Intercorp Financial Services Inc. · NYSE:IFS
Intercorp Financial Services — Q4 2019 Earnings Presentation
47 slides from Intercorp Financial Services's earnings presentation, February 2020
Slide 1: Earnings Presentation 4Q19 & 2019 Results
Earnings Presentation 4Q19 & 2019 Results
Slide 2: Highlights
Highlights Strong growth and profitability in 4Q19 and FY19 • FY19 adjusted net profit(1) grew 21.2% YoY, with adjusted ROAE(1) at 21.3% • 11.2% YoY loan growth(2), with a 17.5% increase in retail loans, outpacing the system Banking • Retail deposits grew 11.5% YoY, resulting in 50 bps market share
Slide 3: Strong earnings growth in 2019
Strong earnings growth in 2019 Intercorp Financial Services Banking Net profit in S/ million Net profit in S/ million 17.4% excl. 19.6% excl. ROAE 18.4%(1) 18.6%(2) rev. of prov.(3) ROAE 20.2% 21.3%(4) rev. of prov.(3) 1,479(2) 1,229 1,236(1) 29 1,011 3 -145 1,450 1,225(4) 1,091 2018 2019 2018 2019
Slide 4: IFS key indicators 2019
IFS key indicators 2019 S/ million 2018 2019 %chg YoY Total revenues (1) 4,907.2 5,426.3 10.6% Net interest and similar income (2) 3,150.7 3,481.8 10.5% Efficiency ratio (1) 34.6% 34.0% -60 bps Profit for the period 1,091.4 1,450.1 32.9% IFS Adjusted profit for the period (1) 1,236.2 1,479.1 19.7% R
Slide 5: Strong 4Q19 earnings growth
Strong 4Q19 earnings growth Intercorp Financial Services Banking Net profit in S/ million Net profit in S/ million 17.0% excl. 19.0% excl. ROAE 15.9% 16.8% 20.3%(1) rev. of prov.(2) ROAE 18.0% 19.8% 23.6%(1) rev. of prov.(2) +57.6% +53.4% +38.4% +30.4% 442(1) 29 366(1) 335 280 291 29 239 413 337 4Q1
Slide 6: IFS key indicators 4Q19
IFS key indicators 4Q19 S/ million 4Q18 3Q19 4Q19 %chg QoQ %chg YoY Total revenues (1) 1,271.6 1,376.0 1,447.3 5.2% 13.8% Net interest and similar income (1) 816.6 884.2 907.2 2.6% 11.1% Efficiency ratio(1) 35.3% 34.6% 33.1% -150 bps -220 bps Profit for the period 280.3 334.5 412.8 23.4% 47.2% IFS A
Slide 7: Relevant net income grew 17.8% in 2019
Relevant net income grew 17.8% in 2019 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 21.3% 22.0% 32.4% 31.9% 25.7% 24.7% Adj. 20.0%(1) 20.0%(2) 20.0%(3) 21.1%(4) 25.7% 25.3%(5) ROAE 1,
Slide 8: Positive evolution of our digital indicators
Positive evolution of our digital indicators Digital users and 100% digital customers Off-branch transactions Our digital platform % of digital users and 100% digital customers % of total transactions performed digitally 63% 25% 53% 95% 96% 21% 19% 17% 76% 79% Dec 2018 Dec 2019 Dec 2018 Dec 2019 Dec
Slide 9: Continuous growth in digital sales
Continuous growth in digital sales Savings accounts Business accounts (Cuenta Negocio) New digital features recently launched % of savings accounts opened digitally % of business accounts opened digitally 34% 62% 41% 16% Dec 2018 Dec 2019 Dec 2018 Dec 2019 Instant bank-to-bank transfers using cellph
Slide 10: Banking
Cd Intercorp Financial Services Banking
Slide 11: Core revenues growth drives improvements in efficiency ratio
Core revenues growth drives improvements in efficiency ratio Net interest and similar income Loan provision expense S/ million S/ million NIM(1) 5.7% 5.8% 5.8% Cost of risk 2.6% 2.6% 1.7% Adj. NIM after Adjusted 3.7% 4.0% 3.8% 2.9% 2.6% 2.8% provisions(2) cost of risk(3) +13.6% +10.1% 724 741 252(2)
Slide 12: 11.2% YoY loan growth, +15.8% in retail loans
11.2% YoY loan growth, +15.8% in retail loans Performing loans Breakdown of loans S/ million S/ million %chg %chg 4Q18 3Q19 4Q19 QoQ YoY System’s growth(1) Consumer loans Credit cards 4,871.3 5,662.4 5,870.0 3.7% 20.5% +11.2% Other consumer 5,539.1 6,189.2 6,365.2 2.8% 14.9% Total consumer loans 10,
Slide 13: Retail deposits grew 11.5% YoY, +50 bps in market share
Retail deposits grew 11.5% YoY, +50 bps in market share Funding structure Funding breakdown S/ million %chg %chg S/ million 4Q18 3Q19 4Q19 QoQ YoY LDR(3) 103.8% 103.8% 101.6% Deposits 31,291.8 33,741.8 35,577.8 5.4% 13.7% Retail 14,328.4 15,316.3 15,981.9 4.3% 11.5% System’s Commercial(1) 16,963.4 1
Slide 14: Gradual improvement in risk profile
Gradual improvement in risk profile Expected loss Expected loss – Retail banking by product Stock of provisions (% of total exposure) Stock of provisions (% of total exposure) 6.1% 10.3% 5.8% 5.8% 5.6% 5.7% 9.6% 5.5% 5.5% 5.5% 9.2% 9.1% 9.1% 9.1% 9.2% 9.0% Update of IFRS9 4.2% models 3.9% 3.8% 3.8%
Slide 15: FY19 adjusted cost of risk relatively stable
FY19 adjusted cost of risk relatively stable Cost of risk Non-performing exposure NPL coverage 130.4% 117.7% ratio 2.5%(1) 2.6%(2) 2.2% 2.2% 11.6% 8.9% 2.9% 2.9% 2018 2019 2018 2019 CoR Adjusted CoR (S2+S3) ratio NPL ratio (S3 + refinanced loans) Cost of risk – Retail and commercial banking Cost of
Slide 16: 4Q19 adjusted cost of risk decreased 10 bps YoY
4Q19 adjusted cost of risk decreased 10 bps YoY Cost of risk Non-performing exposure NPL coverage 130.4% 126.4% 117.7% ratio 2.9%(1) 2.8%(2) 11.6% 2.6% 2.6% 2.6% 9.5% 8.9% 1.7% 2.9% 3.0% 2.9% 4Q18 3Q19 4Q19 4Q18 3Q19 4Q19 CoR Adjusted CoR (S2+S3) ratio NPL ratio (S3 + refinanced loans) Cost of risk
Slide 17: CET1 improved 100 bps YoY
CET1 improved 100 bps YoY Capital ratio evolution Capital ratios Tier I Tier II CET1 Banking system 14.7% 15.3% 14.8% 14.9% 14.6% Total Capital Ratio 16.4% 16.1% 15.8% 15.4% 15.2% • Interbank’s capital ratio of 15.2%, 4.4% 4.3% above regulatory risk-adjusted 4.4% 4.1% 3.9% minimum capital ratio requ
Slide 18: Insurance
Cd Intercorp Financial Services Insurance
Slide 19: FY19 gross premiums plus collections increased 6.9%
FY19 gross premiums plus collections(1) increased 6.9%; Interseguro remains market leader in annuities Yearly gross premiums plus collections by business unit Quarterly gross premiums plus collections by business unit S/ million S/ million Annuities Annuities market 30.2% 28.9% market 32.2% 26.1% 25
Slide 20: Interseguro's investment portfolio increased 10.7% YoY
Interseguro’s investment portfolio increased 10.7% YoY Investment portfolio Results from investments(1) S/ million S/ million ROIP(2) 6.0% 6.3% 6.0% Impact of IFRS9 +10.7% and impairments: 4Q18: S/ +29 mm 3Q19: n.m. +7.7% 4Q19: S/ -16 mm 12,303 12,436 11,236 962 972 191 184 987 926 1,063 170 860 10,
Slide 21: Wealth Management
Cd Intercorp Financial Services Wealth Management
Slide 22: Strong growth in other income and fees
Strong growth in other income and fees Net interest and similar income Fees from financial services S/ million S/ million Fees/AUM(1) 0.9% 0.9% 1.0% -16.3% +13.0% 47 30 27 42 41 25 4Q18 3Q19 4Q19 4Q18 3Q19 4Q19 Other income(1) Revenues S/ million S/ million +34.8% 102 30 4Q19 M2M impact: 75 S/ +32.5
Slide 23: Sustained growth in AUM and loans
Sustained growth in AUM and loans AUM Loans S/ million S/ million +4.3% +6.1% 18,341 +3.1% 18,087 1,625 1,576 1,569 17,593 4Q18 3Q19 4Q19 4Q18 3Q19 4Q19 Other expenses Net profit S/ million S/ million ROAE 22.9% 11.7%(1) 34.1%(1) +10.9% +57.6% 35 33 71(1) 29 +4.1% 1 4 1 45 M2M impact: S/ +32.5 mm 31
Slide 24: Guidance
Cd Intercorp Financial Services Guidance
Slide 25: Guidance FY20
Guidance FY20 Guidance 2019 FY20 Guidance IFS 2019 FY20 ROAE(1) 18.6% 17% - 19% System loan 5.7% ~ 7% growth(4) Guidance Loan Low 2019 11.2% FY20 growth(5) double-digit Banking ROAE(1)(2) 21.3% 18% - 20% NIM(1) 5.7% 5.7% - 5.9% Banking NIM after 3.9% 4.0% - 4.2% Guidance Prov.(1)(6) 2019 FY20 Insura
Slide 26: Summary
Cd Intercorp Financial Services Summary
Slide 27: Takeaways
Takeaways Strong growth and profitability in 4Q19 and FY19 • FY19 adjusted net profit(1) grew 21.2% YoY, with adjusted ROAE(1) at 21.3% • 11.2% YoY loan growth(2), with a 17.5% increase in retail loans, outpacing the system Banking • Retail deposits grew 11.5% YoY, resulting in 50 bps market share g
Slide 28: Appendix
Cd Intercorp Financial Services Appendix
Slide 29: IFS 4Q19 Statement of financial position
IFS 4Q19 Statement of financial position Intercorp Financial Services' Statement of financial position S/ million %chg %chg 4Q18 3Q19 4Q19 QoQ YoY Assets Cash and due from banks and inter-bank funds 8,875.4 11,710.7 11,203.4 -4.3% 26.2% Financial investments 17,629.4 18,353.2 19,073.5 3.9% 8.2% Loan
Slide 30: IFS FY19 P&L
IFS FY19 P&L Intercorp Financial Services' P&L Statement S/ million %chg %chg 2017 2018 2019 19/18 18/17 Interest and similar income 3,809.0 4,321.3 4,847.2 12.2% 13.4% Interest and similar expenses -1,119.9 -1,170.6 -1,407.9 20.3% 4.5% Net interest and similar income 2,689.1 3,150.7 3,439.3 9.2% 17
Slide 31: IFS 4Q19 P&L
IFS 4Q19 P&L Intercorp Financial Services' P&L statement S/ million %chg %chg 4Q18 3Q19 4Q19 QoQ YoY Interest and similar income 1,128.6 1,228.9 1,249.9 1.7% 10.7% Interest and similar expenses -312.0 -344.6 -385.1 11.7% 23.5% Net interest and similar income 816.6 884.2 864.7 -2.2% 5.9% Impairment l
Slide 32: Banking segment's FY19 P&L
Banking segment’s FY19 P&L Banking Segment's P&L Statement S/ million %chg %chg 2017 2018 2019 19/18 18/17 Interest and similar income 3,346.2 3,559.1 4,074.0 14.5% 6.4% Interest and similar expenses -1,047.1 -1,067.7 -1,290.1 20.8% 2.0% Net interest and similar income 2,299.1 2,491.4 2,783.9 11.7%
Slide 33: Banking segment's 4Q19 P&L
Banking segment’s 4Q19 P&L Banking Segment's P&L statement S/ million %chg %chg 4Q18 3Q19 4Q19 QoQ YoY Interest and similar income 937.7 1,038.2 1,051.7 1.3% 12.2% Interest and similar expenses -285.4 -314.6 -353.2 12.3% 23.8% Net interest and similar income 652.3 723.6 698.5 -3.5% 7.1% Impairment l
Slide 34: 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 (4Q19) S/ million S/ million +53.4% 105 29 2 366(1) 291 29 239 11 11 337 Includes S/ 1.9 mm adjustment due to adoption of IFRS 16 4Q18 3Q19 4Q19 Reclassification Retail: 337 of fees on S/ +45
Slide 35: Dollarization decreased in retail and commercial loans
Dollarization decreased in retail and commercial loans Total loans Retail loans Commercial loans % PEN 68% 70% 89% 91% 57% 58% System 7% 6% 27% 26% 49% 51% 93% 94% 73% 74% 51% 49% 2018 2019 2018 2019 2018 2019 Retail loans breakdown Commercial loans breakdown Consumer(1) Credit cards Mortgages Corpo
Slide 36: Other expenses grew 7.2% YoY in FY19
Other expenses grew 7.2% YoY in FY19 Growth in other expenses YoY growth in other expenses by line % YoY growth +13.7% +5.9% +23.8% +1.9% +7.2% 10 • Efficiency ratio at 39.6%(1) in 2019, 28 compared to 40.9% in 2018 37 • Total expenses / Assets ratio at 3.0% 34 Mainly related in 2019, 20 bps below t
Slide 37: Other expenses grew 3.5% YoY in 4Q19
Other expenses grew 3.5% YoY in 4Q19 Growth in other expenses YoY growth in other expenses by line % YoY growth +19.1% +1.2% +17.4% -4.2% +3.5% 2 6 6 • Efficiency ratio at 37.7%(1) in 4Q19, compared to 39.2% in 3Q19 and 12 40.6% in 4Q18 Personnel: S/ +6 mm (+4.5%) Mainly related to credit card Profi
Slide 38: Insurance segment's FY19 P&L
Insurance segment’s FY19 P&L Insurance Segment's P&L Statement S/ million %chg %chg 2017 2018 2019 19/18 18/17 Interest and similar income 334.8 611.0 612.5 0.3% 82.5% Interest and similar expenses -19.7 -54.3 -56.4 3.8% 175.7% Net Interest and similar income 315.0 556.6 556.1 -0.1% 76.7% Recovery (
Slide 39: Insurance segment's 4Q19 P&L
Insurance segment’s 4Q19 P&L Insurance Segment's P&L Statement S/ million %chg %chg 4Q18 3Q19 4Q19 QoQ YoY Interest and similar income 148.5 148.0 155.6 5.2% 4.8% Interest and similar expenses -13.5 -14.5 -16.0 10.5% 18.5% Net Interest and similar income 135.0 133.5 139.6 4.6% 3.4% Recovery (loss) d
Slide 40: Net insurance underwriting result at S/ -79.0 million
Net insurance underwriting result at S/ -79.0 million due to higher adjustment of technical reserves Net premiums Adjustment of technical reserves S/ million S/ million 172 157 156 50 8 48 52 61 38 59 34 33 34 78 64 63 4Q18 3Q19 4Q19 4Q18 3Q19 4Q19 Annuities Individual life Retail Insurance D&S Net
Slide 41: Insurance segment's FY19 net profit bridge to IFRS
Insurance segment’s FY19 net profit bridge to IFRS S/ million Includes net results on valuation of RE Investments: S/ -193 MM 52 Different attributable expenses related to the acquisition of S. Sura 197 436 57 130 Net profit (SBS) 2019 Underwriting result Investment results Goodwill and Interest and
Slide 42: Insurance segment's 4Q19 net profit IFRS vs. Local GAAP
Insurance segment’s 4Q19 net profit IFRS vs. Local GAAP Net profit – IFRS Net profit bridge from Local GAAP to IFRS (4Q19) S/ million S/ million +94.8% 34 35 13 18 4Q18 3Q19 4Q19 108 90 5 14 Net profit – Local GAAP 38 35 S/ million Net profit Underwriting Net results on Impairments Translation Goodw
Slide 43: Wealth management segment's FY19 P&L
Wealth management segment’s FY19 P&L Wealth Management Segment's P&L Statement S/ million %chg %chg 2017 2018 2019 19/18 18/17 Interest and similar income 151.8 154.1 168.0 9.0% 1.5% Interest and similar expenses -53.9 -44.1 -61.5 39.4% -18.1% Net interest and similar income 97.9 110.0 106.5 -3.2% 1
Slide 44: Wealth management segment's 4Q19 P&L
Wealth management segment’s 4Q19 P&L Wealth Management Segment's P&L Statement S/ million %chg %chg 4Q18 3Q19 4Q19 QoQ YoY Interest and similar income 42.1 42.5 41.0 -3.5% -2.7% Interest and similar expenses -12.6 -15.9 -16.3 2.2% 29.5% Net interest and similar income 29.5 26.6 24.7 -6.9% -16.3% Imp
Slide 45: 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 46: 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 47: Slide 47
Intercorp Financial Services — Q4 2019 Earnings Presentation on 6ix