Q1 2024 Intercorp Financial Services Inc Earnings Call

May 14, 2024

Speaker Change: [music].

Operator: Good morning, and welcome to the Intercorp Financial Services first quarter 2024 conference call. All lines have been placed on mute to prevent any background noise.

Operator: Please be advised that today's conference is being recorded. After the presentation, we will open the floor for questions. At that time, instructions will be given as to the procedure to follow if you would like to ask a question. Also, you can submit online questions at any time today using the window on the webcast. And they will be answered after the presentation during the Q&A session. Simply type your question in the box and click Submit Question. It is now my pleasure to turn the call over to Ana Diaz-Cecil, of Inspire Group. Ma'am, you may begin.

Good morning.

And welcome to the Intercorp financial services first quarter of 'twenty 'twenty four conference call.

Speaker Change: All lines have been placed on mute to prevent any background noise.

Speaker Change: Please be advised that today's conference is being recorded.

Speaker Change: After the presentation, we will open the floor for questions.

Speaker Change: At that time instructions will be given as to the procedure to follow if you would like to ask a question.

Speaker Change: Also you can submit online questions at any time today using the window on the webcast.

Speaker Change: And they will be answered after the presentation during the Q&A session.

Speaker Change: Simply type your question in the box and click submit question.

Speaker Change: It is now my pleasure to turn the call over to Ana D. S six of.

Speaker Change: Inspire great.

Speaker Change: Ma'am you may begin.

Ana Diaz-Cecil: Thank you, and good morning everyone. On today's call, Intercorp Financial Services will discuss its first quarter 2024 earnings. We are very pleased to have with us Mr. Luis Felipe Castellanos, Chief Executive Officer, Intercorp Financial Services; and Ms. Michela Casasa, Chief Financial Officer, Intercorp Financial Services. Mr. Gonzalo Basadre, Chief Executive Officer, Interseguro. Mr. Bruno Ferrecchio, Chief Executive Officer, Interrego. Mr. Carlos Dori, Chief Executive Officer, Interbank

Ana Diaz-Cecil: Thank you and good morning everyone. On today's call, Intercorp Financial Services will discuss its first quarter 2024 earnings. We are very pleased to have with us Mr. Luis Felipe Castellanos, Chief Executive Officer, Intercorp Financial Services; and Ms. Michela Casasa, Chief Financial Officer, Intercorp Financial Services. Mr. Gonzalo Basadre, Chief Executive Officer, Interseguro. Mr. Bruno Ferecchio, Chief Executive Officer, Interrigo. Mr. Carlos Dori, Chief Executive Officer, Interbank

Speaker Change: Thank you and good morning, everyone on today's call and just work financial services will discuss its first quarter 2020 for earnings. We are very pleased to have with US Mr. Luis Felipe just being honest Chief Executive Officer, Intercorp Financial services, Mrs. Michelle <unk>, Chief Financial Officer, and Jill for financial services Mr.

Speaker Change: Oh, the Ela beside the Chief Executive Officer, <unk>, Mr. Bruno <unk>, Chief Executive Officer, and Toledo, Mr. Carlos Doherty, Chief Executive Officer Interbank.

Michelle <unk>: They will be discussing the results that were distributed by the company yesterday. There's also a webcast presentation to accompany discussion. During this call you said didn't receive a copy of the presentation or the earnings report. There are now available on the company's website I used us dotcom DRP otherwise if you need any assistance today. Please call the fire group in New York at six.

Michelle <unk>: 46940843.

Operator: 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.

Operator: Please be advised the forward looking statements may be made during this conference call does not account for future economic circumstances industry conditions, the company's future performance or financial results.

Operator: Such statements made are based on several assumptions and factors that could change, causing actual results to materially differ from the current expectations for.

Speaker Change: 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 Mr. Luis Felipe Castellanos, Chief Executive Officer of Intercorp financial services for his opening remarks. Mr. Stfan. Please go ahead Sir.

Ana Diaz-Cecil: They will be discussing the results that were distributed by the company yesterday. There will also be a webcast video presentation to accompany the discussion during this call. 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. Otherwise, if you need any assistance today, please call Inspire Group in New York at 646-940-8843. 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.

Ana Diaz-Cecil: Please be advised that foreseeing 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, the statements made are based on several assumptions and factors that could change, causing actual results to materially differ from the current expectation.

Speaker Change: Thank you good morning, everyone and welcome to our first quarter of 2024 earnings call I want to thank you for attending our call today.

Ana Diaz-Cecil: 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 Mr. Luis Felipe Castellanos, Chief Executive Officer of Intercorp Financial Services, for his opening remarks. Mr. Castellanos, please go ahead, sir.

Luis Felipe Castellanos Lopez: Thank you. Good morning, everyone, and welcome to our first quarter 2024 earnings call. I want to thank you for attending our call today. This is my first call in my revamped role as CEO of IFS, which started May 1st. As announced, this new role will allow me to be more focused on growing our platform and creating synergies within our operating company. Carlos Tori, formerly VP of Payments, has taken over Interbank's CEO role.

Speaker Change: This is my first call with my revamped role as CEO of ISS and started made first.

Speaker Change: Now this new role will allow me to be more focused on growing our platform and creating synergies within our operating complex.

Cardinal study: Cardinal study, formerly VP of payments has taken over <unk>.

Cardinal study: Joel.

Luis Felipe Castellanos Lopez: He has deep expertise in retail, commercial banking, and payments. We believe that this new leadership platform will allow IFS to continue on its growing path with more focus to face the upcoming challenges and opportunities. I will start by assessing the macro situation in Peru. We began 2024 with a slightly better feeling than 2013. Economic growth was positive in the first two months of the year, as El Nino was not as strong as expected.

Cardinal study: Yes deep expertise in retail commercial banking on page, we believe that this new leadership platform will allow <unk> to continue on its growth path with more focus to face all of the <unk>.

Joel: Coming challenges and opportunities.

Joel: I will start by assessing the macro situation.

Luis Felipe Castellanos Lopez: Thank you. Good morning everyone, and welcome to our first quarter 2024 earnings call. I want to thank you for attending our call today. This is my first call in my revamped role as CEO of IFS, which started May 1st. As announced, this new role will allow me to be more focused on growing our platform and creating synergies within our operating company. Carlos Tori, formerly VP of Payments, has taken over Interbank's CEO role.

Joel: We began 2034, which is slightly better feeling that it sounds like the new sweep economic growth was positive in the first two months of the year. After Nino was not as strong as expected.

Luis Felipe Castellanos Lopez: He has deep expertise in retail, commercial banking, and payments. We believe that this new leadership platform will allow IFS to continue on its growing path with more focus to face the upcoming challenges and opportunities. I will start by assessing the macro situation in Peru. We began 2024 with a slightly better feeling than in 2020. Economic growth was positive in the first two months of the year, as El Nino was not as strong as expected.

Luis Felipe Castellanos Lopez: Although that recovery is delayed in consumer-linked sectors, inflation has decreased consistently, entering back to the central bank's target range in April. In that line, the Central Bank has reduced the Solace reference rate by 200 basis points from its peak to the current level of 5.75%.

Luis Felipe Castellanos Lopez: Although the recovery is delayed in consumer-linked sectors, inflation has decreased consistently, entering back into the central bank's target range in April. In that line, the Central Bank has reduced the Solace reference rate by 200 basis points from its peak to the current level of 5.75%.

Speaker Change: Although the recovery is delayed in consumer lead sectors.

Speaker Change: In terms of inflation.

Joel: It has decreased consistently enter it back to the central bank's target range in April.

Joel: And that line the Central Bank has reduced the soldiers reference rate by 200 basis points from its peak level of 575%.

Luis Felipe Castellanos Lopez: The combination of falling interest rates, elevated metal prices, and better market sentiment leads us to expect GDP growth to be around 3% this year, which is a recovery versus last year, but still with several challenges ahead. Moving on to our business, our key strategic priority continues to be to achieve digital excellence for our customers by providing them with a world-class, flexible, and secure data platform. We're breaking down geographic barriers through 100% digital products and services that empower Peru.

Central Bank: The combination of falling interest rates.

Speaker Change: Debated metal prices and better market sentiment leads us to expect GDP growth to be around 3% for this year, which is a recovery versus last year, but feel which several challenges.

Speaker Change: Moving onto our business our key strategic priority continues to be to achieve digital excellence for our customers by providing them with a world class <unk>.

She: She boat and secure digital platform.

Speaker Change: We're breaking down geographic barriers to a 100% digital photos on services that empower peruvians, we want to become the leading data platform, providing profitable solutia with clear strategic focus on certain and key businesses.

Luis Felipe Castellanos Lopez: We want to become the leading digital platform providing profitable solutions with a clear strategic focus on certain and key businesses. We continue to develop our analytical capabilities, leveraging the best talent. This is our strategy, and we will continue to focus on it with a long-term vision. IFS continues to show resilience in its core operations. We continue to grow our customer base on all checklists as we consolidate the results of our digitalization efforts, and Andrew Bandt, market shares across key business lines remain strong, despite moderation in retail loans, as we are still being very cautious with the cost of risk, mainly in the consumer finance sector. Even though the cost of reach remains high, there is a marginal improvement. Banks remain well provisioned and very well capitalized.

Speaker Change: We continue to develop our analytical capabilities.

She: <unk> all the best.

She: This is our strategy and we will continue to focus on it with a long term vision.

Luis Felipe Castellanos Lopez: IFS continues to show resilience in its core operations. We continue to grow our customer base on all checklists as we consolidate the results of our digitalization efforts, and Andrew Bandt, market shares across key business lines remain strong, despite moderation in retail loans, as we are still being very cautious with the cost of risk, mainly in the consumer finance sector. Even though the cost of risk remains high, there is a marginal improvement. Banks are well-provisioned and very well capitalized.

Speaker Change: <unk> continues to show a genius in its core operations, we continue to grow our customer base are all check niche as we consolidate the results of our vehicle integration efforts at.

Speaker Change: <unk> market shares across key business lines remained strong despite moderation in retail loans as we are still being very cautious with the cost of risk mainly in the consumer finance segments, even though cost of risk remains high there is a marginal improvement.

Speaker Change: Bank.

Speaker Change: It remains well positioned and very well capitalized.

Luis Felipe Castellanos Lopez: At Interseguro, we continue to grow premiums for individual life while consolidating market leadership in a new era. This quarter, Interseguro's results were impacted by the investment portfolio results and by certain accounting adjustments. Our wealth management business had a positive first quarter towards its recovery path as customers' AUMs and fees improved. Finally, on payments, the number of affiliates and transactional volumes continue to expand, as EasyPay's core business is complemented by a value-added service. Interbank and Ifipay continue working on creating synergies, while Plin continues to engage more users. We acknowledge that these quarter results are below expectations and potential, and we were probably at the bottom of the credit cycle.

Luis Felipe Castellanos Lopez: At Interseguro, we continue to grow premiums for individual life while consolidating market leadership in a new era. This quarter, Interseguro's results were impacted by the investment portfolio results and by certain accounting adjustments. Our wealth management business had a positive first quarter towards its recovery path as customers' AUMs and fees improved. Finally, on payments, the number of affiliates and transactional volumes continue to expand as EasyPay's core business is complemented by a value-added service. Interbank and Ifipay continue working on creating synergies, while Plin continues to engage more users. We acknowledge that these quarter results are below expectations and potential, and we were probably at the bottom of the credit cycle.

Speaker Change: How do you just say.

Bank: We continue to grow previous book individual life, while consolidated market leadership in annuities.

Bank: This quarter <unk> results were impacted by the investment portfolio results.

Bank: Short term accounting adjustments.

Speaker Change: Our wealth management business had a positive first quarter torches recovery bus are supposed to emerge.

Speaker Change: And see improved.

Speaker Change: Finally on payments the number of affiliates and transactional volumes continues to expand our seafood based core business is complemented with a value added service.

Clean: Your budget debate continue working on creating synergies while clean continues to engage more users.

Speaker Change: We have noticed that this quarter results are below expectations and potential we're probably at the bottom of a pretty title, but we remain confident about iff's.

Luis Felipe Castellanos Lopez: We remain confident about IFS's outlook going forward as we monitor the macro conditions where we continue to build on our long-term strategy with emphasis on our key strategic priorities, which are growth, digital, and focus on key business. Now, let me pass it on to Michela for further explanation of our quarterly results. Thank you.

Speaker Change: Outlook going forward as we monitor the macro conditions, but we continue to build on our long term strategy with emphasis on our key strategic priorities, which are growth digital I'm focused on key businesses now let me pass it onto Makena for further explanation or quarter review results.

Makena: Thank you.

Makena: Thank you Lee Philippe good morning, and welcome again, everyone to Intercorp financial services 2020 for freshwater earnings call. Today, We will review four sections of our earnings presentation and before we start let me get a little bit deeper into the macro outlook for favorable.

Michela Casasa: Thank you, Luis Felipe. Good morning, and welcome again, everyone, to Intercorp Financial Services' 2024 First Quarter Earnings Forum. Today, we will review four sections of our earnings presentations. And before we start, let me get a little bit deeper into the macro outlook for Peru. On slide 3, complementing what Luis Felipe just mentioned, we see early signs of recovery in the macro environment. GDP for the first two months of the year grew by 2.1%. Inflation is finally within the central bank's boundaries at 2.4% in April.

Michela Casasa: And the exchange rate has remained relatively stable. As you know, the Central Bank started to cut rates in the second half of 2023 and has continued to do so, reducing 200 basis points from 7.75% at its peak to 5.75% as of today. We expect 2024 to be a year of recovery for the Peruvian economy, with an expectation of 3% GDP growth, mainly due to a base effect versus 2023 as no major disruption was caused by El Nio.

Makena: On slide three complementing what Philippe just mentioned, we see early signs of recovery in the macro environment. Our GDP for the first two months of the year grew two 1% inflation is finally within the central bank's boundaries of two 4% in April and the exchange rate has remained relatively stable.

Makena: As you know the central Bank started to cut rates. The second half of 2023 and have continued to do so reducing 200 basis points from 775% to.

Speaker Change: To 575% as of today.

Makena: We expect 2024th to be a year of recovery from the Peruvian economy, with an expectation of 3% GDP growth, mainly due to a base effect versus 2023 as no major disruption was caused by El Nino.

Michela Casasa: Second, recovery in public investment after the first year of the newly elected regional government. And finally, some positive impact from private investment. On slide four, we observe signup progress as leading indicators show moderate improvement. Consumer confidence remains stable, while business trust starts improving its trajectory. Moreover, the expectation for private investment in 2024 surpassed previous estimates, reflecting some optimism.

Michela Casasa: Second, recovery on public investment after the first year of the newly elected regional government. And finally, to some positive impacts from private investment. On slide four, we observe signup progress as leading indicators show moderate improvement. Consumer confidence remains stable, while business trust starts improving its trajectory. Moreover, the expectation for private investment in 2024 surpassed previous estimates, reflecting some optimism.

Makena: Second recovery in public investment after the first year of the newly elected regional governments and finally to some positive impacts from private investments.

Speaker Change: On slide four we are satisfied with the progress as leading indicators show moderate improvement consumer confidence remained stable while at these distressed stocks improving his trajectory. Moreover, the expectation for private investment in 2020 for surplus previous estimate reflecting somewhat.

Michela Casasa: We wanted to mention that, even though economic data is starting to reflect a better sentiment, S&P recently downgraded Peru from BBB to BBB minus, which had an effect on the ratings of several entities in the financial sector. Interbank was the only bank to maintain its previous rating, while all other financial companies were downgraded one notch, including IFP. Moving on, it's in this context that we continue to build on our three key strategic priorities, which are:

S&P: We wanted to mention that even though economic data is starting to reflect a better sentiment S&P recently downgraded farooq from chipotle to Triple B minus which had an effect in the ratings of several entities in the financial sector.

Speaker Change: Interbank was the only bank to maintain its previous rating while all other financial companies were downgraded one notch, including IMS.

Michela Casasa: First, profitable growth to become a leading digital platform, growing customer double digits for all the segments while still in a challenging environment. Second, create the best digital experience, as 77% of our retail banking clients are digital, and our current NPS for banking is 61. Third, we continue to focus on our core businesses with relevant market shares in consumer banking loans at 21.8% and in the acquiring business at 43.5%. We have grown market shares in banking retail deposits at a record 15.1%, now ranking number three in the Peruvian financial system, and in annuities at 31.3% as a market leader.

Speaker Change: Moving on is in this context that we continue to build on our three key strategic priorities, which are first.

Speaker Change: Third profitable growth to become a leading digital platform growing customers double digit for all of the segments, while still in a challenging environment.

IMS: Second create the best digital experience at 77% of our retail banking clients a beat.

Speaker Change: <unk> results in a current M. D. S. Four banking is 61.

Speaker Change: Third we continue to focus on our core businesses with relevant market share in consumer banking loans at 21, 8% and in the acquiring business at 43, 5%.

Speaker Change: We have grown market shares in banking retail deposits at a record 15, 1%.

Speaker Change: Now ranking number three in the Peruvian financial system, I mean annuities at 31, 3% as a market leader.

Michela Casasa: Finally, in wealth management, assets under management continue to consolidate, growing 11.5% year-over-year. Now, let's move on to the first section of the presentation, which focuses on sustainable growth. On slide 7, we wanted to share our key messages for the work.

Speaker Change: Finally in wealth management assets under management continued to consolidate growing 11, 5% year over year.

Speaker Change: Now, let's move on to the first section of the presentation, which focuses on sustainable growth.

Speaker Change: On slide seven we wanted to share our key messages for the quarter.

Michela Casasa: First, better banking results partially compensate for extraordinary impacts on the insurance business associated with the investment portfolio and some accounting adjustments. This results in an ROE of 5.6%. Second, gradual improvement in the cost of risk, decreasing by 55 basis points in the quarter, translates into better results for Interbank with 30 basis points higher ROE than the previous quarter. Third, we continue the cost management type, reflecting solid efficiency levels for ISM. Fourth, asset-under-management growth in a subtle recovery of investment portfolio in wealth management results in more than 7% higher ROE than 2025.

Speaker Change: First better banking results, partially compensate extraordinary impact from insurance business associated to the investment portfolio and some accounting adjustments.

Speaker Change: This results into a narrow E a five 6%.

Speaker Change: Second gradual improvement of cost of risk decreased by 55 basis points in the quarter translates into better results for interbank with 30 basis points higher.

IMS: In the previous quarter.

Speaker Change: Third we continue the tight management of costs, reflecting solid efficiency levels for ISS.

Speaker Change: Fourth asset under management growth in a sector recovery of investment portfolio in wealth management results more than 7% higher than 2023.

Michela Casasa: As mentioned before, insurance net income was impacted by non-recurrent events, still maintaining a 5% return on the investment portfolio. And finally, we keep strengthening synergies within IFS, as the flow coming from easy pay merchants to interbank accounts grew around 40% year over year. On slide 8, we can see earnings of 141 million soles in the quarter, explained mainly by around 100 million non-recurring events related to the insurance investment portfolio, of which around 42 million are a provision related to Rutas de Lima and some accounting adjustments related to IFRS 17. The other three businesses had a slight improvement when compared with the fourth quarter and mixed results when compared with a year ago.

IMS: As mentioned before insurance net income was impacted by nonrecurring event still maintaining 5% return over the investment portfolio.

Speaker Change: And finally, we can we keep strengthening she noticed with the now your fish as the flow coming from Egypt pain medicines to interbank accounts grew around 40% year over year.

IMS: On slide eight we can see earnings up 141 million solid in the quarter explained mainly by around <unk> hundred million nonrecurring events related to insurance and investment portfolio of which around 42 million Arab Felicia related to route at the Lima, and some accounting adjustments related to <unk>.

IMS: 17, yeah.

IMS: The other three businesses had a slight improvement when compared with the fourth quarter and mixed results when compared with a year ago.

Michela Casasa: In the year-over-year comparison, banking still presents high cost-of-risk levels, while the standout is the wealth management business, multiplying its net income by threefold, resulting in an ROE of 11.2%. Excluding the non-recurring items, earnings rise to $240 million, and ROE elevates to almost 10%, though still below the levels of 2023 and the mid-term target. On slide 9, we see a year-over-year growth of 2% in revenues, mainly due to a better performance in wealth management as the proprietary portfolio starts to recover and slightly higher margins in banking, which we will explain in later slides.

Speaker Change: In the year over year comparison banking still presents high cost of risk levels, while they stand out is the wealth management business multiplying its net income by threefold, resulting with a narrow E of 11, 2%.

Speaker Change: Excluding the non recurring items earnings rise to 240 million in a row elevates to almost almost 10%, though feel below the levels of 2023 and they meet them package.

Speaker Change: On slide nine we see a year over year growth of 2% on revenues, mainly due to a better performance of wealth management and the appropriate type portfolio starts to recover is likely slightly higher margins in banking, which we will explain in later slides.

Michela Casasa: On slide 10, we wanted to follow up with further insights on the risk profile of the loan portfolio. First, 45% of Interbank's portfolio is concentrated on commercial banking, which continues to perform well, with the cost of risk returning to levels seen a year ago below 1%. This is mainly because of our conservative approach to commercial banking, focusing on low-risk clients and with quite limited participation in small and micro companies.

Speaker Change: On slide 10, we wanted to follow up with further insights on the risk profile of the loan portfolio.

Inter Bank: First 45% of inter bank's portfolio is concentrated in commercial banking, which continued to perform well with cost of risk returning to levels seen a year ago below 1%.

Speaker Change: This is mainly because of our conservative approach on commercial banking, focusing on low risk clients and with quite limited participation in small and micro companies.

Michela Casasa: This approach has allowed us to balance the risk of our overall portfolio, maintaining a lower PDL versus our peers. On the consumer portfolio, we have three different regions. First, the unsecured consumer portfolio, which is the one impacted during 2023 and as of today, representing 21% of the total loan book. Second, mortgages, which are 22% of the loan book. And third, payroll deductible loans to public sector employees, a very low-risk segment, which represents 12% of the total loan book. This quarter, still within a challenging macro environment, cost of risk remains high at 4.7%, with retail cost of risk at 7.9%.

Speaker Change: This approach has allowed us to balance the risk of our overall portfolio, maintaining a lower PD L versus our peers.

Speaker Change: On the consumer portfolio, we have three different risks.

Speaker Change: First the unsecured consumer portfolio, which is the one impacted during 2023 and as of today, representing 21% of the total loan book.

Mortgages, which are 22% of the loan book and third favorable deductible loans to the public sector employees, a very low risk segment, which represents 12% of the total loan book.

Speaker Change: This quarter still within a challenging macro environment cost of risk remains tight at four 7% with retail cost of risk at seven 9%. The good news is that these levels are lower than the previous quarter and slightly better than our estimates at.

Michela Casasa: The good news is that these levels are lower than the previous quarter and slightly better than our estimates. Additionally, the three-month deterioration rate has improved year over year, which means there will be good performance from the new harvest. And finally, the coverage ratio for the retail portfolio remains strong, above 176%. On a slightly lower level, we continue to monitor the behavior of consumer loans. The rescheduling still represents around 20% of the portfolio, although it has slightly decreased. Now, the payment behavior for performing loans is quite different for customers with reschedules.

Speaker Change: Additionally, the three months of duration rate has improved year over year, which means there is a good performance from the new harvest and finally, the coverage ratio for the retail portfolio remained strong above 176%.

Speaker Change: On slide 11, we continue to monitor the behavior of consumer loans, the rescheduling still represent around 20% of the portfolio. Although it has slightly decreased.

Speaker Change: The payment behavior for performing loans is quite different for customers reschedule.

The unpaid portion for regular clients is only 2% while it is around 16% for rescheduled claims for installments that matured as of March slightly higher than what we saw on the ship.

Michela Casasa: The unpaid portion for regular clients is only 2%, while it is around 16% for rescheduled clients for installments that matured as of March, slightly higher than what we saw in December. Finally, in this section, on slide 12, as always, we wanted to highlight the tight management of costs we continue to pursue, with only 2% increase in total expenses at IFS versus the previous year and no increase from the banking segment. With this, the efficiency ratio is 33.3% for IFS and 38.7% for interval.

Speaker Change: Finally on this section on slide 12, as always we wanted to highlight the tight management of course, we continue to pursue with only 2% increase in total expenses at our U.

Speaker Change: Versus the previous year and no increase from the banking segment would be the efficiency ratio.

Speaker Change: 73, 3% for fish and 38, 7% for endeavour.

Michela Casasa: Moving on to the section on building a digital platform, we continue to develop digital solutions for our clients in all segments. We have invested in building a world-class, leading, and scalable digital proposition, which is rapidly being adopted by existing and new customers. Interbank's app user base has experienced significant growth, increasing to over 2.6 million, and easy-paced merchants have 1.4 million. On slide 15, we have positive news on our digital indicators, which continue to show nice trends when compared to the previous year.

Speaker Change: Moving onto a section on building a digital platform.

Speaker Change: We continue to develop digital solutions to our clients in all segments, we have invested to build a world class, leading and scalable digital proposition, which is rapidly being adopted by existing and new customers into the bank App user base has experienced significant growth increasing to over $2 6 million.

Speaker Change: In Egypt based merchants are one for me.

Speaker Change: On slide 15, we have positive news in our digital indicators, which continue to show nice strength when compared to the previous year as of March 24 digital sales in banking reached 63% up three points from last year in digital customers reached 77% of retail.

Michela Casasa: As of March 24, digital sales in banking reached 63%, up 3 points from last year, and digital customers reached 77% of retail customers who interact with the bank during the last 30 days. And this is up 5 points from the past year.

Speaker Change: Customers, who interact with the banks during the last 30 days and this is up five points in the past year.

Michela Casasa: Furthermore, our Digital Self-Service Indicator has improved sharply from 7.7% from 69% to 76%, and our NPS improved slightly to 61%. Insurance and wealth management digital indicators show positive developments as well, with digital self-service reaching 63% in insurance. And SOAX sales reached 82%, and digital premiums were still small but growing, reaching 13% at Interseguro. On wealth management, digital transactions for fund management reached 45% at Interfondos, and early users reached 21% of total Interfondos customers.

Speaker Change: Furthermore, our digital self service indicators have improved sharply from seven points.

69% to 76% and our N P S improved slightly to 61.

You should have some wealth management digital indicators show positive developments as well with digital self service, reaching 63% in insurance.

Speaker Change: And so let's sales, reaching 82% and digital premiums still small, but growing reaching 13% I think the school on wealth management digital transactions for fund management reached 45% that in their phone does an empty users reached 21% of total in there from those customers.

Michela Casasa: Now, let's move on to show you some more details on the performance of our four key businesses. On slide 18, given the macro scenario mentioned before, we have remained cautious in the loan book, growing double-digits in lower-risk products such as mortgages and payroll deductible loans with 10% and 13% year-over-year growth in disbursements, respectively. The tightening of credit standards continues to impact credit and debit card purchases as well as personal loan disbursements.

Speaker Change: Now, let's move on to show you some more details on the performance of our four key businesses.

Speaker Change: On slide 18, given the macro scenario mentioned before we have to remain cautious in the loan book growing double digit in lower risk products, such as mortgages and payroll deductible loan with 10% and 13% year over year growth in disbursement respectively.

Speaker Change: Tightening of credit standards continues to impact graded and David car purchases as well as the personal loan disbursements.

Michela Casasa: On the other hand, Impulso Mi Per is allowing us to grow in commercial banking with lower risk, hence the important growth in SME disbursements and commercial banking stock on a year-over-year basis. On slide 19, in line with this conservative strategy in the retail segment, our market share in consumer and retail loans has slightly decreased, still with strong positioning, while market share increased to 14.6% in payroll inflows from 13.7% one year ago. The focus on commercial loans and the impact of Impulso Mi Per are reflected in the market share for commercial loans.

Corso: On the other hand in Corso me bedroom is allowing us to grow in commercial banking with lower risk, hence the important growth in SME disbursements and commercial banking stuck on a year over year basis.

Corso: On slide 19 in line with these conservative strategy in the retail segment, our market share in consumer and retail loans have slightly decreased steel with strong positioning while market share increased to 14, 6% in payroll inflows from 13, 7% one year ago.

Speaker Change: The focus on commercial loans and the impact of impulse only Peru is reflected in the market share of commercial loans. Moreover, sales finance is one of our key products has market share continues to grow up from 11% just 12 months ago to almost 17%.

Michela Casasa: Moreover, sales finance is one of our key products as market share continues to grow from 11% just 12 months ago to almost 17%. Additionally, we have been working hard to enhance our value proposition to clients on the liability side, which has resulted in a higher retail banking deposit market share at 15.1%, now ranking third in the financial sector. Aligned with the current macroeconomic conditions, the government has launched Impulso Mi Per, designed to stimulate economic growth.

Speaker Change: Additionally, we have been working hard to enhance our value proposition to clients on the liability side, which has resulted in higher retail banking deposits market share at 15, 1% now ranking third in the financial system.

Speaker Change: Aligned with the current macro conditions. The government has launched imposed suddenly badal designed to stimulate economic growth does.

Michela Casasa: This program does not provide funding but gives 50% to 98% guarantee levels on credit given to SMEs and mid-sized companies. The allocation of the guarantee is conducted through auctions where the bidding variable is the interest rate offered to clients. So far, we have been awarded more than 1,400 million soles, of which almost 1 billion have already been disbursed.

government: This program does not provide funding, but gifts, 50% to 98% guarantee levels to credit given to SME and mid cycle.

government: The allocation of the guarantee is conducted through auctions, where they're being variable is the interest rate offered to clients.

Speaker Change: So far we have been awarded more than 1400 millions of dollars of which almost 1 billion have been already disbursed, 36% to Smes and the remaining two mid sized companies.

Michela Casasa: 36% to SMEs, and the remaining to mid-size companies. On slide 21, we observe a reduction of 20 basis points on MIM, reaching 5.3%, which aligns with the shift of the loan book and the increase in the cash balance, and Secure Loans, which includes credit cards and personal loans, decreased from 24% to 21% year over year, resulting in a decrease in yield on loans of 10 basis points. On the positive side, risk-adjusted means improved in the quarter in line with a lower cost-of-care.

Speaker Change: On slide 21, we observed a reduction of 20 basis points mean, reaching five 3%, which aligns with the shift of the loan book and the increase of cash balances.

Speaker Change: Unsecured loans, which includes credit cards personal loans decreased from 24% to 21% year over year, resulting in a decrease in yield on loans of 10 basis points.

Speaker Change: On the positive side risk adjusted NIM improved in the quarter in line with a lower cost operation.

Michela Casasa: Furthermore, this quarter brings positive news as the cost of funds starts to show a changing trend, decreasing to 4% as shown in slide 22. This is attributable to better funding needs at lower market rates as the short duration of interest-bearing deposits allows for faster reprice. Moreover, the cost of deposits saw a decrease of 40 basis points in the quarter. Furthermore, positive news is also that the deposit share in total funding remains stable and that the retail deposit market share continues to increase. Finally, our loan-to-deposit ratio of 96% is in line with the industry standard.

Speaker Change: Furthermore, this quarter brings positive news as the cost of funds start to show a change in trend decreasing two 4% as shown in slide 22. This is attributable to better funding mix in love with lower market rates at the short duration of interest bearing deposits allows for faster.

Speaker Change: Repricing.

Speaker Change: Moreover, cost of deposits has seen a decrease of 40 basis points in the quarter.

Speaker Change: The positive news is also that the deposit share in total funding remains stable in the retail deposit market share continues to increase.

Speaker Change: Finally, our loan to deposit ratio of 96% is in line with the industry.

Michela Casasa: On payments, we want to give you a quick summary of the recent developments. Starting with PLYN on slide 23, the new landscape of interoperable P2P systems has enabled PLYN to accelerate its growth as transactions expand by fourfold in one year and users reach more than 15 million by the end of March, with interbank participation stable at 46%. Also, the volume has multiplied by 2.6 in the same period. Sling and Yappa interoperability started in April, and QR code interoperability was added in September.

Speaker Change: On payments, we want to give you a quick summary of the recent developments.

Interbank representative: Working with clean and slide 23, the new landscape of indirect interoperable P to P system has enabled <unk> to accelerate its growth as transaction expand by fourfold in one year end users, which more than 15 million by the end of March with interbank participation stable at 46%.

Speaker Change: Also the volume crush multiplied by two six in the same period.

Yep interoperability: Clean and Yep interoperability started in April and QR code interoperability wash out in September.

Michela Casasa: This development is helping to bring more Peruvians into the financial system, reducing the use of cash, which continues to be high in the country. On slide 24, the acquiring business continues to grow in all segments as the synergy between EasyPay and Interbank is key to our payment strategy. The enhanced value proposition EasyPay has to offer has resulted in an increase of 17% of merchants year-over-year, reaching 1.4 million, while transactional volume grew 11%. In the case of EasyPay Ya!, our solution for micromerchants, significant growth continues.

Speaker Change: This development is helping to bring more peruvians into the financial system, reducing the use of cash which continues to be high in the country.

Yep interoperability: On slide 24, the acquiring business continues to grow in those segments and the synergy between ECP and interbank is key for our payment strategy.

Speaker Change: The enhanced value proposition if they have to offer how should we felt it in an increase of 17% of maritime year over year, reaching one 4 million what transactional volume grew 11%.

ECB: In the case of ECB yacht, our solution for micro marathon important growth continues the number of micro merchants have grown 42% in the transactional volumes, 40% year over year.

Michela Casasa: The number of micromerchants has grown 42% and the transactional volumes by 40% year over year. On slide 25, EasyPay represents a profitable operation as the number of affiliated merchants and transactional volumes continue to expand. Revenues continue to grow slightly on a yearly basis, although there is a decline of 13% in the quarter due to the effect of the Christmas season on the previous quarter.

ECB: On Slide 25, you should pay represents a profitable operation of the number of affiliated merchants in transactional volumes continue to expand.

Speaker Change: Revenues continued to grow slightly on a yearly basis, although there is a decline of 13% in the quarter due to the effect of the Christmas season on the previous Clark.

Michela Casasa: A bid that has seen a contraction due to margin compression in a more competitive landscape. We have been working to accelerate the growth of our payment ecosystem, focusing on increasing transactional volumes, offering merchants value-added services, continue to pilot low-risk loans to merchants, and use EasyPay as a distribution network for interbank, as well as a source to increase flow. We are starting to see results from this strategy, as evidenced by the following four key figures.

Speaker Change: That has seen a contraction due to margin compression in a more competitive landscape.

Speaker Change: We have been working to accelerate the growth of our payment ecosystem, focusing on increasing transactional volumes offering merchants value added service continued to pilot low risk loans to merchants and you use easy pay as a distribution network for everyone.

Speaker Change: Well a source to increased truck.

Michela Casasa: 20% yearly increase in easy pay flow coming to interbank accounts and 40% increase in flow from Merck. 1.6 times yearly increase in transactional volumes and 7% growth in flows from micro-merchants, thanks to EasyPay Yelp. Now moving to insurance, on slide 26, premiums were up 3% in the quarter and more than 16% year over year, as market share of annuities rose to 31.3% as of March 24, above 7.1% from the previous year.

Speaker Change: We are starting to see results from this strategy as evidenced by the following four key figures.

Speaker Change: 20% yearly increase in easy pay flow coming to inter bank accounts, and 40% increasing flow from Merrill Lynch. One six times yearly increase in transactional volume and 7% growth inflows from micro merchants thinks we should be yet.

Speaker Change: Now moving to insurance on slide 20 seats premiums were up 3% in the quarter and more than 16% year over year.

Merrill Lynch: As market share of annuities raised to 31, 3% as of March 24.

Merrill Lynch: Both seven 1% from the previous year.

Michela Casasa: Individual life and private annuities business lines continue to grow nicely year over year, or 18% each, increasing their contribution to total premiums. On the other hand, retail insurance had a contraction in the first quarter, mainly due to three reasons.

Merrill Lynch: Individual life and private annuities business lines continued to grow nicely year over year or 18% each increasing their contribution to total green.

Speaker Change: On the other hand retail insurance had a contraction in the first quarter, mainly due to three reasons changing so I broker lower loan activity at interbank and placing of vehicle insurance.

Michela Casasa: Changing SOA broker, lower loan activity at the interbank, and leasing of vehicle insurance. Finally, on wealth management, we continue to see growth in assets under management with a yearly growth of 11.5% and 3.5% on a quarterly basis. On the back of that, there is a recovery in fee income on a quarterly basis. At last, we see more consistent investment results that align with a well-diversified portfolio. Now, let me move to the final part of the presentation, where we will provide an update on ESG, operating trends for 2024, and some takeaways.

Speaker Change: Finally on wealth management, we continue to see growth in asset under management with a yearly growth of 11, 5% and three 5% on a quarterly basis on the back of that there is a recovery on fee income on a quarterly basis at.

Speaker Change: At last we see more consistent investment results that align with a well diversified portfolio.

Speaker Change: Now, let me move to the final part of the presentation, where we work.

Speaker Change: We will provide an update on ESG operating trends for 'twenty 'twenty four and some takeaways.

Michela Casasa: On slide 29, we want to share our sustainability update. We are proud to have been recognized for our sustainability efforts, both at the national level, occupying the first place in the Merkle ESG Responsibilities, and at the international level, being included in the S&P's 2024 Sustainability Year. Additionally, last week, we were included once again in the S&P BBL Peru General ESG Index. In line with our responsible business strategy, we continue to build a sustainable platform following our three main pillars. On the environmental front, we finance new green lines for up to 11 million dollars related to sustainability certified agricultural and forestry activities.

Speaker Change: On slide 29, we want to share our sustainability update we are proud to have been recognized for our sustainability efforts both at national level occupied in the first place in the medical ESG responsibility and adding their national level being included in the SMB <unk> 'twenty 'twenty four sustainability yearbook.

Speaker Change: Additionally, last week, we have been included once again in the F&B BVO Baidu General ESG index.

SMB: In line with our responsible business strategy will continue to build a sustainable platform. Following our three main pillars in the environmental front, we finance new Green line for up to $11 million related to sustainability certified.

Speaker Change: Zero in forestry activities.

Michela Casasa: On the social front, all four of our subsidiaries were once again recognized by Great Place to Work, this time in the general and women-focused rankings for 2024. Also, building upon our group-wide platform, EasyPay participated in an Intercorp pilot that brought digital and financial inclusion to more than 1,000 bodegas around the country and plans to expand during the rest of the year. On the governance front, Interbank became the only bank in Peru to be part of the UN Global Compact Forward Faster Initiative, in which we have been committed to disclose our progress in sustainable finance. Additionally, Interbank was recognized as number one in customer experience in the Peruvian banking sector by both CX Index and ICO Solutions.

Speaker Change: In the social from all four of our subsidiaries were once again recognized by great place to work. This time in the general and the woman focused ranking for 2024.

Speaker Change: Also building up our group wide platform East Bay participated in any type of fiber that Brooke digital and financial inclusion to more than 1000, but that's around the country and plans to expand during the rest of the year.

Interbank representative: And the government from interbank became the only bank in Peru part of the UN Global compact for work faster initiatives in which we have been committed to disclose a prohibition sustainable finance.

Interbank representative: Additionally, interbank was recognized as number one in customer experience and the Peruvian banking sector by both CX index and IV.

Interbank representative: ACO solutions.

Operator: On slide 30, let me give you an update on our operating results for the first quarter 24 in comparison with the guidance. We continue to present some capital levels with a total capital ratio of 15.1 and a core equity tier one ratio at 11.3%, which after dividend distribution are above our guidance. ROE of 5.6% in the quarter is still below the mid-term range, and has been impacted by the cost of risk and non-recurring investment results.

Interbank representative: On Slide 30, let me give you an update on our operating results for the first quarter 'twenty four and the comparison with the guidance. We continue to present, some capital levels with total capital ratio of $15, one and core equity tier one ratio at 11, 3%, which after DVD distributions above.

Speaker Change: Our guidance on ROE of five 6% in the quarter is still below meet them run.

Speaker Change: Has been impacted by cost of risk in nonrecurring investment results.

Operator: Year-end recovery of ROE will depend mostly on the recovery of these two factors. Long-term growth of 2.2% is below our guidance but above the financial system, reflecting our ongoing market share gains in key products. It is worth to mention that this is aligned with the conservative approach on unsecured loans as consumer loans decreased by 2.4%. NIM for Interbank was 5.3 percent, slightly below guidance. We expect it to recover during the year as the cost of funds decreases in line with lower market rates.

Speaker Change: And recovery of Arrow will depend mostly on the recovery of these two factors.

Speaker Change: Loan growth of two 2% below our guidance, but above the financial systems, reflecting our ongoing market share gains in key products. It is worth to mention that this is aligned with a conservative approach on answer to launch a consumer loans decreased by $2 four crushing.

Speaker Change: NIM for interbank was five 3% slightly below guidance, we expected to recover during the year as cost of funds decreased in line with lower market rates.

Operator: Cost of risk for banking was 4.7% in the quarter, slightly better than our expectations for this quarter due to the improvement. Also, it improved from the previous quarter. As mentioned in the last conference call, we expect a gradual recovery. So, in the following quarters, we should see better payment behavior from the consumer portfolio. We continue to see good efficiency levels at IFS in line with the guidance as we are strictly monitoring and managing costs, especially at the bank, which has reached a cost income ratio below 39 percent. On slide 31, let me conclude the presentation with some key points.

Speaker Change: Cost of risk for banking was four 7% in the quarter slightly better than our expectations for this quarter due to improvement.

Scott: Scott also improving from previous quarters I've mentioned in the last conference call. We expect a gradual recovery. So in the following quarters, we should see a better payment behavior from the consumer portfolio.

Scott: We continue to see good efficiency levels are that you face in line with the guidance as we are strictly monitoring and managing costs, especially at the bank, which has reached a cost income ratio below 39%.

Scott: On Slide 31, let me finalize the presentation with some key.

Operator: Pardon me, we seem to have lost the connection. We will work on it. Just hold on for a second. Thank you for your patience. And excuse me, this is the operator. Mr. Luis, if you could open up your audio, Ms. Michela has disconnected.

Speaker Change: Pardon me, we seem to have lost the connection we will work on it just hold on for.

Speaker Change: Second thank you for your patience.

Operator: Excuse me. This is the operator Mr. Mr. Luis if you could open up your audio Miss Micaela has disconnected.

Operator: Yeah.

Operator: And again, this is the operator. Mr. Luis, could you please open up your audio? Ms. Michela's video has disconnected. We will need to have your audio open so that she can finish her remarks.

Operator: And again this is the operator, Mr. Luis if you could open up your audio Misma kilos. A video has disconnected we will need to have your audio open so that she can finish her remarks. Thank you.

Operator: Okay.

Operator: No, I'm sorry, can you hear us now? Yes, and excuse me, this is the operator.

Luis Felipe Castellanos Lopez: No I'm, sorry can you hear me.

Operator: Ms. Michela's line is now reconnected. Thank you. Okay, sorry for that. So, Michela, I think you need to repeat the takeaway. Sorry to everybody. OK, let me.

Speaker Change: Yes, and excuse me. This is the operator of MS. Michela. His line is now reconnected. Thank you.

Speaker Change: Sorry for that.

Kevin: So we can I think Joel you, Kevin you need to repeat the takeaways, okay, sorry to everybody.

Michela Casasa: Okay, let me go back to slide 31 to finalize the presentation with some key takeaways. First, the macroenvironment is showing first signs of recovery in 2024. Second, the investment portfolio was impacted by non-recurring events and by market-to-market, and we expect a recovery over the year. Third, selective growth in retail banking with a slight improvement in the cost of risk. Fourth, Impulso Mi Per enables growth in commercial banking at low risk. Fifth, time management of costs is reflected in solid efficiency levels. And finally, we continue strengthening our digital positioning and presence on paper. Thank you very much. We welcome any questions you might have.

Joel: Okay. Let me go back to slide 31 to finalize the presentations with some key takeaways.

Michela Casassa Ramat: Macro environment is showing first recovery signs in 'twenty 'twenty four second the investment portfolio was impacted by nonrecurring events and by Mark to market and we expect a recovery over the year.

Sir: Sir selective growth in retail banking with a slight improvement in cost of risk fourth improved semi bedroom enables growth in commercial banking at low risk phase.

Speaker Change: With tight management of costs reflected in solid efficiency levels and finally, we continue strengthening our digital positioning and pregnancy page. Thank you very much now we welcome any questions you might have.

Operator: Thank you very much. First, we will take the questions from the conference call and then the questions from the webcast. If you would like to ask a question and you are connected through a phone line, please press the star key followed by the one key on your touchtone phone now. Questions will be taken in the order in which they are received.

Speaker Change #102: Thank you very much at this time, we will open the floor for your questions.

Speaker Change: We will take the questions from the conference call and then the questions from the webcast. If you would like to ask a question and you are connected through a phone line. Please press the star key followed by the one key on your Touchtone phone now.

Operator: If at any time you would like to remove yourself from the questioning queue, please press star two. Again, to ask a question, please press star 1 now. For the webcast viewers, simply type your question in the box and click submit question. We will pause momentarily to compile a list of questions. And our first question is coming from Alonso Aramburu from BGG. Alonso, please go ahead.

Speaker Change: <unk> will be taken in the order in which they are received.

Speaker Change #104: If at any time, you would like to remove yourself from the questioning queue. Please press star two.

Speaker Change: Again to ask a question. Please press star one now.

Speaker Change #100: For the webcast viewers simply type your question in the box and click submit question.

Webcast Host: We will pause momentarily to compile a list of questioners.

Webcast Host: Okay.

Webcast Host: And our first question is coming from Alonso Aramburu from BTG Alonso. Please go ahead.

Alonso Aramburu: Yes, hi, good morning, and thank you for the call. Two questions on my side. First, you mentioned some early signs of the economic recovery. Can you maybe comment if you're seeing some early signs of demand for loans, whether that's improving or not? And second, regarding your payment business, you're growing in volume and merchant numbers year-over-year. Can you comment, maybe, on the dynamics of fee income and competition at ECP? Thank

Alonso Aramburu: Yes, hi, good morning, and thank you political two questions on my side first you mentioned some early signs of economic recovery can you maybe comment if you're seeing some early signs of demand for loans are whether that's improving or not.

Alonso Aramburu: Second regarding your payment business are you growing volume on a merchant numbers year over year speech up to that.

Webcast Host: Can you comment maybe on the dynamic opinion gummy competition. Thank you.

Webcast Host: Yeah.

Luis Felipe Castellanos Lopez: OK, thanks, Alonso, for your questions. Let me pass them on to Carlos Tori, so he can also make his debut answering questions as the recently appointed CEO of Intervalle.

Gaslog story: Okay. Thanks, a lot so for your for your questions. Let me pass it onto Gaslog story. So she can also make use debating I'm sorry, Chris.

Josh: Questions Josh.

Gaslog story: You can see it by a shield interbank.

Carlos Tori Grande: Hello, Alonso. How are you doing? Thanks for your question. On the first one, in terms of the economy and loans, we have seen – well, everybody expected a year to start very negatively with El Nio, right? So just not having El Nio was positive, but we have also seen the central bank controlling inflation and lower rates and slight growth in GDP. So all of that helps.

Webcast Host: Hello, Alonso how are you doing.

Alonso Aramburu: Thanks for your question on the on the first one in terms of the economy and loans.

Alonso Aramburu: We have seen when everybody is expected a year to start very negatively within media right. So just not having a nino was supposed to do but we have also seen.

Central Bank: The central bank controlling inflation and lower rates and slight.

Central Bank: Growth in GDP. So all of that helps consumption is growing slightly.

Carlos Tori Grande: Consumption is growing slightly, and we have been able to – we're confident that our new vintages of loans are performing well, no, in terms of the last six, nine months of vintages. We're still going through the older vintages in terms of credit risk, but the new portfolio is performing well. We are being cautiously confident in terms of growth. [inaudible] Hopefully, GDP growth and inflation will continue. GDP growth to grow and inflation to continue to be under control. So that's kind of what we're looking at. And then, in terms of your question about easy pay, well, there's basically.

Central Bank: And we have been able to.

Central Bank: We're confident on our new vintages of loans are performing well no in terms of the last stop sheets nine months of vintages.

Speaker Change #107: We're still going through the order being produced in terms of great risk, but the new portfolio is.

Speaker Change #111: <unk> is performing well.

Speaker Change #103: We are being.

Speaker Change #118: Cautiously confident in terms of growth we want to re.

Speaker Change #108: Two to start growing again, but we want to do it.

Speaker Change #109: In the Bronx, and segments, where we are comfortable.

unknown: We have been growing more in commercial banking.

unknown: And we have been able to build.

Speaker Change #109: Built on the impulse when we pay to our program for Florida Mall for Smes, So that is helping us grow and.

Speaker Change #109: Hopefully the GDP growth and inflation, we will continue to.

Speaker Change #121: GDP growth grow and inflation to continue to be under control. So that's kind of what we're looking at and then in terms of your question for ECP.

Speaker Change #122: Well the there's basically.

Carlos Tori Grande: I would say two, maybe three things that impact the competition dynamic. The first one is that there are more competitors. There used to be two acquisition players, Nubis and DCPay; today, there are five.

Speaker Change #112: I would say two maybe three things.

Speaker Change #112: Does that impact the competition dynamic the first one is theres more competitors they're.

ECP: There used to be two acquisition players not new lease and BCP today they are fine.

Carlos Tori Grande: There are three new competitors, so there is pressure on pricing for sure. However, we have been able to hold our market share, and we have had to be more aggressive on pricing in certain segments. We are trying to have a mix of keeping our market share but not going too aggressive on pricing in certain segments. As Michela mentioned, some of the value, a large portion of the value of EasyPay is not only the fees that you charge to the merchant but on having the flows of those sales come to Interbank, and the relationship and the other products allow you to do that.

Speaker Change #114: There are three new competitors.

Speaker Change #125: So there is pressure on pricing for sure.

Speaker Change #125: We are in.

Speaker Change #114: We have been able to hold our market share.

Speaker Change #114: And we have a.

Speaker Change #115: Two two to be more.

We: Aggressive on pricing on certain segments, where we are trying to have a mix of keeping our market share.

We: But not not going to.

Speaker Change #127: Too aggressive on pricing on certain segments.

Speaker Change #127: As Michela mentioned some of the value of alerts.

Michela: A large portion of the value of EC pay is not only on the fees that you charge to the merchants, but on having the flows of those saves gum to interbank and our relationship and the other folks' clouds. So that is one thing that that affects dynamics and the other one is.

Carlos Tori Grande: So that is one thing that affects dynamics. And the other one is the economics of credit cards and debit cards, and that is something with the brand that is always changing and moving in terms of how much pricing you give to each type of credit card. So those are two things that are pressing on margins, but we have been able to successfully keep profits stable while growing transactions and keeping our market share.

guardsman: The economics, we've great guardsman debit cards and that is something with the brand.

Speaker Change #115: Yeah.

unknown: That is always changing and moving in terms of how much pricing you gave two two to each type of grade. So that is those are two things that are pricing on margins, but we have been able to successfully.

Speaker Change #115: Keep a profits stable, while growing transactions and keeping our market share one good thing about the payments market is that it continues to grow a lot in terms of more payments going through digital instead of cash and that is a positive any way you look at it in terms of flows in terms of.

Carlos Tori Grande: One good thing about the payments market is that it continues to grow a lot in terms of more payments going through digital instead of cash. And that is positive in any way you look at it, in terms of flows, in terms of float to the bank, and also in terms of the cost or the cost that you're not having in terms of moving cash around in our branches and our ATMs. So, still very positive on that front.

Speaker Change #115: Float to the bank.

Speaker Change #120: And also in terms of the cost or the cost that you are not having in terms of moving cash around in our branches and our and our ATM. So so still very positive on that front.

Speaker Change #120: Yeah.

Carlos Tori Grande: Thank you, Carlos, and congratulations on the new role. Thank you.

Speaker Change #120: Thank you Carlos and congratulations on the on the Bureau.

Speaker Change #120: Thank you. Thank you.

Operator: Thank you. And again, let me remind you, if you're connected to us through a phone call and would like to ask a question, please press star one. And at this time, we can continue by moving to the webcast questions. So I will turn the call over to Inspire Group.

Speaker Change #120: Thank you and again, let me remind you if you are connected to us through a phone call and would like to ask a question. Please.

Speaker Change #131: Please press star one.

inspire route: And at this time, we can continue by moving to the webcast questions. So I will turn the call over to inspire route.

Operator: Thanks, Operator. The first question comes from Juan Nicolas Pardo from Credit Corp. Could you go through the details of the investment portfolio events that took place during the quarter?

Speaker Change #138: Thanks, Operator, the first question comes from Juan Neutralist Pardo from credit Corp could.

Speaker Change #124: Could you go into the details of the investment portfolio events that took place during the quarter.

Luis Felipe Castellanos Lopez: Okay, let me pass it on to Gonzalo so he can help us address that investment portfolio results. Let me just do a brief introduction.

Speaker Change #136: Okay, Let me.

Speaker Change #126: Let me pass it onto two on cellular so he can help.

Speaker Change #132: Help us addressing.

Speaker Change #134: The investment portfolio.

Gonzalo Jose Basadre Brazzini: I guess that the non-recurrent that was reported includes some accounting changes that represent approximately 20 to 25 percent of the reported number and then the investment portfolio base. So now, Gonzalo can help us with the specifics of the investment portfolio. Sure, thanks, Luis Felipe.

Speaker Change #134: Results.

Speaker Change #140: Let me give you a brief introduction.

Speaker Change #140: Is that the nonrecurring that was.

Speaker Change #126: Reported includes.

Speaker Change #126: Some accounting changes.

Speaker Change #126: That represent approximately 20% to 25% of the reported number and then the investment portfolio pitch, so allowance halo back help us in their specific.

Speaker Change #126: Of the investment portfolio.

Gonzalo Jose Basadre Brazzini: Thanks, Luis Felipe. As you mentioned, the 100 million soles is composed of actually three different things. First, the accounting change you mentioned is around 23 million soles. Then we have an impairment regarding Ruta de Limas, as Michela mentioned, that's around 42 million soles, and then for 33 million soles, it's a loss on the evaluation of some investors. Remember, our portfolio has about 16 billion soles in assets. We infrequently have a loss of this magnitude; this is not very common because most of our investments are fixed income and held to maturity, but from time to time, we may have this kind of either losses or, in other cases, gains.

Speaker Change #129: Sure, Thanks, and as a leader.

Speaker Change #147: As you mentioned the 100 million solid is composed of.

Speaker Change #146: Actually three different drinks versus the accounting change you mentioned is around three 3 million soles.

Speaker Change #141: And then we have a an impairment.

Michela Casassa Ramat: Lima as Michela mentioned, that's around 42 million soles and then.

Michela: For the first 33 million soulless, it's a.

Michela: A loss on the valuation of some investments.

Michela Casassa Ramat: Remember our portfolio.

Michela: Above 16 billion Sonus in assets.

Speaker Change #130: We in frequently have this.

Speaker Change #139: A lot of this magnitude.

Speaker Change #144: This is a very common because most of our investments are our fixed income held to maturity but.

Speaker Change #133: From time to time, we may have the sky.

Speaker Change #133: Either losses or in other cases.

Marcelo: Thank you Marcelo.

Gonzalo Jose Basadre Brazzini: The next question comes from Judith Fernandez from J.P. Morgan. Can you please explain in detail the $100 million potential, non-recurring, I apologize for the question; we're moving to another question. That question was taken away. The next question comes from Jose Ignacio Mejia. Regarding your banking operations, our analysis shows that your delinquency rate adjusted by charge-offs has been increasing at a significant pace over the last month, while the NPL coverage ratio is at a historical low point. Given these trends, when can we expect to see an improvement in loan quality and a subsequent reduction in loan provision?

Jpmorgan: The next question will come from you would've Fernandez from Jpmorgan can you. Please explain in detail the hundred million colors potential nonrecurring.

Speaker Change #151: I apologize the question, we're moving to another question that question, let's take the next question comes from Jose Ignacio Mahir regarding your banking operation. Our analysis shows that your delinquency rate adjusted by charge off has been increasing at a significant pace over the last month, while the NPL coverage ratio is at a historical low point.

Speaker Change #137: Given this trend when can we expect to see an improvement in loan quality and a subsequent reduction in loan provision.

Gonzalo Jose Basadre Brazzini: Sure, let me answer that, I guess... Obviously, we're going through the credit cycle. Based on what we've seen, we think that we might be hitting the bottom, so it's probably this and the next quarter. We have already, as Carlos mentioned, seen early signs of recovery, so hopefully, based on our models and our expectations of the economy, we will see marginal improvement going forward. Actually, this quarter was a marginal improvement versus the last quarter.

Speaker Change #143: Sure, Let me answer that I gave.

Speaker Change #152: Obviously, we're going through to through the credit cycle our.

Speaker Change #142: Based on what we're seeing we think that we might be hitting the bottom so could probably be felt in next quarter.

Carlos: We are ready as Carlos mentioned seeing early signs of recovery.

Carlos: So hopefully based on our models and outerwear expectations of economy.

Speaker Change #142: We will see.

Speaker Change #145: Marginal improvement going forward no actually.

Speaker Change #145: This quarter was our Marianna gourde versus last quarter.

Gonzalo Jose Basadre Brazzini: Given what Carlos mentioned about vintages and the evolution of the economy, this trend should probably continue. Maybe not as fast as we expected, given that the economic recovery is lagging in terms of consumer activity and consumer confidence. However, we're probably already in the path of a slight recovery. Let me, maybe just,

Carlos: Given what Carlos mentioned about vintages of the evolution of the economy, probably these trends should continue maybe maybe not as fast as we expected given that the economic recovery is lagging in terms of consumer activity and consumer confidence.

Speaker Change #154: However, we're probably already in the past calls.

Carlos: Slight recovery.

Gonzalo Jose Basadre Brazzini: Let me maybe just add something related to the NPL coverage ratio, which as of the first quarter was 141% for the bank. In particular, the coverage ratio for retail banking was 176%, which is a pretty high coverage ratio considering that it is more than 200% for the consumer unsecured portfolio, you know, and much lower for mortgages and payroll deductible loans. So you see a decrease in this level over the past two years, but this is because we have some, let's say, expert criteria provisions that were made during COVID that brought those levels to, let's say, historically high levels, and they have been normalizing over the quarter.

Carlos: Let me, maybe just add something related to the NPL coverage ratio, which after the first quarter was 141% for the bank.

Speaker Change #160: In a particularly the coverage ratio for retail banking was 176%, which is a really high coverage ratio considering that it is more than 200% for the consumer and.

Speaker Change #149: Unsecured portfolio nine much lower for mortgages and payroll deductible loans, so you'll see a decrease in this level over the past two years, but this is because we have some.

Speaker Change #157: Let's say extra criteria provisions that were made during coffee that brought those levels to let's say historically high levels and they have been normalizing over the quarters.

Speaker Change #157: Thank you Mikael.

Gonzalo Jose Basadre Brazzini: The next question comes from Rodrigo Freire, an independent investor. I would like to know the ROE expectations for Q2.

Speaker Change #161: The next question comes from her Jiggled Friday independent Investor I would like to note that our OE expectations perfusion.

Speaker Change #161: Okay.

Gonzalo Jose Basadre Brazzini: Sure, well, it's actually pretty hard to...

Gonzalo Jose Basadre Brazzini: Sure, well, it's actually pretty hard to give you an exact number. However, given what has been mentioned during the call, probably this was a low ROE number for this quarter, and assuming that we will reach our 12 percent, around 12 percent for the year, we should start seeing a recovery in the upcoming quarters, including next quarter. By the end, the whole year should bring us to where we got it for, so numbers should start coming in. The big question mark continues to be market volatility and the pace at which the Consumer Payments, Sgt. Booth

Lloyd capsule: Sure Lloyd capsule very pretty hard too.

Lloyd capsule: Give you an exact number however.

Lloyd capsule: Given what has been mentioned during the call by these words.

Speaker Change #149: No.

Roy: Roy number for this quarter and assuming that we will reach our 12% around 12% for the year, we should start seeing a recovery in the upcoming quarters, including next quarter.

Speaker Change #149: But at the end.

Speaker Change #156: The whole year should bring us to what we.

Michael: <unk> guided for so so numbers should start coming up the big question, Michael genius to be the market volatility.

Michael Genius: The pace at which.

Michael Genius: Consumer payments start to Bruce.

Operator: The next question comes from Diego Guzman from BTG Pax. Does your ROE guidance for 2024 include a $100 million one-off? That could be an early range of guidance for a 2025 ROE with a smoother operation with a new NIM mix in traditional reality.

Michael Genius: The next question comes from Diego Mcmahon from BTG Pactual.

Diego Mcmahon: Our guidance for 2024 includes the 100 million one off that can be an early range of guidance of a 20 to 25 are we with media operation with a new and then Mike and I I am mix and traditional reality.

Diego Mcmahon: I'm sorry can you repeat the question please.

Operator: I'm sorry, can you repeat the question, please?

Mike: Of course. The question is does your RV guidance for 2024 include. This 100 is 100 million one off that can be an early rank of guidance of a 2025 <unk> with a smoother operation with the new N I M makes any strategic reality.

Operator: Of course, the question is, does your ROE guidance for 2024 include this $100 million one-off? That could be an early range of guidance for 2025 ROE with a smoother operation with a new NIM mix and a strategic reality. Sure.

Luis Felipe Castellanos Lopez: Sure. Yeah, we expect, where we stand today, that we will be able to recoup this one time through our normal activities. Again, that will be subject to market conditions, but that continues to hold as true. And then I think it's early to tell a 2025 range for ROE. However, we do expect that as the macro conditions normalize, we will be targeting to go back to what we believe is our sustainable ROE, which is around 18% for IFS. However, when we will be targeting that depends on the evolution, and we'll keep you posted.

Mike: Sure.

Operator: Luis, we lost you in the last sentence; we could not hear you.

Mike: We expect.

Speaker Change #171: Where we stand today that we will be able to recoup these.

Mike: One time.

Mike: Through our normal activities again that will be subject to market conditions.

Roy: But that continues to hold true and that I think it's early to tell and 2025 range for Roy However, we do expect that.

Speaker Change #172: As market conditions normalize, we will be targeting to robot to our what.

Roy: What we believe is our sustainable a week, which is around 18% for <unk>.

Roy: However.

Speaker Change #163: When we will be targeting that.

Speaker Change #174: Bench on the evolution and we'll keep you posted.

Speaker Change #163: Yeah.

Louise: Louise We lost you on the last sentence, we cannot hear you.

Operator: Excuse me, this is the operator. I've opened up Mr. Luis's audio. Can you speak again, sir?

Operator: Excuse me. This is the operator I've opened up Mr. Luis is audio but can you speak again Sir.

Operator: I think they've lost the connection.

Speaker Change #173: I think they've lost connection.

Luis Felipe Castellanos Lopez: I'll answer if there's any remaining questions.

Operator: And if I'm doing it,

Charlotte: At this time there are no further questions. Thank you Charlotte I will turn to questions I will turn the call back to the operator.

Charlotte: Okay.

Operator: It was the last question. Did you...

Operator: It was the last question we.

Charlotte Jones: We do on here the last answer I thought it was full body. If you have a follow up on that I'd be happy to.

Operator: Sorry.

Operator: There are no follow-ups. We just missed the last sentence. We heard most of the answers.

Richard: There are no follow up Richard Mr. Last sentence, we heard most of the answer.

Richard: Okay.

Operator: All right, thank you. Okay, thank you very much. And there appear to be no further questions at this time, so I would like to turn the floor back over to Ms. Casasa for any closing remarks.

Richard: Alright, thank you.

Speaker Change #175: Okay. Thank you very much and there appears to be no further questions at this time.

Speaker Change #175: So I would like to turn the floor back over to MS. Casassa for any closing remarks.

Richard: Okay.

Michela Casasa: Thank you very much, everybody, for joining us all.

MS. Casassa: Thank you are you able to add equal joined Hello.

Operator: Hold on for one second. Can you hear Michela now?

MS. Casassa: Hello ones are going to can you hear me killer now.

Operator: Hello.

Operator: Yes, we can hear it now. Thank you. Thank you, everybody.

MS. Casassa: Yes, we can hear now.

Operator: Thank you okay.

Michela Casasa: Thank you everybody for joining our call. We'll see each other again next for the second quarter results. Bye-bye.

Speaker Change #170: Thank you everybody for joining our call we'll see each other again in the next in the second quarter results Bye Bye.

Operator: Thank you very much. This concludes today's conference call. You may now disconnect. Have a great day.

Speaker Change #169: Thank you very much. This concludes today's conference call you may now disconnect and have a great day.

Speaker Change #169: Okay.

Q1 2024 Intercorp Financial Services Inc Earnings Call

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