Intercorp Financial Services Inc. · NYSE:IFS
Intercorp Financial Services — Q1 2023 Earnings Presentation
62 slides from Intercorp Financial Services's earnings presentation, May 11, 2023
Slide 1: Earnings Presentation 1Q23 Results
Earnings Presentation 1Q23 Results
Slide 2: Financial highlights, Key messages, Takeaways
1 Financial highlights 2 Key messages 3 Takeaways
Slide 3: 1Q23 recurring earnings of S/ 308 mm impacted by CoR and investment results
1Q23 recurring earnings of S/ 308 mm impacted by CoR and investment results IFS net profit (S/ mn) – IFRS17 Re-expressed figures for IFS & insurance in 1Q22 and 4Q22 for comparison purposes ROE 22.4% 16.7% 11.5% | 13.3%(1) ROE 19.1% 20.2% 13.6% | 15.8%(2) n.m. 15.1% 40.5% 322 365 113 | 39 Banking(3)
Slide 4: Highlights: 1Q23 profitability impacted by cost of risk
Highlights IFS 1Q23 profitability impacted by cost of risk Banking • Double digit growth across all revenue lines • Continuous expansion of NIM to 5.5% with pressure on risk-adjusted margins • Rising funding costs, one of the best LDR among peers • CoR at 3.2% in the quarter impacted by sustained in
Slide 5: IFS key indicators 1Q23
IFS key indicators 1Q23 22.4% 5.4% 5.1% 5.5%(1) 16.7% 13.3%(1) 4.5% 11.5% ROE NIM 1Q22 4Q22 1Q23 1Q22 4Q22 1Q23 2.2% 1.7% 1.4%(1) 2.5% 3.2% 1.2% Banking 1.4% ROA CoR 1Q22 4Q22 1Q23 1Q22 4Q22 1Q23 IFS 5.4% 5.1% 5.4%(1) 41.7% 36.9%(1) 4.5% 37.9% 39.1% NIM C/I ratio 1Q22 4Q22 1Q23 1Q22 4Q22 1Q23 34.6%
Slide 6: Recurring revenues grew 21% YoY, banking NIM reached 5.5%
Recurring revenues grew 21% YoY, banking NIM reached 5.5% IFS quarterly revenues (S/ mn) Re-expressed figures for IFS & insurance in 1Q22 and 4Q22 for comparison purposes NIM 4.5% 5.4% 5.4%(1) NIM 4.5% 5.4% 5.5%(2) 1,259 1,263(2) 460 468 498 Insurance 1,042 Banking 1,855 1,883(1) 1Q22 4Q22 1Q23 1Q22
Slide 7: Diversified fee income growth of 11% YoY
Diversified fee income growth of 11% YoY IFS quarterly net fee income (S/ mn) 183 211 207 Banking % revenues 18.2% 17.4% 16.8% 16% 62% (% revenues) (Fee contribution to IFS) 1Q22 4Q22 1Q23 -2% QoQ | +13% YoY 323 317 Payments(2) 93 86 80 284(1) 91% 26% (% revenues) (Fee contribution to IFS) 1Q22 4Q22
Slide 8: Operating leverage improved, efficiency levels at 33% in IFS and 37% in banking
Operating leverage improved, efficiency levels at 33% in IFS and 37% in banking IFS expenses (S/ mn) Banking expenses (S/ mn) Re-expressed figures for IFS & insurance in 1Q22 and 4Q22 for comparison purposes C/I 34.1% 33.1% 33.3%(2) C/I 41.7% 37.9% 36.9%(2) 455 508 487 730 695 -4% QoQ 629(1) +7% YoY
Slide 9: Solid capitalization levels after Basel III changes & dividend distribution at banking
Solid capitalization levels after Basel III changes & dividend distribution at banking Banking System 15.1% 14.4% 15.6% 152.2% 138.7% 145.6% TCR Insurance 100.0% Reg. For 1Q23, considers dividend min. distribution & Basel III implementation 1Q22 4Q22 1Q23 15.5% 15.1% 15.2% 12.0% 10.9% 11.1% Solvency
Slide 10: Financial highlights, Key messages, Takeaways
1 Financial highlights 2 Key messages 3 Takeaways
Slide 11: Key messages
Key messages Challenging macro 1 2 3 Wealth management environment IFRS17 adoption results still impacted impacting banking in insurance by investments profitability 4 Positive development in digital indicators 5 Continuous growth in payments 6 ESG update
Slide 12: Challenging macro environment
1 Challenging macro environment 12 month GDP growth YoY (%) Interest rates (%) Soles reference rate (BCRP) May23 2023E 7.75 7.75% 13.6 13.3 7.50 2.5 5.50 6.5 5.6 4.95 4.00 2.7 1.9 May23 2.50 5.25% 4.50 4.75 Jan21 Jun21 Dec21 Mar22 Jun22 Dec22 Feb23 0.25 1.75 0.25 0.25 0.25 0.50 -11.2 Mar21 Jun21 Dec
Slide 13: Slowdown in banking activity with more focus on low risk segments
Slowdown in banking activity with 1 more focus on low risk segments 7.0 6.9 9.7 10.3 5.5 8.1 -1% QoQ +6% QoQ +25% YoY +27% YoY 1Q22 4Q22 1Q23 1Q22 4Q23 1Q23 Credit & debit cards purchases (S/ bn) Credit cards & personal loans balances (S/ bn) 1,077 1,048 296 884 263 -3% QoQ 233 -21% QoQ +19% YoY -11
Slide 14: Double digit growth across all recurring revenue lines in banking
Double digit growth across all 1 recurring revenue lines in banking % YoY +24% +13% +15% +21% +24 +16 +181 1,263 1,042 (1) (1) 1Q22 Net interest and Fee income from Other income 1Q23 similar income financial services, net Banking – Revenue bridge from 1Q22 to 1Q23 (S/ mn) 14 1) Banking net interest
Slide 15: Continuous expansion of NIM to 5.5% with pressure on risk-adjusted margins
Continuous expansion of NIM to 5.5% 1 with pressure on risk-adjusted margins Reactiva Commercial Mortgages Payroll deduction loans Yield on loans NIM Risk-adjusted NIM Credit cards & personal loans 10% 4% 10.9% 10.5% 9.8% 41% 9.1% 38% 8.3% 5.4% 5.5% 21% 4.9% 5.0% 21% 4.5% 11% 52% 11% 55% Retail Reta
Slide 16: Rising funding costs, one of the best LDR among peers
Rising funding costs, one of the 1 2 best LDR among peers 1Q22 4Q22 1Q23 Cost of funds Cost of deposits Interbank 99% 101% 99% 3.6% 3.2% 2.8% Bank 1 99% 102% 97% 3.3% 2.2% 2.8% 1.8% 2.4% Bank 2 117% 109% 107% 1.7% Ref. rate YoY (2) 1.2% +375 bps (S/) +450 bps (US$) Bank 3 128% 134% 124% System 106%
Slide 17: CoR at 3.2% in the quarter impacted by sustained inflation, protests and rains
CoR at 3.2% in the quarter impacted by 1 sustained inflation, protests and rains NPL 169% 173% 178% coverage ratio (1) (S2+S3) ratio S3 NPL ratio 3.2% 10.8% 11.2% 2.5% 9.6% 1.4% 2.9% 2.6% 2.6% 1Q22 4Q22 1Q23 1Q22 4Q22 1Q23 Banking – Cost of risk Banking – Non perfoming loans NPL NPL 256% 244% 252% 8
Slide 18: Key messages
Key messages Challenging macro 1 2 3 Wealth management environment IFRS17 adoption results still impacted impacting banking in insurance by investments profitability 4 Positive development in digital indicators 5 Continuous growth in payments 6 ESG update
Slide 19: 1Q23 earnings of S/ 31.3 million, ROE at 40.5% after IFRS17 adoption
1Q23 earnings of S/ 31.3 million, ROE at 2 40.5% after IFRS17 adoption Positively impacted by low ROE Impairment on Rental income, M2M, sale on Best estimate of liabilities (BEL), 40.5% equity contractual service margin (CSM), net fixed income investments premium of retail products, credit investmen
Slide 20: Decrease in annuities due to market contraction and increased competition
Decrease in annuities due to market 2 contraction and increased competition Quarterly gross premiums (S/ mn) – Local GAAP Annuities market 32.9% 27.7% 25.1% share(1) %chg YoY -6.7% QoQ -19.4% YoY 330 +17% 285 75 266 +28% 85 51 88 51 62 65 -28% 45 37 153 93 -50% 76 1Q22 4Q22 1Q23 Annuities Private an
Slide 21: Quarterly ROIP at 6.6%
2 Quarterly ROIP at 6.6% Investment portfolio (S/ mn) Results from investments (S/ mn)(1) ROIP 5.2% 7.5% 6.6% 12,707 12,582 12,927 1,200 1,287 1,276 1,007 751 771 230 211 169 10,499 10,545 10,880 1Q22 4Q22 1Q23 1Q22 4Q22 1Q23 Fixed Income Equity and Mutual Funds Real Estate +3% QoQ | +2% YoY -8% QoQ
Slide 22: Key messages
Key messages Challenging macro 1 2 3 Wealth management environment IFRS17 adoption results still impacted impacting banking in insurance by investments profitability 4 Positive development in digital indicators 5 Continuous growth in payments 6 ESG update
Slide 23: WM performance still impacted by market conditions
WM performance still impacted by market 3 conditions Fees / Avg. 0.7% 0.7% 0.7% AUM(1) 26 24 21 41 37 40 -11% QoQ +6% QoQ -18% YoY -3% YoY 1Q22 4Q22 1Q23 1Q22 4Q22 1Q23 Net interest and similar income (S/ mn) Fees from financial services (S/ mn) 56 47 43 n.m. QoQ -17% QoQ -5 -41% YoY +10% YoY -14 -2
Slide 24: Positive AUM evolution due to local mutual fund business
Positive AUM evolution due to local mutual 3 fund business AUM (S/ mn) Deposits (S/ mn) Loans (S/ mn) 1,784 1,728 1,658 21,795 4,099 21,307 21,317 3,835 3,696 1Q22 4Q22 1Q23 1Q22 4Q22 1Q23 1Q22 4Q22 1Q23 +2% QoQ | +2% YoY -10% QoQ | -4% YoY -3% QoQ | +4% YoY 24
Slide 25: Key messages
Key messages Challenging macro 1 2 3 Wealth management environment IFRS17 adoption results still impacted impacting banking in insurance by investments profitability 4 Positive development in digital indicators 5 Continuous growth in payments 6 ESG update
Slide 26: Positive development in banking digital indicators
Positive development in banking digital indicators… 4 71% 59% 60% 65% Mar22 Mar23 Mar22 Mar23 Digital customers Digital sales (% of digital customers) (% of products sold digitally) 96% 47 89% 45 Mar22 Mar23 Mar22 Mar23 Business accounts NPS – Digital customers (% of business accounts opened digital
Slide 27: As well as in insurance and wealth management
… as well as in insurance and wealth management 4 35% 41% 33% 37% Mar22 Mar23 Mar22 Mar23 Vida cash life Digital transactions premiums Interfondos (% of total life premiums) (% of digital transactions)
Slide 28: Banking customers reached 5.5 million
Banking customers reached 5.5 million 4 +17% YoY +29% YoY +23% YoY 5.3 5.5 2.2 2.2 162 4.7 1.7 152 132 1Q22 4Q22 1Q23 1Q22 4Q22 1Q23 1Q22 4Q22 1Q23 Banking – retail customers (mn) Banking – digital customers (mn) Banking – commercial customers (th) 28
Slide 29: Key messages
Key messages Challenging macro 1 2 3 Wealth management environment IFRS17 adoption results still impacted impacting banking in insurance by investments profitability 4 Positive development in digital indicators 5 Continuous growth in payments 6 ESG update
Slide 30: Solid YoY growth in key business drivers
Solid YoY growth in key business drivers 5 693 1,159 88.2 94.4 +67% YoY +7% YoY Mar22 Mar23 Mar22 Mar23 Merchants (th) Revenues(1) (S/ mn) E-commerce 14% 16% (%) 10.9 13.5 34.1 32.4 +24% YoY -5% YoY Mar22 Mar23 Mar22 Mar23 30 Transactional volumes in payments acquirer (S/ bn) EBITDA (S/ mn) 1) Profo
Slide 31: Over 11.1 million users in Plin and 2.6 million in Tunki
Over 11.1 million users in Plin and 2.6 million in Tunki 5 +64% YoY +59% YoY Apr23 Apr23 11.1 942 917 10.7 578 6.6 Mar22 Mar23 Mar22 Mar23 Users (mn) Merchants (th) +46% YoY +56% YoY Apr23 Apr23 2.6 581 2.6 1.8 575 368 Mar22 Mar23 Mar22 Mar23 Users (mn) Merchants (th) 31
Slide 32: Continuous growth in Plin and Tunki transactions
Continuous growth in Plin and Tunki transactions 5 Transactions (units in mn) Transactions (units in mn) 21.2 5.4 19.3 19.8 5.1 4.5 14.5 3.1 10.9 8.5 2.2 1.5 Mar22 Jun22 Sep22 Dec22 Mar23 Apr23 Mar22 Jun22 Sep22 Dec22 Mar23 Apr23 +3% QoQ | +2x YoY +13% QoQ | +3x YoY 32
Slide 33: Key messages
Key messages Challenging macro 1 2 3 Wealth management environment IFRS17 adoption results still impacted impacting banking in insurance by investments profitability 4 Positive development in digital indicators 5 Continuous growth in payments 6 ESG update
Slide 34: ESG updates
ESG updates update 6 Environmental Social Governance & Economic +35K clients GHG emissions 2022 MINAM recognition measurement • Interbank •Interseguro #1 Interbank • Interbank +150K savings accounts •Inteligo +65K credit loans +6K housing access Interbank's social- +S/14K employee donations environm
Slide 35: Financial highlights, Key messages, Takeaways
1 Financial highlights 2 Key messages 3 Takeaways
Slide 36: 1Q23 update on operating trends
1Q23 update on operating trends Capital Profitability Loan growth 2023 1Q23 2023 1Q23 High single digit growth in IBK TCR ∼ 15% 15.2% IFS ROE ∼ 18.0% 13.3%(1) | 11.5% total loans(2) led by low double digit growth in consumer loans IBK CET1 ∼ 11% 11.1% To remain at sound levels Continued path to reco
Slide 37: Takeaways
Takeaways Challenging macro 1 2 3 Wealth management environment IFRS17 adoption results still impacted impacting banking in insurance by investments profitability 4 Positive development in digital indicators 5 Continuous growth in payments 6 ESG update
Slide 38: Appendix
. Appendix CJ Intercorp Financial Services
Slide 39: 40 bps quarterly market share gain in retail loans
40 bps quarterly market share gain in Banking retail loans Performing loans (S/ mn) Breakdown of loans (S/ mn) Breakdown of loans +1% QoQ | +8% YoY % chg % chg 1 Q22 4Q22 1 Q23 QoQ YoY Consumer loans 43,592 43,937 Credit cards & other loans 8,1 45.5 9,689.5 1 0,358.0 6.9% 27.2% (1 ) 40,712 Payroll d
Slide 40: Stable market share in retail deposits
Banking Stable market share in retail deposits Funding breakdown (S/ mn) Funding structure (S/ mn) 99% 101% 99% % chg % chg LDR(2) 1 Q22 4Q22 1 Q23 QoQ YoY System’s Deposits 42,885.9 44,597.9 46,247.0 3.7% 7.8% 106% 107% 104% Retail 22,1 90.3 23,670.0 23,548.3 -0.5% 6.1 % LDR(2) (1 ) Commercial 20,6
Slide 41: Main financial indicators
Banking Main financial indicators NIM 4.5% 5.4% 5.5%(1) CoR 1.4% 2.5% 3.2% 917 929(1) 368 748 278 +1% QoQ 152 +32% QoQ +24% YoY n.m. YoY 1Q22 4Q22 1Q23 1Q22 4Q22 1Q23 Net interest and similar income (S/ mn) Loan provision expense (S/ mn) % 20% 27% 28%(1) C/I 41.7% 37.9% 36.9%(1) Revenues 342 334 508
Slide 42: New rescheduled loans granted to customers, mainly in credit cards
New rescheduled loans granted to Banking customers, mainly in credit cards Rescheduled credit card loans (S/ mn) 149 142 114 • New rescheduled loans granted in 1Q23 with more flexible conditions than regular ones, in line with SBS guidelines 69 • Payment behavior of customers under 62 monitoring, fi
Slide 43: Asset quality metrics evolving with macro outlook
Asset quality metrics evolving with Banking macro outlook Impairment loss on loans, net (S/ mn) Cost of risk (%) 1,291 13.4% 463 368 313 328 278 199(1) 193 210 4.5% 189 178 3.4% 3.1% 3.2% 148 152 2.5% 110 1.9%(1) 1.8% 1.7% 1.1% 1.4% 1.8% 1.9% 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q
Slide 44: Reactiva loan balances down 60% YoY, representing 4% of total portfolio
Reactiva loan balances down 60% YoY, Banking representing 4% of total portfolio Reactiva Peru loan balances by segment (S/ bn) 1Q23 Segment YoY Corporate -85% 4.2 Mid-sized -62% Corporate: S/ 0.4 bn Mid-sized: S/ 0.8 bn 2.3 SME: S/ 0.5 bn SME -50% 1.7 Total -60% 1Q22 4Q22 1Q23 44 SME Mid-sized Corpo
Slide 45: Manageable dollarization levels
Banking Manageable dollarization levels Total loans Retail loans Commercial loans % PEN 67% 72% 88% 93% 56% 60% System 8% 5% 26% 25% 46% 50% 92% 95% 75% 75% 54% 50% 1Q18 1Q23 1Q18 1Q23 1Q18 1Q23 Retail loans breakdown Commercial loans breakdown Consumer Mortgages Corporate Medium Small & Micro 96% 9
Slide 46: Key differences between IFRS4 and IFRS17
Key differences between IFRS4 and Insurance IFRS17 From IFRS4 to IFRS17 1 Profit is recognized at the beginning of the contract in IFRS4, while profit is recognized over the period of the contract in IFRS17 (early recognition of losses on onerous contracts is mandatory) No changes in: 1 2 Liabilitie
Slide 47: IFRS4 – IFRS17 transition 2022
Insurance IFRS4 – IFRS17 transition 2022 S/ 644MM Impact on ROE 26.6% 57.7% equity, will normalize in time Recognized vs deferred profit Net premiums: - S/850MM Tech. reserves+Claims: +S/762MM Higher liabilities under IFRS17 11 4 -88 57 248 Cash flow vs 232 amortized cost 2022 IFRS4 Insurance Expens
Slide 48: Results QoQ IFRS17
Insurance Results QoQ IFRS17 ROE 15.1% 40.5% 6 52 22 -40 -10 -9 15 31 38 -3 31 13 4Q22(1) Net interest Impairment Fee income Result from Insurance Expenses Translation 1Q23 income financial Results result transactions Insurance 4Q22 - 1Q23 results – bridge IFRS17 48 1) Negative insurance phasing in
Slide 49: Important source of fees for IFS
Payments Important source of fees for IFS 181 170 20 18 18 137 -6% QoQ -14% QoQ +24% YoY -2% YoY 1Q22 4Q22 1Q23 1Q22 4Q22 1Q23 Payments acquirer (S/ mn) Correspondent banking & Credit cards processor (S/ mn) 109 201 101 188 75 155 -7% QoQ -7% QoQ +35% YoY +21% YoY 1Q22 4Q22 1Q23 1Q22 4Q22 1Q23 49 Se
Slide 50: IFS' 1Q23 statement of financial position
IFS’ 1Q23 statement of financial position Intercorp Financial Services' Statement of financial position S/ million %chg %chg 03.31.22 12.31.22 03.31.23 QoQ YoY Assets Cash and due from banks and inter-bank 13,690.8 13,489.5 12,448.5 -7.7% -9.1% funds Financial investments 24,306.7 22,787.6 24,447.2
Slide 51: IFS' 1Q23 P&L
IFS’ 1Q23 P&L Intercorp Financial Services' P&L statement S/ million %chg %chg 1Q22 4Q22 1Q23 QoQ YoY Interest and similar income 1,248.1 1,684.0 1,658.0 -1.5% 32.8% Interest and similar expenses -303.2 -535.4 -579.9 8.3% 91.3% Net interest and similar income 945.0 1,148.5 1,078.2 -6.1% 14.1% Impair
Slide 52: Banking segment's 1Q23 statement of financial position
Banking segment’s 1Q23 statement of financial position Banking Segment' Statement of financial position S/ million %chg %chg 03.31.22 12.31.22 03.31.23 QoQ YoY Assets Cash and due from banks and inter-bank 11,518.4 11,348.4 10,810.7 -4.7% -6.1% funds Financial investments 10,549.3 9,586.3 10,726.1 1
Slide 53: Banking segment's 1Q23 P&L
Banking segment’s 1Q23 P&L Banking Segment's P&L statement S/ million %chg %chg 1Q22 4Q22 1Q23 QoQ YoY Interest and similar income 1,010.0 1,396.4 1,384.6 -0.8% 37.1% Interest and similar expenses -261.9 -479.5 -525.5 9.6% n.m. Net interest and similar income 748.0 916.9 859.1 -6.3% 14.9% Impairment
Slide 54: Insurance segment's 1Q23 statement of financial position
Insurance segment’s 1Q23 statement of financial position Insurance Segment' Statement of financial position S/ million %chg %chg 03.31.22 12.31.22 03.31.23 QoQ YoY Assets Cash and due from banks and inter-bank 643.2 631.2 558.4 -11.5% -13.2% funds Financial investments 11,506.7 11,295.1 11,673.2 3.3
Slide 55: Insurance segment's 1Q23 P&L
Insurance segment’s 1Q23 P&L Insurance Segment's P&L statement S/ million %chg %chg 1Q22 4Q22 1Q23 QoQ YoY Interest and similar income 202.6 245.1 228.1 -6.9% 12.6% Interest and similar expenses -30.4 -37.0 -30.4 -17.9% -0.2% Net interest and similar income 172.2 208.1 197.8 -5.0% 14.8% Recovery (lo
Slide 56: Wealth management segment's 1Q23 statement of financial position
Wealth management segment’s 1Q23 statement of financial position Wealth Management Segment' Statement of financial position S/ million %chg %chg 03.31.22 12.31.22 03.31.23 QoQ YoY Assets Cash and due from banks and inter-bank 1,413.5 1,457.4 988.2 -32.2% -30.1% funds Financial investments 2,010.3 1,
Slide 57: Wealth management segment's 1Q23 P&L
Wealth management segment’s 1Q23 P&L Wealth Management Segment's P&L statement S/ million %chg %chg 1Q22 4Q22 1Q23 QoQ YoY Interest and similar income 35.3 41.9 43.8 4.6% 24.2% Interest and similar expenses -9.3 -18.0 -22.6 25.3% n.m. Net interest and similar income 26.0 23.9 21.2 -11.0% -18.3% Impa
Slide 58: Payments segment's 1Q23 statement of financial position
Payments segment’s 1Q23 statement of financial position (1) Payments Segment' Statement of financial position S/ million %chg %chg 03.31.22 12.31.22 03.31.23 QoQ YoY Assets Cash and due from banks and inter-bank 119.4 111.1 107.1 -3.6% -10.3% funds Financial investments - - 53.1 n.m. n.m. Loans, net
Slide 59: Payments segment's 1Q23 P&L
Payments segment’s 1Q23 P&L Payments Segment's P&L statement (1) S/ million %chg %chg 1Q22 4Q22 1Q23 QoQ YoY Interest and similar income 0.0 0.9 1.7 92.3% n.m. Interest and similar expenses -0.5 -0.4 -1.1 n.m. n.m. Net interest and similar income -0.5 0.5 0.6 32.9% n.m. Fee income from financial ser
Slide 60: 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 61: 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 62: Intercorp Financial Services
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Intercorp Financial Services Inc. Common Shares — Q1 2023 Earnings Presentation on 6ix