Intercorp Financial Services(IFS) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a net income of PEN 456 million for the quarter, representing an 81% increase year-over-year, with a return on equity (ROE) of approximately 16% [9][16] - The accumulated ROE for the first nine months of 2025 stands at 17.4%, which would have been 18.3% excluding the one-off impact from Rutas de Lima [15][16] - The risk-adjusted net interest margin (NIM) improved by 60 basis points over the past quarter, with a current NIM of 3.8% [9][28] Business Line Data and Key Metrics Changes - Interbank's loan portfolio grew by over 5% year-over-year, with higher-yielding loans increasing by 7% [21][39] - Interseguro reported strong performance in private annuities and life insurance, with retail premiums growing by 58% year-over-year [10][35] - Inteligo's assets under management reached new record highs, growing at a double-digit pace [7][32] Market Data and Key Metrics Changes - Peru's GDP growth was reported at 3.3% as of August, with private investment projected to grow by 6.5% by year-end [4][12] - Inflation in Peru remains low at around 1.7%, and the Peruvian sol has appreciated by approximately 10% this year [4][11] - The internal demand projection for 2025 has been revised upward to 5.1%, driven by strong growth in private investment and consumption [13][14] Company Strategy and Development Direction - The company aims to achieve digital excellence and deepen primary client relationships through data-driven services and innovation [7][10] - There is a focus on maintaining profitability while expanding into higher-yielding loan segments and enhancing the payments ecosystem with PLIN and Easy Pay [23][25] - The company is committed to long-term sustainability and profitability, adapting quickly to market changes [6][7] Management's Comments on Operating Environment and Future Outlook - Management maintains a cautious outlook due to international conditions and the pre-election period but remains optimistic about Peru's economic stability [4][5] - The company expects to navigate challenges related to pension fund withdrawals while focusing on higher-yielding segments [23][50] - The outlook for 2026 anticipates moderate growth in internal demand and a stable economic environment despite potential political uncertainties [12][14] Other Important Information - The company has provisioned around 40% of its exposure related to Rutas de Lima, which represents less than 1% of its total investment holdings [46][48] - The cost of risk remains low at 2.1%, with expectations for gradual increases as the consumer and small business portfolios expand [27][28] - The company continues to invest in technology and talent to support long-term growth ambitions, with a cost-to-income ratio of 37.7% [20][39] Q&A Session Summary Question: Regarding Rutas de Lima and its impairment level - Management indicated that 40% of impairment has been booked, and the situation is being closely monitored as legal proceedings continue [46][47] Question: Impact of pension withdrawals on retail growth - Management noted that pension withdrawals may have a short-term negative impact on growth but could also lead to increased liquidity and improved collections [50][51] Question: Expected loan growth for 2025 and 2026 - Management expects to continue accelerating growth in credit cards and consumer finance, with a focus on gaining market share [58][59] Question: Corporate-level disbursements in 2026 - Management anticipates mild growth in corporate activity, primarily focused on working capital replenishment and small CapEx, with no large projects expected [63][64]