Q4 2021 Intercorp Financial Services Inc Earnings Call
Speaker 1: Good morning and welcome to InterCorp Financial Services' fourth quarter 2021 conference call. All lines have been placed on mute to prevent.
Good morning, and welcome to Intercorp financial services fourth quarter 2021 conference call.
All lines have been placed on mute to prevent any background noise.
Speaker 1: Please be advised that today's conference is being recorded. After the presentation, we will open.
Please be advised that today's conference is being recorded.
After the presentation, we will open the floor for questions.
Speaker 1: At that time, instructions will be given as to the procedure to follow if you would like to ask a question.
At that time instructions will be given as to the procedure to follow if you would like to ask a question.
Speaker 1: Also, you can submit online questions at any time today using the window on your webcast, and they will be answered after the presentation during the Q&A session.
Also you can submit online questions at any time today using the window on your webcast.
And they will be answered after the presentation during the Q&A session.
Speaker 1: Simply type your question in the box and click Submit Question. It is now my pleasure to turn the call over to Rafael Borja of Inspire Group. Sir, you may begin.
Simply type your question in the box and click submit question.
It is now my pleasure to turn the call over to Rafael Borja of inspire group, Sir you may begin.
Speaker 2: Thank you and good morning everyone. On today's call, Intercorp Financial Services will discuss its four quarter 2021 earnings. We are very pleased to have with us Mr. Luis Felipe Castellanos, Chief Executive Officer of Intercorp Financial Services.
Thank you and good morning, everyone on today's call Intercorp financial services will discuss its fourth quarter 2021 earnings. We are very pleased to have with US Mr. Luis Felipe Castellanos, Chief Executive Officer, and Telco financial services.
Speaker 2: Mrs. Miquela Casasa, Chief Financial Officer of Intercorp Financial Services, Mr. Juan Pablo Segura, Chief Financial Officer of Interseguro, and Mr. Bruno Ferrecho, Chief Executive Officer of Inteligo.
Let me say as Michela Casassa, Chief Financial Officer of Intercorp Financial services, Mr. Juan Pablo Segura, Chief Financial Officer said off in terms of Guido I'm used to Bruno for Rachel Chief Executive Officer of Intel Eagle.
Speaker 2: They will be discussing the results that were distributed by the company yesterday. There is also a webcast video presentation to accompany discussion during this call.
They will be discussing the results that were distributed by the company yesterday. There is also a webcast video presentation to accompany these cashman. During this call. If you didn't receive a copy of the presentation or the earnings report they are now.
Speaker 2: If you didn't receive a copy of the presentation or the earnings report, they are now available on the company's website, ifs.com.be, to download a copy. Otherwise, for any reason, if you need any assistance today, please call Inspire Group in New York at 212-710-9686.
<unk> available on the company's website or you faced outcome that would be to download a copy or otherwise for any reason if you need any assistance today. Please call each buyer group in New York at 212, saving one zero nice seeks a six 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.
Speaker 2: 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.
Speaker 2: Please be advised that forward-looking statements may be made during this conference call. These do not account for future economic circumstances, industry conditions, the company's future performance or financial results. As such, statements are based on several assumptions and factors that could change causing actual results to materially differ from the current expectations.
Please be advised that forward looking statements may be made during this conference call. These do not account for future economic circumstances industry conditions, the company's future performance or financial results are.
Such statements made are based on several assumptions and factors that could change, causing actual results to materially differ from the current expectations.
Speaker 2: For a complete note on forward-looking statements, please refer to the earnings presentation and report issued yesterday. It is now my pleasure to turn the call over to Mrs. Michaela Casasa, Chief Financial Officer of Intercorp Financial Services.
For a complete note on forward looking statements. Please refer to the earnings presentation and report issued yesterday. It is now my pleasure to turn the call over to Mrs. Michela, Casassa, Chief Financial Officer of Intercorp financial services.
Speaker 2: who will begin representation. Mrs. Casasa, please go ahead.
Who will begin our presentation, we just got sorry, Sir Please go ahead.
Speaker 3: Good morning and welcome everyone to Intercorps Financial Services fourth quarter and year-end 2021.
Good morning, and welcome everyone to Intercorp financial services fourth quarter and year end 2021.
Speaker 3: This time, we will focus on three items on the agenda, which include financial highlights, key messages, and takeaways.
This time, we will focus on three items on the agenda, which include financial highlights key messages and takeaway.
Speaker 3: I will start with a brief summary of financial highlights on slides 3 to 8. The main highlights are, for Interbank, profitability recovers on higher revenues and lower provisions, full-year ROE at 21 percent, and fourth quarter 21 at 27.8 percent ROE. Consumer loans grew 15 percent year-over-year, gaining 60 basis points in market share.
I will start with a belief a brief summary of financial highlights on slide 328.
Main highlights.
For interbank profitability recovers on higher revenues and lower provisions for year.
21% in first quarter 'twenty one.
A 27, 8% not really consumer loans grew 15% year over year, gaining 60 basis points market share.
Speaker 3: We've had a 10% growth in retail deposits, with a market share at 15%. Risk-adjusted NIM recovering, contribution of consumer loans still below pre-COVID levels. Healthy asset quality, 0.9% cost of risk, or 1.6% when excluding the reversal of provisions. Expense growth driven by the recovery of activity and digital investments.
We've had a 10% growth in retail deposits with a market share at 15% risk adjusted NIM recovery contribution of consumer loans still below pre COVID-19 levels healthy asset quality with 9% cost of risk or one 6% when excluding the reversal of provision expense growth.
Driven by the recovery of activity in digital investment customer base growing around 20% in 2021 putting definitely Rudolph strong full year results full year, our OE at 28% premiums grew more than 70% year over year with a strong performance across all of these.
Speaker 3: customer base growing around 20% in 2021.
Speaker 3: For Interseguro, strong full-year results, full-year ROE at 28%. Premiums grew more than 70% year over year with a strong performance across all business lines. Investment portfolio increased 2.4 in the quarter with a return on the investment portfolio at 4.7%.
<unk> investment portfolio increased $2 four in the quarter with a return on the investment portfolio at four 7%.
Speaker 3: Net insurance and the writing loss decreased more than 70% on the quarter and on the year.
Net insurance underwriting loss decreased more than 70% on the quarter and on the year end.
Speaker 3: And Interseguro continues to be the market leader in annuities with a 31% share in 2021.
There's a water continues to be the market leader in annuities with 31% share in 2021.
Speaker 3: For Inteligo, full-year profits grew 16.6% with a full-year ROE at 23%, with strong revenues in the year driven by fee income and positive mark-to-market during the year, a 20% increase in fee income during the year and 14% increase in asset under management plus deposits. The fourth quarter results were affected by negative mark-to-market on the investment portfolio.
For the day legal full year profit grew 16, 6% without full year ROE at 23% with strong revenues in the year driven by fee income and positive mark to market during the year.
A 20% increase in fee income during the year and 14% increase in asset under management slash deposits. The fourth quarter results were affected by negative mark to market on the investment portfolio.
Speaker 3: At IFS, record earnings of 1,800 million soles in 2021 and a return on adjusted equity of 19.3%. There has been a strong recovery in core indicators driving the top line growth.
I use this record earnings of 1000 800 million solace in 2021, and a return on adjusted equity of 19, 3%. There has been a strong recovery in core indicators driving the top line growth.
Speaker 3: This recovery in operating activity has resulted in an 8% year-over-year growth in revenues with efficiency at 35%. The fourth quarter results were impacted by the negative market-to-market investments.
This recovery in operating a CVT has resulted in an 8% year over year growth in revenues with efficiency at 35%.
The fourth quarter results were impacted by the negative mark to market on investment.
Speaker 3: We've seen a strong progress in our digital indicators thanks to the two-tiers digital strategy we have been implementing to foster growth.
We've seen a strong progress in our digital indicators sales stood at two Pierce digital strategy, we have been implementing to foster growth.
Speaker 3: We have solid capital ratios at all IFS segments and sustainability as a future competitive advantage.
We have solid capital ratios at all our U S segment.
And sustainability as a future competitive advantage.
Speaker 3: Among the key performance indicators on slide number five, I would like to highlight the recovery in the quarterly and yearly NIM of both Interbank and Intercorp Financial Services.
Among the key performance indicators on slide number five I would like to highlight the recovery in the quarterly and yearly NIM of both intermodal and Intercorp financial services. There has been a 20 basis point improvement in the quarterly NIM higher fish.
Speaker 3: There has been a 20 basis points improvement in the quarterly MIM of IFS, driving the MIM for the year to 4.1% within our guidance.
The NIM for the year to four 1% within our guidance on.
Speaker 3: On the other hand, at Interbank, the increasing MIM in the quarter is 40 basis points, driving the quarterly MIM to 4.4% and the full-year MIM up to 4%.
On the other hand at interbank, the increasing meaning the quarter is 40 basis points driving the quarterly NIM to four 4% in the full year NIM up two 4%.
Speaker 3: Moreover, the efficiency ratio of IFS
Moreover, the efficiency ratio of I S or how you face.
Speaker 3: despite slightly increasing in the quarter, has remained at healthy levels of 34.7% in the low range of our guide.
Despite slightly increasing in the quarter, how should remain at healthy levels of 34, 7% in the low range of our guidance.
Speaker 3: On slide 6, you can see the comparison of our year-end results with our original and revised guidelines.
On slide six you can see the comparison of our year end results with our original and revised guidance.
Speaker 3: As you can see, we continue to have some capital levels with a total capital ratio of 15.9% and a core equity tier 1 ratio of 12.5%.
And you can see we continue to have.
Sounds capital levels with a total capital ratio of 15, 9% in our core equity tier one ratio of 12, 5%.
Speaker 3: ROE ended up at 19.3 percent.
Roy I really ended up at 19, 3%.
Speaker 3: above our original guidelines and slightly above the revised guidelines of 18%.
Both our regional guidelines in the slightly and slightly above the revised guidance of 18%. Moreover reached the lowest register a strong pickup in the fourth quarter driving the year end growth to double digit levels of 13%.
Speaker 3: Moreover, retail loans register a strong pickup in the fourth quarter, driving the year-end growth to double-digit levels of 13% and surpassing the guidance, while commercial loans continue to have a negative trend, mainly due to the REACTIVA prepayments and amortizations, but grew almost 8% when excluding REACTIVA loans.
Surpassing the guidance, while commercial loans continue to have a need at these trend mainly due to the vaccine that prepayments and amortizations that grew almost 8% when excluding reactive alone.
Speaker 3: Revenues have started to recover reaching an 8% yearly growth with NIM closing the year at 4.5%.
Revenues have started to recall, they're reaching an 8% yearly growth with NIM closing the year at four 5%.
Speaker 3: Cost of risk continues to be below pre-COVID levels as anticipated and close the year at .9% or 1.6 when excluding the reversal of COVID provisions done in the fourth quarter.
Cost of risk continues to be below pre COVID-19 levels as anticipated and closed the year, 49% or one six when excluding the reversal of public provisions done in the fourth quarter.
Speaker 3: On slide seven, we are showing the relevant net income for dividend distribution, which has reached 1,657 million soles in 2021, close to the levels registered in 2019.
On slide seven we are showing the relevant net income for dividend distribution, which has reached 1650 7 million soles in 2021 close to the levels registered in 2019.
Speaker 3: On slide eight, we continue to have a solid capital position as evidenced by the ratios of Interbank previously commented, but also in Interseguro and Intelliwe.
On slide eight we continue to have a solid capital position as evidenced by the ratio of interbank previously commented, but also indirect rudow and intangible.
Speaker 3: Now I will focus on the key messages we would like you to take home from this call on slide 11.
Now I will focus on the key messages, we would like you to take home from this call on slide 11.
Speaker 3: First, we have experienced a strong recovery in our core indicators across our three businesses, which has driven top-line growth in 2021.
First we have experienced a strong recovery in our core indicators across our three businesses, which has driven top line growth in 2021.
Speaker 3: Second, we have a healthy risk profile, which closes 2021 still below pre-COVID levels, both reported and excluding the effect of the releasing provisions due to the better payment behavior of the retail portfolio.
Second we have a healthy risk profile, which closest 2021 still below pre COVID-19 levels, both reported and excluding the effect of the recent provisions due to the better payment behavior of the retail portfolio.
Speaker 3: Third, we continue to work on our two-tier strategy in order to foster growth at IFS. And fourth, we are foreseeing a continued recovery of IFS in 2022 in a context of political uncertainty, higher rates, and low GDP growth.
Third we continue to work on our two tier strategy in order to foster growth in Iff's.
And fourth we are foreseeing a continued recovery of Iff's in 2022 in a context of political uncertainty high rates and low GDP growth.
Yeah.
Speaker 3: On slide 12, monthly operating trends have closed the year with a very strong fourth quarter. At interbank, credit cards and debit cards turnover have increased substantially, or 20% for credit cards and two times for debit cards when compared to pre-COVID levels. This growth has allowed us to increase market shares.
On slide 12, most of the operating trends have closed the year with a very strong fourth quarter.
Neither bank credit cards debit cards turnover have increased substantially or 20% for credit cards in good times for debit cards, when compared to pre COVID-19 levels. This growth has allowed us to increase market share.
Speaker 3: 200 basis points in the past two years for the combined turnover, mainly thanks to our Interbank Benefits Program, our increased focus on e-commerce and high-growth product categories, and finally, also thanks to our upselling strategy. Moreover, credit card sales have increased two-fold in 2021, getting close to 2019 levels.
200 basis points in the past two years for the combined to nowhere.
Many thanks to our interbank benefits program, our increased focus on e-commerce and high growth product categories and finally also thanks to our Upselling strategy. Moreover, credit card sales have increased twofold in 2021 getting close to 2019 levels.
Speaker 3: New disbursements of retail loans have also increased substantially. Consumer loans disbursement have increased almost 50 percent when compared to 2019. Mortgages disbursements more than 30 percent. And payroll deductible loans to the public sector employees more than 20 percent.
New disbursements of retail loans have also increased substantially consumer loans with norseman have increased almost 50% when compared to 2019.
Mortgages disbursements more than 30% in payroll deductible loans to the public sector employees more than 20%.
Speaker 3: On slide 13, moving to growth in loans, we have very good news in this quarter as there has been an acceleration in growth of credit cards and other personal loans, which has reached 21.8 percent year-over-year and 13.6 percent in the quarter.
On slide 13, moving to growth in loans.
We have very good news in this quarter as there has been an acceleration in growth of credit cards in all their personal loan, which has reached 21, 8% year over year and 13, 6% in the quarter.
Speaker 3: This has allowed us to gain 60 basis points market share in total consumer loans during the year. As for commercial loans is concerned, the quarterly growth has been 4.6% when excluding reactiva, and the yearly growth almost 8%. As a result, total loans grew 5% in the quarter and 11% in the year when excluding reactiva loans.
This has allowed us to gain 50 basis points market share in total consumer loans during the year.
For commercial loans is concern the quarterly growth has been four 6% when excluding that fever, and the unit growth almost 8% as a result total loans grew 5% in the quarter and 11% in the U yeah, when excluding reactive alone.
Speaker 3: On slide 14, we have been able to continue to gain market share in retail deposits, reaching 15% this year, thanks to a 10% growth.
On slide 14, we have been able to continue to gain market share in retail deposits, reaching 15% this year.
Thanks to a 10% growth.
Speaker 3: in retail deposits. Cost of funds has started to increase as a result of the rising rates impacting 10 basis points this quarter up to 1.6 percent.
In retail deposit cost of funds has started to increase as a result of the rising rates impacting 10 basis points this quarter up to one 6%.
Speaker 3: On slide 15, Interseguro continues to grow in a substantial way, with premiums growing 24% in the quarter and more than 70% in the year, with strong performances in all business lines. Annuities grew two times in 2021, private annuities 87%, individual life 31%, and retail insurance 7%.
On slide 15 in the same Rudolph continues to grow in a substantial way with premium's growing 24% in the quarter in more than 70% in the year with strong performances in all business lines annuities due to time between 2020 , one private annuities, 87% individually.
31% and with the insurance 7%.
Speaker 3: On slide 16, Inteligo has had a very good year in terms of growth, also thanks to the political uncertainty experience. Asset under management plus deposits grew 14% year over year, and a very positive development has been the growth in the offshore client base of almost 30% this year.
On slide 16 in daily walk us kind of a very good year in terms of growth also thanks to the political uncertainty experience.
Under management plus deposits grew 14% year over year in a very positive development has been the growth in the offshore client base of almost 30% this year.
Speaker 3: The diversification of IFS businesses continue to play an important role in the yearly recovery of revenues. The banking business continues to recover in a more gradual way, mainly due to the pressure in net interest income and NIM coming from low-yield REACTIVA loans, excess cash, and portfolio mix, with a smaller contribution of credit.
The diversification of our fish businesses continue to play an important role in the yearly recovery of revenues. The banking business continues to recover in a more gradual way mainly due to the pressure on net interest income and NIM coming from low yield raptiva loans excess cash and portfolio mix with a smaller contribution of traded guys.
Yeah.
Speaker 3: On slide 18, the efficiency ratio of IFS was 34.7% in 2021 in the low range of the 31 to 37 guidance given at the beginning of the year.
On slide 18.
The efficiency ratio a higher Fad was 34, 7% in 2021.
In the low range of the 31% to 37 guidance, even at the beginning of the year.
Speaker 3: This quarter, we have continued to see a recovery of expenses driven by banking activity when compared to previous year. It is important to remember that during 2020, IFS was one of the few financial institutions in the region which was able to execute an aggressive cost reduction program, which ended up reducing the total cost base 5% for the full year and improving the efficiency ratio in such a challenging environment.
This quarter, we have continued to see a recovery of expenses driven by banking activity when compared to previous year.
It is important to remember that new in 2025th was one of the few financial institutions in the region, which was able to execute an aggressive cost reduction program, which ended up reducing the total cost base, 5% for the full year and improving the efficiency ratio in such a challenging environment.
Speaker 3: At Interbank, efficiency ratio is at 42.7% in the year, above the 38.6% registered last year, as expenses have increased 16.6% in line with our expectation and as reflected in our guidance. The increasing cost at Interbank is mainly due to three reasons.
At interbank.
Patiency ratio is at 42, 7% in the year above the 38, 6% registered last year as expenses have increased 16, 6% in line with our expectation and are reflected in our guidance the increasing costs at interbank is mainly due to three reasons.
Speaker 3: A 16% increase in technology costs and new ventures, which include the technology expenses for our digital transformation, as well as new investments in payments in our venture with Rappaport.
A 16% increase in technology costs, and new ventures, which include the technology expenses for our digital transformation as well as new investments in payments and in our venture with Raffi.
Speaker 3: A 4% increase in personnel costs, which is mainly coming from the increase in mandatory employee profit sharing in line with improvement of the local gap earnings.
A 4% increase in personnel costs, which is mainly coming from the increase in mandatory employee profit sharing in line with improvement of the local GAAP.
Earnings in.
Speaker 3: And finally, an 82% increase in variable costs related mainly to credit cards and in line with the percentage increase in credit and debit card turnover, which generates fees and financing volume.
And finally, and 82% increase in variable costs related mainly to credit cards and in line with the percentage increase in credit and debit cards to nava, which generate fees and financing volumes Mauro.
Speaker 3: Moreover, we have continued with our branch optimization initiative, reaching a total reduction of number of branches of 35% from the peak in 2016, or around 100 branches.
Moreover, we have continued with our branch optimization.
Initiatives, reaching a total reduction of number of branches of 35% from the peak in 2016 or around 100 branches.
Speaker 3: Moving on to the second key message on slides 20 to 23, we have a healthy risk profile, which is still below pre-COVID levels. On slide 20, cost of risk in the quarter includes a release of COVID-related provisions of 297 million soles, mainly linked to the retail consumer portfolio.
Moving onto the second key message on slide 'twenty to 'twenty three we have a healthy lease profile, which is still below pre COVID-19 levels on slide 20.
Of risking the quarter includes a release of Covid related provisions of 297 million solid mainly linked to the retail consumer portfolio excluding.
Speaker 3: Excluding such reversion of provisions, the cost of risk of the quarter would be 1.9%.
Excluding such reversion of provisions the cost of risk of the quarter would be one 9%.
Speaker 3: The cost of risk was 0.9% in the full year and 1.6% when excluding the releasing provisions in line with our revised guidance of around 1.6% updated in the third quarter and well below our original guidance of around 2%.
The cost of risk was 049 percent in the full year and one 6% when excluding the releasing provisions in line with our revised guidance of around one 6% update it in the third quarter and well below our original guidance of around 2%.
Speaker 3: One important thing is that the NPL coverage of 131% at the bank level is still well above the 118% that we used to have pre-COVID. And this is mainly related to the coverage ratio of retail loans, which closes the year at an abnormally high 190%, which is well above the 135% that we used to have in 2019.
One important thing is that the NPL coverage of 131% at the bank level is.
He is still well above the 118% that we used to have pre COVID-19 and this is mainly related to the coverage ratio of retail loan loans, which closer to the year.
Normally height of 190%, which is well above the 135% that we used to have in 2019.
On slide 21.
Speaker 3: We are showing the recovery of yields of the loan book of Interbank as well as in the risk-adjusted MIM. Yield on loans reached 8.3% in the quarter at 40 basis points versus the previous quarter. In the same way, MIM is improving 40 basis points in the quarter.
We are showing the recovery of yields of the loan book of inter bank as well as in the risk adjusted NIM yield of loans reached eight 3% in the quarter up 40 basis points versus the previous quarter in the same way Naeem is improving 40 basis points in the quarter yields and NIM are still below 2019 levels asset.
Speaker 3: Yields and MIM are still below 2019 levels as the portfolio mix of the bank is still recovering from the sharp decrease in credit card volumes experienced during 2020, as evidenced by the trend in the share of consumer loans, which decreased from 34% in 2019 to 26% in 2020, and has reached now 30%, still a way to go for the full recovery, especially in the high-yield portion of the consumer loan book.
Full year mix of the bank is still recovering from the sharp decrease in credit card volumes experienced during 2020 as evidenced by the trend in the share of consumer loans, which decreased from 34% in 2019% to 26% in 2020 and has reached now 30% still a way to go for the full recover.
Average specially in the high yield portion of the consumer loan book.
Speaker 3: We expect these trends to continue improving in the following months, thanks to a better portfolio mix, the increasing rates, and lower reactive alone.
We expect this strength to continue improving in the following months, thanks to a better portfolio mix the increase in rates and lower reactive alone.
Speaker 3: On slides 22 and 23, two positive news are, first, the reduction of 50% from the peak of June of the rescheduled portfolio, and second, the reduction of 26% of reactiva balance.
On slides 22, and 23 to positive news.
First the reduction of 50% from the peak of June of the rescheduled portfolio and second a reduction of 26% of rack fever balances.
Speaker 3: Now, let's move to the third key message of this presentation. In slides 21 to 31, sorry, 25 to 31, we will share with you a little bit more of our overall digital strategy, which is driving most of our efforts in supporting our strong core results and growth in our client base.
Now, let's move to the third key message of this presentation.
<unk> 21 to 31, sorry, 25 to 31 will share with you a little bit more of our overall digital strategy, which is driving most of our efforts in supporting our strong core results and growth in our client base.
Speaker 3: Slide 25 is a summary of our two-tier digital strategy. On one hand, we have the digitalization of our core activities with the main goal of allowing clients to be able to interact with IFS companies and fulfill their needs 100% digitally with a high NPS. And this is being evidenced by the 26 additional points in NPS of our 100% digital clients when compared to non-digital retail customers.
Slide 25 is a summary of our two tiered digital strategy.
One hand, we have the digitalization of our core activities with the main goal of allowing clients to be able to interact with companies and fulfill their needs, 100% digitally with a high M. P S and.
And this has been evidenced by the 26 additional points in NPS of one of our 100% digital clients when compared to non digital retail customers.
Speaker 3: On the second front, we have new growth initiatives, which aim at increasing the client base and to create new sources of revenues and profitability.
On the second front, we have new growth initiatives, which aim at increasing the client base and to create new sources of revenue and profitability.
Speaker 3: On the digitalization front, some examples of our digital solutions include.
On the digitalization front some examples of our digital solutions include.
Speaker 3: PiggyBank, a 100% digital solution for savings, which allows clients to have specific pockets of savings for specific purposes and helps clients to save with just one swipe.
He bank, 100% digital solution for savings, which allows clients to have specific buckets of savings for specific purposes and helps clients to safe, we guess one flight.
Speaker 3: MyFinances, another solution in the Interbank app, which helps retail clients to control their expenses and manage their budget, and which now incorporates also a credit scoring solution and gives them suggestions on how to improve their credit work.
My finances, another solution in the interbank up which helps retail clients to control expenses and manage their budget and which now incorporates also our credit scoring solution and gives them suggestions on how to improve their credit worthiness.
Speaker 3: Interbank Benefit, our 100% digital rewards program platform linked to credit cards. Plin, the P2P and QR code.
Interbank benefit our 100% digital rewards program platform linked to credit cards.
Playing the P to P and QR code payment solution.
Speaker 3: Dividelo, our buy now, pay later solution linked to digital purchases.
D V. They know our buy now pay later solution linked to digital purchases.
Speaker 3: Interbank.pe for businesses, which allow commercial clients to open business accounts 100% digitally and fulfill their cash management needs.
Instead of asking them to pay for businesses, which allow commercial clients to open business accounts, 100% digitally and fulfill their cash management needs.
Speaker 3: So at Digital, the first 100% digital insurance product. And finally, Ernie, our mutual funds investment platform.
So it'd be done the first 100% digital insurance product and finally, Ernie or mutual fund investment platform.
Speaker 3: On the second front of our digital strategy, we have a number of initiatives which we have been working on in the past years that are at different stages.
On the second front of our digital strategy, we have a number of initiatives, which we have been working on in the past years that are at different stages.
Speaker 3: on the consolidating growth phases, we are including. First, Interbank 100% digital accounts for retail and commercial clients, which today constitute the most important part of growth of our client base for both retail and commercial clients.
On the consolidated growth phases, we are including first interbank, 100% digital accounts for retail and commercial clients, which today constitute the most important part of growth of our client base for both retail and commercial clients.
Speaker 3: Second, Tunki, our digital wallet. And third, Plin, our P2P and QR code payment solution, which enables interoperability with multiple financial institutions, and is a bridge between the bank and the unbanked.
<unk>, our digital wallet and third clean R to P to P and QR code payments solution, which enables interoperability with multiple financial institutions and it's a bridge between the bank Indian banks.
Speaker 3: We are also working on two additional initiatives which are currently at early stages of development, which include Rappi Bank, our alliance with Rappi to create a new way of banking or neo-bank, and Shopstar, our marketplace aiming to become the preferred e-commerce option for IFS customers and a sandbox to test our initiatives such as Dividello and Interbank Benefit.
We are also working on additional initiatives, which are currently at early stages of developing which include rapid bank our alliance with rapid to create a new way of banking new bank and shops that are marketplace aiming to become the preferred e-commerce option for ISS customer in a sandbox to test.
Our initiatives such as D V. The law and interbank benefit.
Speaker 3: All of these initiatives are being developed with a strong approach in advanced analytics, which allows us to improve our risk management, to increase the level of personalization and contextuality of campaigns, and to increase sale leads and their hit rates.
All of these initiatives are being developed with a strong approach in advanced analytics, which allows us to improve our risk management to increase the level of personalization and contacts quality of campaigns into increased sales leads and their hit ratios.
Speaker 3: On slide 26, we continue to see strong progress in our digital indicators. As of December 2021, digital users reached 80% of customers who interact with the bank during the last 30 days, up 17 points in the past two years.
On slide 26, we continue to see strong progress in our digital indicators as of December 2021 digital users reached 80% of our of customers who interact with the bank. During the last 30 days up 17 points in the past two years.
Speaker 3: 100% digital customers who are clients that do not use branches or contact centers any longer and who use digital channels plus ATM and correspondent agents only for cash-in and cash-out have reached almost 60% up 27 points from December 2019.
3rd% digital customers, who are clients that do not use branches or contact center any longer and who use digital digital channels, plus APM and correspondent agents only for cashing in cash out has reached almost 60% up 27 points from December 2019.
Speaker 3: Digital sales have also performed well. At Interbank, retail digital sales reached 56% in December , and Interseguro saw digital sales reach 81%, both increasing sharply in the last two years.
Digital sales have also performed well at interbank retail digital sales reached 56% in December and industrial water saw digital sales reached 81% both increasing sharply in the last two years.
Speaker 3: It has been a real challenge to maintain and continue to grow some of these indicators, as the initial jump in these indicators was very high, given the strong and long lockdown experience in Peru. Moreover, the increase in the level of activity of 2021 has brought an additional channel to this trend.
It has been a real challenge to maintain and continue to grow some of these indicators as the initial jump in these indicators was very high given the strong and long lockdown experiencing them. Moreover, the increase in the level of activity of 'twenty 'twenty. One has brought an additional channel to these.
Great.
Speaker 3: We have continued to see an important number of new digital accounts being opened for both individuals and businesses. As of the end of December , 54% of new retail saving accounts were opened digitally, while 95% of new business accounts were opened digitally.
We have continued to see an important number of new digital accounts being opened for both individuals and businesses as of the end of December 54% of new retail saving accounts were opened digitally while 95% of new business accounts were opened digitally.
Now.
Speaker 3: Moving on to our new growth initiatives on page 27, Tunki is our digital wallet and ally to Bank the Unbanked. It was the first digital wallet in Peru to be able to deliver government financial aid in the context of COVID 100% digitally to Peruvians and today has reached 1.7 million users. We have increased 19 times the number of merchants using Tunki during 2021 and seven times the number of transactions compared to last year.
Moving on to our new growth initiatives on page 27 to <unk> is our digital wallet in ally to bank. The Unbanked. It was the first digital wallet in Peru to be able to deliver government financial aid in the context of call it 100% digitally to Peruvian and today has reached $1 7 million.
We have increased 19 times the number of merchants using tools during 2021 and seven times the number of transactions compare to last year.
On slide 28.
Speaker 3: Plin has reached 6 million users in two years.
Clean has reached 6 million users in two years out of which 42% used interbank as main bank. We believe clean is the most successful launch of a digital solution in bedroom given the high number of user achieved in only two years. It provides.
Speaker 3: out of which 42% use Interbank as main bank.
Speaker 3: We believe Plin is the most successful launch of a digital solution in Peru, given the high number of users achieved in only two years.
Speaker 3: P2P and QR code payments within Interbank App in Tunki and allows interoperability with BBVA, Scotiabank, Bambis, Caja Arequipa, Caja Suyana, Caja Municipal de Ita.
To beat and QR code payments, we've seen interbank up in <unk>.
And I know its interoperability with BBVA scotiabank belief guided keep Buckeye has again that <unk> 2021 has been a year with focus on increasing the number of micro merchants in activity with good results. The number of micro merchants tripled during 2021.
Speaker 3: 2021 has been a year with focus on increasing the number of micro-merchants and activity with good results. The number of micro-merchants tripled during 2021 and was four times higher for the number.
And was four times.
Yeah for the number of transactions.
Speaker 3: Moving on to our initiatives currently at early stages of slide 29, RapiBank, our alliance with Rapi to create a new way of banking, has reached more than...
Moving onto our own initiative currently at early stages on Slide 29, roughly bank our alliance with rapid to create a new win of banking has reached more than two.
Speaker 3: 200,000 accounts and more than 60,000 credit cards placed. Accounts were launched in February 21 and credit cards in May 21.
200000 accounts and more than 60000 square cash plays account will launch in February 'twenty, one in credit cards in May 'twenty one.
Speaker 3: Current MPAs is at 65 points, still shy of our objective, reflecting the strong customer-centric approach which is being used to launch the RapidBank solutions and names and improving it even further.
Current M. P. S is at 65 points since Schauf, our objective, reflecting the strong customer centric approach, which is being used to launch the rapid bank solution and names and improving it even further.
The second initiative.
Speaker 3: at early stage is Shopstar, our marketplace aiming to become the preferred e-commerce platform for IFF customers.
Early stage, if shops, there our marketplace aiming to become the preferred e-commerce platform for our U S customers. After the initial pilot in the second half of 2020 it was launched in.
Speaker 3: After its initial pilot in the second half of 2020, it was launched.
Speaker 3: in the first month of 2021, and has now almost 70,000 active customers, number that has grown eight times during 2021. Moreover, the gross merchandise value, or GMV, has grown 10 times during this year and has already become the number one e-commerce platform for IFS clients with more than 10% share of wallet of their e-commerce purchase.
In the first months of 2021 and has now almost 70000 active customer number that has grown eight times during 2021. Moreover, the gross merchandise value or GMB has grown 10 times. During this year and has already become the number one e-commerce platform for I used is playing with.
More than 10% share of wallet of their e-commerce purchases.
Speaker 3: All of the different initiatives described before have the purpose of accelerating even further the growth of our client base, to increase the level of engagement, satisfaction, and loyalty among those customers.
All of the different initiatives described before have the purpose of accelerating even further the growth of our client base to increase the level of engagement had the infection and loyalty among those customers.
On slide 31.
Speaker 3: You can see that our client retail base has grown 18% during 2021, reaching 4.6 million customers.
And you can see that our clients retail base cost base has grown 18% during 2021 reaching $4 6 million customers.
Speaker 3: 20% when talking about 100% digital customers, and 24% when speaking of commercial clients, most of which are being acquired digitally.
20% when talking about 100% digital customers in 24% when speaking of commercial clients.
Most of which are being acquired digitally.
Speaker 3: The last key message refers to the future and to the recovery that we expect to pursue for IFS during 2022.
The last key message.
It refers to the future and to the recovery that we expect to pursue for Iff's during 2022.
Speaker 3: On slide 33, we are showing a snapshot of the underlying trends for 2022.
On slide 33, we are showing a snapshot of the underlying trends for 2022.
Speaker 3: GDP is expected to grow around 3% according to the central bank, but other sources believe GDP growth to be more around 2%.
GDP is expected to grow around 3% according to the central bank, but other sources believe GDP growth to be more around 2%.
Speaker 3: Inflation should go back to the 3 percent levels after 2021, close to 7 percent, and exchange rate is expected to remain relatively stable amid political instability.
Inflation should go back to the 3% levels. After a 2021 close to 7% and exchange rate is expected to remain relatively stable amid political instability.
Speaker 3: Finally, in the past few months, the solace interest rate has already increased.
Finally in the past few months a solid interest rate has already increased.
Speaker 3: 275 basis points and is expected to increase further during 2022. In fact, the central bank increased their policy rate further yesterday, 50 basis points to 3.5%.
275 basis points and is expected to increase further during 2002, new tool in fact, the central bank increased their policy rate further yesterday 50 basis points to three 5%.
Speaker 3: With this scenario, let me move to the guidance for 2020.
With this scenario, let me move to the guidance for 2022.
Speaker 3: 2022 will be a year in which we will continue to rebuild our consumer loan book and profitability, and we'll continue to focus on our digital transformation.
2022 will be a year in which we will continue to rebuild our consumer loan book and profitability and we will continue to focus on our digital transformation.
Speaker 3: The six operating trends we expect for 2022 are, first, capital ratios to remain at sound levels, with total capital ratio above 15% and core equity tier one ratio above 11%.
The six operating trends, we expect for 2022, our first capital ratios to remain at sound levels with total capital ratio above, 15% and core equity tier one ratio above 11%.
Speaker 3: Second, a continued path to recovery in core profitability with IFS ROE above 16%.
Second our continued path to recovery in core profitability with Iff's Roe above 16%.
Speaker 3: Third, high single-digit growth in total loans led by double-digit growth in consumer loans together with the substitution of a portion of reactiva loans in commercial banks.
Third high single digit growth in total loans led by double digit growth in consumer loans together with the substitution of a portion of reactive at launch and commercial banking.
Speaker 3: revenues will continue to recover with mean between 4.2 and 4.6 percent after closing 2021 at 4.1 percent. The speed in which we will be able to translate increase in rates and the speed of reduction of the reactiva portfolio will have an impact on this number.
Core revenues will continue to recover with NIM between for two and four 6% after closing 2021 at four 1%.
The speed in which we will be able to translate the increase in rates and the speed of reduction of the vaccine portfolio will have an impact on these numbers.
Speaker 3: Price, cost of risk will be below 1.8% and still below pre-COVID levels in line with the composition of the portfolio mix.
Cost of risk will be below one, 8% and still below pre COVID-19 levels in line with the composition of the portfolio mix.
Speaker 3: We will continue with our focus on efficiency and expect efficiency ratio again to be between 35 and 37 percent.
We will continue with our focus on efficiency and expect efficiency ratio again to be between 35 and 37%.
Speaker 3: Finally, on slide 35, we wanted to share with you our results of the first year of participation in the Dow Jones Sustainability Index, which was 53 points, which is 15 points above industry's average.
Finally on slide 35, we wanted to share with you our results of the first year of participation in the Dow Jones sustainability index, which was 53 points.
Which is 15 points above industry average.
Speaker 3: The focus of our ESG initiatives in 2022 will be on three fronts.
The focus of our ESG initiatives in 2022 will be on three fronts.
Speaker 3: First, to promote inclusion and vulgarization. Second.
First to promote intrusion in luxury fashion.
Second.
Speaker 3: to focus on environment and sustainable finance, and third, to promote a culture of sustainability in IFS.
Two focus on environment and sustainable finance insert to promote a culture answer liability.
The ability in Iff's.
Speaker 3: Moreover, we wanted to share with you that we have been awarded the number one, number three, and number five position in Great Place to Work 2022 for Interbank, Inteligo, and Interseguro respectively.
Moreover, we wanted to share with you that we have been awarded the number one number three and number five position in great place to work 2020, due for interbank, Intel legal and industry Woodall, respectively.
Speaker 3: On slide 37, let me finalize with the four key messages of this presentation.
On Slide 37, let me finalize with the four key messages of this presentation.
Speaker 3: First, strong recovery in our core indicators is driving top-line growth. Second, we have a health.
Strong recovery in our core indicators is driving top line growth.
Second we have a healthy risk profile.
Speaker 3: Third, our two-tier digital strategy is fostering our growth, and fourth, we expect ISS recovery to continue in 2022.
Third our two tier digital strategy is fostering our growth and four we expect a recovery to continue in 2022.
Speaker 3: Thank you very much. Now we welcome any questions you might have.
Thank you very much now we welcome any questions you might have.
Yes.
Speaker 1: Thank you. At this time, we will open the floor for your questions.
Thank you.
This time, we'll open the floor for your questions.
Speaker 1: First, we will take the questions from the conference call and then the webcast questions.
First we will take the questions from the conference call and then the webcast questions.
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Speaker 1: For the webcast viewers, simply type your question in the box and click Submit Question. We will pause momentarily to compile a list of questionnaires.
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Okay.
Speaker 1: The first question today comes from Ernesto Gavilando from Bank of America. Please go ahead.
The first question today comes from Ernesto Gaba Lando from Bank of America. Please go ahead.
Speaker 4: Hi, good morning, Miss Felipe and Michaela. Thanks for the opportunity to take questions.
Hi, good morning Felipe.
Joe Thanks for the opportunity to take questions.
Speaker 4: My first question will be in your 2020 guidance. I just want to double check, what was the recurring income base in 2021?
My first question would be in your 2020 guidance.
Just wanted to double check.
On the base.
2021.
Speaker 4: If we exclude the non-recurring items, I'm getting to 1.5 billion solids and a recurring ROE of around 16%. So if that is the case, your 2020 guidance is assuming a recurring ROE above 16%.
We have created a nonrecurring items I'm getting to one $5 billion.
I'll requeue narrow you of around 16% so.
That is a gauge.
Turning to guidance.
Guidance.
Our recurring <unk>.
Above 60%.
Speaker 4: So, would that be 1.56 billion of solid or at least 1.6 billion of solid of net income this year? I just want to check if that is correct.
So that'd be 156 billion a solid.
At least one.
$4 6 billion of Sundance.
This year.
Just wanted to check if that is correct.
Speaker 4: And then what would be the dividend payout ratio that you are considering in your ROE guidance?
And then what would be the dividend payout ratio that you are considering.
Guidance.
Speaker 4: And also the same topic, where do you see the IFS long-term or sustainable, are we?
Thank you this topic, what do you see the defense.
Long term.
In their sustainable laterally.
Speaker 5: Hi, thank you, Ernesto, for your questions. I'm going to answer really quick and maybe Miguel I can compliment. I think your numbers, obviously, I cannot go into detail, but they look bullpup, right? Maybe what I would say is...
Alright, Thank you Ernesto for your questions.
And that's a really great complement.
Your numbers, obviously I cannot go into detail, but they look ballpark right, maybe what I would say.
Speaker 5: how do we get to those earnings will be a little bit different. As you know, this year we had very strong results from investments at the three subsidiaries, Interbank, Intenew and Interseguros. So probably what you'll see next year will be a different mix with the core operating indicators having a stronger performance. That's our expectation.
That type of work.
How do we get to those earnings will be and it will be different.
This year, we had.
Very strong.
Results from from investment.
The three subsidiaries.
Interbank.
<unk>.
Probably what Youll see next year will be a different mix with the core.
Operating indicators, having stronger performance, that's our expectation.
Speaker 5: On your second question on the dividend payout, we are still reviewing that. Obviously, last year, Interbank, which was the main contributor to...
On your second question on the dividend payout.
We are still.
With you with that.
Obviously last year entered language was the.
The main contributor due to cash flow for dividend.
Speaker 5: Castro for dividends. Given COVID did not upstream dividends to the holding company, this year will be completely different. So, we do expect to get back to normal. So, if you review what we've done in the recent past, except 2021, should be a good indicator. But that's still under discussion. We'll come back to your market as soon as we define that.
Given COVID-19 did not upstream dividends to the holding company. This year will be completely different so we do expect to get back to.
Normal so we view would be what we've done in recent past, except 2021 should be a good indicator, but that's still under discussion.
We'll come back to the market as soon as we define that.
Speaker 5: Okay, and on the third one, it's.
On the third one.
Speaker 5: I don't believe very much on sustainable ROEs, no, in a changing environment that we have today. Our target is to get back to north of 18% ROEs, which is what we've been delivering before COVID. So a target that we are aiming would be around that. And then let me ask Micaela.
I don't believe were veteran on sustainable Roe's.
Changing environment that we have today, our target is to get back to north of 18%.
What we've been delivering before.
So our target and we are.
Be around that.
And then let me ask.
She has some vehicles not do have already said everything I guess, maybe just to comment a couple of trends on whether it's Philippe was mentioning in terms of the different mix of different profitability of 2022, which which I think is important.
Speaker 3: No, you have already said everything I guess. Maybe just to comment a couple of trends on what Felipe was mentioning in terms of the different mix of the profitability of 2022, which I think is important. 2021 has been a year in which
In 2021 has been a year in weeks.
Speaker 3: The bank has taken a little bit longer in order to recover, especially in terms of revenue generation, and especially in terms of net interest income in NIM. And there has been a stronger contribution of Intelio, Interseguro, and other.
The bank has taken a little bit longer in order to recover, especially in terms of revenue generation and especially in terms of net interest income and NIM now and there has been a stronger contribution of a daily under the water and in other income.
Speaker 3: Thanks to the strong growth we have experienced in the second half of the year, and especially in the last quarter at Interbank in the retail portfolio, this is starting to change, no, and with the increase in rates even further. So what we are expecting for next year is a much different revenue mix, no, with a stronger contribution of net interest income coming from Interbank, no, and a lower incidence on investment income from the other parties.
Thanks to the strong growth we have experienced in the second half of the year and especially in the in the last quarter at interbank and the retail portfolio. This is starting to change now with the increase in rates. Even further so what we're expecting for next year is is a much different revenue mix with a stronger cons.
Dilution of net interest income coming from from Interbank nine lower incidents on a investment income from from the other two subsidiaries.
Speaker 4: Thank you very much, Mr. Lipe. Yes, thank you very much, Mr. Lipe and Michaela. I just have two last couple of questions.
Thanks Jordan.
Thank you very much from Citibank.
Yes.
I'm just traveling to last couple of questions.
Speaker 4: One is in terms of your expectations on fees and outtakes, I think those are two key variables that will be embedded in your guidance.
One is in terms of your expectations on fees and Opex I think.
Those are two key variables that can be embedded in your guidance a few gold was 14% in 'twenty. One. So I was wondering you continue to see that.
Speaker 4: 14% in 21, so just wondering if you continue to see that pace of growth in this year. And in terms of expenses, the same. No, they grew 18% last year. So should we continue to see OPEX growing at that level, or do you think it could be more at the low double-digit growth?
Based on growing this year.
Terms of the expenses that they know they grew 18% last year.
Should we continue.
See opex growing a collateral.
Be more at the low double digit growth.
Speaker 4: So that's my second question. And then the last question is on the digital transformation.
So that's my my second question and then the last question is on the digital transformation.
Speaker 4: We have seen some banks in the region separating the traditional banks and creating digital banks as they are seeing different metrics in terms of clients and future profitability.
We have seen some banks in the region.
The traditional bank and creating digital banks.
They are different metrics in terms of clients and our future profitability. So.
Speaker 4: And we have been seeing that they continue to invest in the digital transformation for the traditional client base. But at the same time, they want to create these new digital banks to attend the on-bank segment and again, following different client base, different key performance metrics.
And we have been saying that they could you do the digital transformation for their traditional client base, but at the same time they wanted to credit views the banks to what then.
Bank segment.
The handful of a different game day.
Our key performance metrics. So just wanted to understand your case.
Speaker 4: So you just wanted to understand in your case, are you evaluating to have a similar structure like having the traditional bank and a digital bank or you will continue to keep the same inside the traditional bank?
Are you evaluating to kind of a similar structure.
Having the traditional bank digital bank or you will continue to keep the same.
Inside the traditional banks.
Speaker 5: OK, thanks, Ernesto. On the first one, I'm going to completely defer to Michela. She's the expert on growth and opex. But let me go address first the second part of your question.
Okay, Thanks and Mr. On the first one on Grand completely deferred to two major launches the expert on board.
On Opex that Disney will address first.
Second part of your question.
Speaker 5: We have, as you've seen, a dual strategy. Our strategy is basically a digital strategy. We're trying to digitalize everything what we do in order for every customer or client of Interbank to be able to do whatever they need to do.
We have as you've seen our duo study our studies, Michigan DCM study, we're trying to do everything what we do.
In order for every customer or client of interbank to be able to do whatever they need to be done.
Speaker 5: And then the second part of our study is to create these new sources of growth, new businesses, where we have some initiatives that, in other markets, you could perfectly conceive them as spinning them off. However, in Peru, we're bounded by regulation. We do not have two banking licenses. So even though that's the regulatory part, we...
And then.
Second part of our strategy is to to create these new sources of growth new businesses, where we have some initiatives in.
In other markets you could perfectly can give them.
Spinning them off however in Peru, we are bounded by regulation, we do not have two banking licenses. So even though that's the regulatory but we are organizing ourselves to manage these on separate ways, we have internal P&L of each of those.
Speaker 5: do our organizing ourselves to manage these on separate ways. We have internal P&Ls of each of those solutions. We are working in order to understand the KPIs of the different types of customers that we have.
Solutions, we are.
We're keen in order to understand the kpis for the different types of customers that we have.
Speaker 5: So the strategy, the way we are executing is very different, but unless regulation changes in Peru that allows us to have another license, that won't be able to happen in Peru, at least in the short term. So that's kind of where we are.
So the strategy the way, we're executing is very different but in this regulation transition through that allows us to have another license that won't be able to happen in Brazil.
At least in the short term.
That's kind of where we are on that however, again internally, we have flagship bring it down to be announced.
Speaker 5: However, again, internally, we have like separate accounts, separate PNLs, and we're tracking very closely each of those initiatives and measuring the impact separately. And now let me pass it on to Miquel Azucita.
And we're tracking very closely each of those.
Initiatives.
In Michigan the impact Shepherd.
Now, let me pass it on to get Us where she can respond with their number one.
Speaker 3: Okay, Ernesto, on fees, this year, no, the strong growth that we have seen has.
Okay.
And if so on fees.
In this year not the strong growth that we have seen.
Speaker 3: has a number of components. I mean, first of all, we have the recovery of the fees at Interbank, because the turnover of both Credit Cards and Debit Cards, as you have seen, has grown substantially, and it kind of declined in 2020. And then we've also had very strong fees coming from Intelligo. So what we are expecting from the future is not a double-digit fee growth. It's more of a single-digit growth.
Number of components I mean first of all we have the recovery of the fees at interbank not because the turnover of both credit and debit cards. If you have seen has grown substantially and it kind of declining in 2020 and then we've also had very strong fees coming from.
No. So what we are expecting from the future if not a double digit fee growth is more in the single digit growth.
Speaker 3: And moving on to expenses, there is also a similar explanation, no? Expenses this year, as I explained, have a strong component of variable cost.
And moving onto expenses. There was also a similar explanation expenses. This year as I explained have a strong component of variable costs that come from a low level of activity, especially our credit culture and interbank note that started to recover that will be the case for the future.
Speaker 3: that comes from a low level of activity, especially at credit cards and interbank, no, that started to recover. That will be the case for the future, but we were starting from a very low base this year.
But we were starting from a very low base. This year. So in terms of growth of expenses, we are not expecting for the next year.
Speaker 3: So in terms of growth of expenses, we are not expecting for the next year the strong double-digit growth that you saw this year, but we are more in the single-digit growth of expenses for IFS.
Strong double digit growth that you saw this year, but we are more in the single digit growth of expenses for <unk>.
Speaker 4: You've been super careful. Thank you very much. And yeah, sorry.
Super helpful. Thank you very much.
Speaker 6: I was just wanting to, a final comment, I think it would be very interesting and helpful to have some indicators of your separated P&Ls in the future, just giving you that comment. Thank you.
Mike.
So I wonder just wanted to a final government I think it will be very interesting and helpful.
Some indicators of yours should be announced in the future.
I'm, just giving you that comment thank you.
Great. Thank you.
Speaker 1: As a reminder, if you have a question, please press star, then 1 to be joined to the question queue.
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Speaker 1: The next question comes from Samuel Mora with Credit Corp. Capital. Please go ahead.
The next question comes from Daniel Mora with Credit Corp Capital. Please go ahead.
Hi, Good morning, Luiz Felipe Mek that thank you so much for the presentation.
Speaker 7: Hi, good morning, Luis Felipe and Michaela. Thank you so much for the presentation. I have a couple of questions. The first one is with the positive evolution of the loan portfolio and also the increasing rates, when do you see the need returning to pre-pandemic levels? And if you can, please provide the sensitivity analysis of the increases of the central bank rate.
A couple of questions. The first one is with the positive evolution of the loan portfolio and also the increase in rates when do you see the need returning to pre pandemic levels and if you can please provide the sensitivity analysis of the increases of the central bank rates over a 100.
Speaker 7: For 100 basic points increase in the central bank rate, what can we expect of the NIM at Interbank?
Two points increase in the Central bank rate what can we expect.
The name of inter bank that will be the first one.
Speaker 7: That will be the first one. The second one is if.
One is <unk>.
Speaker 7: Considering the reversal of provisions in the fourth quarter, can we expect also additional reversal in the coming months, at least in the short term, or it was just a one-off in the fourth quarter?
Considering the rebuilt on a provisional.
In the fourth quarter.
Oh.
Also additional reversal.
Come in months at least in the short term or it was just a one off in the fourth quarter.
Speaker 7: And the third one is regarding the strategy of RapiBank in Peru, given the strategy of RapiBank or RapiPay in other regions. We already start seeing the disbursement of credit cards, but how do you see this initiative in the coming months and also how this strategy complements with the strategy of Tunki, the other application?
And the third one is regarding this throughout the day of the bank in and in Peru.
The chart that you have left the bank.
Our reputation.
<unk>, we already start seeing them the disbursement of credit cards, but how these how do you see these initiatives in the coming months and also how visa strategy complement with the with this throughout the year.
Applications that you have.
Speaker 5: Great, let's see, on question number one.
Great.
Pete.
Question number one.
Speaker 5: What I can tell you is that the recovery of the NIM, of NIM getting back to previous levels, will be dependent on how we get back to our structural composition of consumer loans in the overall book. On the sensitivity, I'm going to defer it to Miquela, and a reversal of provisions also to Miquela, and then I'll come back with Rafa.
What I can tell you is that the.
Recovery of the Nemo, and even getting back to previous levels will be dependent on how we get back to our structural composition of consumer loans in the overall book.
On the S&P activity I'm going to defer it to begin.
A reversal of provisions also to make a London I'll come back with Ravi.
Speaker 3: Go ahead. OK. Good morning, Daniel.
Okay.
Good morning, Daniel.
Speaker 3: I mean, talking about me, okay.
I mean talking about NIM, Okay M.
Speaker 8: This year, 2022, by year-end, we are not still considering that the critical portfolio will be at the levels of 2019, okay? So in terms, in relating to that, NIM will still take a little bit longer to recover to pre-pandemic levels.
This year 2022, we by year end, we are not still considering that the credit card portfolio will be at the levels of 2019, okay. So in terms of in relating to that NIM will still take a little bit longer to recover to pre pandemic levels.
Speaker 8: And then, to be sincere, I mean, the sensitivity that we have today to a 100 basis points increase in rates, it's a neutral impact. Okay. But I have to say that we are reviewing the sensitivity by month by month, because what's going on now is that as we have had so many increasing rates so quickly.
And then two meetings here I mean, the sensitivity that we have today to 100 basis points increase in rates, it's a neutral impact okay, but I have to say that we are reviewing the sensitivity by month by month, because what's going on now is that we have had so many.
The increase in rates so quickly.
Speaker 8: This sensitivity will depend, at the end of the day, first on the speed on which we will be able to translate to clients these increasing rates. And on the other hand, we will be able to delay the impact on the financial expenses. And then.
This sensitivity will depend at the end of the day first on the speed of which we will be able to translate to clients. These increasing rates and on the other hand, we will be able to.
<unk>.
<unk> not added they impact on the financial expenses and then.
Speaker 8: given the high number of increasing rates, to what extent we will be able to translate most.
Given the high number of increasing rates to what extent, we will be able to translate most elite. Okay. So that's the theoretical exercise that we have now is this neutral impact on our numbers.
Speaker 8: OK, so the theoretical exercise that we have now is this neutral impact on our numbers.
Speaker 3: Moving on to the additional reversion of provisions, I want to bring your attention back to the fact that, I mean, the levels of...
Moving onto the in additional reversion of provisions.
I I want to bring your attention back to the fact that a I mean the levels of coverage ratio that we have as of year end in the retail portfolio, especially.
Speaker 8: coverage ratio that we have as of year-end in the retail portfolio especially are still very high, okay? We've had this reversal of provisions, you know, and you've seen the
I mean very high Okay. We've had this reversal of provisions and you've seen that the.
Speaker 3: total coverage ratio of the bank going down from 182% in 2020 to 131%. But the number of 2019 was 118%. That's for the total bank. But when you look at the retail portfolio, the numbers are much higher. So the coverage ratio as of year-end is 190%.
Total coverage ratio of the bank going down from 182% in 2020% to 131%, but the number of 2019 with 118% that's what the total bank, but when you look at the retail portfolio. The numbers are much more much higher and also the coverage ratio as of year.
<unk> is 190%.
Speaker 8: which is very close to what we had in 2020 when we did the expert criteria because of COVID, no? And it's well above the 135%. So today, no, we have like this extra coverage ratio. And of course, we need to see how the portfolio evolves.
Which is very close to what we had in 2020, when we did the expert criteria because of Covid and is well above the 175%. So today no. We have like this extra coverage ratio and of course, we need to see how the portfolio evolved.
And the comps.
Speaker 3: Now, let me pass it back to Luis Felix for wrapping up.
Determine provisions.
Now, let me pass it back to defend our IP.
Speaker 5: Thank you, Michaela. Okay, on RAPI, yes, you're right, Daniel. The initial product that we have placed are basically accounts. And the core focus, because we want to be able to monetize this as soon as possible, has been credit cards. We're very happy with the traction we've had in this first month. So that's good. It's a different...
Thank you Michelle.
<unk>, yes.
Youre right.
The Neal.
No.
Can you show.
Product that we have placed our basically accounts.
Our core focus because we want to.
Be able to monetize this as soon as possible has been credit cards.
Very happy with the traction we have the vision for <unk>.
First months, so thats good.
It's a different.
Speaker 5: product than Tumquia or Digital Wallet as mentioned by Miquela during the presentation. The wallet is more targeted to
Rather than to deal with diesel wallet as mentioned by the end of the presentation. The one it's more targeted to.
Speaker 5: to the unbanked or the people that do not want to do banking and that's getting good traction there and then we have a strategy once they are there, which type of customers we bring into the bank or we keep them at the wallet with PLYM being the bridge between the bank and the unbanked. So that strategy is very clear. We have the bridge.
Two the unbanked or the people that do not want to do banking.
That's getting good traction there and then we have a strategy once they are there which type of customers, we bring into the bank and we keep them at the wallet with being the bridge between the bank and up and up.
So that strategy is very clear we have the reach to provide financial services and thats.
Speaker 5: to provide financial services and that's working well.
Working well rabobank.
Speaker 5: RapidBank has a different target. It's mainly for people that want to do banking in a different way. Obviously, 100% GITA, that's why we conceived it as a new bank. And what we're finding is that the.
Different target.
Mainly for people that want to do banking in a different way.
Obviously, 100%.
We contribute is after new bank.
And what we're finding is that the.
Okay preferred customer that taking that pose a very young customers they'll be between I would say 2535.
Speaker 5: customers that are taking that product are very young customers, between, I would say, 25 and 35.
Speaker 5: So that's the majority of the customers. So the strategy is targeting to focus on that segment of customers, which is finding this very attractive. And we are using the rapid channel for people who do everyday things. In that channel, obviously, it's very appealing to them to get financial services solution that will allow us to make true whatever they're trying to do with.
So so that the majority of our customers. So the strategy is.
To focus on those.
That segment of customers, which is funding this.
Very attractive and we are using the rapid channel or like people, who everyday thing in that channel.
Obviously is very appealing to them to get financial services.
Solution that will allow us to make through whatever they're trying to do with it.
Speaker 5: well-being in the Rappi app, but also what we're finding at that customers, given how nice the credit card and the value proposition is, are also using it very strongly outside of the Rappi.
Jim.
While being in the RV up but also what we're finding is that customers given how nice the credit card in the.
Value proposition is are also using it very strongly outside of Russia.
Rob.
Speaker 5: platform. So basically those are the differences and the strategy, again, it's early, it's promising, we will continue to learn, but so far we're very pleased with the way it's evolved.
So so basically those are the differentiation.
Strategy again.
Early it's promising we will continue to learn.
But so far we're very pleased with the way each of them.
Perfect. Thank you so much very clear.
Thank you.
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Speaker 1: There appears to be no further questions at this time. I would like to turn the floor back over to Mr. Castellanos for any closing remarks.
There appears to be no further questions at this time I would like to turn the floor back over to Mr. Castellano for any closing remarks.
Okay.
Speaker 5: Okay, so I first wanted to thank everyone for attending our call. 2021, as you've seen, has been a record year for IFF with strong performance by Inteligo and Interseguro. Interbank continues its recovery path after the effects of COVID during 2020.
Okay. So I first wanted to thank everyone for attending our call 2021, and <unk> has been a record year for <unk> with strong performance by Intel Eagle Intel to Interbank continues its recovery path after the effects of cohort of Covid.
In 2020.
Speaker 5: As you've seen, Peru is going through times of political instability. The economy, while growing below its potential, remains with good indicators based on macro business.
As you've seen for who is going through times of political instability. The economy, we're growing below its potential remains with good indicators based on macro.
Speaker 5: IFS platform has proven to be very resilient under these circumstances, and I believe it is well positioned to continue growth.
I would just platform has proven to be very resilient under these circumstances and I believe it is well positioned to continue growth.
Speaker 5: to continue meeting goals in the financial sector in the coming years. We remain committed to building a great company, as evidenced by our financial results, our ESG indicators, and our great face-to-work position.
To continue leading growth in the financial sector in the coming years, we remain committed to building a great company as evidenced by our financial results, our ESG indicators and our great place to work this issue.
Speaker 5: Our vision is to become a leading digital financial services platform for the benefit of our consumers and to impact positively the life of Peru.
Our vision is to become a leading digital financial services platform for the benefit of our consumers and to impact positively the LIFO boots.
Speaker 5: Our strategy continues to drive our efforts.
Our strategy continues to drive our efforts.
Speaker 5: Again, I hope you remain safe and healthy and look forward to seeing you in our next conference.
Again, I hope you remain safe and healthy and look forward to seeing you in our next conference call.
Thank you.
Speaker 1: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Okay.