Intercorp Financial Services(US:IFS)2025-08-11 22:55Financial Performance - Net income for Intercorp Financial Services in Q2 2025 was S/ 579.6 million, a 29.9% increase QoQ and a significant increase of S/ 293.4 million YoY[4]. - The company achieved an annualized ROE of 20.7% in Q2 2025, up from 16.3% in Q1 2025 and 11.2% in Q2 2024[4][25]. - Net profit for the period ended June 30, 2025, was S/ 1,025.7 million, compared to S/ 427.3 million in the same period of 2024[160]. - Earnings per share attributable to IFS's shareholders increased to S/ 9.058 from S/ 3.710 YoY[160]. - Total comprehensive income for the period, net of income tax, was S/ 1,122.9 million, compared to S/ 628.8 million in the prior year[161]. - The return on equity (ROE) for Inteligo stood at 43.9% in 2Q25, significantly higher than 14.2% in 1Q25[125]. Income and Revenue - Other income surged by S/ 211.7 million YoY, primarily due to higher mark-to-market valuations in the wealth management business[12][13]. - Commission income increased by 7.8% QoQ and 17.0% YoY, driven by higher transaction volumes in the banking business[3][16]. - Net fee income from financial services increased by S/ 17.9 million YoY, or 9.2%, mainly due to higher commissions from credit card services and banking services[85]. - Other income increased by S/ 19.0 million YoY, primarily driven by higher net gains on financial investments and property sales[89]. - Total other income for 2Q25 was S/ 147.5 million, a decrease of 5.8% QoQ but an increase of 14.8% YoY[91]. Asset Management - Assets under management (AuMs) grew by 3.5% QoQ and 13.9% YoY, indicating strong performance in wealth management[3]. - Inteligo's net profit reached S/ 117.0 million in 2Q25, an increase of S/ 79.5 million QoQ and S/ 110.7 million YoY, primarily due to mark-to-market profits on proprietary portfolio investments[122]. - Assets under management (AUM) grew by 3.5% QoQ to US$ 7,766 million and by 13.9% YoY, attributed to inflows in mutual funds and private wealth management[128][129]. Loan and Deposit Growth - Total performing loans rose by 2.5% QoQ and 5.2% YoY, totaling S/ 48,282.0 million, driven by a 4.1% increase in commercial loans and a 1.1% increase in retail loans[32]. - Total deposits increased by 2.7% QoQ and 7.4% YoY, reaching S/ 52,036.0 million, with commercial deposits rising by 7.9%[50]. - Direct loans increased to S/ 40,201,836,000 as of June 30, 2025, up from S/ 38,456,682,000 at the end of 2024, reflecting a growth of approximately 4.5%[199]. - Total loans, net, reached S/ 50,415,084,000 as of June 30, 2025, compared to S/ 49,229,448,000 at the end of 2024, indicating a year-over-year increase of about 2.4%[199]. Risk and Loan Quality - The cost of risk (CoR) improved to 2.5%, down 150 basis points YoY, reflecting better payment behavior and a shift towards lower-risk credit segments[3]. - The proportion of past due loans decreased by 19.3% YoY, indicating improved loan quality[32]. - The S3 non-performing loan (NPL) ratio remained stable at 2.5%, with a cost of risk at 2.5% in 2Q25, lower than 2.8% in 1Q25[76]. - The impairment loss on loans, net of recoveries, was S/(000) 651,278 for the first half of 2025, down from S/(000) 1,023,253 in 2024, indicating improved loan performance[164]. Capital and Funding - The bank's total capital ratio stood at 16.9% as of 2Q25, down from 17.2% in 1Q25 but up from 15.0% in 2Q24[95]. - Risk-weighted assets (RWA) increased by 4.6% QoQ, mainly due to higher capital requirements for credit risk resulting from an increase in loans[97]. - The bank's total funding base increased by 2.7% QoQ, with deposits and obligations accounting for 80.4% of total funding[43]. - The average cost of funding remained stable at 3.2% in 2Q25 compared to 1Q25, with a net interest margin of 5.1%[65]. Digital Transformation and Customer Engagement - Digital customer base grew by 5.2% YoY, with retail digital clients increasing from 80% to 83%[145]. - Plin active users grew by 13% YoY, with transaction volumes increasing by 1.5x YoY, while Izipay transaction volumes rose by 12% YoY[146]. - The share of digital self-service in insurance reached 68.8%, up from 65.8% in 2Q24, indicating stronger online channel engagement[153]. - In wealth management, digital users of Interfondos accounted for 28.8% of total users, up from 22.7% in 2Q24[155]. Financial Position - Total assets as of June 30, 2025, amounted to S/ 97,592.3 million, up from S/ 95,503.8 million at the end of 2024[159]. - The company’s cash and cash equivalents at the end of the period were S/(000) 12,173,002, compared to S/(000) 9,829,024 at the end of June 2024, indicating strong liquidity[165]. - Financial investments totaled S/27,313,781 as of June 30, 2025, an increase of 3.47% from S/26,397,552 as of December 31, 2024[192].