Intercorp Financial Services Inc. · NYSE:IFS
Intercorp Financial Services — FY2018 Earnings Presentation
43 slides from Intercorp Financial Services's earnings presentation, 2019
Slide 1: Earnings Presentation 2018 Results
Earnings Presentation 2018 Results EJ Intercorp Financial Services
Slide 2: Highlights
Highlights Record year in growth and earnings, with strong improvementin cost of risk * Earningsreached S/ 1,025 million, a 16.5% increase YoY; 20.3% ROAE * 17.3% YoY loan growth, supported by a 28.4% growth in credit cards ie Cost of risk down 60 bps YoY, to 2.5% Interbank Fully merged Interseguro
Slide 3: IFS FY18 recurring profits increased 19.6%
IFS FY18 recurring profits increased 19.6% IFRSO IFS Net profit in $/ million 1,236) 1,033 pa se ety a &§ | - 2016 2017 2018 Interseguro Net profit in S/ million Interbank Net profit in $/ million 1,025 847 39% y 2016 2017 2018 Inteligo Net profit in $/ million o% 832 19.8% 2 re 8.9% TL ee ad a -61
Slide 4: IFS key indicators FY18
IFS key indicators FY18 IFRSO $/million 2017 2018 tone Total revenues®® 4,330.8 4,923.0 13.7% Net interest and similar income 2,689.1 3,150.7 17.2% Efficiency ratio 37.1% 34.8% -230bps IFS Profit for the period 1,033.5 1,091.4 5.6% Normalized profit 1,033.5 1,236.2 19.6% ROAE® 19.3% 18.6% -70bps ROA
Slide 5: IFS 4Q18 results
IFS 4Q18 results reached S/ 280 million IFRSO IFS Net profit in $/ million ROAE t 20.4%) | -2.4% 316 287 711.3% 280 | Lo 7 4Q17 3Q18 4Q18 Interseguro Net profit in S/ million 46.7% 20 10.7% 18 2 = 4Q17 3Q18 4Q18 (1) 4G17 under JAS 39, while 3Q18 and 4@18 under IFRS 9 (2) Excluding non-recurring gain
Slide 6: IFS key indicators 4Q18
10} (2) @ (4) (6) © IFS key indicators 4Q18 IFRSO S/ million 4Qi7 3Q18 4Q18 %chgQoQ_%chg YoY Total revenues™ 1,168.3 1,238.8 1,276.0 3.0% 9.2% Net interest and similar income 709.4 780.5 816.6 4.6% 15.1% Efficiency ratio® 35.9% 35.0% 35.6% 60bps _ -30 bps IFS Profit for the period 287.1 316.1 280.3
Slide 7: Relevant net income grew 32.9% in 2018
Relevant net income grew 32.9% in 2018, reaching S/ 1,585 million Local GAAP &IFRS Interbank — Local GAAP Interseguro — Local GAAP Inteligo —IFRS® Net profitin S/ million Net profitin S/ million Net profitin S/ million rons ED => QT Ea cs QT Pa Ee Rone 232%? 200%? sD 1,040 875 0.2% —> 361 1 49.8% 18
Slide 8: Interbank
EJ Intercorp Financial Services
Slide 9: Further improvement in NIM
Further improvement in NIM IFRSO Net interest and similar income S/ million adjusted NIMe> 10.8% } Loan provision expense S/ million +10.7% J 653 209 Yo s/o 589 6200 ee nl 189 166 ety nl 4Q17 3Q18 4Q18 4Q17 3Q18 4Q18 Total other income Other expenses S/ million S/ million rcrcvenes) ED f 303%) => cr
Slide 10: Clear focus on digital transformation
iO} (2) @ (4) Clear focus on digital transformation 52% Digital 39% customers 4Q17 4Qi8 94% 99% Off-branch transactions® 4Q17 4a18 95% Oy Ddicital 9% functionalities 4Q17 4a18 Digital sales & self-service Digital customers: % of retail clients that use digital platforms Off-branch transactions: % of
Slide 11: 17.3% YoY loan growth, supported by credit cards
17.3% YoY loan growth, supported by a 28.4% growth in credit cards Performing loans Breakdown of loans S/ million 417.3% } 31,435 30,124 ae 26,794 14,894 15,850 S/million %chg %chg 4Qi7 3Q18 4ais QoQ YoY Consumer loans: Credit cards 3,792.6 4518.5 4,871.3 7.8% 28.4% Other consumer 4,854.8 5,395.7 5,
Slide 12: Retail deposits increased 6.6% QoQ and 12.7% YoY
iO) @ Retail deposits increased 6.6% QoQ and 12.7% YoY Funding structure Funding breakdown S/million %chg %chg S/ million 4Qi7 3Q18 4Q18 QoQ YoY Gross Loans, Deposits 30,559.3 29,0791 31,2867 7.6% 2.4% Deposits 912% <> <> Retail 12,709.2 13,442.2 14,328.4 6.6% 12.7% Commercial” 178501 15,6369 — 16,9
Slide 13: FY18 cost of risk down 60 bps, to 2.5%
FY18 cost of risk down 60 bps, to 2.5% IFRS® Cost of risk (IFRS vs. Local GAAP) Non-performing exposure 3.1% 2.5% NPL Coverage Ratio 12.7% 2% including positive impact of construction companies 1.6% 3.2% 2.9% 2017 2018 BIAS39 "IFRSO Cost of risk — Retail and commercial banking 2017 2018 ™(S2+S3) rat
Slide 14: Slight increase in cost of risk in the quarter
Slight increase in cost of risk in the quarter IFRS® Cost of risk (IFRS vs. Local GAAP) Non-performing exposure NPL Coverage Ratio 9 9% includins 12.7% 2.7% 29% positive 11.8% 11.6% 2.2% impact of 3.2% 2.8% 2.9% 4Qi7 3Q18 4Q18 4Qi7 3Q18 4ais BIAS39 =IFRSO ™(S2+S3) ratio NPL ratio (S3 + refinanced lo
Slide 15: Loan delinquency remained stable
Loan delinquency remained stable Local GAAP PDL vs. System Loan provision expense vs. System = Interbank —i=System =" Interbank =te=System Interbank Coversxe > £75:0%) Ratio 3.0% 3.1% 3.0% | ; = BB s 4Q17 318 4a18 4Q17 318 4a18 PDL retail banking vs. System PDL commercial banking vs. System le Inter
Slide 16: Dollarization levels increased in corporate loans
Dollarization levels increased in corporate loans driven by trade-related activity Total loans Retail loans Commercial loans %PEN System ERD t 681%) 26.5% 47.7% 48.8% 91.8% 4Q17 4Q18 4Q17 4Q18 Retail loans breakdown Commercial loans breakdown Consumer Credit Cards Mortgages Corporate Medium Small &
Slide 17: Solid core capital levels for Interbank
Solid core capital levels for Interbank BIS ratio evolution soon D> GD GD 4Qi7 17.5% 16.7% 1Q18 mmm Tier | 2Q18 mmm Tier Il 3Q18 —®—CET! 4Qi8 +1.7% Additional Regulatory Capital Requirement 10.0% Total Regulatory Minimum SBS has adopted Basel II since 2008 SBS introduced a first set of Basel III sta
Slide 18: Interseguro
Iinterseguro - R j Wi 7 ia “~~ im EJ Intercorp Financial Services
Slide 19: 1.5% QoQ growth in gross premiums plus collections
1.5% QoQ growth in gross premiums plus collections IFRSO Gross premiums plus collections by business unit S/ million +43.5% | 250 ise 8 39 BS) 4Qi7 3Q18 4Qi8 "Annuities ™Retail Insurance "Individual Life ™Private Annuities — D&S (1) 417 under IAS 39, while 3@18 and 4Q18 under IFRS Regulated Annuitie
Slide 20: Net premiums increased 24.4% YoY
Net premiums increased 24.4% YoY IFRS® Net premiums Adjustment of technical reserves S/ million S/ million Annuities market share 0 25.0%] &> => 174 172 138 a 34 60 50 2 51 52 44 48 58 #5 7 4Q17 3Q18 4Q18 4Q17 3Q18 4Q18 ™Annuities ™Retaillnsurance ™IndividualLife © D&S Net claims and benefits incurr
Slide 21: Interseguro's fixed income portfolio remained stable
Interseguro’s fixed income portfolio remained relatively stable Q@oG and YoY IFRS Investment portfolio Results from investments@. S/million S/million roe => & & +0.2% 11,270 11,328 -0.3% 170 28 2 134 4Qi7 3Q18 4ais 3 -4 4Qi7 3Q18 4ais BFixed income = Equity & Mutual funds =Real estate mFixed Income
Slide 22: Inteligo
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Slide 23: Recovery in core business revenues offset by lower other income
Recovery in core business revenues offset by lower other ° ° income in 4Q18 IFRS® Net interest and similar income Fees from financial services S/ million S/ million un ED 25% = 1+27.9% } wee } 26 29 31 31 23 OS» 7 ly 4Q17 3Q18 4Q18 4Q17 3Q18 4Q18 Other income Other expenses S/ million S/ million 84.
Slide 24: Growth in loans backed by higher deposits
Growth in loans backed by higher deposits; ROAE stood at 22.7% in 4Q18 IFRS® AUM + Deposits Loans S/ million S/ million +9.1% } +18.1% | 15295 scx 15,593 2,153 2,609 1576 1335 4300 a 4Q17 3a18 4a18 4Q17 3a18 4a18 @ Deposits m@ AUM Revenues Net profit S/ million S/ million (2) Fee = @& @ rons = ED f
Slide 25: Summary
Summary
Slide 26: Takeaways
Takeaways Record year in growth and earnings, with strong improvementin cost of risk * Earningsreached S/ 1,025 million, a 16.5% increase YoY; 20.3% ROAE * 17.3% YoY loan growth, supported by a 28.4% growth in credit cards ie Cost of risk down 60 bps YoY, to 2.5% Interbank Fully merged Interseguro p
Slide 27: Appendix
Appendix EJ Intercorp Financial Services |
Slide 28: IFS 4Q18 Statement of financial position
IFS 4Q18 Statement of financial position IFRS Intercorp Financial Services' Statement of financial position S/ million %ChE 31.12.2017 01.01.2018 31.12.2018 31.12.18/ (IAS 39) (IFRS 9) (IFRS 9) 01.01.18 Assets Cash and due from banks and inter-bank funds 11,608.4 11,608.4 8,875.4 -23.5% Trading secu
Slide 29: IFS FY18 P&L
0) @ @ IFS FY18 P&L IFRSO Intercorp Financial Services' P&L Statement SJ million sche sche 2016 2017 2018 18/17 17/16 Interest and similar income 3,7048 3,809.0 43213 13.4% 2.8% Interest and similar expense -1,081.9 AN99 1,170.6 45% 3.5% Net interest and similar income 2,623.0 2,689.1 3,150.7 17.2%
Slide 30: IFS 4Q18 P&L
IFS 4Q18 P&L IFRS Intercorp Financial Services' P&L statement $/ million 9ochg 9ochg 4Q17 3018 4a18 QoQ YoY Interest and similarincome 9975 1086211286 3.9% 13.1% Interest and similar expense -288.1 -3057 “312.0 2.0% 8.3% Net interest and similar income 709.4 780.5 816.6 4.6% 15.1% Provision forloan
Slide 31: Interbank FY18 P&L
0) @ @) interbank FY18 P&L IFRS® Banking Segment's P&L Statement S/ million sechg sechg 2016 2017 2018 18/17 17/16 Interest and similar income 3,279.4 3,348.0 3,561.0 6.4% 21% Interest and similar expenses 40098 _-1,0470 1,067.4 19% 3.7% Net interest and similar income 2,269.6 2,301.0 2,493.6 8.4% 1
Slide 32: Interbank 4Q18 P&L
0) @ @) interbank 4Q18 P&L IFRS Banking Segment's P&L Statement S/million sechg sechg 4Q17 3a18 4a18 QoQ YoY Interest and similar income 852.6 8988 9383 4.4% 101% Interest and similar expenses -2633 -2788 -2853 2.3% 83% Net interest and similar income 589.2 620.0 653.0 5.3% 10.8% Provision for loan
Slide 33: Interbank's FY18 net profit bridge to IFRS
Interbank’s FY18 net profit bridge to IFRS S/million Retail: /-3. ‘ommercial deferred income tax 129 20 47 as Reclassificatio of fees on loans, from interest income to fee income Net profit(SBS) Netinterestand Feeincomefrom Provision forloan Sale of securities Taxes Other Net profit (IFRS) 2018 simi
Slide 34: Interbank's 4Q18 net profit IFRS vs. Local GAAP
Interbank’s 4Q18 net profit IFRS vs. Local GAAP Net profit — IFRS Net profit bridge from Local GAAP to IFRS (4Q18) S/ million S/ million Higher 2.4% deferred income tax 273 248 nny, 2 8 Z 31 —> Reclassification of fees on loans, from interest income to fee income Commercial: S/+0.9MM Others: 4Qi7 3Q
Slide 35: Interseguro FY18 P&L
Iinterseguro FY18 P&L IFRS® Insurance Segment's P&L Statement s/million sche sche 2016 2017 2018 18/17 17/16 Interest and similar income 293.0 334.8 61.0 825% 143% Interest and similar expenses 14.4 19.7, ~543 a.m. 36.7% Net Interest and similar income 278.5 315.0 556.6 76.7% 13.1% Fee income from f
Slide 36: Interseguro 4Q18 P&L
0) (2) Interseguro 4Q18 P&L IFRS® Insurance Segment's P&L Statement S/ million Y%chg %chg 4Q17 3Q18 4a18 QoQ YoY Interest and similar income 109.4 1473 1485 08% 35.7% Interest and similar expenses “11 142 135 -5.0% 21.4% Net Interest and similar income 98.3 133.1 135.0 1.4% 37.3% Fee income from fin
Slide 37: Interseguro's FY18 net profit bridge to IFRS
Interseguro’s FY18 net profit bridge to IFRS S/million includes impact, of adoption of new mortality tables: S/-145M cludes profit from new asset allocation strategy: S/A66MM / _ Different attributable expenses related tothe acquisition 193 of SSura - Net profit* (SBS) 2018 Underwriting result Inves
Slide 38: Interseguro's 4Q18 net profit IFRS vs. Local GAAP
a (2) QB) @ Interseguro’s 4Q18 net profit IFRS vs. Local GAAP Net profit — IFRS Net profit bridge from Local GAAP to IFRS (4Q18) S/million S/milion 46.7% includes profit 20 from new asset llocatior - = oe ones ‘S/-10MM attributable expenses related tothe acquisition 7 ° 4Q17 3Q18 4Q18 Net profit — L
Slide 39: Interseguro's total equity decreased 25.0% QoQ
Interseguro’s total equity decreased 25.0% QoQ and increased 14.4% YoY IFRS Total equity S/ million 414.4% 1,037 i * — Total equity increased 14.4% YoY but i decreased 25.0% QoQ 4a 1o18 ears sais 4ar8 : © S/280 million reduction in unrealized Total equity variation analysis i results was composed by
Slide 40: Inteligo FY18 P&L
Inteligo FY18 P&L IFRS® Wealth Management Segment's P&L Statement S/ million %chg %chg 2016 2017 2018 18/17 17/16 Interest and similar income 152.1 149.9 151.9 1.3% 14% Interest and similar expenses -59.4 -53.9 -441 -18.1% -9.3% Net interest and similar income 92.7 96.1 107.8 12.2% 3.6% Provision fo
Slide 41: Inteligo's FY18 P&L analysis
Inteligo’s FY18 P&L analysis IFRSO Net interest and similar income Fees from financial services S/ million S/ million a 27%) o 20% o 3.4% 124 17 117 108 0.1% % 93 3.6% 96 12.2% a Sead a —*> 2016 2017 2018 2016 2017 2018 Other income Other expenses S/ million S/ million 103 86 ad ee gl 2016 2017 2018
Slide 42: Inteligo 4Q18 P&L
Inteligo 4Q18 P&L IFRS Wealth Management Segment's P&L Statement S/ million %chg %chg 4Q17 3Q18 4Qis QoQ YoY Interest and similar income 35.0 37.7 415 9.9% 18.5% Interest and similar expenses 12.4 11.6 12.6 8.4% 13% Net interest and similar income 22.6 26.1 28.9 10.5% 27.9% Provision for loan losses
Slide 43: Intercorp Financial Services
(J Intercorp Financial Services
Intercorp Financial Services — FY2018 Earnings Presentation on 6ix