In This Article:
Release Date: November 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Intercorp Financial Services Inc (NYSE:IFS) reported a significant improvement in net income, doubling from the previous year and achieving over 15% ROE in the third quarter.
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The company has seen a decrease in the cost of risk, with a reduction of 90 basis points for the quarter and 210 basis points from the peak in the fourth quarter of 2023.
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IFS has demonstrated resilience by growing its market share in loans and deposits, particularly in commercial banking.
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The company has achieved substantial growth in digital customers and digital sales, with 81% of retail banking customers being digital.
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Interseguro, the insurance arm, has seen relevant growth in premiums, particularly in private annuities and individual life, maintaining its market leadership.
Negative Points
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IFS experienced an operational issue in Interbank, leading to service interruptions, although normal service was restored quickly.
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A data breach occurred where unauthorized access exposed certain client data, although no transaction-enabling data was compromised.
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Loan growth has been moderate this quarter, with a focus on lower-risk products impacting the overall yield on loans.
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The consumer loan book is smaller than desired, affecting the cost of risk and overall growth potential.
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There is uncertainty regarding the economic environment in Peru, especially with the upcoming pre-electoral year, which could introduce volatility.
Q & A Highlights
Q: What are the expectations for NIM (Net Interest Margin) in 2025, considering the economic recovery and potential growth in credit card appetite? A: (Miquela Casassa, CFO) We expect a recovery in NIM for 2025 due to a decrease in cost of funds and a potential increase in the high-yield portion of the portfolio, such as consumer loans and credit cards. This should positively impact NIM, with an expected improvement to around 5.5%.
Q: How do you see the cost of risk evolving over the next years, given the current trends? A: (Miquela Casassa, CFO) The cost of risk is currently at a normalized level of 3%. While the consumer loan book is smaller than desired, and a portion of the commercial loan book is state-guaranteed, we expect the cost of risk to remain around current levels, with potential slight increases due to portfolio mix changes.
Q: What are the expectations for fee income growth, considering the performance of EasyPay and the wealth management business? A: (Miquela Casassa, CFO) We expect fee income to grow nicely in 2025, driven by the recovery in the consumer loan book, fees from EasyPay, and the positive performance of the wealth management business.