Q3 2021 Intercorp Financial Services Inc Earnings Call
[music].
Good morning, and welcome to Intercorp financial services third quarter, 2021 conference call.
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It is now my pleasure to turn the call over to Rafael Borja of inspire group, Sir you may begin.
Thank you and good morning, everyone on today's call Intercorp financial services will discuss its third quarter 'twenty 'twenty. One earnings we are very pleased to help with US Mr. Luis Felipe Castellanos, Chief Executive Officer of Intercorp Financial services, Let me say as Michela Casassa, Chief Financial Officer of Intercorp financial services.
And he said one silo about Saturday Chief Executive Officer head of intermodal on Mr. Bruno fairly true Chief Executive officer of intelligible. They will be discussing the results that were distributed by the company yesterday November 9th there is also a webcast a video presentation to accompany discussion during this call. If you would even receive a copy of the.
A presentation or the earnings report they are now available on the company's website or you face I've called out the two they'll know the kobe or otherwise for any reason if you need any assistance today. Please call inspire group in New York at 212, saving one zero nice seeks a fix.
I would like to remind you that today's call is for investors and analysts only therefore questions from the media will not be taken please.
Please be advised that forward looking statements may be made during this conference call the sooner that account for future economic circumstances industry conditions, the company's future performance or financial results.
Such statements made are based on several assumptions and factors that could change, causing actual results to materially differ from the current expectations for a complete note on forward looking statements. Please refer to the earnings presentation on report issued yesterday. It is now my pleasure to turn the call over to Mr. Luis Felipe Castellanos Chief Exec.
The folks who said of Intercorp financial services for keeps opening remarks, we still got the Yano. Please go ahead Sir.
Yes.
Thank you Rafael.
Good morning, everyone welcome to our third quarter 2021.
Earnings call. We appreciate you taking the time to attend our call I hope that you and your families remain safe.
Let me start by giving you a brief overview of the hill and macro situation.
On the cemetery front.
What's able to speed up his butt vaccination process as a result currently half of the population or 16 million individuals are fully vaccinated.
Restrictive measures has significantly softened across the country and although there has been a slight increase in the number of Covid cases recently, a third wave is not yet in the horizon.
We are hopeful that 2030 due will take us back to a neutral Maggie very much like the one we had before the pandemic.
Moving on.
Related GDP growth levels as of the month of August showed a stroke stroke rebound however.
Estimates for GDP for the rest of the year remained goes to zero.
So we foresee around 12% full year GDP.
Easy one.
Pvt versus the previous year, despite the forecasted deterioration of the last part of the year.
In the political front, we continue to see volatility what.
What do you think those challenges remain high.
Is that the branches continued to establish himself the consumer and business confidence indicators remained at low levels. The political front continues to be uncertainty factor and this might be the case in the coming months. Nevertheless, I guess deep under these challenging environment are you face continues to improve.
Britain and Ricky.
As you will see later during the presentation. Our results continue to improve based on the recovery path that after the effects of the pandemic.
Our clear strategic focus has stated our face to reach another solid quarter with strong results in all of our operating segments.
We strongly believe in our people our management team.
Our ability to adapt to changes in our.
A detail oriented strategy are our strength and the basis that will allow us to grow profitably in the future.
We will continue to grow in a sustainable way in order to fulfill our purpose.
Lower all Peruvian to achieve financial will be.
Now I will pass it onto Makena to update you on the results of this quarter and with a detailed review of our operations. Thank you very much.
You Philippe and good morning, and welcome everyone to enhance our financial stewardship FY 'twenty.
<unk> 21 earnings call.
This time, we have divided the presentation.
Which include financial highlights key messaging results by segment and twin some takeaways at the end I always start with a brief summary of financial highlights on slide three to find the main highlights on the Intercorp financial services had record earnings of 551 million to walk there.
We've got a return on adjusted EPS would be up 23, 1%.
Some business performance review 2020.
One guidance for <unk> and cost of risk the nine months accumulated and 1500 35 million with a 22% hourly and two 3% return on assets.
Revenues are growing almost 18% in the nine months with efficiency ratio at 32%.
We have a growing customer base, thanks to digital adoption in solid capitalization and some liquidity at all operating companies and interbank interest 299 million without the return on equity of 18, 6% and these positive ramp this year.
Retail loans grew three 6% in the quarter, gaining 10 basis points market share to 18, 8%.
The market share and we can be positive onetime height 15, 2%.
We have a sequential improvement mean.
Training up 10 basis points. This lockdown and the credit risk profile is better than pre COVID-19 lifts recovery inexpensive if you mean by increased activity and digital investment.
Yes.
The quarterly results are affected by lower other income and higher technical reserve.
Must be new collections grew almost 17% on a quarterly basis and 90% on a yearly basis.
So it is a little bit versus pre COVID-19 levels, we have a 13 billion investment portfolios and solutions with a return on the portfolio of $6 70 per cent.
Yeah.
We continue to be the market leader in annuities with a 29, 7% share year to date.
Depending on.
Search for Mark to market on investment we have a significant growth in revenues driven by other income.
Which has been boosted by mark to market on the investment portfolio. We also have very good cooperative banks with assets under management and deposits growing four 2% in the quarter and 22, 8% year over year.
And a solid contribution to profitability and efficiency.
Top line has continued to be strong driving the year to date growth to 18% compared with 23.
This mainly thanks to a recovery in March revenue lines, including net interest income fees and other income.
This recovery has taken place in the core businesses of all three operating company, but it is important to notice that in case. They would have any illegal have contributed to the strong growth in the community revenues with extraordinary legal and investment, which will most likely not be repeated in the future.
Now I will focus on the key messages, we would like you to take home from this call on slide 10.
There are six key messages, which we will cover in detail in the following slides.
First the macro fundamentals continue to be a point of concern as GDP growth.
<unk>.
Second we have a strong balance sheet with capital and liquidity levels substantially better when compared to pre COVID-19 levels.
We have continued to see a strong recovery in our core indicators in all three operating companies.
Well, maybe just an adoption trends continue to support <unk> strategy, which translates into growth of clients and business.
This liquidity risk profile of the portfolio continues to be below pre COVID-19 level.
And the last is that we continue our focus on efficiency and branch rationalization.
On slide eight we can see that economic activity in Peru have started to decelerate after a very strong month of recovery when compared to 2021.
Political uncertainty has started to impact growth, especially in terms of private investment, which is one of the aging of the appointment.
Central banks are still not updated its three 4% growth estimate for 2022 and other estimates indicate that one 5% to 2% growth.
Growth from GDP with a flat to decreasing private investment and acceleration in public investment in a slow growth in private and public consumption.
Expectations on economic activity had been decreasing in the past month does it but due to the political uncertainty and turned to negative territory, but have seen a slight improvement when speaking of the next 12 months when compared to the previously.
We have experienced important increase in rates in the medium term rates and lately in the central Bank short term reference rates or 125 basis points, bringing that the current the current solid reference base to one 5%.
More rising rates are expected in the near future.
On slide nine we see exchange rate and inflation still impacted by political uncertainty, but also by international ratios. So their dollar and high pressure.
Evidenced by the comparison with Latam peers on the exchange rates shrunk some positive developments in the local environment there.
So no let level to have a bit of a ratio in the past weeks, while inflation shortages worldwide as lockdowns and.
A boost also in placement in Peru, However, inflation in Peru is slightly below EPS.
On slides 10 to 11, the second message relates to capital increase.
On slide 10, we continue to have a solid capital position at all three operating companies.
Our total capital ratio as of the end of June was 16, 3% at interbank compared to 15, 1% of the system and the minimum eight 5% required by listen for an hour.
Our core equity tier one ratio improved 50 basis points in the quarter up to 12%.
In terms of water, our solvency ratio stands at almost 160% well above the 100% require light at Intel Eagle, our capitalization ratio is almost 24% again, well above the 8% request.
On page 11, we continue to reduce the high levels of liquidity. The third quarter has seen an improvement in the financial system and interbank have been able to grow total deposits by 3% on a quarterly basis and most importantly to reach an all time high market share and weakened deposits of 15, 2%.
A 70 basis point increase in the quarter the loan to deposit ratio is at 90% well below durations of our main peers in the system average and below pre COVID-19 levels, we continue to have ample liquid assets.
Almost $27 billion of interbank out of which more than 17 billion, so less cash and equivalents and have around one big installation.
And alone out of which around 300 million solid cash.
And if we let it.
On slide 12, mostly operating trends have continued.
Continued to show positive would be balanced development in IP.
Interbank debit and credit cards to know that it reached 43% above pre COVID-19 levels, New disbursements are favorably that you announced with the public sector employees and growing 24% versus pre COVID-19 levels. While mortgages has started to recover in the past couple of months after a slowdown in growth in July and August you.
The increase in rates in our now growing 3% versus pre COVID-19 matters totaled.
Total fees for interbank around 85% of pre COVID-19 level or 97% when excluding the impact of the restructuring charge.
Late payment fees, which came with the capital rates legislate.
Commercial banking fees have recovered faster than retail fees, mainly thanks to new business coming from the aggressive for us even though strategy, but we have also seen a nice recovery in legal fees linked to the strong credit and debit character know their volumes in the case I think that I Wouldnt tell you the recovery was much sooner and faster with gross premiums.
In September this year at almost 170% versus pre COVID-19 levels and asset under management at plus 23%.
On slide 13, we are showing the quarterly evolution of total revenues for ASX with vaccine another slow quarter in terms of total revenues, which life and at 17, 8% increase in revenue during the first nine months of the year.
This growth is mainly coming from first Mr. Realization of interbank revenues were relatively flat in the quarter, but growing two 7% and related.
So a recovering revenues coming from other income from investments, but also from other sources of revenues I think I said, we will not engage in daily lock has seen another strong quarter in terms of revenues, thanks to core business and mark to market.
New York has been impacted this quarter by a lower level of other income.
And higher technical reasons due to inflation and maximize.
And last a positive continuation of macro market at the holding level.
The diversification of our business continues to play an important role in the yearly recoveries revenues. The banking business continues to recover in a more gradual weight, mainly due to the pressure in net interest income and NIM coming from low yield rates, even though there's cash portfolio lease mix.
Mixed with a smaller contribution of Covid and also the heat from the late payment fees things of that nature.
We are including a new set of information on slide 42 shows a recovery in the yields on the loan book of the bank as well as in the risk adjusted EBITDA.
In the lows reached seven 9% in the quarter.
So anyway basis point versus the second quarter, while we invest in Reis is improving 80 basis points in the quarter and 240 basis points.
Year, and improving 400 basis points in the cumulative C, whose efforts with them in the same way knee is improving 10 basis points in the quarter that risk adjusted NIM is improving much faster.
Cnemis by provisions reached <unk>, 3% in the quarter up 50 basis points in the quarter and 160 basis points in the year. We expect this strength to continue improving in the following.
Moving onto the first message on slide 15, our digital Tpi's continued to improve.
Digital users.
And then 79% of our customers who interact with the bank in the last 70 days.
Pinpoint in the past two years.
Percent digital customers, who are clients that do not use branches or contact center any longer.
And who use these antenna plus at AT&T quite funded in the last 30 years only 30 days only for Kashi Gasthaus have reached 58% in September 26 points from September 2019.
<unk> I hope so.
Well and interbank has reached 49% in September and anything you can say.
So our digital sales reached 79% both increasing sharply in the last two years. We have continued to see an important number of new digital accounts being opened both for individuals and businesses.
At the end of September 55% of new retail saving accounts were opened digitally while 91% of new business accounts are opened digitally.
On slide 15, we have reached more than four 3 million retail customers and 122000 businesses.
<unk> client base has increased 14% CAGR over the past few years, while our commercial client base has increased 36%.
100% retail digital customers have grown at a CAGR of 55% in the past three years, reaching almost one 5 million customers new digital client acquisition of retail customers reached 40% compared to 21, 21% two years ago.
On slide 17.
The P to P feature among multiple banks operating with telephone number is already active in more than $5.
1 million users at the end of October 42% out of which use interbank as their key accounts.
<unk> are 100% digital solutions for payment, which was re launched in February next year has reached one 5 million users as of the <unk>.
End of October.
Moreover, both payment initiative has aggressively started to increase their number one.
One side 20 has reached 251000 metric tons at the end of October and then the other side interbank alone for fleet affiliated 624000 net.
The first key message refers to the low level of provision to register again this quarter with cost of risk at one one below recorded net the current credit risk profile of the bank portfolio has stabilized and is less risky than our target, we still fight which is closer.
To pre Covid levels of course is positively impacting our stock reached completion and on the other hand, if negatively impacting revenue generation as mentioned in previous slides. There are three positive strength impacting risk profile on slide 18. The first positive strain is that outstanding risk.
<unk> loans have continued to decrease.
Linda outstanding rescheduled loans were 7 billion or 17% of the total loan book.
This number represents a 45% decrease versus the peak of June last year.
This is true for both retail and commercial portfolios. Moreover, the number of total clients reschedule answer the grief as the new inflow has been margin. During this last month on the other hand, the payment behavior continues to be solid.
On slide 19, we actually for the first time the quarterly evolution of receiver launch as of September <unk>, we have $5 5 billion solid as active a lot loans down 18% versus the peak in September last year, and you can see from the graph there have been prepayments and amortization in the corporate and midsize companies.
Greece interactive alone by 53, and 22% respectively year over year.
Yeah.
As an additional 12 months rescheduling period was approved by the government to help patients attorneys, we do not see a major reduction in that segment. Moreover, extended loans reached 32% of the receiver launch as of the end of September and these extensions are allowed until year end. So we might see this fee.
Increasing a bit more.
On slide 20, the third positive trend is the low level of service.
Cost of risk for the quarter was extraordinarily low at 141% below the one 7% of the previous quarter and below the pre COVID-19 level of two 2% for the full year 2019.
Mainly due to the low cost of risk in retail, which today has a lower contribution coming from credit cards, which is the product with the higher cost of risk in the portfolio.
This is reflecting the low cost of risk of retail in the quarter, which was one 7%.
Down from three 2% in the second quarter and below the 4% full year 2019, because isn't it.
Merchant banking continues to have low levels of cost of risk same store on a small participation in the SME segment in West Vela 0.5 in the quarter.
The NPL coverage for the bank as of September it's almost all of them.
170% and for reaching those is pretty high at 220%.
Our stock of provisions of the end of September represents around six 4% of our total loans, excluding that event the R&D portion of loans.
Finally, the last key message on slide 21 refers to the disciplined and proactive management of costs.
<unk> has pursued before and after public stock during the first nine months of 2021, we have registered a very low efficiency ratio of 32%.
Just below our guidance of 35 37, mainly thanks to the positive impact of revenues previously described which have contributed to our operating leverage as the accumulated a 13% increase in revenue and language.
<unk> costs. This quarter, we have continued to see a recovery of expenses driven by banking activity when compared to the previous year. It is important to remember that during 2020 I. You said was one of the few financial services institution in the region, which was able to execute an aggressive cost reduction program, which ended.
Reducing the total cost base of higher face by 5% for the full year and improving the efficiency ratio in such a challenging environment.
At Interbank efficiency ratio is 42, 9% for the first nine months of the year above the 38% registered last year as expenses have increased 15% in line with our expectation it's in as reflected in our guidance the creation cost at interbank is mainly <unk>.
Due to three reasons first a 17, 8% increase in technology cost of New ventures, which include the technology expenses for our digital transformation as well as new investments in payments and our venture with value.
Second an 8% increase in personnel cost, which is mainly coming from the increase in mandatory employee profit sharing in line with the improvement of the local GAAP earnings.
And third a 76% increase in variable costs related mainly to credit back in line with the 79% increase in credit and debit card turnover, which generates fees and financing partners.
Moreover, we have continued with our branch optimization program started in 2016 and have closed additional 63 branches and venous Tucker, reaching a total reduction in number of branches of 30.
5% or almost 100 branches from the peak in 2016.
Expenses will continue to increase in the last quarter of 2021 point compared to the previous year driven by the regions. Please reexplain guidance remains at 35, 37% cost income ratio for the full year right.
Likely in the lower range of the range.
Now, let's have a look at some additional indicators by segment on slide 23 to 29.
On slide 23, we are showing a recovery in most of our key banking indicators, including our second consecutive quarter of recovery NIM, which was up 10 basis points in the quarter rate in the quarter with recovery in risk adjusted NIM, taking place much faster or 50 basis points in the quarter as previously explained.
Total fee and other income increased four 2% in the quarter, mainly driven by the strong FX trading results.
Second quarter fee income recovery and growing one 9% in the water and eight 5% when compared to the same quarter last year.
At interbank other expenses increased 11% in the quarter and 27% after one year ago, mainly due to the recency easily explained on slide 24, the positive news coming from the accelerated growth in credit card and other consumer loans with week nine 8% in the quarter driving my.
Chairman consumer loans up 50 basis points this quarter.
Retail loans grew three 6%, resulting in a gain of market share of 10 basis funk igloo five 5% year over year.
Commercial banking loans were down 3% in the quarter, mainly due to last year.
Overall total loans were flat both in the quarter and midyear that grew two 5% in the quarter and three 6% year over year.
When excluding receiver loan balance.
On slide 25, total deposits increased 2% in the quarter and nine 5% year over year with retail deposits increasing strongly.
11%.
The Q on Q, and 19% year over year gain 70 basis point market share in the quarter and 130 basis points in a year. So the record 15, 2%.
Yep.
Cost of funds increased 10 basis points in the quarter to one 5% and 20 basis points below the previous year, the higher cost of funds.
Mainly come from the impact of the increase in rates in the short term institutionalized.
Moving on to inventory at <unk> on Slide 26, gross premiums plus collections grew 17% in the quarter.
This third quarter, almost all business lines, you with regular annuities, leading the growth in premium as a result of better market conditions, while individual life premiums due to an improvement in the collection of premiums lightweight industrial Rudolph remain market leader with a 29, 3%.
Market share in these blocks.
On slide 27.
<unk> investment portfolio reached $12 9 billion, a 2% decrease on a quarterly basis and two 2% decrease on a yearly basis, the quarterly and annual decrease was mainly explained by the effect of lower mark to market valuations on the fixed income portfolio and higher cash positions as we rebalance the portfolio the return.
On the investment portfolio in the third quarter was $6 seven that's fine with a positive contribution from inflation.
Moving onto our wealth management segment on Slide 28, and 29 is that English net interest and similar income was 26 million in the third quarter, a decrease of soy consumption when compared to the second quarter, mainly attributable to a lower asset allocation to fixed income investors investments within the portfolio.
Net interest and similar income increased 4% year over year, a sequential lift from the lower cost of funds caused by lack of liquidity E zones in non interest bearing accounts.
Fee income was boots and increased two 8% in the quarter and 25% year over year, mainly thanks to an increase in fees from fund management supported by higher foreign exchange rate.
In terms of other income reached $146 million in the third quarter, an increase of 94 million Q on Q and 71 million year over year.
Mainly attributable to a strong boost mark to market valuations on property portfolio investment.
Revenues generated by Intel even for the quarter reached 223 million, increasing 70% in the quarter and almost 60% year over year.
On slide 29.
Intangible asset under management, plus deposits had a strong growth during the quarter and a four 2% driving the yearly growth to 22, 8% and reached $28 3 billion solid free shipping.
Earnings of 184 million solid for this quarter.
The already strong second quarter of 19 million songs.
On slide 31, we are providing a comparison of our communities results with the operating trend expected for the full year 2021 as.
As we mentioned in our previous conference call 2021 will be a year of rebuilding the portfolio interbank to foster growth in the coming years in Pascagoula, and Intel level should continue to grow nicely.
Keeping up the positive strength, but distance even in 2020 despite cogs.
First related to capital, we expect interbank capital to remain at sound levels, well above regulatory requirement September total capital ratio of 16, 3% in core equity tier one ratio of 12% or above the guidance.
Profitability.
<unk> September accumulated return on adjusted equity is up 22, 1%, we are increasing our ROE guidance for year end to about 18%.
Year to date loan growth as of September was eight 1% for retail and minus 4% for convention in line with our guidance, we expect retail loans to continue building up by year end.
NIM was 4% in the first nine months and four 1% in the quarter growing 10 basis points nine with guidance.
Cost of risk came again below the guidance at one 1% in the quarter and one 5% you need at least as of September.
We are revising our guidance downward to a cost of risk for yearend at around one 5%.
I use cash efficiency ratio was 32% as of September better than our 35% to 37% guidance. We have continued with our cost efficiency efforts and brand Regimentation program and we expect an increase in expenses in the fourth quarter in line with the recovery of our CVP, which drive variable Cogs.
And further acceleration of our digital investments, including building our venture with Iraq, We should end the year and the year sorry in the low end of the guidance.
On Slide 32, let me finalize with the six key messages of this presentation.
We're not.
Macro fundamentals continue to be a point of concern knowing we see Peruvian GDP growth decelerating second we have a strong balance sheet capital and liquidity levels substantially better than pre COVID-19 levels.
We have continued to see a good recovery in our core indicators in all three operating companies.
The digital adoption trends continue to support <unk> strategy, which translates into growth of clients and businesses.
Credit risk profile of the portfolio if below pre COVID-19 levels, and we continue our focus on efficiency and branch rationalization.
Before we move.
Two questions, we would like to let you know that as of yesterday, we have approved an extraordinary dividend of 65 cents a dollar a share.
We see this as an opportunity to optimize our capital structure at this time, given our comfortable capital position the future level of growth and the liquidity at <unk>.
So very much now we welcome any questions you might have.
Thank you at this time, we will open the floor for your questions.
First we will take questions from the conference call and then the webcast questions.
I would like to ask a question. Please press star followed by the number one on your Touchtone phone at this time.
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Pause momentarily at this time, Paul I'll list of questionnaires.
And our first question comes from Ernesto gasoline.
Bank of America. Please go ahead.
Hi, good morning, Felipe and Michela and good morning to all of you Tim.
Congratulations for your strong bottom line growth your new ROE guidance on your generic dividend.
My first question is on loan growth and net interest income.
We noticed that during the quarter there was practically no loan growth.
So.
Just wanted to hear from you what are you thinking toward next year are you expecting better lending dynamics.
But we can have a lower GDP growth.
And how active are loans should continue to impact in loan growth.
And related to this.
Do you think that the net interest income.
Should start to be above loan growth.
We consider a higher retail exposure, especially in credit cards.
And also the higher interest rates.
And also could you remind us how was your sensitivity.
To higher rates.
So this is my first question and I understand there's a lot of questions inside that one.
For my second question is in.
In terms of your cost of risk.
As you pointed out customer base came below pre pandemic levels for a third consecutive quarter.
So what do you see cost of risk are normalizing next year.
And finally my last question is on the.
Your sustainable lateral we are your new guidance assumes 18% ROE for the year.
Well, what do you see that as sustainable or are we and where do you expect to be close to to get to that level. Thank you.
International Thanks, very much for your questions.
Let me, let me jump straight to Makena I'm sure she will be able to answer the three of them.
Okay. Good morning, Evernet, though so let's start with loan growth this quarter loan growth is flat, but this is mainly because of their active of loans.
In Amortizations, Okay. When you look at the growth of retail retail has grown three 6% this quarter with a very very nice growth of almost 10% and greater caution in other consumer loans. So basically what is driving the gross down east commercial loans, which is 3%.
Negative this quarter, but it's a positive number when you exclude their active AR balances. So that is also helping a net interesting. Okay. So just I mean, one first comment there is growth in the portfolio. When you exclude the impact of that fever now for next year.
With the deceleration of growth of GDP no. We are expecting similar trends NASO rebuild continue growing in commercial decreasing because of reacting and also because of a slowdown in the level of investment giving them. Okay.
Okay. The second point was how fast is the net interest income is going to increase related to the loan growth, we see positive trends in the east. Knowing this is coming from a number of factors first the increase in rates take on more credit catching the portfolio. It also.
A recovery in day in overall risk profile mix of the credit card portfolio.
On the other hand, we have.
Increase in rates, which is also impacting most of funds. So basically net interest income.
Slightly above loan growth in these leads me too in the sensitivity of the balance sheet, which we have recently.
Revised in with increasing rates of 100 basis points in soil is the impact on the balance sheet is relatively flat and of course here there are a number of.
Things that need to happen in order to improve that in the first of them being the ability to translate this increase in rates to clients.
Moving onto the second question on cost of risk a COO.
Cost of risk as we have seen is still below pre.
Covid levels in these M is mainly explained by retail in by the overall retail portfolio mix now remember that gray has started to recover bodies still more than 20% below the volumes of the pre COVID-19 now for 2019.
So basically being credit card the product with the higher cost of risk and being 20 plus cents below not these these drive the cost of risk down. Moreover, the cost of risk of credit card is also low because we are rebuilding the portfolio.
And we are with risk profile of the credit card portfolio, which is better than what we used to have pre COVID-19 and what is our desired level of risk. So what we are expecting for the next year as we have discussed in previous conference calls is that the cost of risk is going to start.
Increasing.
But we believe it will not be yet.
The same level as pre COVID-19.
Especially the credit card portfolio is not going to reach the same level in the same share in the overall portfolio as pre COVID-19. So most likely that can take place.
During maybe 2023 and the last question, which is related to the sustainable laterally I mean, we have seen this year thorough very positively impacted by a number of mark to market in.
Revenues coming from I mean, definitely we're doing in data, we believe a more sustainable arrow E for the years to come is around 18% now which is a mix of different <unk> in the three operating companies and of course, there's a lot of work to be done there, especially because of the context.
Low growth and increase your rates, but that's that's the number that we're shooting for.
Super.
Thank you very much.
Okay. Thank you, yes, perfect. Thank you so much.
Yes.
Our next question comes from.
Please go ahead.
Okay.
Hello, Hello, everyone.
Uh huh.
And Nick Hello, My I have two questions. The first is on the political side.
Mentioned that political uncertainty is still impacting the macro we did see a real bounce from from our market lows.
If you could talk about perhaps some improvement in in the political uncertainty from your perspective, and what still remains to be seen in what your concerns are.
On that front.
And secondly, I wanted to ask on the deposit dynamics you showed market share gains the highest.
Or a level that <unk> seen.
15, 2%.
Particularly coming from retail, which looks very attractive if you can talk about the strategy there.
What kind of clients are bringing their deposits to interbank whats driving that or these from other.
Clients. Other banks are these new entrants in the banking system et cetera. Thank you.
Thank you.
You are all very aware.
Still.
Again, it's early in the.
New government.
Suddenly celebrated 100 days however.
The period has been marked but.
The executive branch trying to establish basically a working team.
The current until Theyre still reshufflings in the Governor as you know the Prime Minister was changed.
Recently, a new team came in I think that change decreased the level of uncertainty and west part of the remarks. However, there's still a number of positions that are being observed people.
And Congress are.
<unk> taken a very shoes Luke.
In terms of the qualifications of the people that are coming into well over another one.
Cary deliver but also throughout the team executive.
<unk> has two put together so I guess until there is more stability in that front.
The consumer confidence in the business.
Community confidence will continue to be at low levels.
Yeah.
The change could be.
Well to your messages toward.
The right people in place.
Stability in terms of.
Supporting the strength of the institutions clear rules cluster in private investment.
Or that would that we usually talk about.
In order to stress and growth in our country. So so so again still think.
Being observed.
Some noise.
These days in terms of what that meant that the people that are being.
Recruited to be part of the executive branch that needs to be geared in order to to continue to set the path for that for that economy.
Okay.
In terms of deposits.
<unk>.
<unk>.
Being able to increase our retail deposit base basically.
I would attribute that to our very aggressive.
<unk> strategy.
Yeah.
Realizing that this has been a very good year, where there's money being coming out from Benjamin functions.
There has been.
The grant of cash by the government. So we've had a strategy.
<unk>.
Bring more people into the system through our hour.
Detailed payment solution that donkey, we purchase and distribute distributing.
The cash grant by the government by the government to part of the population with our 100% digital solution. We were the first western good last year and we have continued to lose digirad.
With participating very actively in that process. So there is some fun conversation there.
But also we were one of the first was to add a 100% data process tool to help people received the funds from the pension fund.
And that has been part of our COO.
Tactical strategy would be one four for last year that has granted very good.
We just for us in terms of acquiring new clients.
Higher.
<unk>.
And then the overall strategy that we have in terms of providing digital solutions to our customers and being able to open an account with a few clicks and managing your money.
Creating diego system of payment.
So that has also resulted in a very good traction in terms of increasing our customer base as you can see.
In Japan has been.
2 million plus customers for many years until the last let's say three years, when we started to accelerate new study and today, we have $4 3 million retail customers and also so I guess, it's a mix of different things and the strategy that has a combination of them.
A movement given the environment. That's also the COO.
Consolidation of the long term results of the core strategy of not building.
Detailed for solutions.
So far showing there so that we are able to.
To show this partner.
Thank you very much for the comments.
Sure.
Jordan.
The next question comes from Australia.
All of Santander. Please go ahead.
Good morning, and thank you for the presentation. My first question is regarding efficiency.
One.
Your initial remarks, you mentioned you expect expenses to remain in the four quarter. My question is mostly regarding 2022.
We assume.
The growth in credit cards.
And in addition.
Digital expenses.
Can we assume that your efficiency ratio will remain under pressure for a few for a few years from now on we tend to be at the wrong, 40% or you expect.
To do any better than this and my second question is regarding interactive alone.
The exploration of.
Repayment of those loans.
I'm curious to see if you guys have been able to offer those clients.
Breaking levels. He knew of those Frac do you have a launch and overall if you can comment on your strategy to entering reactive out as an opportunity for you guys too.
Expanding into the SME segment. Thank you.
Then maybe michela can complement of the efficiency, yes, youre right efficiency will be under pressure because we are well deserved.
<unk> has particularly been special not because we're seeing a rebound in expenses compared to last year. However.
Hey, Doug.
Going forward, our Chevy invest mentioned detailed we will continue to put some pressure.
Okay.
Base.
The thing is if we're able to rebuild our credit card portfolio.
Income revenue start coming back from that part of the portfolio.
We believe somehow.
And then I think the other important thing is that.
We see that the woodlands tell you still.
With very very high levels of.
Opposition to show all sum up together.
We'll continue to have ISS as a whole.
Below 40% the bank will be mid 40 is probably for some time I don't know if its going to be four years as you mentioned maybe.
The following quarter, it's more likely until the credit card portfolio on jump on the retail loans continued to come in.
Close to what we had in 2019.
We were able to us.
In interbank below 40.
Send efficiency levels.
Regarding reactive alone strategy.
Paid off actually we had a couple of ideas win going strongly interactive up the first of August was to grow our customers and hope to ILUVIEN in this situation.
And then the second objective was to increase our customer base to get new new customers with.
This.
Facilities that were designed very well by the central Bank and the met at that time.
Yes, we are offering.
Replacement of those loans to our customers.
Hi, its actually married that we have.
More of it will get towards that toys, especially medium sized enterprises.
Playing very well in.
Small sized enterprises, we kind of.
Double down in terms of of the strategy, we increased more than 1000 customers.
Even more silicon.
And that's in dollars.
A big number.
Of customers that we are taking it.
With.
Lots of caution we are building our models because.
A different type of of underwriting that we need to do there.
We're building our models, probably going to take a little bit more time in order to fully understand that segment today, we're working with those customers with the guarantee of Raptiva once our model.
Start, giving us good information about the risk profile of those customers will be able to become more of risks are behind the.
The growth in direct in smaller sized enterprises will start to be able to get more familiar with those types of customers something that interbank before did not have.
Based on that.
Grow our franchise on the it's more complex.
Maybe I missed something that you want to complement.
Yes, I mean, maybe maybe just to say that when we launched direct you a strategy, we will more aggressively thinking in the <unk> now.
And so far what has happened is that we increased the number of clients with loans I mean big numbers and if it means that also in the mid size company. So basically they were loans that have started to mature as of today or the corporate and midsize companies and also we have started to replay.
Those are active along with traditional loans at higher yields and indications midsized companies is between 30, and 40%, but what we're being able to keep out of the in Vancouver loans that go away.
That is working quite nicely I believe but indications the small businesses there have been a very few.
Deadlines of the loans now because remember they have also had this chance to extend further lead at 12 months the low so.
I show you in the in the sign of reactive to be young.
<unk> loans that we have with the small business. It is pretty stable because they're there have not being in many maturities yet.
So in that vein no I guess things are moving a little bit slower and more cautiously.
So maybe a bit less was mentioning and maybe just one last comment on the efficiency specific Steve.
They're back no we have seen a high increase when you look at percentages percentage points in the <unk>.
Expansion interbank also because we had a very low base last year.
Basically we don't expect.
First to increase in 2022 is not.
'twenty one.
All the comments of the Philip if our efficiency ratio.
Our challenge there.
Both the operating leverage interbank also be enabled.
We'll start to take place in 2012 through being able to grow.
Revenues much faster than an expense.
That's very clear thank you Walt for your responses.
Thank you.
Okay.
Yes.
Again, if you would like to ask a question. Please press <unk>.
Star one on your telephone for.
For the webcast viewers. Please remember that you may type your question in the box click So next question.
Our next question on the phone comes from Alonso.
Of BTG Pactual. Please go ahead.
Yes, hi, good morning, and thank you for the call.
Wanted to ask about the digital payment solutions can you give us some color on what are your monetization of expectations, where you are today in that respect what initiatives are you planning.
I guess, especially for turnkey how about that as well as plan. Thank you.
Yes.
Thanks for your for your questions.
The clinician is much simpler.
It's a bit to be among banks.
And there what.
We're doing it work with merchants that are able to to receive payments with clean. So what are the first modifications.
Solutions that we have.
Actually getting the float going through those.
Merchant.
And then the other one will be.
No given more accessibility to customers that want to move their transfers and a simple way of.
Getting deposits it's important for us.
As a strategy we have.
I think.
Retailer can complement these but.
Started since inception with monetization solutions, there and it's going very well.
We have top ups in turnkey.
Oh.
We are able to.
To build the same strategy.
Top ups.
Float.
We are also able to be is in services.
Okay multitude of all that.
You can see on that that's also already running.
And the platform and then the same ecosystem concept of <unk>.
Merchant acquiring and being able to meet.
Move payments through that now.
Ecosystem.
Basically that's it and then we will obviously be helps further plans that we will be presenting and once we get them into the.
<unk> platform now.
Got it and just stop offering a promising we would like to say to talk about the things that we are actually able to.
Okay, great. Thank you and as far as the number of users.
What are your expectations for next year.
Yes.
Do we have right now.
Not yet.
No.
Not not yet sorry Wilkes.
We will come back to you with that.
I'll also obviously, it's growing idea I've seen it going electric 7% there for months basically on both fronts.
Expect that trend to continue or accelerate based on the things we're doing but we don't have to.
Pacific numbers that we are showing now.
Okay. Thank you.
Youre welcome.
There appears to be no further questions at this time I would like to turn the floor back.
Mrs Michela Casassa for any closing remarks.
Okay. Thank you very much everybody for joining this.
This call and we will be meeting again to review our year end results next year, stating buyback.
Conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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