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01/11 04:03
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals strong financial performance, including a significant increase in net income and ROE, improved cost of risk, and growth in retail banking customers. Despite a slight decline in loan yields, other financial metrics like AUM and insurance premiums show robust growth. The Q&A session supports this positive outlook, with expectations for improved NIM and manageable OpEx growth. The market cap indicates a potential positive reaction, likely in the 2% to 8% range, given the overall strong financial health and optimistic guidance.
Net Income PEN 580 million at IFS with an ROE of around 21%, double what was reported a year ago and 30% higher than the last quarter. This growth was driven by solid investment results and strong performance in core businesses.
Cost of Risk 2.5%, which is 150 basis points below last year. This improvement is attributed to a better portfolio mix and improved client payment behavior.
Cost of Funds Improved by 40 basis points year-over-year, primarily due to a better funding mix.
Retail Primary Banking Customers Grew 10% in the last year, reflecting strengthened primary banking relationships.
Other Income in Wealth Management Grew 5.3x year-over-year, driven by strong investment performance.
Written Premiums in Insurance Increased by 77% year-over-year due to growth in private annuities and life insurance.
Consumer Portfolio Growth Cash loan disbursements increased by 80% year-over-year, and credit card turnover rose 15% year-over-year. However, the overall consumer portfolio expanded by only 0.6% in the last quarter due to cautious supply and demand dynamics.
Total Loans Grew 6% year-over-year, outperforming the system by a multiple of around 3x, resulting in a gain of 30 basis points in total market share.
Loan Yields Declined 70 basis points year-over-year to 9.9%, but remained stable versus the first quarter. This was due to lower market rates and loan book mix.
Assets Under Management in Wealth Management Grew 14% year-over-year, reaching new highs of $7.8 billion, supported by strong client engagement and market performance.
Contractual Service Margin in Insurance Grew 17% year-over-year, mainly driven by individual life insurance.
Short-term Insurance Premiums Grew by over 110%, driven by disability and survivorship premiums acquired through a 2-year bidding process from the Peruvian private pension system.
Digital Excellence: IFS aims to become the leading digital platform in Peru, focusing on advanced analytics and customer experience.
PLIN Metropolitano: Launched to expand use cases and accelerate adoption of digital payments.
Interfondos App: Enhanced to act as a digital adviser for mutual funds clients.
Market Share Growth: Interbank gained 90 basis points in commercial banking market share, driven by focus on midsized companies and synergies with Izipay.
Wealth Management Expansion: Inteligo's assets under management grew 14% year-over-year, reaching $7.8 billion.
Insurance Growth: Interseguro saw a 77% year-over-year increase in written premiums, driven by private annuities and life insurance.
Cost of Risk: Quarterly cost of risk stood at 2.5%, 150 basis points below last year.
Funding Mix: Cost of funds improved by 40 basis points year-over-year due to a better funding mix.
Loan Growth: Total loans grew 6% year-over-year, outperforming the system by 3x.
Sustainability Initiatives: IFS advanced renewable energy efforts and trained corporate banking executives in Climate Technologies.
Inclusive Growth: Supported over 1.2 million entrepreneurs through Izipay and provided financial training to 3,600 entrepreneurs.
Diversity and Inclusion: Interbank ranked #2 in Great Place to Work Diversity, Equity, and Inclusion ranking.
Market Conditions: The international context and next year's presidential elections in Peru could introduce volatility, potentially impacting the company's operations and financial performance.
Consumer Loan Growth: The growth of the consumer portfolio has been slower than expected, reflecting both supply and demand dynamics. Ongoing liquidity events, such as several funds withdrawals, have provided extra liquidity to clients, reducing their need for additional credit.
Competitive Pressures: The consumer lending environment remains challenging, especially in a more competitive market, which could impact the company's ability to grow its retail portfolio.
Regulatory and Economic Uncertainty: Global uncertainty and potential regulatory changes could affect the company's operations and financial stability. Additionally, the Central Bank's cautious approach to easing rates may delay financial system recovery.
Strategic Execution Risks: The slower-than-expected recovery in consumer loans and the cautious approach to growth in higher-yielding segments may hinder the company's ability to meet its strategic growth targets.
Supply Chain and Operational Challenges: The company faces challenges in maintaining a low cost of risk and stable NIM amidst slower consumer loan growth and lower market rates, which could pressure margins.
Peruvian Economy Growth: The Peruvian economy is projected to grow by 3.1% in 2025, driven by private investment and consumption. The Central Bank has revised its internal demand forecast upward from 3.5% to 4.5%.
Private Investment and Consumption: Private investment is expected to grow by 5% this year, supported by self-construction, improved financial conditions, and higher business confidence. Private consumption remains dynamic, fueled by wage growth and employment recovery.
Loan Growth: Total loans are expected to grow around 5% in the second half of 2025, mainly driven by retail lending.
Net Interest Margin (NIM): NIM is expected to show a slight recovery in the second half of 2025, despite ongoing pressure.
Cost of Risk: Cost of risk is expected to remain well below guidance, helping to offset lower margins.
Return on Equity (ROE): The year-end ROE is expected to normalize closer to 17%, following a strong first half performance of 18.4%.
Wealth Management Growth: Assets under management in Wealth Management are expected to continue growing at a healthy pace, supported by market performance and client engagement.
Insurance Growth: Insurance premiums, particularly in private annuities and life insurance, are expected to continue growing, supported by diversification in distribution strategies and digital channels.
Digital Strategy: The company aims to enhance digital adoption and self-service capabilities, with a focus on increasing primary banking relationships and digital transactions.
Sustainability Initiatives: The sustainable loan portfolio has reached EUR 400 million, with continued focus on renewable energy and inclusive growth initiatives.
The selected topic was not discussed during the call.
The earnings call presents strong financial performance with significant net income growth, improved NIM, and low cost of risk. Despite some uncertainties like the Rutas de Lima impairment, the impact is minimal. Positive trends in loan portfolio growth, insurance premiums, and wealth management assets support a favorable outlook. Additionally, strategic investments and digital engagement indicate a robust future. While management's vague responses on certain issues may raise concerns, the overall sentiment is positive, suggesting a likely stock price increase of 2% to 8%.
The earnings call reveals strong financial performance, including a significant increase in net income and ROE, improved cost of risk, and growth in retail banking customers. Despite a slight decline in loan yields, other financial metrics like AUM and insurance premiums show robust growth. The Q&A session supports this positive outlook, with expectations for improved NIM and manageable OpEx growth. The market cap indicates a potential positive reaction, likely in the 2% to 8% range, given the overall strong financial health and optimistic guidance.
The earnings call highlights strong financial performance, including record high revenue, significant net income growth, and improved ROE. Despite some concerns in the Q&A regarding consumer loan recovery and Telefonica provisions, the overall sentiment remains positive with optimistic guidance on NIM and cost of funds. The lack of a shareholder return plan is a slight negative, but the company's robust financial metrics and growth in digital and retail sectors outweigh these concerns. Given the small-cap nature of the stock, a positive market reaction is likely.
The earnings call reveals mixed signals: strong financial performance, with net income more than doubling YoY and ROE above 15%, suggest positive sentiment. However, issues like operational and data security risks, lack of explicit shareholder return plans, and cautious guidance on loan growth and regulatory risks introduce uncertainties. The market cap indicates moderate volatility, and with no major catalysts like partnerships or secondary offerings, the stock is likely to remain stable, resulting in a neutral outlook.
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