Q2 2020 Intercorp Financial Services Inc Earnings Call

[music].

Good morning, welcome to intercourse financial services second quarter 2020 conference calls.

That being placed on mute to prevent any background noise.

After the presentation, we will open the floor for questions.

At the time instructions will be given I said it procedure to follow if you would like to ask a question.

It's now my pleasure to trying to go over the border how old I advise Gerberry communications.

Please begin.

Thank you and he can lose money in every one well into the school in third quarter financial services when discounts <unk> second quarter 2020 earnings.

We're very pleased to help me those can you sort of at least really pick up to your nose, Chief Executive officer, often difficult financial services. He says make a lot Guthrie Chief financial officer don't seem to go to punish I'm sorry. He says Mr. Gonzalo about how they chief Executive Officer Olefins <unk>.

Mr. Bruno fill rate Cho, Chief Executive officer, hoping for legal.

It would be discussing that we sold well distributed by the company yesterday did he saw webcast presentation to accompany discussion. During these calls if you didn't see if a copy of the person speech on old <unk> earnings report the I don't know what they like what on the company's what are you say stuff come to appeal to download a copy or otherwise for anyway. So if you need.

The assistance to the please call your Bison, New York I too want to Photofix see seeks 95.

I'd like to remind you that today's call. It 20 best choice on on only so many different what's you'll find the media will be taken.

Please be advised <unk> looking statements may be made during these conference calls diesel not account for future economic circumstances industry conditions, the company's future performance or financial results such extreme is me based on several assumptions outside those that could change go seen I told you so still materially different from the current expectation.

For the compute nodes all forward looking statements. Please refer to the quarterly report issued yesterday. It's now my pleasure to try to Colbert told me said, we've really pick up to your nose Chief Executive Officer. He said I think the core financial services for his presentation. You said it got to you I know you. Please go ahead Sir.

Thank you.

Good morning, everyone well go to undertake to second quarter Urban school.

You are.

Moving on to extraordinary circumstances, given the coverage then people.

We hope you are you probably did you think healthy.

That's right.

Drew is one of the countries that have you target and then.

According to the National results for the system I think we're probably in bucket.

Our main focus confused you either built up already <unk>.

Well the deal you all necessary resources available to ensure we continued to <unk>.

You did you do they should.

So we get agenda, we've done we've got to be Bartlett, our <unk> for me.

He metric you're <unk>.

Second quarter, we sold a mistake.

I'm going to start with five key messages would you care the core of our business execution.

These days.

He called are you going to follow we like.

Like under three because you didn't happen.

Well I'm, just trying to do that you're probably double teacher into place.

Two.

I wonder where he accordingly.

<unk>.

Really the bucket.

Right that continued to support our you purpose it's dropping.

For our precautionary approached the good news from you about.

What didnt sold.

Alright, well was drilled.

Brady the Pieczynski departure got said the Nick in but then you know what bridge.

Let's move to no.

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Got you does not sure what parts drawing people solution.

I will not be bought did make sure.

I just haven't.

No he joined the level for I feared and below the average of 102 per se.

The breakdown by currency also looked a little bit your with your beat your solid.

No.

Hoggard bankruptcy, but keep the 218 person.

Our total deposits middle eastern I'd be very stable during each quarter.

No aging of the sing a long enough to get 70 basis points if markets. Your overall and then babies born.

It's not good start.

Oh, you could fanatical asset featured.

No okay one.

The only on sort of.

Oh, good fortune beyond solid.

I mean.

At the local level are you.

No.

No more than 900 million solid <unk> knocked it out of which more than 400 million sorry did I catch up.

Now to cover the Standalone operating and financial commitment.

Please next for you.

Moving on to fight.

Got it seems to be topic. So this topic, that's usually you know three operating company.

Injured by.

For the food that each runs about your do subordinated both nascent like dirt.

Total company, though they show up 16.7%.

But the industry average up 14.8%.

But that's all you need that's good 0.7%.

All of course, it did you watch it sounds like 7.1%.

You bet you spoke about <unk>, we've got one year ago.

I think that's.

Our children you raised your 145% one club there you would probably be.

There you go back.

I think I read your drilling one question also so I'm very comfortable.

Teacher.

The second key message either recovered in acute.

It's like you you can see that <unk>, usually going from there, but it's old you probably know them that has been.

During the second quarter, we held or.

What happened on the negative impact in the region, but probably in the world.

The dragging 40 person <unk>, 33% to me on that if you made during the since June.

Uh huh.

You'll begin to be putting that'd be covering it every day.

I'd like a June.

You gave us.

In the might even teaching <unk> as well into two <unk> and cement consumption.

Moving to slide seven yeah.

What we bought it would translate into our operating or.

It should continue doing the rest of the you.

We are showing great up would you like you can see injured one when compared to pre club no different credit card.

Turnover.

Almost 90%.

Yes, there's mental they won't be doctrine boasted Bobby.

Almost 70, but then.

It is there's no longer distances.

Interest income <unk>, 80%.

The thing it's important to say, we'd already didnt, we try to net recoveries.

More than 90%, we called it never.

Hi, how are your win.

I believe it's like.

You can prove that GDP should go up I don't recall that during the following quarter.

Okay. That's it.

Ladies and train.

Moving to slide eight.

She said I would use Duck Creek.

We need to show positive trends supporting our you should not be affected striking.

No I said they get concerned butter.

Well into big numbers.

So while we've.

Got Bobby deal.

I know what do both at the meat.

Our customers I know what lessons from these changing consumer behavior.

Oh, Gee I chose not a couple well each one.

Ease of use words, it's done not 74% boosted by our work and absolutely.

During the peak you'd be feature for tractors, we didn't even buying houses they reach more than 1.4 million user nurtured no.

40% or would you get your back on your key account.

Thank you.

100% eat opinions region, which more than 400000 user seems to be launching in March.

You got 100% VW customers.

Checkpost America <unk> News Digest contact center I believe that would be channels like 80 isn't going to agents only for gosh, even though they have reached 52% or close to be.

Apple.

I'll take the board since March.

Either so I also see nothing concrete.

<unk>.

Joe 71%.

Okay. So I joked reached 91%.

Both increasing sharp <unk> the number of gold sold versus the first quarter of your versus the second quarter Lucky.

We continue to see if he picked up in the number of new D. Bellicosity open both <unk> and <unk>.

As of yet of doing that didn't notice there no legal coding accounts open he does.

Maybe 1% of new business accounts compared to 29, and 44% one year ago.

No. These are like the teacher to lead the customers you 65 for sure.

30, or 40 Bucks in one year ago.

This big New accounts, maybe you could you, possibly one sorry.

There's really no did you got a correlation to eat up.

The other side they need to happen account to be able to keep the government it back to its Buster both we.

<unk>.

Well.

We bought it from the end before any would go a little closer to.

It's also a book.

Moving to slide.

We have reached 3.7 million be took off the mark another 1 million hundred percent either go <unk> and interest.

Our recent customer base.

15% year over year I'm almost 14.

Almost 4% during the quarter.

Hunger for thing you got costumer, nothing more than 80% in one year I'm more than 35% in the quarter.

All of you.

Interaction and engagement.

Okay and proved to be structured.

Aided by our with 39, but they're not 49% NPS indicator the 12 customers on a harder, but since the cost too much respect.

Let's talk you Miss it reverts to old people should not be approach.

It's not just mogul medium to high levels of <unk>, we track impacted this quarter results.

Moving to slide 10, we're showing the impact Gabi Thunder Bayou portfolio in terms of care to know.

Well you bought it.

Oh I'm sorry, you can.

Of the most exposed to meet expose segment either island.

9 billion solid don't book.

Most exposed.

Walter turns mobiuss, that's followed by that they do their thing.

Retail loans to the self employed work.

Next we know where potential impact we have the 29% leased the loans to private sector.

Finally.

I believe you have to go with social overall.

Super Center for before.

Large and mid corporate loans as well.

We don't do public sector.

Right.

Right you got Judy evolution from victims of the percentage of we'd get lost in our total don't.

He has remained relatively stable around 30% 90. This is an average.

43% of eat the loans and drinking personal commercial loans I guess.

You can lead to the hypertensive, Turkey credit card <unk>, 60% I personally don't <unk>, 50%, well north of here I close to 40%.

Payroll deductible loans.

I'd like you know that.

You didn't commercial banking, 60%, coupled with more business it because it hasn't either <unk> or in Frankfurt, then when excluding you've got 2000.

During the experts in mid corporates, and 10% notch for break even just got it.

As you can see pretty good number most of the rescheduling of what we're doing in April.

You know <unk>.

Well, we have experienced in the probably one month, especially within the retail portfolio did the same client hovering closer to schedule and Intricons told me I too I know its then I'll be quick the total debt was good.

Kevin No I'm, not even try and beauty.

It's Ricky nothing has told me you don't need or they control pretty poor or 40 advance.

The overall payment schedule.

Sure, it's they or with the reduction of rate.

<unk>.

You just wants to know what do we do light because you're going to be cagar payments. These loans when compared to the biggest month.

However, it is due to various you draw any conclusions.

Tony Wallboard books turnover is getting Jones act requires a payment so far.

Most of these payments with Dr. not you always an opt awards at that time, we will be able to most effective he understands the payment behavior clients.

You got more details I'm pretty sure overall impact.

I started so.

Moving to slide 11.

Taking a cautious approach <unk> adjustments made to be expected loss model to determine probably shouldn't yet.

Adjusted that we've got that include further we have updated I look forward looking model with the may not Dubai.

Second we need the credit card and personal loan portfolio to try to check the Lincoln.

We have migrated from the stages, one I'm too.

I think it's too I'm treat the costumers multi both children or total debt the skin.

Commercial don't <unk>, including Italy, we have right I can't give I'm not.

These adjustments to the expected not more there it's open.

For the bank 13.4 per se.

For the quarter April practicing in different trials.

After they didn't like they just they just upfront.

I made the stage two to three loans over the old protects birds <unk> <unk>.

Our own pinpricks imports from 13% 23%.

The biggest impact would be changes we made it to the retail loan portfolio and this is the maybe what caused you to lead the loans, which didn't read the thing.

Quarter <unk>.

<unk>, 14.5% into Smith.

NPL coverage for the bank as of June.

180, but I.

I believe the loan you got more than two public person.

You didn't important to have in mind that coverage ratios <unk> change guidance is stuck to migrate between the state your other tequila stuck to mature.

You can you.

He will be the quarter with a higher cost of these I'd, we'd have to strike when PPSA based.

Thanks, good losses to come.

Can you do I guess the majority of the called the impact this year 2000 trend.

However, we also believe that we'll see how your provision levels when compared to be copies metals.

The next couple of quarters.

As mentioned, we will be able to find out what the nations during the following month basis, having a better understanding of the new beginning behavior.

That's fine.

Moving to slide 12.

Yes, the message is terrestrial radio features.

As we shrunk there was uncertainty around customer behavior the region incomes for I guess, if somebody wants to come.

We have more controlled all the level of expenses.

Correct, that's net losses.

You have been very focused on these two it's called it starts.

Well I'll, let you a double D reduction, but the second quarter when compared to previous year.

I can probably the teachers to make sure I Fred.

<unk>.

So if you get your major where I said <unk>, 30% in the quarter injured that at 35%.

Mr State getting Blue book, when Fusions up didn't say simple Olive branch network. How can close can you do have eternal branches the 2000 drink.

Reaching a total reduction in a number of.

20%.

In 2016 on more than 8% easier.

Also we have some vitally needed to credit card cubic yards incentives that happen substantially during the quarter night, we if we can acute.

We are actively managing every line of it's been like imports imports from didn't program NOLA Brady.

No.

Let me talk you don't do because it can go.

And it's also before.

Thank you anything.

Good morning, everybody now let me move.

That's what they show.

Hi.

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Yeah, No update if you.

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Global system with market share.

Well go.

<unk> participation in talking about that.

So well in the fall below Michael Chip I was talking to best.

In closing.

Down 50 basis points into <unk>.

Eight from five plus.

Let's call it based on the adjustments to get that loves model and double digit adoption. Thank you to be costly <unk> mentioned by you.

Well certainly well that's why we call very interesting definitely <unk>.

Topline, but some of the problem.

By luck Lincoln benefit.

Okay. Thank you.

It's not something that well.

He.

Thanks Walter.

Okay.

We've done an investment portfolio and we can't keep us on.

Okay, I did not get Needham.

Kevin.

Yes.

And then go so well.

Although you clean Boston <unk>.

Readiness and get them quite well he could be affected by multi market.

<unk>.

You do they shouldn't you mean.

I can tell me lighting.

Assets under management.

Anything in case, they get their said well.

Yes, you've done the bottom line although that.

Well done on adjusted it.

Im thinking about.

After a challenging so caught.

I.

Well the highest let me just thinking about possibly a fourth I suppose if it sounds to me that's all.

Uh huh.

Joe liquidity in capital position across all subsidiaries.

You should see lace up 30%.

I mean, it's Linda.

Thank you for walking Dave if I was founded in 10 basis.

Yes.

I've mentioned before let's give it didn't used to be called them, it's called the only thing though.

The began capable team to support.

Now, let's set up.

Somebody should indicate this whole places by segment on slide.

Yes.

Oh like safety.

So that's something that's in fact, if most of the key biking indicate.

<unk> decreased 60 basis points, either flat or down 5%.

One last Inc.

So if you can we kept on 400 basis points lean into block.

<unk> used to be label on one side to default hold your <unk>.

He stayed low.

Yes, I suppose instead, it's got long life, hoping to cooperate Oh.

Other sites.

No no.

In summary, asking about loan.

10 basis points into <unk>.

But with any other income decreased 28, that's taking the quarter.

In fact, if they have is actually seems on the whole once I.

Thank you that's one of the kitchen section like Oh listen to positive, especially if they thought related.

But also to nowhere else <unk> other rethinking how much I thought.

On slide 21.

I want to your loan growth accelerated this quarter.

Yes.

Thanks, that's all for the quarter, 19%.

Commercial banking you don't think spoken to.

37 fold into yet.

Okay great.

Well he didn't like the length of some decent they got buttons.

Yes, so growth in commercial banking together with a lower that's something that we take on.

Well if.

Hospital, one good thing I was placed on no not that shell totally basis boys in the park.

Oh license.

We talked so I'll.

It's probably worth their working capital.

Well the love down with the that even though I thought you do we thought this does.

Good point 8 billion, so looking young increasing our commercial loan.

Hey.

Most of the low hobbies blanket don't need quote place more business <unk> 40, 50% instead it to me, but I thought the June.

Oh, well, let me tell me repo auction have already taken place.

HM.

No. It's good to be installed or even said he says I will focus among <unk>.

Yeah.

I've been able to update 6.5 billion, so oh, sorry, yes, the shape of the farm.

Which is slightly above market, Chile commercial banking mindful pipeline.

Before mr. usually talk being.

People think deal in the 95.7 key backup to pull one being <unk>, 80% that'll keep bucket in there that you can't enlighten cycle or the April stands out as.

We have already this.

Hi.

Insulates us up to that.

On slide 20.

Well some deposits speed up they grow.

Well.

Well I didn't think it apart and can decipher sales you have a year.

The game 70 basis points market share in the third week I wake up 13.2 vessel.

We didnt, both new drugs that sentiment as well.

Well done Kings bifurcate deal that you are getting 10 basis points I could change as well and we can't analytical 13.8, plus is not there.

<unk>.

You do that we keep the finding somebody says on called back yet that we put all that I think we work on 50% of Walker in line, but well unless I've got it.

One very positive development is being moved into cost of funds.

Basically in the process and 18 basis points year over year.

Good good bye.

Today's call a combination of publicly.

In a business started.

Considering you definitely sounds funny enough you do have the deal one Bob.

Moving on to the insurance segment.

Okay.

Oh slightly size monkey.

What we call the replay after 35% decrease on a quarterly basis.

The second quarter, all the business life constructive, but I do believe constructing the most well known by what do they did I lose it becomes an issue is it didn't know what extent baby's life.

Looking at Jumeii numbers, we talk to us.

Thank you all business lines, we indeed life and so did I know it's already a ball.

<unk>.

Yes.

Not that neither.

We have to 5.5 and not the chip in the caught.

On slide 10.

So, we don't see definitely portfolio, which plus instead of being.

Oh, 7.5 questions and keeping a close in basis.

4.5% on a yearly basis.

He said something best movie called like from the perspective, which gets displaced leap of faith in all 30 basis. Both I bought the second part of 50000, they didn't return on investment.

Moving onto our wealth management exactly on flights like you said.

I don't read anything to get them quoted.

So Dave positively affected by maximizing their income, which we there so my negative 86 million into affects corpus.

And well into second quarter.

He said many others have led to one question tokens weddings, having said he will form a negative seven theme in the first quarter two approximately 71.

Second quarter.

On slide 28.

Then eagle asset management, which 19.3 billion silicon to pick imports. It I said, if we get that could be on a quarterly there's.

No increase as well during the quarter capable just definitely.

Yesterday, we call them in the top line.

We have other expenses of 24% in a 40 basis and 7% getting basis. You can look net losses are they new York.

88, new they sold its about the big as far as a result.

Finally on slide 14, instead anyone that's gotta look a bit but they take place going forward what is some good take away.

And Paul.

On slide 14 guidance, we need to spend it Oh, he did a high level of uncertainty out there must have done.

Just as we work it to share with you right that you didn't inflammation W.P. Carey function, but we can make todays goodness.

Yeah the recipe.

Hello, maybe.

Thank you maintain solid net dot people given they kept them occasionally but will grow as well as adequate levels of liquidity.

Thank you all that electing to teach trips that can't be called Oh, he's in the past due loans.

Hello.

Thank you both commercial loan growth.

So yeah, we continued to be bucket, you to know would weaken multi wall bag.

Yes, no loan yields and they always kidney and that's despite the lower cost of funds in the month.

We expect a lower cost of the rest of the year. After the big like you said another second quarter.

We also expect every coleen, Steve given that rates already Q.

And we expect no that's all that's too costly they should be.

Okay, I said why I won't get killed the presentation.

Somebody decides key messages Luiz Felipe they introduced at the very beginning up if inflation.

Number one we have Joey agree they didn't have any type of situation, which we have substantially when compared to three public yet.

Number two I see anything if you recall there is one called low.

Both either funky.

Which should positively impact future.

He did just that plays continue to support our UK strategies, which translates <unk> growth guidance and business outlook for me the system.

Oh, Hi sold each and every day the Easter stocky Corpus was plus we are taking up the cautionary approach of yet Jeff can be expected no.

Insight double digit degrees goal in the quarter I think you cost containment initiatives already implemented each of the key operating company.

Actually affected the top line.

Thank you very much now we welcome any questions you may have.

At this time well open the floor for your questions first we will ticked up questions from the conference call I'm done their web cast questions.

If he would like to ask a question. Please press the star Keith.

Why keep on your Touchtone phone now.

Well be taken in the order in which they are received.

Any time, you would like to remove yourself from the question in queue just <unk>.

Again to ask a question. Please press star one now.

For the webcast viewers simply click the question Mark.

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And then simply type your questions in a box actually extend.

We will pause momentarily to compile a list of questioners.

And our first question comes from the line off kind of nice.

Bank of America. Please go ahead your line is open.

Hi, good morning, ladies Felipe Hello, and good morning, everyone.

Thank you for your presentation. My first question you saw provision charges as you mentioned, you'll be able to another provisions this quarter and dangerous affecting not downward trend in the next quarter's however, we would like to know that future level or are you trying to start quieter will normalize to the level.

We saw you into first quarter.

Do you think they continued to be it'll be tire.

Then my second question some diva.

Joe mentioned that you have but did you painted with 3.8 billion Solaris.

How much could you speak for that you might launch 3% not your total loan portfolio considering the first and the second round will be another 3.8 billion and I will appreciate it did you can break down.

What was your expectations for the long road.

Correct.

On the same phonemes, what have you seen would've been in that NIM pressure oneq, that's either in the impact from that Eva.

And then my last question, we saw the important reduction in operating expenses to mediate some of the impacts related to called me 19, So would it be reasonable to expect Opex to decline do you think too.

Hi.

Let me.

A couple of questions first regarding cost of risk.

Yes, we do believe mixes.

Hi, this level.

I just mentioned.

Ill.

Working through the numbers and the models.

But.

We do expect.

The next quarters would be below where we don't do you expect to do do get to the metals free color.

We expect gossip, we used to be higher than prequalified Daryl.

We don't foresee that we would have to.

Yes, some of everything you can Buck then next quarter or nowhere darn. These.

Water.

Hi, you're done a pretty public levels.

With the aim to digest all these insights or most of the coffee in.

During this year.

Having been.

First quarter, so next year or more.

Those two coffee level, a pretty calling level with the information we have no no that's.

Based on the current situation based on the economic recovery that we foresee for 2021.

<unk> that will depend on but overall, it's tiny Tata that's all.

Oh.

The cost.

And.

Then you've got to their own too.

You can last for.

Your next question.

Hey, good morning.

Related to the occupational Oh, Yeah, Steve I don't see fall.

This show in Leipzig <unk>.

Hey, we.

They political eventually.

Well take one I told you that we can take a long, it's only 2%, which would mean, it's around space it definitely both along.

Yes, we sliding sleeve.

The government they pick on both.

And he was reached around senior Vice President of nickel National mobile. So we're hoping to be positive for people sample of the overall no.

Now moving to the low growth you saw the TV media and we're just saying they see me I'm, giving you about <unk>.

Peter on the second phase, we will reach it had double digit loan growth Nvidia, including <unk> feeble, but when you.

The that'd be actually we had expected something it like like slot lateral either likely be though in the <unk>.

It was talking about a nice of you see a or maybe even dial in number no. They mean hobbies basket.

I'm going to wait doesn't give shall we vifor fans.

I mean, we kept the leap a horrible thing objective, we are expecting more impact the leading into cycles I hope.

We talk to the full of state.

No not in the portfolio.

And so basically is the top 10 basis points you.

Need from where I see that do they <unk>, but that even <unk> wage 20 basis.

Right. So we do see me declining a bit.

But to what we've seen a in default.

A I guess there was one workplaces, which I didn't get so he can you give me it's about the overall cost base, we do expect that given dark.

Metrics that are already Nathan we have taken since the beginning April.

Total cost.

Very good.

Around 5%.

Sure.

2000 trend than previous years, that's why we're shooting for.

Super helpful. Thank you very much reduced Felipe any good luck.

Your next question comes from the line.

With Scotia Bank. Please go ahead.

Hello. Thank you very much I have two questions. My first is on the cost of risk in provisioning decided the cost of risk of 13% for inter bank in the second quarter.

Also with the retail banking a 23.6%.

Based on the I guess this is spaces you mentioned on it for cross it precautionary approach.

And then expected loss model. So can you talk to the assumptions.

That you're making in this model.

In terms of the the length of the economic lengthen and depth of the economic downturn the lock down.

And expected recoveries that an important part of this that's the economy recovers next year.

And my second question is that you showed some pretty positive data.

Monthly data for July 2020.

Indicating recovery showing a in the presentation. They <unk> the credit card or credit and debit cards turned over the originations of payroll and mortgage loans fee income recovering.

Premiums recovering.

And assets over assets under management at Intel or though.

Back to where they were in February if you can talk perhaps of what you've seen in August and what so far in August and why.

You know what are the the the pros and cons here or that the positives that could make this continue or the concerns you have a it sounds like where we're hearing there they're putting some more restrictions on individuals in Peru.

Based on Coke.

Thank you.

Okay, they sometimes because of the here. Thanks for your question I'm going to go for it was.

Second question.

And.

Over the following defended trends that we see that we saw in July.

So in terms of GDP or these following the same trends.

Yeah.

So I can we expect.

To continue recording inline with the overall expectation.

D., but for the country.

That was have already gone through.

Thank you.

We tried to the current if I'm sorry.

Excuse me conditions.

Turning to duration.

I know you know.

<unk>, it's not like.

You mean control of the situation yeah absolutely.

So.

Kind of Sun control, but what are you calling me reopened he wants naturally I expect it to half the cages go up we are undergoing that process no.

It's something that we did not expect.

There were lots of concern, but given the the coffee will go back toward.

Mistress yesterday, the new metrics were announced and although we don't actually because they have audits.

I don't suppose somebody like everything else remains the same.

[music].

Hey, some specifics you probably that says that I've seen.

It's stroke, but also being on a more strict quite effect.

But more kind of moral it places.

So so no big change it.

In the country overall, except for the Sunday Delta, which we have a marginal but.

In terms of their TV itself.

Oh, we do expect well close to be better than July in terms of GBP hopefully the month, you got to follow that pattern.

And you only youre right I think there.

Gets to that to the payment behavior of customers do not he's a very good month, because a peruvians received.

And our dependence receive an extra salary and so that's why we're so do night very positive intends bill payment patterns.

One of draws to see people going to show all those will be at better month for us in order to us as because it's not the that that's been Harvey Upticking liquidity that the movie I forget.

But also because.

Yeah.

Most of that debt, who knows we will help and their peers. So we will be able to get more day docking Jeff.

Little paid.

So we do expect positive overcome berke to it.

In terms of GBP.

It would be an important about a philosophy in order to properly assess each of the level for resource that we have foreseen.

It is it's under right truck.

Which I mean I, we strongly believe we are well not very precautionary.

No.

We've done.

Adjustment in order to be very active I'm concerned I I'm going to pass it onto micaela because she can you explain a little bit more specific that we've done in order to move forward as much as opposed to pay as much as possible dissipate as much as possible.

The potential impact in terms of provision.

And then.

Situation.

Okay. Thank you Miss anything and let me go through these specific yeah definitely make any effect that lost mother, ideally languages and lots of some of it wont be just so that you can't and understandably I'd be more widely D.A. within Oh caught up in spot whatsoever. It's anything unusual we bought it.

And I Wonder if oh.

Oh, yes, that's what we became the first quarter, we updated the macroeconomic body. So basically he will not situations the macroeconomic variables should reflect.

These changes of the environment, if you want a vehicle macroeconomic conditions principal leach.

As we all believe if he's nodding off we are on top and bottom doing some additional money a job.

Bolt on D.A. weekday portfolio in the commercial portfolio.

They said, Jeff I'd be done indeed, I get caught in consumer lending fault.

So they do most of that glad he is a.

A kind of slow in Pennsylvania, and in a big portion of the portfolio stuff beans escape.

Looking now she's yesterday the behavior of pain. These guys. So what she is doing.

Thank you the behavior of the schedule, so basically the different types of the scheduling whether or not place happy with.

Only one.

More than $1 or whether he kathy he or she is evident with it's odd structurally scheduling of that.

We are moving blips up but I am just stated we are kind of sending lately.

They're eating deterioration. So basically we are taking place on stage one to stage insights on stage.

This is the main reason why the nonperforming cultural and they still they see over total exposed to wait until I see.

You know lifestyle, increasing before reaching 13.4% page.

Hey, <unk> buddies Nicolas either Japanese attribute to the expected more than that number actually goes up to date glyphosate faces some big a Japanese.

And if he wants to see that specific movement.

They just to be over the official they got such as the portfolio we are facing demos.

Not really move somewhere around 22, but they do a ball for the first thing, but those are really loved the non live which.

He said he believes and once we start seeing their behavior. They if they need to get their needs. If applied we maybe able to adapt and that's fine, but the list I live with each school so.

We haven't done there.

On a one by one a cases not no.

They show you for small businesses, which is lucky he wasn't litigation that's more before but also in the news sites anything that's helpful. But none of those there are much more leasing pencil.

Thirdly, because of the but if they can also be cool off the telephone.

Yes, just to complement.

Yes.

[music].

I think.

The thing.

We see the after me had microphone fold in my past, but that will be keep the apart.

They don't enjoy.

Given that we're not that big that book Weve been able to give you something very tough to doing in December for funding as I've taken a one to one of the with contract with most of our customer not only to do that Ah Ah statistics and the magnitude, but also like more concrete quite scabies information of the auction.

Jason Mills, and that's what works it works team.

Those customers like 80% opt for some back over to Nancy goes.

In the hardest those birdie are the ones that are one of the higher cost of risk, but there's very limited impact in our portfolio. There on that 900 million saw this overall were more than 30 or close to 30 billion solid.

Exposure.

And then caused a unsecured financing.

For retail.

Customer Dr was strictly demos.

That's very helpful. Thank you.

Thank you.

Next week.

No side I went to Scotia Bank. Please go ahead your line is open.

[music].

Hi, Thank you I have just a quick question on expenses I'm asking you mentioned you must have double digit cut and expenses this quarter and I just wanted to have a sense. If we are going to see a similar magnitude following quarter thing all this artifact.

You know on overall push by the bank.

Wanted to know.

And what magnitude you're expecting thank you.

Hi, Thank you.

Yeah, we would put a very strict.

Okay and cost containment program in place.

In the beginning of the Nick.

The disappointed that you could do happen like double loved him. If he wants because one is the cost control measures, but also.

That does significant load on either.

So some of that variable costs related to for instance, readied Park.

Disputing that.

Cutting costs or paid into two to two.

Just to certain strategic partners or even incentives two hours worked for naturally have been down because of these are not going to be it's always a beauty to recover that kaka variable cost will come up.

And hopefully with a corresponding increase and income.

And then.

Overall, the structural measure that we have been taken continue to date.

Your next thing so what I mentioned, we are shrinking, but the overall cost for we're shooting for being able to the overall cost eight.

2000 training to be I leave.

Close to 5% nowhere.

The previous year.

But very clear thank you.

Well.

Your next question comes from to line up Sebastiana gave away to Credicorp capital. Your line is like please proceed with your question.

Good morning, everyone. Thanks for the presentation.

A couple of questions. The first one if you could elaborate a bit more on day one off in fact that you recorded this quarter given them a indication of contract contractual cash flows.

Due to the laundry scanning and I would like to know how was that conducted and whether or not and even though it says he is a one off if we could potentially see.

Sure no additional impacts going forward on day 99 second question is regarding liquidity.

I was looking out the presentation and I didn't find it.

If you could provide a day LCR ratio that there that bank is running right now.

Or so.

Dnos second quarter that will be a very helpful.

Considering the current environment and finally I noticed on so that you your models your economic models I was suggesting.

A rebound of the economic activity in 2021 off 11.5% how does a are you assuming that our vaccine will come.

In a in early two any 21 or what what are you assuming on that 11.5% a GDP recovery.

Which looks which looks high a little bit high.

To me at least.

Okay, Hi, and if there's anything on your.

HM.

The your judgment is it's based on like a international Accountants, and that's where do you have to do you have to do an NPV value all.

Of the new.

Cash flow expected about getting those are the discount it should be back I'd be or you know interest rate or be it no and being the scope.

At the difference in the NPV there to be always you know there.

I'm out of the known it be.

He came to returning value or do you went up.

And they have to impact but.

That's a one time.

Oh gosh, it's a noncash event.

And then going forward once you start.

Collecting those loans, you will see Baltic if in fact month by month or quarter by quarter and.

To offset these one factor so.

Given the current situation, what we eat we expect anything good positive impact quarter by quarter.

Covering all of these loans that are being at least Ken.

And then we'd do more and.

Okay. If you are and sanitary conditions continue and we need you like again massive for scattered in actual injuries race, which I don't.

We will have to be sensitive feeder unfolds what's impressive.

Sage based on what Ricky I again nice.

I'm going to jump or third party.

No.

And could be.

And what we.

In terms of Microprojects right. It was.

I think that's in there you are saying we work with the mutual success like all your microphone. So we also moved out when more did you say in so that's the beauty cake.

The 11th attendees basically a rebound over the long battle.

Yeah, and without 40% or whatever and be a specific and.

Third quarter Uh Huh, that's running through the rest of the year. It would make that GDP for this year that would be very low and then the next that's for the rebound effect on a better control of the but then.

And those are the members that that's at the team.

Not specific to any correlation to Ah that's unique I mean.

In order for something like that.

For your question number two let me pass it onto Micaela.

I guess.

We didn't always have Afghan themselves a liquidity coverage ratios are we I Paramount I find it already in place we said.

At the beginning of June 19th themselves, So I guess any more than $264 last dose escalation.

Perfect. Thank you very much.

Our next question comes from a nice so don't wait to Santander. Please go ahead. Your line is open.

Thank you all good morning to all long. Thank you for the presentation I'll like to go a little bit deeper on the discussion on marching up when we when we saw this base poor performance, we saw a 30 basis points contract, Sean Oh for the Newman launch basically not 10 10 basis points.

So for that.

But excuse interactive effect I would like to understand these 20 basis points. Obviously have also the effect of the change in the oil mix.

But what to what extent the lowered rates in both solace on bull ours are putting some pressure on the you're asking yields and also considering the current discussions in congress or some of them relate that to a potential interest rate caps for consumer launching through to what extent.

These putting some pressure on the banks ability to charge kind of rights on B.

Sepracor shrunk they they are reducing the rights for their customers. Thank you.

Does not mean, a andreas thank you for the questions. Let me go all the a big pop.

I would say that once you cross <unk> in this second quarter. The biggest impact of did you mean is related to the portfolio mix. So basically you see what has happened between retail and commercial.

Basically the volumes have done while we were still pass kind of 55% repaint now it's more close to 45%.

The portfolio that has the key demos has been good ideas credit cards.

You can't take out because they see a close to 10% in.

In the quarter. So that is what is good.

<unk> <unk> and Leach <unk>, Yeah, we think will fall into credit platform called if that's what we call there not should help me about moving up what's that.

It's only going to happen we believe.

And next year, but because even when we covering volumes, who we billing credits cats.

We expect uranium volumes for retail if they see that people can you tax to be below one year ago. So I always thought you don't think indicates that whole. They go with five that I just want to point out that the biggest eat that economy varies from a decrease in rate that Uh huh.

Do we began the skandi much low tech sector, a that's for sure mix eat what he or she is they need down a default.

Yeah, that's too close on your question about.

I think some congress the women, but right now.

Not really know those old separate ways the price.

I'll always I think it's amazing to me, Jason Gems of segments that we are serving.

And that goes in the trend you compare to two.

To do this this is a great nature.

That Congress discussion.

Starting.

We don't know where does that go into it.

However.

Yeah.

Just to close out.

That affect you know occur institutions like now obviously, you probably wouldn't it.

A situation very closely taking all the necessary measures in order to ensure that whatever.

Goes through its according to.

Oh preferences are in that part of.

But you got a framework through but that's a separate discussions in terms of college is backing out what segments. We have started now.

You know where our business model.

Perfect. Thank you I'm, they're not second question on the other active out to a part of a there are going according to your skin are you targeting the same market share that you've already interact tivo, one or he's going to be a different I want I'm given that these funds are intended more towards the DSMB me on.

Micro lending segments, which you US you mentioned before.

Not a bigger bigger spoke for your portfolio. The focus of these money view when you've got it is going to be to support your current clients already great going to use this money outside of opportunity to defend your penetration can be segments.

Yes, that's except for your question.

Yeah, we are targeting to get at the same level in terms of rack do you have to of what we got into that was probably a little bit below.

It correctly or one was mostly in our case directed to it.

[music].

Two two main efforts to help existing customer both corporate medium size and small company I also it sounds like US okay. Good some new customers.

Oh credit for the bank, but.

Hi, Sun relationship before because different approach like you know two changes there it'll be in terms of our effort. We are aiming to go no work in terms of that type of the company and they will do before is how.

As much as we can it wouldn't liquidity to different types of companies, but also present opportunity for our for what you just mentioned.

We've been very conservative inserting yes. It is because it's it's a tough business to be in doing that cycle.

We're always.

Working on improving malls and whatnot, but that that has not been.

And Richard so from our perspective.

So we're just going back to business, but today, we have these opportunities to increase our client base through direct show more people go through these.

Tough situation, but also we have enabled us to they're much more about these segments in order to improve our more tilted a.

I'm.

Come up with better services for these cycles. So it's both we're gonna help I love to.

The new segments, and we'll be able to learn and be more close to these type of customer. So we do expect positive impact in terms of our relationship with these type of customer due directly.

Great. Thanks, so much.

Next question comes from duties Fernandez with JP Morgan. Please go ahead. Your line is open.

I think tourism and I have a follow up on RG <unk>.

I understood that we could said this can be pressured easier. So about 20 be truly have you for a long, but I also feel that the single stage three loans or four quarter coming quarters.

That could have any back 20 or no more people do right. So so and also have you ever shouldn't be a two year loans right you have to number one and so it is alone. These negative impacts if something doesn't really stayed on your balance sheet for awhile. So my question is how to peak margins right because I end there.

Good it will come down, but how much don't do think it's possible for margins true to keep under pressure.

My second question is a follow up on the phone with discussions if you can emirates, maybe the thought three views you were see there I think there was decent need to restrict cash there was another one on automatic school spani off of additional installments and we also have the additional pension withdrawal so issue.

I don't know like and maybe that's owned it seems that article see you should be and what did they start was on that that would be helpful. For us. Thank you.

Good morning, Julie it's all that but let me try to to grow a little dig deeper into the margin discussion, maybe and breaking it down between Eaton <unk> okay.

In fact in the commercial loan book, Okay, and taking a wait and see that discussion because actually eight none, but it's not a financial base like 10 basis points before they even we walk a little around 20 basis points.

Oh, yeah, right, but of course on so the news of the commercial loans overall specialty calls.

Last quarter, we thought body, he's going down because of Citi. Please seems like not forget there is an impact.

Yeah.

That's a big numbers there and then argues that wed already know kind of flows everything but love to September you get a fan I say, one we see when we looked at deposits follow me and have why do you topping weekend not so basically.

And besides the portfolio make schemes that that I described the phone, which is actually quite high because we'll see retail easily share over the Pope alone.

Oh 10 basis points in increased got even more than that what we've seen some of the flying he'll talk long and.

In the consumer and loan book stage heap Leach Pascagoula, some or do something to keep up with gave you need Oh well also it it's a mix Oh I wonder if things.

I mean, I wouldn't want to review and they're all guidance intense, meaning because really easy wouldn't be paying off the state of the any color there will never get portfolio in a number of things that what we are 14 for the second half of the year needs that we.

We've been no worse than what we've not seen in the first half the year why is the physical Utah they seem to extend the.

Think about alone and in fact, no well disciplined processes and he is also part of the for the state of the degree right, which means that the connection and loan book and only for the for the state of the football for let me know which started to change only.

Not the beep I would say the main reason why.

Plays in a now let me talk at all if want to Congress passes and if any.

They are Judy so yeah.

Covered obviously something that we are following very closely.

And first of all what's the buckets.

Congressman.

Obviously, they want to help Peruvians, you do anything okay. It because obviously the impact has been very big So we understand that was sympathetic with that I think I need you to a line or vicious you know there to come up with solutions that.

Couple of things first held through the US go through these crisis.

Okay that's taken.

[music].

The institutional framework on.

I could be take a model that caught in Copenhagen, they built a very solid.

And then show industries that is very well regulated I'm back Oh, that's being felt in our called minutes ago, So and that's that framework.

And we see we are.

Working I can association and together with experts and trying to explain.

Gration to do it converts and would've made some progress and because we're bidding gene you said these and many of them are left that too early and then.

Started but so far.

Do you mean.

The tens of what it's been for both have been a changing in order to address some of the concern that the regulator Andrew.

Okay players in the system.

These having I'd also making sure that they're not that constitutional violations.

These trucks and so we are feeling and.

Waiting to see what happens we cannot predict tend to find out what sort of what we're doing the work that that's got nothing association or non financial players need to do no there to make sure we're going to whatever comes through.

Is there is something that if any that will definitely.

Get the objective for helping without they've indicated the system the bank we have dogs.

Also who's getting already probably the highest level in Latin America and after you've seen in over a number like the numbers were huge in terms of its calories in April I know, we're in humans and also structural so dangerous to Chris Weber really need to cope no. It doesn't have the specific dynamics of course.

The changes every day you know the latest developments are that their economy completion, he's asking to take more control all the projects related to the financial system, apparently they're gonna be successful, which is good news because it DC the wonder how exactly more technical support.

In terms of.

Preparing their there.

Paperwork.

Whatever steel or it's not that very few years, what the ultra deep sea. We are taking all the mentioned we're prepared to take all the necessary measures.

Make sure that whatever stem through it affects that wall. According to the regulatory frameworks and buy back where we are right. Some uncertainty on that from working in order for these two up though expected impact not unexpected.

You know things when they tell us inclusive.

Your next question comes from the line OFS capitals comments with HSBC. Please go ahead.

Good morning, [laughter], one more question about that much in and I realize that's we are discussing this today I'm going to kick into their matching we'd be lower end to take on healthy yeah. We understand that so but two we understand that there's going to be further decline in and <unk> net interest income from the level that we have seen in.

The second quarter, if that's what we should just picked up the so called <unk> fourth quarter should see in <unk> decline from that.

Okay, well up to second quarter.

Second I went to assure about I'm happy to give you guidance for next year. Obviously this is not again, because you're making lots of money.

How it up to you at this point expect to have it beginning to focus on 21.

And.

To do you have any considerations regarding that that I.

I have faces holding company cash and without a need sort of that's not need have you been them from the 5%.

[noise] does not mean God knows a yet just due to finalize their discussion and Mike, Yes, you're right and we are expecting a slight decline in net interest income.

The second half of the every process, if we do see nations and leasing yes.

And for that the talent and indeed has had any evidence indicates yeah hi, its very very early our focus is now.

No.

Thinking about dividend.

We're very focused on.

Executing our plan in helping customers go through the process on the back and.

We have strong capital, but probably more time to continue to give you the strength of our topic does that.

No.

Too early to tell but that focus would be in making sure we have right topic, a little in order to.

Great whatever extend to the impact of the something.

Our holding company level, where we have a obligations both on the operational of religion I was hoping nature as mentioned in his vision, we have uncle.

Oh gosh darn good resources that will.

And just that with a cash on hand that we have we wouldn't be able to comply with financial requirements in the Brady requirements for the holding company for the next four years and I know doubled up we help our related investments that we could also lifted.

With that not so that's not a specific concerns for us.

That's really can pick it up.

<unk> combos catalogue, let me just.

One more thing sorry on the in on the discussion and margins and I mean on the often it trends now we will see us I wasn't nation net interest income going down into second half of the yet, but we have both seen gun in other income recoveries from the low level.

Fair enough.

So those two.

As a kind of fed levy. Please note that that we will see nothing can be seen can be because when you're expecting kind of picking up.

And these were covering tea.

Small screen from the critical.

Yes, yes, but not only gay cat now because actually I mean, the most impacted seats Kathy gossiping come back also on the retail in commercial banking.

He's talking about that because they don't have enough to see if it's not so we are expected to be calling in most of the fees. We should have shown that number or something like that I will try to wait at almost 80% of people forget it.

[noise] that anybody can think of so much.

Your next question comes from the line of showing that gallstone with <unk>.

Please proceed with your question.

Hi, Good morning. Thank you for taking my question I just have one.

One question, but he's not really I personally is just a double check my understanding some of my goodness comments and on and that question on on a copy tell I'm gonna be.

In the first thing is that's not going into two me kind of comment on on that documents the company, Oh expertise and not be folks actually.

He's got nacco and incentive for you.

To move back when clients.

Do I feel I pay to because of exposure three forks seem that exposure going forward the embedded in that capital clients is nowhere I I think on fees are are there.

Okay, and I guess, you have died incentive to doing that in coming months no decline.

Add to that type of program.

And my second question. My second question will be <unk>, you are running currently updates on devaluation of your guarantee.

Hey, already babies are waiver from the company tendency of for finance.

It does updates invigorate month and put funding.

[noise] Hi, sorry, you said you pay on your personal.

I see that actually is that correct.

A program is designed to help.

I guess would there be green tea, and they're working capital requirements.

Your suppliers to phase and payroll.

And actually you cannot use that money to pay a prepaid international gnomes older than current its told it's kind of kind of make no. So so given buried by like deciding on so by the way, we see let's wait to strengthen our customer.

In terms of our company.

Because there is in fact for port for company.

It's not that incentive or is there because they're getting patients.

All these new we went to build lasting companion not just to do it recovered partner.

Okay.

And then you can you repeat your second question Gary completely.

It is just related to guarantee and usually you have to make and releases. So they want it sounds like guarantees and you will be themes.

Or they will likely and in any of their portfolio do you have.

So in you know, there's one thing that the banking lithium finest have gave away waivers to actually not have they those valuations.

The cooling.

On fine.

So my question was he very sad fascination with them as a bank and then he leaves you are running and currently.

Okay. That's all for example in mortgages, if you're out baiding, they run or anything else well down the line assets on mortgages et cetera.

[noise] yeah, Okay fair enough on that front that superintendency, specifically for the banking, there's two centsfive not issues any specific relationship. We are doing business is neutral if we need to.

We kind of you've raised it because it is starting to do any update or by you or does of course, the Iraqi isn't a portfolio. We just do it and this is Jason if I do it we take that into consideration I've not seen in fact, there is specifically for mortgages alone.

To value is around 55%. So we have ample capacity there in terms to too.

Hey, I guess any potential reduction in the value of guarantee it but no it's going to try to do better.

And they're not being regulation and activate spending to bring tendency for the banking system.

Yeah, I think if you can do with the bad because we have been doing pretty good.

Perfect. Thank you very much.

It works.

Our next question comes from Jon Thompson.

Please go ahead.

Hi, there thanks, we sleep and they cannot apologies. If this question is already being asked but my line is dropped a few times. So Paul just everyone else itself, there, but when you kind of silly. When you say you expect and I have to decline is that from the reported second quarter basis or is that.

After adding back the onetime charge.

Yes, Hi, Yeah, no. That's after having adopted why not catch something they normalize five first hand back that we have this office.

Okay.

Got it.

<unk>.

That's it.

Yes.

I don't know where pesky worse, if he would like Cascade question simply click the question Mark button on your webcast player, but we know we love here and they simply type your question in a box.

And.

Hey, we had a question.

During the webcast assess hi could you. Please keep me.

More detail on the Threeq there'll be people eat retail loans.

Yes.

It is due to temporary relief programs renegotiated loans grace periods et cetera.

Hi, I guess, maybe too I guess it we've covered this already and specifically we've seen really take loans again, we see when they launch is would be did decline into creating kind of portfolio, which is the one is a bit higher yields they want that has impact.

The most no. Yes. There is also an impact from that we need programs et cetera. That's for sure. The biggest impact is the portfolio needs and we feel this weekend.

Thank you and it appears that we have no further questions at this time I would like to turn the floor back over to me just go south of for any closing remarks.

Okay. Thank you everybody for joining me in these calls a I hope we haven't been able to give you. Some E. Additionally, information, even if not only inflammation, but you would pop kids.

And we'll a in leasing to reach out there we'd be set parting thoughts. Thank you very much.

This concludes today's conference you may now disconnect.

[music].

Hmm.

[music].