Intercorp Financial Services ((IFS)) has held its Q4 earnings call. Read on for the main highlights of the call.
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In the recent earnings call, Intercorp Financial Services reflected a strong recovery in its financial performance, characterized by positive economic indicators and a cautiously optimistic outlook for future growth. The sentiment was tempered by potential challenges related to the upcoming electoral year and the ongoing recovery of the consumer portfolio.
Strong ROE Recovery
Intercorp Financial Services (IFS) demonstrated remarkable resilience with a return on equity (ROE) of 18% in the fourth quarter. This achievement underscores the company’s rapid recovery and robust operational performance.
Loan Growth Outperformance
IFS’s loan portfolio exhibited impressive growth, increasing by 6.5% year-over-year. This performance significantly surpassed the market growth, which was less than 2%, highlighting IFS’s strategic strength in loan management.
Market Share Gains in Banking
Interbank, a subsidiary of IFS, strengthened its position in the banking sector by gaining market share in both loans and deposits. This advancement consolidates its status as the third largest bank, with an 80 basis points increase in commercial banking.
Asset Management Growth
Inteligo, another arm of IFS, witnessed an all-time high in its assets under management, which grew by 17% over the year. This growth reflects the company’s effective asset management strategies.
Positive Economic Outlook
Peru’s GDP growth of 3.7% in the fourth quarter indicates a buoyant economic environment, with expectations for continued positive growth heading into 2025.
Cautious Outlook for Consumer Portfolio
Despite notable improvements, caution remains over the consumer loan book, which is still in the recovery phase due to historical deterioration.
Potential Electoral Year Volatility
The approaching pre-electoral year in 2025 is anticipated to bring uncertainty, potentially affecting the economic dynamism and introducing volatility.
Forward-Looking Guidance
Looking ahead, Intercorp Financial Services has outlined several projections for 2025. The company expects Peru’s GDP to grow by 2.8%, with high single-digit loan growth anticipated within the banking segment. The consumer portfolio is expected to recover further, while the cost of risk is projected to stay around 3%. Improvements in the cost of funds are also expected due to a better funding mix. The ROE is guided to be around 16%, with a medium-term target of 18%. Efficiency will remain a priority, with an expected cost-income ratio of 37%. Digital excellence is a key focus, with digital customers constituting a significant part of retail and commercial banking clients, and digital sales in insurance reaching 85%. The Wealth Management segment is poised for continued growth, fueled by better market conditions and enhanced digital capabilities.
In summary, Intercorp Financial Services is on a path of strong financial recovery, supported by positive economic indicators and strategic growth in various segments. While the company remains cautiously optimistic about future growth, it is mindful of potential challenges such as electoral year volatility and the recovery of the consumer portfolio. The guidance provided for 2025 reflects a balanced approach to growth and efficiency, with a keen focus on digital transformation.
