Group companies approved their Responsible Investment Policy aligned to: Co-host at climate risk New app for small management conference
Slide 33: Takeaways
Takeaways 1. 1H23 challenging macro conditions aggravated by the social unrest and climate factors 2. Growing IFS customer base, 15% revenue increase YoY & market share expansion 3. Further NIM expansion to 5.6% due to increasing yield on loans 4. Retail CoR continues to increase on the back of macr
Slide 34: Appendix
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Slide 35: IFS key indicators 2Q23
IFS key indicators 2Q23 10.8% 11.5% 13.3%(1) 14.3% 4.9% 5.1% 5.5%(1) 5.6% ROE NIM 2Q22 1Q23 2Q23 2Q22 1Q23 2Q23 1.1% 1.2% 1.4%(1) 1.5% 3.2% 3.6% 1.8% Banking ROA CoR 2Q22 1Q23 2Q23 2Q22 1Q23 2Q23 IFS 5.4%(1) 5.5% 42.3% 36.9%(1) 37.3% 5.0% 5.1% 39.1% NIM C/I ratio 2Q22 1Q23 2Q23 1Q22 4Q22 1Q23 manage
Slide 36: IFS key indicators 1H23
IFS key indicators 1H23 5.4% 5.6%(1) 16.5% 12.8% 13.7%(1) 4.7% ROE NIM 1H22 1H23 1H22 1H23 1.6% 1.4% 1.5%(1) 3.4% Banking 1.6% ROA CoR 1H22 1H23 1H22 1H23 IFS 5.3% 5.5%(1) 4.7% 42.0% 38.2% 37.1%(1) NIM C/I ratio 1H22 1H23 1H22 1H23 management 44.0% 34.9% 34.2%(1) 5.6 5.9 Wealth C/I ratio AUM (US$ mn
Slide 37: On track for Basel III transition
On track for Basel III transition at banking Banking System 14.7% 15.6% 15.8%(1) 145.6% 136.1% 128.9% TCR Insurance 100.0% Reg. min. 15.2% 15.2% 15.2% 11.1% 11.1% 11.4% 2Q22 1Q23 2Q23 Solvency ratio Banking 10.7% Reg. 6.4% management min. Reg. min. 19.4% 16.7% Wealth 16.2% 12.0% Reg. min. 2Q22 1Q23
Slide 38: Expanding market share in loans & deposits
Expanding market share in loans & Banking deposits Breakdown of loans (S/ mn) Funding structure (S/ mn) %chg %chg %chg %chg 2Q22 1Q23 2Q23 QoQ YoY 2Q22 1Q23 2Q23 QoQ YoY Consumer loans Deposits 43,576.8 46,247.0 45,623.2 -1.3% 4.7% Credit cards & other loans 8,774.4 10,358.0 10,778.9 4.1% 22.8% Reta
Slide 39: Asset quality metrics evolving with macro outlook
Asset quality metrics evolving with Banking macro outlook (S2+S3) ratio & S3 NPL ratio (%) Impairment loss on loans, net (S/ mn) & Cost of risk (%) 16.0% 800 12.8% 12.7% 1,291 14.0% 700 11.2% 12.0% 13.4% 600 10.0% 463 500 417 8.0% 368 400 313 328 278 6.0% 300 189 199 (1) 193 210 178 2.5% 2.6% 2.7% 4
Slide 40: Reactiva loan balances down 65% YoY
Reactiva loan balances down 65% YoY, Banking representing 2% of total portfolio Reactiva Peru loan balances by segment (S/ bn) 2Q23 3.5 Segment YoY Corporate -87% Corporate: n.m. 1.7 Mid-sized: S/ 0.8 bn SME: S/ 0.4 bn Mid-sized -49% 1.2 SME -54% Total -65% 2Q22 1Q23 2Q23 40 SME Mid-sized Corporate
Slide 41: Manageable dollarization levels
Banking Manageable dollarization levels Total loans Retail loans Commercial loans % PEN 67% 72% 88% 93% 56% 59% System 8% 4% 27% 25% 50% 53% 92% 96% 73% 75% 50% 47% 2Q18 2Q23 2Q18 2Q23 2Q18 2Q23 Retail loans breakdown Commercial loans breakdown Consumer Mortgages Corporate Medium Small & Micro 96% 9
Slide 42: Continuous growth in fees
Payments Continuous growth in fees 170 174 151 18 18 17 +2% QoQ -3% QoQ +15% YoY -7% YoY 2Q22 1Q23 2Q23 2Q22 1Q23 2Q23 Payments acquirer (S/ mn) Correspondent banking & Credit cards processor (S/ mn) 188 191 101 103 169 88 +1% QoQ +1% QoQ +13% YoY +17% YoY 2Q22 1Q23 2Q23 2Q22 1Q23 2Q23 42 Fee income
Slide 43: IFS' 2Q23 statement of financial position
IFS’ 2Q23 statement of financial position (1) Intercorp Financial Services' Statement of financial position S/ million %chg %chg 06.30.22 03.31.23 06.30.23 06.30.23 06.30.23 03.31.23 06.30.22 Assets Cash and due from banks and inter-bank 12,504.0 12,448.5 11,159.1 -10.4% -10.8% funds Financial inves
Slide 44: IFS' 2Q23 P&L
IFS’ 2Q23 P&L (1) Intercorp Financial Services' P&L statement S/ million %chg %chg 2Q22 1Q23 2Q23 QoQ YoY Interest and similar income 1,392.1 1,658.0 1,808.3 9.1% 29.9% Interest and similar expenses -360.2 -579.9 -632.6 9.1% 75.6% Net interest and similar income 1,031.8 1,078.2 1,175.7 9.0% 13.9% Im
Slide 45: Banking segment's 2Q23 statement of financial position
Banking segment’s 2Q23 statement of financial position Banking Segment' Statement of financial position S/ million %chg %chg 06.30.22 03.31.23 06.30.23 06.30.23 06.30.23 03.31.23 06.30.22 Assets Cash and due from banks and inter-bank 10,676.2 10,810.7 9,837.3 -9.0% -7.9% funds Financial investments
Slide 46: Banking segment's 2Q23 P&L
Banking segment’s 2Q23 P&L Banking Segment's P&L statement S/ million %chg %chg 2Q22 1Q23 2Q23 QoQ YoY Interest and similar income 1,107.4 1,384.6 1,544.5 11.5% 39.5% Interest and similar expenses -316.9 -525.5 -592.0 12.7% 86.8% Net interest and similar income 790.5 859.1 952.5 10.9% 20.5% Impairme
Slide 47: Insurance segment's 2Q23 statement of financial position
Insurance segment’s 2Q23 statement of financial position (1) Insurance Segment' Statement of financial position S/ million %chg %chg 06.30.22 03.31.23 06.30.23 06.30.23 06.30.23 03.31.23 06.30.22 Assets Cash and due from banks and inter-bank 538.8 558.4 418.3 -25.1% -22.4% funds Financial investment
Slide 48: Insurance segment's 2Q23 P&L
Insurance segment’s 2Q23 P&L Insurance Segment's P&L statement (1) S/ million %chg %chg 2Q22 1Q23 2Q23 QoQ YoY Interest and similar income 249.9 228.1 214.1 -6.2% -14.3% Interest and similar expenses -31.5 -30.4 -17.9 -41.0% -43.1% Net interest and similar income 218.4 197.8 196.1 -0.8% -10.2% Recov
Slide 49: Wealth management segment's 2Q23 statement of financial position
Wealth management segment’s 2Q23 statement of financial position Wealth Management Segment' Statement of financial position S/ million %chg %chg 06.30.22 03.31.23 06.30.23 06.30.23 06.30.23 03.31.23 06.30.22 Assets Cash and due from banks and inter-bank 1,210.8 988.2 764.5 -22.6% -36.9% funds Financ
Slide 50: Wealth management segment's 2Q23 P&L
Wealth management segment’s 2Q23 P&L Wealth Management Segment's P&L statement S/ million %chg %chg 2Q22 1Q23 2Q23 QoQ YoY Interest and similar income 34.6 43.8 47.6 8.5% 37.3% Interest and similar expenses -10.6 -22.6 -21.9 -2.9% n.m. Net interest and similar income 24.0 21.2 25.6 20.6% 6.6% Impair
Slide 51: Payments segment's 2Q23 statement of financial position
Payments segment’s 2Q23 statement of financial position Payments Segment' Statement of financial position S/ million %chg %chg 06.30.22 03.31.23 06.30.23 06.30.23 06.30.23 03.31.23 06.30.22 Assets Cash and due from banks and inter-bank 185.5 107.1 191.7 78.9% 3.3% funds Financial investments - 53.1
Slide 52: Payments segment's 2Q23 P&L
Payments segment’s 2Q23 P&L Payments Segment's P&L statement S/ million %chg %chg 2Q22 1Q23 2Q23 QoQ YoY Interest and similar income 0.2 1.7 2.1 20.1% n.m. Interest and similar expenses -0.5 -1.1 -1.3 21.6% n.m. Net interest and similar income -0.3 0.6 0.7 17.6% n.m. Fee income from financial servic
Slide 53: 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 54: 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 55: Intercorp Financial Services
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Intercorp Financial Services Inc. Common Shares — Q2 2023 Earnings Presentation on 6ix