Intercorp Financial Services(IFS) - 2023 Q1 - Quarterly Report

Financial Performance - Intercorp Financial Services reported a net profit of S/ 266.9 million in 1Q23, a decrease of 30.5% QoQ and 44.1% YoY[6]. - Interbank's net profit for 1Q23 was S/ 250.2 million, a decrease of 31.4% QoQ and 22.4% YoY, primarily due to an increase in impairment loss on loans of S/ 89.5 million[35]. - The net profit for the period ended March 31, 2023, was S/(000) 266,914, a decrease of 44.1% compared to S/(000) 477,845 in the same period last year[182]. - The net profit for the period was S/(000) 265,093, compared to S/(000) 475,390 in the previous period[184]. - Net profit for the period decreased to S/266.914 million in Q1 2023 from S/477.845 million in Q1 2022, representing a decline of 44.1%[187]. Revenue and Income - Recurring revenues grew 21% YoY, with banking NIM reaching 5.5%[3]. - Net fee income from financial services surged 54.9% YoY, reflecting strong performance across various segments[22]. - Net fee income from financial services was S/ 39.6 million in 1Q23, an increase of S/ 2.2 million, or 5.9% QoQ, mainly driven by higher fees from funds management[158]. - Net interest and similar income grew by 14.9% YoY, attributed to a 37.1% increase in interest and similar income, despite a more than two-fold increase in interest and similar expense[82]. - The payments acquirer segment generated S/ 170.3 million in income in 1Q23, a decrease of 5.9% QoQ but an increase of 24.0% YoY[174]. Impairment and Losses - Impairment loss on loans increased by S/ 218.0 million YoY, primarily due to higher provisions in the retail and commercial loan books[21]. - The impairment loss on loans increased by 32.2% QoQ to S/ 367.7 million, significantly impacting overall profitability[34]. - Impairment loss on loans, net of recoveries increased by 32.2% QoQ and more than two-fold YoY, with an annualized ratio of impairment loss on loans to average loans at 3.2% in 1Q23, up from 2.5% in 4Q22 and 1.4% in 1Q22[94][96]. - The company reported an impairment loss on loans of S/(000) 367,611 for Q1 2023, significantly higher than S/(000) 149,595 in Q1 2022[181]. Assets and Liabilities - Total assets increased by 0.6% YoY to S/ 88,016.2 million as of March 31, 2023[5]. - Total liabilities increased by 1.0% YoY to S/ 78,879.7 million, with deposits and obligations rising by 2.7%[5]. - The equity attributable to IFS's shareholders decreased to S/(000) 9,084,625 as of March 31, 2023, from S/(000) 9,348,528 at the end of 2022[180]. - The balance of rescheduled loans as of March 31, 2023, was S/5,069.584 million, slightly up from S/5,048.978 million as of December 31, 2022[200]. Capital and Ratios - The company maintained solid capitalization levels after Basel III changes, with an annualized ROAE of 11.5% in 1Q23[8]. - The ratio of regulatory capital to risk-weighted assets was 15.2% as of March 31, 2023, slightly above the 15.1% reported at the end of 2022, but below the 15.5% registered a year earlier[110]. - Total regulatory capital decreased by 5.3% QoQ, attributed to dividend distributions and unrealized losses on investments, while risk-weighted assets decreased by 5.9% QoQ[112][111]. Insurance Performance - Insurance earnings were S/ 31.3 million in 1Q23, with a ROE of 40.5% post-IFRS17 adoption[2]. - Interseguro's profits reached S/ 31.3 million in 1Q23, an increase of S/ 17.8 million QoQ, but a decrease of S/ 81.9 million YoY, primarily due to improvements in insurance results[121]. - Insurance income was S/ 275.5 million in 1Q23, an increase of S/ 29.1 million, or 11.8% QoQ, but a decrease of S/ 30.6 million, or 10.0% YoY[138]. - Insurance expenses were S/ 366.8 million in 1Q23, a decrease of S/ 30.6 million, or 7.7% QoQ, but an increase of S/ 48.8 million, or 15.3% YoY[141]. Cash Flow and Investments - Net cash provided by operating activities was S/2,637 million in Q1 2023, a turnaround from a net cash used of S/(1,854.830) million in Q1 2022[188]. - Cash and cash equivalents at the end of the period decreased to S/11,929.297 million in Q1 2023 from S/13,286.242 million in Q1 2022, a decline of 10.2%[188]. - The purchase of investments at fair value through other comprehensive income and at amortized cost increased to S/(1,782.926) million in Q1 2023 from S/(992.876) million in Q1 2022, a rise of 79.5%[188]. Other Key Metrics - The effective tax rate rose from 16.6% in 1Q22 to 28.1% in 1Q23, influenced by a lower translation result and higher rates in the banking business[24]. - The efficiency ratio improved to 39.1% in 1Q23 from 41.7% in 1Q22, and would have been 36.9% excluding the impairment on interest on loans of S/ 70.0 million[107]. - The average cost of funding increased by 180 basis points, from 1.8% in 1Q22 to 3.6% in 1Q23, resulting in a net interest margin of 5.1% in 1Q23, which is 60 basis points higher than the 4.5% reported in 1Q22[93].