IFS

Macroeconomic and Political Context

• Peruvian economic activity moderated in Q2 2026 after strong early-year momentum, but underlying conditions remain constructive with resilient domestic demand. Private investment is projected to grow 17.5% in Q2, the strongest pace since 2012 (excluding the post-pandemic rebound), and employment continues to improve supporting consumption.
• Peru's new market-friendly administration has an agenda focused on El Niño preparedness, security, economic reactivation via private investment, public sector modernization, and improved social/healthcare programs. Business confidence reached 69% (highest in a year) and consumer confidence recovered to 51% as of July 2026.
• Full-year 2026 GDP growth is projected at 3.4% (already incorporates a 0.7-1 percentage point drag from El Niño), with 3.2% growth expected in 2027, driven by non-primary sectors including construction, commerce, and services. Inflation was 4.1% year-over-year in July 2026, with the monetary policy reference rate at 4.25%, and no additional rate cuts are expected currently.

Overall Company Performance

• Intercorp Financial Services (IFS) delivered solid Q2 results, with net income of 585 million soles and return on equity (ROE) of 18.5%, above the company's mid-term target. The 3% quarter-over-quarter decline in net income reflects expected normalization of strong first-quarter investment results and cost of risk, following an exceptionally strong Q1 2026. Year-over-year net income grew 23%.
• Total IFS revenues grew 3% year-over-year; the year-over-year comparison is skewed by unusually strong investment gains recorded in Q2 2025 at Intelligo and the holding company level. Expenses grew 11% year-over-year, driven by investments in talent, digital capabilities, cybersecurity, data analytics, and Interseguro sales force expansion; the cost-to-income ratio remained strong at 37%, consistent with the company's efficiency targets.
• Risk-adjusted net interest margin (NIM) remained resilient at 3.5%, up 10 basis points year-over-year. Cost of risk normalized to 2.1%, still below the company's 2.5% risk appetite threshold. Retail primary banking customers grew 16% year-over-year, and net promoter score remained strong at 61 for retail and 76 for commercial banking.

Strategic and Operational Initiatives

• The company continues to prioritize growth in higher-yielding consumer and small business loan segments, which grew 9% and 31% year-over-year respectively. Cash loan disbursements grew 37% year-over-year and credit card turnover grew 21% year-over-year, reflecting improved consumer confidence.
• The integrated payments ecosystem (EasyPay and Plin) continues to drive transaction growth and low-cost funding: EasyPay float to Interbank grew nearly 50% year-over-year, Plin reached 2.8 million monthly active users with monthly transactions up 45% year-over-year, and small business deposits grew 32% year-over-year. Digital engagement has improved, with 86% of retail customers and 76% of commercial customers using digital channels.
• IFS continues to invest in long-term growth capabilities including digital channels, data analytics, cybersecurity, and generative AI, with a customer-centric focused on profitable, disciplined growth.

• Full-year 2026 ROE is maintained at above 17%, despite first-half 2026 ROE reaching 18.9% (above the existing guidance target). Management is maintaining the current guidance as a prudent measure to account for potential El Niño-related impacts in the second half of the year, and still expects to achieve the 17%+ target even with additional El Niño provisions.
• Full-year total loan growth is projected to remain in the high single digits, consistent with prior guidance, with continued strong growth focused on higher-yielding consumer and small business segments.
• The cost-to-income ratio is projected to remain around 37% for the full year, in line with the company's guidance range.
• Management expects NIM and risk-adjusted NIM to recover in the second half of 2026, as temporary Q2 cost of funds pressures (including excess election-related liquidity, full impact of first-quarter bond issuance, temporary high April inflation, and forward arbitrage funding requirements) fade, and the growing mix of higher-yielding loans positively impacts margins.

1. Interbank (Banking): Quarterly net income remained strong. Revenues grew 9% year-over-year, but declined modestly quarter-over-quarter due to a normalization of strong first-quarter financial transaction results and temporary funding cost pressure. ROE reached 15.6% year-over-year. Total loans grew 6% year-over-year (7% adjusted for FX), with higher-yielding consumer loans up 9% year-over-year and small business loans up 31% year-over-year. Higher-yielding segments now represent 22% of total loans. Cost of risk increased to 0.8% for commercial banking and 3.3% for retail banking, both within risk appetite. Efficient commercial deposits grew 22% year-over-year, and deposits overall make up more than 80% of total funding.

2. Interseguro (Insurance): Performance remained strong, supported by solid annuity and life insurance results and no impairments in the quarter. Contractual service margin grew 10% year-over-year, driven by annuities and individual life insurance. Short-term insurance premiums grew 8% year-over-year. Investment results increased 28% year-over-year with a 7.1% ROI. Revenues were lower quarter-over-quarter due to temporary inflation adjustments; excluding this effect, revenues grew 3% quarter-over-quarter. Digital direct sales grew 27% year-over-year, and digital self-service reached 73% of client interactions.

3. Intelligo (Wealth Management): Grew at a double-digit rate, reaching a new record high of nearly $10 billion in assets under management (including deposits), up 14% year-over-year. Fee income was stable overall, growing 7% year-over-year when adjusted for FX. The investment portfolio delivered a 9.4% return over the last 12 months. Digital user engagement reached 39%, with digital transactions representing 60% of total platform activity.

• The primary identified risk is the potential impact of a strong to extraordinary El Niño event, which has an 80% combined probability of occurring in Q4 2026. El Niño could negatively impact primary sectors (agriculture, fishing), infrastructure, supply chains, and regional consumer/small business segments, potentially leading to higher credit costs and lower activity in exposed regions.
• Inflation remains sticky at elevated levels, which could create additional pressure on funding costs and consumer credit performance.
• The ongoing volatility of the international economic backdrop creates broader uncertainty for domestic Peruvian economic performance.
• Higher-yielding consumer and small business segments naturally carry higher baseline cost of risk, which will lead to a gradual increase in overall company cost of risk over time as the portfolio mix shifts toward these segments. This is expected to be offset by higher yields, leading to attractive risk-adjusted returns.

Q: Why aren’t you increasing ROE guidance after a strong first half, and how are you approaching El Niño-related provisions compared to the 2023 event? / A: Management is maintaining the 17%+ full-year ROE guidance as a prudent measure given the uncertainty around El Niño and sticky inflation, and still expects to hit the target even with additional provisions. Unlike the 2023 coastal El Niño, which occurred alongside post-COVID recovery, high inflation, and social unrest, management expects the impact on the 2026 portfolio to be lower even if the weather event is stronger. Most exposed corporate clients have El Niño clauses that allow capital payment deferrals, and any forward-looking provisions will be added in Q3 and Q4 as the event approaches; management declined to commit to a specific provision amount at this time.

Q: What drove the unexpected Q2 increase in funding costs and margin pressure, and should we expect margin recovery in coming quarters? / A: Q2 margin pressure stemmed entirely from temporary one-time factors: high April inflation increased costs for inflation-linked funding, the first full quarter of first-quarter bond issuance added temporary costs, excess election-related liquidity held for precautionary purposes created a mix impact, and a profitable forward arbitrage opportunity required additional temporary funding. All of these impacts are non-structural, and management expects margins to recover in the second half as temporary effects fade and the growing mix of higher-yielding consumer and small business loans lifts overall yields. NIM partially recovered in July already.

Q: Will you slow loan origination in consumer and SME segments ahead of El Niño, and what was the composition of 2023 El Niño provisions? / A: Management does not plan to meaningfully change the overall growth trajectory. While it will make minor regional adjustments for at-risk areas, the company sees its role as supporting clients through the expected short-term El Niño disruption. 2023 El Niño provisions were almost entirely related to the consumer portfolio, with almost no corporate provisions, and the 2023 context (post-COVID, social unrest, recession) is not comparable to 2026's stronger macroeconomic backdrop.

Q: Excluding El Niño provisions, what is the expected trend for cost of risk in the second half, and why were loan yields flat in Q2 despite faster growth in higher-yielding segments? / A: Cost of risk will continue to gradually increase toward the 2.5% range even excluding El Niño, because IFRS accounting requires upfront provisioning for new higher-yielding consumer and small business loans, and these segments are growing at a double-digit rate. This gradual increase is expected to be offset by higher yields, supporting stable risk-adjusted returns. Flat Q2 loan yields were purely a timing issue: most higher-yielding loan origination occurred late in the quarter, so the full yield impact will show up in Q3.