Intercorp Financial Services(IFS) - 2025 Q3 - Quarterly Report

Financial Performance - Net income for Q3 2025 was S/ 456 million, representing a 17% increase year-over-year (YoY) and a 21.3% decrease quarter-over-quarter (QoQ) [3] - Accumulated net income increased by 81% YoY, with a return on equity (ROE) of 17.4% [3] - The banking segment's profit rose to S/ 401.2 million, a 34.3% increase YoY and 22.3% increase QoQ [21] - Other income increased by S/ 61.1 million YoY, primarily from the banking and insurance businesses [15] - Net profit for the nine-month period ended September 30, 2025, was S/ 1.48 billion, up from S/ 817.37 million in the same period last year [154] - Net profit for the period increased to S/1,481,882,000 in 2025 from S/817,367,000 in 2024, representing an increase of 81.2% [158] Loan and Asset Management - Higher yielding loans grew by 7% YoY, contributing to a risk-adjusted net interest margin (NIM) of 3.8%, up 40 basis points from the previous quarter [3] - Total performing loans increased by 0.1% QoQ, with retail loans up 2.0% and commercial loans down 1.9% [30] - Year-over-year, performing loans increased by 4.7%, with retail loans growing 3.5% and commercial loans growing 7.1% excluding reactivations [32] - The average volume of loans increased by 1.7%, driven by a 2.3% rise in mortgages and a 0.9% increase in credit cards, while commercial loans decreased by 1.6% [56] - Direct loans increased to S/51,557,729,000 as of September 30, 2025, compared to S/50,415,364,000 as of December 31, 2024 [193] Risk and Impairment - Impairment losses on loans decreased by 31.9% YoY, reflecting improved performance in the retail loan portfolio [5] - Impairment loss on loans, net of recoveries, decreased by 16.8% QoQ, reflecting lower provision requirements across the retail and commercial loan books [69] - The S3 NPL ratio improved to 2.4% in 3Q25, down from 2.9% in 3Q24, with a coverage ratio of 140.5% [74] - The cost of risk for the retail segment decreased by 130 basis points YoY, indicating improved payment behavior among clients [73] Income and Expenses - Fee income from financial services increased by 1% QoQ and 16% YoY, driven by higher transaction volumes [3] - Total expenses decreased by S/ 5.8 million YoY, despite a S/ 31.1 million increase in salaries and employee benefits [87] - The efficiency ratio stood at 38.9% in Q3 2025, indicating a slight increase from the previous quarter [4] Capital and Equity - The Core Equity Tier 1 (CET1) ratio stood at 12.1% as of 3Q25, slightly above the 11.7% in 2Q25 but below the 12.2% in 3Q24 [91] - Total regulatory capital decreased by 5.2% quarter-over-quarter to S/ 10,868.5 million as of 3Q25, while the total capital ratio stood at 15.8% [98] - The balance of total equity as of September 30, 2025, was S/(000) 11,951,000, compared to S/(000) 10,516,100 as of January 1, 2025, showing an increase of approximately 13.6% [157] Digital and Customer Engagement - The banking customer base grew by 4% year-over-year, with retail digital customers increasing from 80% to 83% [143] - Digital insurance premiums rose to S/ 32.4 million in 3Q25, reflecting a strong digital adoption trend [148] - Wealth management digital users reached 30.2%, up from 28.8% in 2Q25, indicating sustained momentum in digital investment tools [149] - Digital self-service usage among retail clients improved to 82% year-over-year, reflecting enhanced customer engagement [143] Investment and Financial Instruments - Total financial investments increased to S/27,361,453,000 as of September 30, 2025, compared to S/26,397,552,000 as of December 31, 2024 [186] - The total debt instruments measured at fair value through other comprehensive income and at amortized cost reached S/24,871,082,000 as of September 30, 2025, compared to S/24,162,717,000 at the end of 2024 [192] - The Group's debt instruments measured at fair value through other comprehensive income amounted to S/20,994,458,000 as of September 30, 2025, up from S/20,377,805,000 as of December 31, 2024 [186] Cash Flow and Liquidity - Net cash used in operating activities was S/(1,028,672,000) in 2025 compared to S/3,948,146,000 provided in 2024, indicating a significant cash outflow shift [158] - Cash and cash equivalents at the end of the period decreased to S/11,450,762,000 in 2025 from S/14,322,736,000 in 2024, a decline of 19.7% [159] - The balance of cash and cash equivalents as of September 30, 2025, was S/(000) 1,721,400, compared to S/(000) 1,610,120 at the beginning of the year, showing an increase of approximately 6.9% [157]