Intercorp Financial Services(IFS)2025-02-07 19:03Financial Data and Key Metrics Changes - The company achieved a net income of S/ 496 million in Q4 2024, representing a 71% increase year-over-year and a 26% increase compared to the previous quarter [32][37] - The return on equity (ROE) exceeded 18% in Q4 2024, marking a significant recovery from previous periods and aligning with mid-term targets [14][30] - The cost of risk decreased to 2.6%, which is 180 basis points lower than the previous year and 50 basis points lower than the previous quarter [33][51] Business Line Data and Key Metrics Changes - Interbank's net income nearly tripled year-over-year, driven by lower cost of risk and improved margins, achieving an ROE of 16% [38][41] - The Wealth Management segment, Inteligo, saw assets under management reach an all-time high, growing by 17% year-over-year [18][63] - The Insurance segment reported significant growth in individual life and annuities, maintaining market leadership in these areas [17][62] Market Data and Key Metrics Changes - Peru's GDP growth for Q4 2024 was approximately 3.7%, with expectations of continued growth driven by private investment and consumption [22][24] - The Central Bank of Peru has successfully controlled inflation, with expectations of a stable inflation rate around 2% for 2025 [23][25] - The banking sector is projected to grow at a rate of 5% to 7%, which is expected to be outpaced by the company's growth [121] Company Strategy and Development Direction - The company aims to achieve digital excellence and become a leading digital platform, focusing on profitable growth and enhancing customer relationships [19][30] - The strategy includes strengthening the commercial and payments ecosystem, which has led to increased market share in commercial banking [34][57] - The company is focused on maintaining a significant market share in consumer banking loans and retail deposits, with a goal of continued growth in these areas [31][56] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for 2025, anticipating continued recovery in the consumer portfolio and private investments, while acknowledging potential volatility due to the pre-electoral year [12][80] - The company is focused on rebuilding the consumer loan book and improving efficiency, with expectations of a gradual recovery in net interest margins [108][126] - Management highlighted the importance of monitoring external economic conditions, particularly U.S. economic policy, which could impact the business environment [26][28] Other Important Information - The company has a buyback program approved for up to $100 million, with approximately $75 million already purchased [82] - The company expects to maintain capital ratios above 15% and core equity Tier 1 ratios above 11% [77] Q&A Session Summary Question: Fee income growth expectations for 2025 - Management expects fee income to grow between high single-digits and low double-digits, driven by recovery in personal fees and digital channels [90][91] Question: Variables to monitor for Wealth Management recovery - Key variables include inflation rates and portfolio performance, with expectations for normalization in returns during 2025 [95][96] Question: Effective tax rate expectations for 2025 - The effective tax rate is expected to be slightly higher in 2025 compared to 2024, influenced by the mix of income sources [92][93] Question: Plans for Tier 2 bonds and call options - The company plans to execute the call option on the 2030 Tier 2 bonds in July, following the recent bond issuance [101] Question: Guidance on ROE for 2025 - Management provided guidance for a 2025 ROE of around 16%, with potential for higher returns depending on the recovery of the consumer portfolio [78][104] Question: Competitive outlook in the banking sector - The company aims to continue gaining market share in a competitive landscape, with expectations of growing faster than the overall market [118][121]