Intercorp Financial Services, Inc. Q1 FY2025 earnings call

• Positive start to the year with net income at $446 million and ROE exceeding 16%.
• Macroeconomic stability in Peru with GDP growth projected at 3.2% and private investment expected to grow by 6.7% yoy as of March 2025.
• Interbank increased market share in loans, especially in commercial banking, and is on the path to recover its consumer portfolio.
• Interseguro's core business, including Individual Life and Annuities, saw growth, and Intelligo's assets under management hit a new high.
• Focus on digital excellence and fostering primary relationships as a key strategic priority.
• Cost of risk stood at 2.8%, 190 basis points below last year, though 20 basis points higher than previous quarter due to Telefonica impact. Excluding Telefonica, cost of risk would be 2.5%.
• Cost of funds remained stable with an 80 basis points year-over-year improvement due to fast repricing and better funding mix.
• Retail primary banking customers grew 15% in the last year through top digital experience.

Interbank had a better than expected start, increasing market share in loans and strengthening its position as the third largest bank in the country, with commercial banking gaining over 120 basis points in market share. Interseguro saw relevant growth in its core business, particularly in Individual Life and Annuities, where it continues to be the market leader. Intelligo's assets under management reached a new all-time high, growing by 16% year over year. Revenues increased 14% over the last year, with Interseguro seeing a 37% revenue increase, Interbank showing year-over-year improvement driven by reduced cost of funds and increased fee income, and Intelligo's core business performing strongly with better returns from the investment portfolio.

• Continue to maintain 15% ROE guidance.
• Loan growth expected to continue with high single-digit growth, driven by commercial banking and expected recovery in consumer portfolio.
• NIM expected to recover for the rest of the year as cost of funds improve and yield on loans recovers with consumer portfolio growth.
• Cost of risk remains in line with guidance.

• Potential impact of external factors on global growth, which could offset persistent high commodity prices.
• Uncertainty due to 2025 being a pre-electoral year, which could generate volatility.
• Exposure to Telefonica with around $144 million impact on provisions in the first quarter, though management feels comfortable with current provisions unless drastic changes occur.
• Trade policy uncertainties in the US and their potential indirect impact on Peru's growth in the long term.

Q: Regarding guidance and expectations for 2025, confirming if 15% ROE expectation still holds and what prevents expecting a higher level given first quarter already at that level A: At this point, they continue maintaining the 15% ROE guidance. It's still early in the year, and while there was a solid start, the consumer portfolio hasn't fully recovered yet with various market factors at play Q: Potential additional provisions from Telefonica and cost of risk trend A: Regarding Telefonica, based on current analysis, they feel comfortable with provisions as they are well covered unless drastic changes. On cost of risk, with growth in consumer loans, there could be a trend, but currently, with positive trends in usage and preference, cost of risk is expected to remain closer to 2.5% rather than 3% Q: Competition and evolution of credit card portfolio A: The trends in the credit card portfolio are similar to the industry, with Intercorp starting to see growth in its portfolio, with over 10% growth in turnover, and seeing positive trends in usage and preference though still small Q: Status of Telefonica corporate case and normalized net profits/ROE if cleaning for Telefonica effect A: Based on current analysis, they are comfortable with provisions as models show they are well covered. Removing the Telefonica impact, earnings would likely be north of $100 million Q: Cost of funds improvement and NIM expectations A: There is still some room for cost of funds improvement due to decreasing reference rates, but some medium-term financing has higher rates. NIM should recover based on consumer portfolio growth Q: Consumer loan portfolio contraction and recovery expectations A: The consumer loan portfolio contracted 4.8% yoy in Q1, but there are positive trends in usage, improvement in salaries, and formal employment. Monitoring trends in usage, preference, and balance with good cost of risk, with positive but not huge trends