Intercorp Financial Services Inc. Q1 FY2026 earnings call

Macroeconomic Context

• Peru's Q1 2026 GDP grew 3.6%, better than expected, supported by private spending and favorable commodity prices. Full-year GDP growth is projected near 3%, with private investment expected to expand ~7% driven by a $60 billion+ mining project pipeline and ongoing infrastructure works.
• Private consumption remains solid, supported by 5%+ real formal wage bill growth and a tight labor market.

Strategic Initiatives

• Completed the acquisition of InFinanceXP (formerly FinancieraO) in a 50/50 joint venture with InVito for $130 million, a 1.19 price-to-book transaction. InFinanceXP has ~3 million customers, 1.8 billion soles in loans, and 1.5 billion soles in deposits. The joint venture recently launched SIPP, a combined app for consumer finance, payments, and retail loyalty, whose initial launch has exceeded management growth expectations.
• Expanded the payment ecosystem: Plin (Intercorp's payment rail) reached 2.7 million monthly active users with 70 million monthly transactions; Plin WhatsApp, a bank-led payment service, reached 7,000 affiliates, with per-user transactions up 44% quarter-over-quarter. The recently launched Plin Credit Card BNPL product already has over 30,000 active users. EasyPay flows for small businesses grew 60% year-over-year, contributing to a 40% increase in segment deposits.
• Launched a new integrated small business banking app combining Interbank and EasyPay functionality, supporting the segment's 30% year-over-year loan growth and deepening client relationships. Intercorp has gained market share in the underpenetrated small business segment.

Digital & Innovation Investments

• Increased spending on technology, cybersecurity, and GenAI capabilities, as well as talent acquisition to support long-term growth. IFS overall cost-to-income ratio is 36.6% as of Q1.
• Achieved 84% retail digital adoption and 75% commercial digital adoption. Retail NPS reached a record 68, while commercial NPS reached 73. In insurance, 70% of client self-service is now digital, with digital premiums growing 25% year-over-year. In wealth management, 38% of clients use the digital app, with 58% of total transactions completed digitally.

1. Interbank (Banking Segment): Net income increased 44% year-over-year, with ROE of 19.5%. Revenue grew 8% year-over-year, supported by improved cost of funds, stronger fee generation, and positive investment/FX results. Total loan portfolio grew 6% year-over-year (7% excluding FX impact), with higher-yielding segments growing 9% year-over-year; small business loans grew nearly 30% year-over-year, mortgage lending grew over 8% year-over-year. Interbank holds 16.2% mortgage market share, positioning it as Peru's third-largest mortgage player. Risk-adjusted NIM increased 90 basis points year-over-year to 4.2%, with a quarterly cost of risk of 1.4% (the lowest in four years), cost of funds below 3%, and a non-performing loan coverage ratio of 140%. Total deposits grew 8% year-over-year (9% excluding FX), with retail deposits up 13% and transactional commercial deposits up 27%. Interbank accounted for approximately X% of total IFS revenue, leading the overall revenue growth. 2. Interseguro (Insurance Segment): Revenue grew 18% year-over-year, with total written premiums up 35% year-over-year, driven by strong growth in private annuities and individual life insurance. Contractual service margin increased 15% year-over-year, with annuities up 19% and individual life up 17%. Total client count grew just 1% year-over-year due to a slowdown in low-value bank assurance client growth, which does not reflect the strong underlying high-margin product growth. 3. Intelligo (Wealth Management Segment): Revenue grew 34% year-over-year, fee income grew 9% year-over-year, and assets under management (AUM) reached a new record of $9.5 billion, growing 13% year-over-year. ROE reached 22%, supported by strong investment portfolio performance.

• ROE guidance was revised upward from ~17% to above 17% for full-year 2026, driven by a stronger-than-expected Q1 start, lower-than-projected cost of risk, and strong macro momentum. Management cautions that uncertainty remains, but risks are skewed to the upside.
• Full-year total loan growth is expected to remain in the high single-digits, in line with prior guidance.
• The cost-to-income ratio is expected to remain around 37% for the medium term, as ongoing investments in technology, GenAI, and digital expansion offset scale efficiency gains. Management expects a move below 35% only in the long term.
• Medium-term (3-5 year) growth expectations: System-wide loan/asset growth is projected at 2-3x Peru's GDP growth, so Intercorp targets high single-digit to low double-digit loan growth, outpacing the system to gain incremental market share. Insurance premiums are expected to continue double-digit growth driven by low penetration of life and annuity products, while wealth management AUM is projected to grow at low double-digits driven by the expansion of Peru's emerging affluent class.
• Cost of risk is expected to gradually normalize from Q1's 1.4% to a long-term range of 2.5-2.8%, with no rapid increase projected in the short term.

• Increased volatility in the international environment, with elevated energy prices creating upward pressure on inflation and downside risk to domestic growth. Commodity price volatility could also impact Peru's export-driven economy.
• Domestic political uncertainty related to the 2026 presidential election (with a June 7 runoff scheduled) could temporarily slow business and consumer confidence and investment activity in the near term.
• A moderate El Niño weather event has a 43% probability (up from 21% in January), with potential material impacts on fishing, agriculture, and commercial activity in the second half of 2026 or early 2027.
• Potential changes to payment ecosystem regulation with the launch of the Peruvian Central Bank's new TAP/UPI payment rail in 2027, though management currently expects it to be complementary, not disruptive, to Plin.

Q: What is the timeline for the 2026 presidential election, what is the updated probability of El Niño, and how does management now view 2026 full-year cost of risk after the very strong Q1 result? / A: Vote counting is expected to be completed by June 15, with the runoff between the top two candidates scheduled for June 7. The probability of a moderate El Niño has increased to 43% from 21% in January, with the main impacts expected in late 2026 or early 2027, and Intercorp is already prepared for potential disruptions. Q1's low cost of risk is driven by system-wide excess liquidity from recent pension fund withdrawals, which reduced consumer default rates and credit card balances. Management expects cost of risk to rise gradually as liquidity normalizes, with a long-term target range of 2.5% to 2.8%, not a sharp short-term increase.

Q: Why is Interseguro's total client growth only 1% year-over-year while premiums grow 35%, and what should we expect for future insurance growth? / A: The slow client growth is a mix effect, not a sign of weak performance. Most of Interseguro's current client base is low-value bank assurance clients, while all premium growth comes from high-value private annuities and individual life insurance, which have far larger average premiums per client. This mix shift will continue, so premium growth will remain in double digits even if total client growth stays low, as Intercorp continues to expand in Peru's underpenetrated life and annuity market.

Q: How will the new central bank UPI payment rail affect Plin's strategy and monetization? / A: The existing regulatory framework for payment interoperability between Plin and YAPE is already in place and working, with no new major regulation expected in the short term. The central bank's new UPI rail will act as a third complementary technological option for routing payments, alongside existing rails. Plin will remain a core Intercorp payment brand, and management will assess efficiency over time and may use the new rail alongside existing infrastructure, with no expected material disruption to Plin's growth or monetization.

Q: What is driving the recent acceleration in loan growth, and how is the SIPP app launch performing after the InFinanceXP acquisition? / A: Acceleration in loan growth is 50% normalization of consumer liquidity after pension fund withdrawals are spent, and 50% deliberate growth from Intercorp's improved small business and consumer value proposition and targeted risk models for lower-income segments. Growth is concentrated in consumer credit and small business lending, the bank's higher-yielding target segments. The SIPP app launch, which combines loyalty, consumer finance, and payments, has attracted new customers faster than management expected and exceeded initial launch targets, though meaningful financial results will take time as the business scales.