Intercorp Financial Services Inc. · NYSE:IFS
Intercorp Financial Services — Q4 2023 Earnings Presentation
54 slides from Intercorp Financial Services's earnings presentation, March 2024
Slide 1: Investor Presentation March 2024
Investor Presentation March 2024
Slide 2: Four businesses: bank, insurance, wealth advisory, payments
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: Intercorp Group: striving to make Peru the best place to raise a family
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 Central Bank 2 1) Related companies excluding Aviva and Urbi
Slide 4: 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 Dec23 S/ mn | US$ mn retail annuities wealthy Total assets (1) 89,623 | 24,164 Con
Slide 5: 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 6: Sound capitalization levels
Sound capitalization levels Banking 128.6% 136.1% 127.1% System 14.5% 16.3% 16.4%(1) TCR Insurance 100.0% Reg. min. 4Q23 3Q23 4Q23 15.1% 15.0% 15.5% 12.0% 11.8% 11.2% Solvency ratio Banking 11.0% Reg. 6.5% management min. Reg. 20.4% min. 16.0% 17.4% Wealth 12.0% Reg. min. 4Q22 3Q23 4Q23 4Q22 3Q23 4Q
Slide 7: Macro outlook
1 2 Macro Profitable outlook growth 3 4 5 Digital Key Guidance & performance businesses takeaways
Slide 8: The Central Bank continues to cut rates in line with decreased inflation
The Central Bank continues to cut rates 1 in line with decreased inflation Quarterly GDP growth YoY (%) Interest rates (%) 3.9% 3.4% Soles reference rate (BCRP) Dollar reference rate (FED) 7.50 7.75 7.50 2.0% 2024(E) 6.75 Feb24 1.7% 5.50 3.0% 6.25% 2.50 5.25 5.50 5.50 4.50 0.25 -0.4% -0.5% -0.4% 1.7
Slide 9: Operating trends FY23
1 Operating trends FY23 Capital Profitability Loan growth 2023 FY23 2023 FY23 Guidance Actual Guidance Actual High single digit growth in IBK TCR ∼ 15% 15.5% IFS ROE 8% - 10% 11.3%(1) total loans(2) led by low double digit growth in consumer loans IBK CET1 ∼ 11% 11.8% Impacted by CoR and Total loans
Slide 10: Digital performance
1 2 Macro Profitable outlook growth 3 4 5 Digital Key Guidance & performance businesses takeaways
Slide 11: Customer base growth continues across businesses
Customer base growth continues 2 across businesses 6.1 2.6 5.5 +11% YoY 2.4 +6% YoY Dec22 Dec23 Dec22 Dec23 Banking – customers (mn) Insurance – customers (mn) 1.3 73 67 +9% YoY 1.1 +25% YoY Dec22 Dec23 Dec22 Dec23 Wealth management – customers (th) Payments – merchants (mn) 10
Slide 12: Growth in total revenues driven by NIM recovery
Growth in total revenues driven by NIM 2 recovery Total revenues(1) (S/ mn) NIM (%) +6% YoY 6,563(2) 6,975(3) 5.0% 5.3%(3) 5,488 5,922 4.5% 4.1% 2020 2021 2022 2023 2020 2021 2022 2023 Net profit (S/ mn) ROE (%) 1,800 1,678(2) 19.3% 19.1%(2) 1,079(3) 11.3%(3) 384 4.5% 2020 2021 2022 2023 2020 2021 2
Slide 13: Sustained assets growth supported by appropriate funding
Sustained assets growth supported by 2 appropriate funding Total gross loans (S/ mn) Total deposits (S/ mn) 47,025 48,249 48,898 48,531 49,188 43,082 44,688 47,149 2020 2021 2022 2023 2020 2021 2022 2023 AUM evolution (S/ mn) Net shareholders’ equity (S/ mn) 22,981 23,182 9,555 9,426 10,008 20,989 2
Slide 14: Continuous focus on efficiency
2 Continuous focus on efficiency Optimizing our distribution channels (Units) Variable expenses drive costs higher – Other expenses (S/ mn) 2020 2023 % Change +2% YoY Financial stores 215 153 -29% 2,689 2,750(5) 2,263 1,911 ATMs 1,640 1,666 +2% Correspondent 5,529 7,163 +30% agents(1) Sales force 89
Slide 15: CoR at 5.2% in 4Q23, strong coverage
2 CoR at 5.2% in 4Q23, strong coverage Credit cards & personal loans Payroll deduction loans Banking Retail Commercial Mortgages Commercial NPL coverage ratio Cost of risk Reactiva 194% FY22: 3.8% 5% 1% 221% FY23: 7.0% 8.1% 8.3% 41% 43% 157% FY22: 1.9% 161% FY23: 4.3% 5.2% 21% 22% 5.0% 3.1% 11% 54%
Slide 16: Key businesses
1 2 Macro Profitable outlook growth 3 4 5 Digital Key Guidance & performance businesses takeaways
Slide 17: Our transformation path to a digitally-driven organization
Our transformation path to a digitally- 3 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 dig
Slide 18: Our two-tier digital strategy to foster profitable & sustainable growth
Our two-tier digital strategy to foster 3 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 Paymen
Slide 19: Consolidating digital achievements in banking
Consolidating digital achievements in 3 banking 75% 82% 77% 71% Dec22 Dec23 Dec22 Dec23 Digital customers Digital self-service (% of digital customers – Retail banking) (% of digital self-service) 64% 63% 49 36 Dec22 Dec23 Dec22 Dec23 Digital sales NPS – digital customers (% of products sold digital
Slide 20: Working towards digital innovation in insurance & wealth management
Working towards digital innovation in 3 insurance & wealth management 59% 80% 82% Insurance Insurance 44% Dec22 Dec23 Dec22 Dec23 Digital self-service SOAT digital sales (% of products sold digitally) (% of digital self-service) 10% 10% 48% 42% Insurance WM Dec22 Dec23 Dec22 Dec23 Digital premiums D
Slide 21: Profitable growth
1 2 Macro Profitable outlook growth 3 4 5 Digital Key Guidance & performance businesses takeaways
Slide 22: Increasing market relevance in targeted banking products
Increasing market relevance in targeted 4 banking products 22.2 18.8 19.1 14.7 21.8 13.6 Dec22 Dec23 Dec22 Dec23 Dec22 Dec23 MS Consumer banking loans (%) MS Retail banking loans (%) MS Payroll inflow (%) 14.9 15.1 9.6 17.7 9.2 11.7 Dec22 Dec23 Dec22 Dec23 Dec22 Dec23 MS Retail banking deposits (%)
Slide 23: Net interest income driving growth in FY23 revenues
Net interest income driving growth in 4 FY23 revenues % YoY +13% +2% +4% +10% +415 +16 +19 5,020 4,571 (1) FY22 Net interest income Fee income Other income FY23 Banking – Revenue bridge from FY22 to FY23 (S/ mn) 22 1) Banking revenues in FY23 and YoY growth were S/ 5,090 mn and 11%, respectively, wh
Slide 24: Stable NIM throughout the year
Stable NIM throughout the year 4 NIM Risk-adjusted NIM Retail loans Commercial loans Yield on loans Return on interest-earning assets Financial investments Cash and banks 64,660 66,092 11.5% 11.6% 11.3% 10.9% 10.5% 14% 18% 9.3% 9.1% 9.1% 8.7% 18% 8.3% 15% 30% 5.4% 5.5% 5.6% 5.6% 5.5% 31% 3.8% 3.3% 3
Slide 25: Cost of funds stabilizing on rates outlook
… with cost of funds stabilizing on 4 rates outlook LDR(1) 101% 102% System’s 107% 102% LDR(1) Cost of funds Cost of deposits Ref. rate YoY (2) -75 bps (S/) 57,926 59,096 +100 bps (US$) 11% 8% 13% 12% 4.2% 4.2% 4.0% 36% 39% 3.6% 3.2% 3.8% 3.8% 79% 3.6% 3.3% 41% 40% 2.8% 4Q22 4Q23 Retail deposits Com
Slide 26: Increased contribution of individual life & retail insurance to premiums
Increased contribution of individual life & retail insurance to total premiums 4 Annuities market 28.8% 27.7% 30.5% 26.4% (1) (3) share 285 314 300 %chg %chg 35 QoQ YoY 49 45 +40% +9% 212 90 85 44 93 -6% -9% 70 71 74 62 +6% +19% 34 52% 55% 119 85 92 61 -23% +8% (2) 2019 4Q22 3Q23 4Q23 Quarterly gros
Slide 27: Insurance investment portfolio delivers sound returns
Insurance investment portfolio delivers sound returns 4 Insurance - ROIP (%) Insurance - Portfolio breakdown 7.5% 7.2% 10% 9% 6% 5% 84% 86% 4Q22 4Q23 4Q22 4Q23 Fixed Income Equity and Mutual Funds Real Estate 26
Slide 28: 12% YoY growth in Wealth Management's AUM
12% YoY growth in Wealth Management’s 4 AUM AUM (US$ mn) Deposits (US$ mn) Loans (US$ mn) 5,990 6,250 1,075 468 422 410 5,589 958 893 4Q22 3Q23 4Q23 4Q22 3Q23 4Q23 4Q22 3Q23 4Q23 +4% QoQ | +12% YoY -7% QoQ | -17% YoY -3% QoQ | -12% YoY 27
Slide 29: Solid YoY growth in key business drivers
Solid YoY growth in key business drivers 4 1.3 378.3 395.9 1.1 +25% YoY +5% YoY Dec22 Dec23 2022 2023 Merchants (mn) Revenues (S/ mn) E-commerce 16% 16% (%) 57.3 120.5 114.0 50.8 +13% YoY -5% YoY 2022 2023 2022 2023 28 Transactional volumes in payments acquirer (S/ bn) EBITDA (S/ mn)
Slide 30: Over 14 million users in Plin and 740 thousand merchants in IzipayYa
Over 14 million users in Plin and 4 740 thousand merchants in IzipayYa +46% YoY +2.4x YoY 14.2 11.9 9.8 4.9 Dec22 Dec23 4Q22 4Q23 Users (mn) Volume (S/ bn) +35% YoY +70% YoY 747 1.7 554 1.0 Dec22 Dec23 4Q22 4Q23 Merchants (th) Volume (S/ bn) 29
Slide 31: ESG focus updates: building a sustainable business
ESGon Focus updates building a sustainable business 4 CSA results 2023 Social +963.8K users 1,8K micro credits disbursed +1,2MM sessions 758K micro merchants +2.2MM visits +30 entities free of commission payments Awarded initiative by 61 pts Interbank & Interseguro Best Places for LGBTIQ+ Talent Per
Slide 32: Our way of working will enable us to achieve our goals
Our way of working will enable us to 4 achieve our goals 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 #8 for work from home in Peru in 2023 in 2023 #9 for sustainable management #2 for work from home in Peru in 2023 in 2023
Slide 33: Strong corporate governance
Strong corporate governance 4 Board of directors BOD with independent members Carlos Rodríguez-Pastor Chairman IFS: 4 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 34: Guidance & takeaways
1 2 Macro Profitable outlook growth 3 4 5 Digital Key Guidance & performance businesses takeaways
Slide 35: Operating trends 2024
Operating trends 2024 5 Capital Profitability Loan growth To remain at sound levels Still below midterm range Mid single digit growth IBK TCR > 14% in total loans(1) IFS ROE > 12% IBK CET1 ∼ 11% Revenues Cost of risk Efficiency Stable NIM Improving cost of risk Continued focus on efficiency IBK NIM
Slide 36: Takeaways
Takeaways 5 Good performance in 1 2 3 After weak 2023, macro insurance business, Retail CoR remains sentiment for 2024 is positive investment high, strong coverage relatively positive results in WM 4 5 6 Tight management of Strengthening our Cost of funds stabilizing costs reflected in solid digital
Slide 37: Appendix
Appendix
Slide 38: Overview of Peruvian banking system
Banking Overview of Peruvian banking system Decreasing loan growth – Banking system gross loans (S/ bn) Profitability stabilizing – Banking system net profit (S/ mn) ROE 4.0% 13.3% 17.3% 14.4% CAGR +2.5% CAGR 350 357 351 2020-23 10,119 326 9,226 -1.3% 7,218 238 228 214 222 2,112 129 137 9.7% 104 112
Slide 39: Strategic focus on consumer loans
Banking Strategic focus on consumer loans Distinctive loan breakdown… …when compared to the banking system Banking System Commercial Commercial 44% 61% Mortgages Consumer Mortgages Consumer 38% loans Retail 46% loans Retail 62% 39% 54% 56% S/ 46.8BN S/ 26.2BN S/ 350.9BN S/ 137.0BN Leading position i
Slide 40: 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 Dec23: 15.1% MS 2022: 14.9% Other 6% Bonds Demand Savings 13.3% 7% 23% 39% 9.6% Due to banks Deposits 15% 78% 4.2% 2.7% Time 32% CAGR 2017-22 4Q2
Slide 41: 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 4.3% 3.8% 3.8% 3.9% BBVA BBVA 5.9% 2.6% BBVA 4.7% BCP BCP 4.7% 3.2% BCP 4.
Slide 42: Contained banking NPLs despite growth in provisions
Contained banking NPLs despite growth Banking in provisions, S2 reflects rescheduling (S2+S3) ratio & S3 NPL ratio (%) Impairment loss on loans, net (S/ mn) & Cost of risk (%) 16.0% 1,291 1000 13.3% 14.1% 14.0% 900 12.0% 800 10.8% 13.4% 581 616 700 10.0% 600 463 417 8.0% 368 500 6.0% 313 328 278 400
Slide 43: Reactiva loan balances down 66% YoY
Reactiva loan balances down 66% YoY, Banking representing 1% of Interbank’s portfolio Reactiva Peru loan balances by segment (S/ bn) 4Q23 Segment YoY 2.3 Corporate -79% Corporate: n.m. Mid-sized -67% Mid-sized: S/ 0.5 bn SME: S/ 0.2 bn 0.9 SME -63% 0.8 Total -66% 4Q22 3Q23 4Q23 42 SME Mid-sized Corp
Slide 44: Manageable dollarization levels at Interbank
Manageable dollarization levels at Banking Interbank Total loans Retail loans Commercial loans % PEN 68% 72% 89% 93% 57% 58% System 7% 4% 27% 27% 49% 56% 93% 96% 73% 73% 51% 44% 4Q18 4Q23 4Q18 4Q23 4Q18 4Q23 Retail loans breakdown Commercial loans breakdown Consumer Mortgages Corporate Medium Small
Slide 45: Manageable dollarization levels
Banking Manageable dollarization levels Gross Loans by segment & percentage in S/ Currency mix Dec23 94% 94% 94% 95% 96% 92% 92% 93% Gross Loans Total Assets 89% 85% 78% 76% USD 73% 74% 73% 74% 74% 73% USD 71% 27% 29% 63% 64% 58% 52% 52% 52% 51% 50% 49% 44% 41% S/ 73% S/ 2014 2015 2016 2017 2018 201
Slide 46: 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 Life Regulated 1% 52% annuities D&S 11% Regulated
Slide 47: Annuities market contraction impacted Interseguro's growth
Annuities market contraction impacted Insurance Interseguro’s growth Strong performance in most products Outgrowing the overall insurance industry (Gross premiums and collections by business unit - S/ mn) (YoY growth in Individual Life premiums) Interseguro System 1,271 22.9% 8 1,209 1,144 109 9 8 1
Slide 48: Resilient wealth management business
Wealth management Resilient wealth management business Positive trend in AUM growth – Inteligo Group AUM (S/ mn) Solid fee generation due to client mix – Fee/Avg. Aum (%) 22,981 23,182 20,989 21,317 0.8% 0.8% 0.7% 0.6% 2020 2021 2022 2023 2020 2021 2022 2023 Diversified revenue generation (S/ mn) FY
Slide 49: 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 92% 4% 4% Fee income share FY23 Fee income share FY23 Fee income share FY23 48
Slide 50: IFS income statement
IFS income statement % chg Incom e Statem ent (S/ m m ) 20 22 20 23 ' 23/ ' 22 Interest and similar income 5,871.3 7,120.4 21.3% Interest and similar expenses (1,661.7) (2,592.4) 56.0% = N et i nteres t a nd s i m i l a r i ncom e 4 ,20 9.6 4 ,528.0 7 .6% Impairment loss on loans, net of recoveries
Slide 51: IFS balance sheet
IFS balance sheet % chg B al ance Sheet (S/ m m ) 20 22 20 23 ' 23/ ' 22 Cash and due from banks 13,193.4 9,818.7 (25.6%) Inter-bank funds 296.1 524.9 77.3% Financial investments 22,787.6 26,722.0 17.3% Loans, net of unearned interest 47,530.9 48,869.8 2.8% Impairment allowance for loans (2,027.9) (
Slide 52: 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 53: 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 54: Intercorp Financial Services
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Intercorp Financial Services — Q4 2023 Earnings Presentation on 6ix