Q4 2024 Intercorp Financial Services Inc Earnings Call
Good morning, and welcome to Intercorp financial services fourth quarter 2024 conference call.
All lines have been placed on mute to prevent any background noise.
Please be advised that today's conference is being recorded.
After the presentation, we will open the floor for questions.
Instructions will be given as to the procedure to follow if you would like to ask a question.
So 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.
Type your question in the box and click submit question.
Speaker Change: It is now my pleasure to turn the call over to Mr. Ivan Appeal for inspire group, Sir you may begin.
Thank you and good morning, everyone.
Speaker Change: On today's call Intercorp financial services will discuss its fourth quarter 2020 for earnings.
Speaker Change: We are pleased to have with us Mr. Luis Felipe.
Mr. Yano: Mr Yano, Chief Executive Officer, Intercorp financial services.
Keller: Ms Keller.
Casassa: Casassa, Chief Financial Officer, Intercorp financial services.
Casassa: Mr. Carlos Chaudhry, Chief Executive Officer Interbank.
Speaker Change: Mr Consult <unk>, Chief Executive Officer, Andrew <unk>.
Bruno Rachel: Mr Bruno Rachel Chief Executive Officer and Telecom.
Bruno Rachel: They will be discussing the results that were distributed by the company yesterday.
Bruno Rachel: There is also a webcast video presentation to accompany the discussion during this call if.
Bruno Rachel: If you didn't receive a copy of the presentation or the earnings report. They are now available on the company's website.
Bruno Rachel: <unk> Dot Com Dot T E.
Bruno Rachel: Otherwise if you need any assistance today, please call inspire grouped in New York at 6469408843.
Speaker Change: I would like to remind you that today's call is for investors and analysts only.
Speaker Change: Therefore questions from the media will not be taken.
Speaker Change: Please be advised that forward looking statements may be made during this conference call.
Speaker Change: These do not account for future economic circumstances.
Speaker Change: Industry conditions, the company's future performance or financial results.
Speaker Change: As such statements made are based on several assumptions and factors that could change, causing actual results to materially differ from the current expectations.
Speaker Change: For a complete note on forward looking statements. Please refer to the earnings presentation and report issued yesterday.
Speaker Change: 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.
Speaker Change: Mr. Castellanos. Please go ahead Sir.
Speaker Change: Thank you.
Speaker Change: Welcome to our fourth quarter 2024 earnings call.
Speaker Change: Like to thank you all for attending our call today.
Speaker Change: 2034 marked a few export with Boeing.
Speaker Change: For our country.
Speaker Change: Thanks.
Speaker Change: On the macroeconomic front, we finished the year with an improved sentiment.
Speaker Change: On the bulk ore on the back of a rebound in manufacturing construction Agra and.
Speaker Change: On Fisher inflation remained under control and our currency that's all water state.
Speaker Change: We're anticipating a GDP growth of three 2% for the year 2024, primarily driven by as I mentioned, we got very diverse sectors improve.
Speaker Change: Drivers of private investment and consumption.
So you will probably be the country with the highest growth in the region for 2024.
Speaker Change: Looking ahead to 2015.
Speaker Change: We continue to be modestly optimistic about the future growth of Peru.
Gravity Beckman said consumption to continue its positive trend. However, we are cautious given the 2035 is a pre electoral year on churn gets engaged external environment.
Speaker Change: Certainly.
Speaker Change: 2034 results for.
Speaker Change: Considering that we are emerging from the most challenging phase of the credit cycle.
Speaker Change: During the first half of 2000 to report.
Speaker Change: We are still carrying the challenges.
Speaker Change: The challenge is coming from that deterioration of the consumer portfolio from the previous year.
Speaker Change: As expected in the second half and particularly in these last few we saw an important recovery boosted by a liquidity event.
Speaker Change: And consumers, including the release of Belgium.
Speaker Change: <unk> <unk> of severance indemnities deposits.
Speaker Change: Dr de risking a strategy we implemented in the banking segment has different league baseball.
Speaker Change: You've reached has returned to low levels. Additionally, the market performance has got a positive impact on our investment portfolio, both in the insurance and our wealth management segment.
Speaker Change: As a result, the recovery of our business is headed.
Speaker Change: We achieved an ROE of 18% plus in the fourth quarter, our thoughts recovery that demonstrate the resilience of our operations.
Speaker Change: Believe that these trends should continue.
Speaker Change: At <unk>, we had a positive year and we haven't been able to increase our market share in loans and deposits consolidated our position as the third largest bank in both.
Speaker Change: Our growth in loans has been driven by commercial banking.
Speaker Change: We have gained over 80 basis points in market share.
Speaker Change: We believe we have begun a recovery, but in our consumer portfolio, we have deployed enhanced internal volumes.
Speaker Change: Improving our underwriting standards.
Speaker Change: Although we're still being cautious.
Speaker Change: Incubate an insured bank continued to see business opportunities together, while clean keeps increasing the engagement of abuses fostering more primary banking relationships and supporting growth.
Speaker Change: On a separate note in the banking segment. It is worth to mention that by year end, we executed the successful issuance of subordinated bonds at the lowest ever spreads for interbank with drafting the markets confidence in our brands.
Speaker Change: I think that they would all we have seen revenue growth in our core business.
Speaker Change: In individual life.
Speaker Change: While we continue to be the market leader.
Speaker Change: Our wealth management segment in <unk> and a positive year in its core business assets under management reached an all time high growing by 17% in the year.
Speaker Change: Best in portfolio performed well also improves.
Speaker Change: Our key strategic priorities.
Speaker Change: It continues to be to achieve ddos excellent for our customer the January primary relationships. Our ambition is to be a leading data platform with focus on E business, it's a profitable growth providing a comprehensive offering of the best user experience with deep analytic data.
Speaker Change: <unk> as our competitive advantage.
Speaker Change: Going forward, we continue to be optimistic about ASIC versus franchise outlook on the back of the continued recovery of the lithium demand up while we continue to execute our long term strategy.
Makena: Now, let me pass it onto Makena for a further explanation of this quarter.
Makena: Full year results.
Makena: Thank you Luis anything good morning, and welcome everyone.
Makena: Services revenues in the fourth quarter and full year earnings call.
Makena: We would like to review the macroeconomic outlook.
Makena: On slide two on anything with the lead the nation in both maybe macro economic indicators have been constant throughout the year that is economically globally hospitals in the AG in the fourth quarter.
Makena: <unk> investment income such.
Makena: FX is aimed towards.
Makena: Bill around sleep onset is the CE, marking three consecutive quarters with growth.
Makena: Linda.
Makena: As April 9% growth accumulating take one last question for me here.
Makena: Gradually sector yield growth accumulating take one 5% for the year.
Makena: And then just second fishing season, and that lead that rebound because of our business while non primary sectors.
Makena: At 3%.
Makena: In terms of monetary policy, the central banks have been able to control inflation and frankly, we're seeing a range with the expectation that two questions. Please.
Makena: We think the region. They do when they first reduced rental rates already copied 300 basis points from the age of 775% so the salary Farquhar on Saturday.
Makena: Although the central east closer to the new threat interest rate. We believe it still has room to continue reducing rates and slow at this time.
Makena: It continues to ask okay.
Laura.
Speaker Change: AC has these statements throughout the year, both inflation and the exchange rate are expected to remain stable Julien So any day.
Speaker Change: But anyhow the Peruvian accordingly is projected to grow by around two 8% with a stronger first half.
Speaker Change: To be an excellent year, which typically news it is not yet.
Speaker Change: Yeah.
Speaker Change: The dynamics in this sector.
Speaker Change: Saturday says construction agriculture mining and tourism is expected to continue significantly to grow this year in line with the increase in brand extension.
Speaker Change: And prices recovering growth should generate additional support however, it is still negative with close to 6% of GDP. So any journey for.
Speaker Change: As a comparison the average size.
Speaker Change: It will be important to closely monitor the evolution of economic policy in the U S, which could negatively impact the business environment.
Speaker Change: On slide three consistent with the previous slide indicators show optimism in the labor market and validating that play a key driver for domestic demand has been very good for search.
Speaker Change: Consumer confidence has undoubtedly improved each quarter aligning with the Burmese updating you soon market recovery.
Speaker Change: Nowhere for money.
Speaker Change: We have formal wages have shown year over year growth positively impacting branded gross margin.
Speaker Change: This recovery consumption has also been accelerated by dangerous candidly dweller in severance and Debbie D deposits enhancing people's purchasing power and construction.
Speaker Change: In Australia has remained stable and positive throughout the year. The same time that Natus the board anticipates Friday investment to grow by four 1%.
Speaker Change: Reflecting and Laura TCU of the Peruvian economy.
Speaker Change: According to the needs of the authority in past there are more than 60 infrastructure projects in the filing for upcoming years. So any genotype represented in an estimated total amount.
Speaker Change: Oh <unk> reached seven six.
Speaker Change: I expect this to continue for trades.
Speaker Change: For instance, the new type of data and Jonathan you can get to it later.
Speaker Change: Maybe Mike in the reposition of central them.
Speaker Change: In Denver, Miami budgets that are staying with us for the year and.
Speaker Change: They built any negative effect at some service HD video that 2028. Some examples include <unk>, Chad and Jen.
Speaker Change: In this context, we continue to deal with in our three key strategic priorities.
Speaker Change: On slide four.
Speaker Change: We aim for profitable growth to become a leading digital platform.
Speaker Change: Dave has demonstrated solid recovery showing resilience through the credit cycle.
Speaker Change: Net income, 70% higher than the same period last year and achieved over 18% ROE in the first quarter in line with our unique downtime at.
Speaker Change: Additionally, we'll continue to grow our customer base at double digit rates across both segments consistent with the macroeconomic recovery.
Speaker Change: Second we strive to create the best user experience aiming to generate primary banking relationships as a result more than 80% of our region 19, that's the list and over 70% of our commercial customers are needed that.
Speaker Change: MTS for weakened banking west 55 bonds.
Speaker Change: And he said that we are positive trends for January.
Speaker Change: SG&A is about six people.
Speaker Change: We continue to focus on our core business maintain our significant market share in consumer banking loans to 81%.
Speaker Change: Secondly, the market leader in the policies around 16% ranch and started in the market in the national East as they either with over 30% market share.
Speaker Change: Wealth management assets under management continues to grow at double digit rates, reaching 17% year over year and surpassing previous market.
Speaker Change: Okay.
Speaker Change: On slide five we wanted to share our key messages for the quarter.
Speaker Change: We have a set of a strong recovery in earnings and profitability in the last quarter of the year.
Speaker Change: The 19 investment results, reaching a net income of 490 million solid base that's it.
Speaker Change: This has resulted in Italy, now exceeding 18%, marking a significant improvement from the previous quarter and aligning with our medium term are already booked.
Speaker Change: Second our quarterly cost of risk continues to decrease standing at 246%, which is 180 basis points below last year, and 50 basis points lower than the previous quarter.
Speaker Change: Consequently, we see better results from Dubai, We then not only at 16% higher than both the previous quarter and the same period last year.
Speaker Change: So the cost of funds continues to improve increasing by 200 basis points year over year outperforming decisions either actually decreased by 40 basis points.
Speaker Change: This improvement is primarily due to faster than pricing and a better funding mix supported by synergies with HSA and the proactive management of fuel economy, which enable us to increase no cross default is may 16% year over year.
Speaker Change: Well, we have strengthened our commercial payments ecosystem generating primary banking relationships that allowed us to increase our market share in commercial banking by more than 130 basis points in place anymore.
Speaker Change: Additionally, a share of Egypt based flows to India.
Speaker Change: He's currently above 40%.
Speaker Change: We have achieved double digit growth in individual life and annuity demonstrating improvement in the insurance business.
Speaker Change: Being a leader in annuities.
Speaker Change: And finally with my listening, we experienced a record year in assets under management.
Speaker Change: <unk> grew significantly throughout the year.
Speaker Change: This growth drove the fee income line also allowed us to gain market share in that part of our mutual fund complex.
Speaker Change: Moving now we renewed four sections of our earnings presentation sustainable growth TD says it needed the lofty and finally guidance and thank Elise.
Speaker Change: Yeah, that's definitely the first section which focuses on sustainable growth.
Speaker Change: On slide eight.
Speaker Change: Net income of 490 million solid for the quarter is seven 1% higher than the net income reported last year and 26% higher than the previous quarter.
Speaker Change: This improvement in results.
Speaker Change: This improvement results in a not only of 18, 2%, which is already in line with our unique early goals as stated in niche in 19 net income has almost tripled year over year comparison, primarily due to lower and lower cost of risk and a slight improvement in margin.
Speaker Change: A reduction in the cost per car Ts.
Speaker Change: This has allowed navy income to grow by 2.6 times compared to last year, reaching a narrow range of 16%, which is more than double that of the previous year.
David: Important to mention that there is a seasonal effect on banking results, usually hi, David.
Speaker Change: In defense.
Speaker Change: In the insurance business, our collaborations remains Saudi as annuities and life insurers continue to grow year over year decrease is attributed to the extraordinary results from the investment portfolio in the fourth quarter of 2023.
Speaker Change: Finally in the wealth management business the positive dynamic with clients continues.
Speaker Change: Assets under management record levels, once again driving fee income outlook.
Speaker Change: Additionally, the investment portfolio had an extraordinary performance in the last quarter.
Speaker Change: Equally there is a significant recovery.
Speaker Change: Randy one nine times and it really heavily to 28, 3%.
Speaker Change: On slide nine we aim to create a consistent improvement in quarterly earnings in the banking segment, which represent around 70% of iron test results.
Speaker Change: Firstly, the cost of risk and clearly there's a positive trend throughout the year.
Speaker Change: Going below our 3% appetite for the fourth quarter and plenty plenty funds.
Speaker Change: These improvements in Florida, the rising Felicia and Cleveland three within the consumer portfolio, which was due to the deterioration in the payments. We believe is accretive values amidst sustained high inflation no economic growth embarrassed disruptions caused by winter in Boise that accuracy.
Speaker Change: Right.
Speaker Change: Secondly, they didn't they didn't they're seeing government was achieved through a reduction in the cost of funds, which would be elaborated on.
Speaker Change: On inkjet sequencer.
Speaker Change: There was a really reached 16% in the fourth block there to fund the same theater of a year ago, driven by a one 6% growth in net income.
Speaker Change: These results along with the insurance and wealth management in Asia in the BSA cost issues, you faced on a recovery trend achieving meet them early in the fourth quarter.
Speaker Change: On slide 10, we see a recovery in the last quarter, mainly due to an important improvement in revenues from these days. Thanks.
Speaker Change: Continue to grow and the investment portfolio had a booth tour.
Additionally, I mean brokerage Maggie to interact on a year over year basis, even a reduction in the cost per clients. Finally, we see thus far less of a core business at the desk.
Speaker Change: They don't return on the investment portfolio in the last quarter.
Speaker Change: Finally in this section on slide 11, we wanted to highlight WC efficiency remains a top priority for us.
Speaker Change: A 5% decrease in total expenses in <unk> versus the previous year driven by the fact that I think really from the banking segment, namely due to variable costs the cost income ratio as either within the expected levels.
Speaker Change: As I said great.
Speaker Change: And so the 90% are in the ramp up the full year, which is best practice.
Speaker Change: Now, let's move on to show you more details on the performance.
Speaker Change: <unk> business.
Speaker Change: On Slide 13, we wanted to show you the evolution of our real portfolio as will said, our full year loan growth of six 5%.
Speaker Change: This was the overall market has grown.
Speaker Change: And below 2% on one side the commercial book had an important growth this year with 17% growth year over year. It has gained relevance kidney biopsies from 44% to 48%.
Speaker Change: During the year, we have leverage on the unfortunately been program, which allowed us to grow in SME and midsized companies with government guarantees.
Moreover, sales finance remains one of our key products with market share growing from 17, 7% just 12 months ago towards down 19% ranking second in Denmark.
Speaker Change: Therefore, the commercial banking portfolio I felt their farm. This instance, as midsize companies gaining over 80 basis points in market share now consolidated.
Speaker Change: In the market boosting our commercial banking market share by 130 basis points to 10, 9%, which is our all time high.
Speaker Change: On the other side, we see two separate trends in the retail level.
Speaker Change: We experienced significant growth in mortgages and payroll deductible loans with over 7% year over year growth each in the second half of the year, we had a boost in our mortgage loans, gaining 40 basis points market share over the past year.
Speaker Change: Second the fourth quarter was an inflection point for consumers.
Speaker Change: Activation and consumption and the increase in cash disbursement calculating a recovery in the retail segment with a slight increase of one 4% in the portfolio in the last quarter.
Speaker Change: We have on Saturday, they can approach to grow the enhancement of our internal models easily customer Centricity division helped us generate a more comprehensive value proposition for our guidance, allowing us to grow in excess demand.
Speaker Change: On Slide 14, we suggested me had a gradual increase during the year with a full year improvement of 40 basis points and 160 basis points from the bottom by the end of last year. These trends now.
Speaker Change: The reduction in cost increase.
Speaker Change: Anyway, there was an impact on yields due to the shift of the loan book mix consumer loans, which include credit cards and personal loans decreased from 22% to 18% year over year.
Speaker Change: Lastly, we see no other use of loans of 70 basis points in the annual comparison, reaching 45% for the full year. So he's a default.
Speaker Change: However, we have been proactive in managing our investment portfolio.
Speaker Change: Offsetting these effects taking advantage of market opportunities to generate additional margins.
Speaker Change: On slide 15.
Speaker Change: We wanted to point out that the cost of risk and Npls are rare.
Speaker Change: The low risk appetite and two 6% and two 5% respectively.
Speaker Change: Both indicators have followed that doesn't downward trend.
Speaker Change: They even improvement in the economic indicators and to some extent and liquidity events from the St. Louis.
Speaker Change: The improved macro environment is slowly starting to enhance people's urgency power and increase their disposable income leading to better payment behavior from customers.
Speaker Change: Now, let's walk through some additional insights.
Speaker Change: We have increased our exposure to commercial banking.
Speaker Change: Went from 44 in 2844% <unk> and 48% of indirect portfolio Yang of Citi.
Speaker Change: Each segment has performed well during the year.
Speaker Change: Approximately 13% of the commercial portfolio is back I guarantee from being fully built programs, which generated growth and a lower cost of risk for the following year. We expect to continue growing in this segment standard would have been 17 approach.
Speaker Change: Second during this year, we have stuck to the heat in growing our global response chiefs.
Speaker Change: Reagent portfolio.
Speaker Change: Personal loans have decreased now representing 18% of the total loan book, although in the fourth quarter, we have seen a slight improvement.
Speaker Change: Meanwhile, Europe was stable there that people are known to the public sector employees mortgages have remained stable.
Speaker Change: As a percent and 32% respectively.
She has a lower cost of risk from rebates to reduce around 340 basis points from state and municipal down.
Speaker Change: Two we know are intending on advertising. It has also impacted on the NPL ratio for weekend, we saw resulting in a lower carbon S ratio when compared to a year ago and in fact, we just still yield to the mix of the portfolio.
Speaker Change: Gracious in each specific region.
Speaker Change: Our consumer products continue to have over 200%.
Speaker Change: Finally, we have taken advantage of our analytic capabilities enhancing our strategy in origination and risk management aims to promote growth in efficacy manner.
Speaker Change: Separately, the right allocation of Nos weak result in our cost of risk we see a recap.
Speaker Change: On slide 15, we had a positive year in terms of the cost of funds as the downward say west coast starts throughout the year.
Speaker Change: These new tools first lower market rates at the short duration of interest bearing deposits allows for faster with Verizon.
Speaker Change: <unk> no current duty buses.
Speaker Change: Due to a better funding mix as the efficient funding our real costs R&D has gained relevance improving from 33% in 2023% to 36% in 2020 for deposits have become a more relevant.
Speaker Change: These structure, increasing from 70, 881% in the last 12 months as a result, our cost of funds improved by 100 basis points on a year over year basis.
Speaker Change: 40 basis points in the full year comparison.
Speaker Change: The emphasis on low cost funding and the synergies with ECB have shown results as we continue to grow deposits faster than they did dose reaching an annual growth rate of 11, 2% compared to 10, 8% of the banking system.
Speaker Change: Additionally, we have been working to enhance our value proposition to clients aiming to increase primary banking relationships, which has positively impacted our deposits.
Speaker Change: Sure.
Speaker Change: Recent in retail deposits has consistently grown over the past few years to 14, 6% as of December 2024, well officially intermodal has been so not just banking with deposits and also equal time deposits finally, our loan to deposit ratio of 96% is in line with.
Speaker Change: The industry patterns.
Speaker Change: On slide 17, we wanted to take a closer look at the efficient funding strategy of Ethernet, which Fred Miami focuses on capturing savings deposits and current accounts with no easiest way to.
Speaker Change: To achieve this we have implemented various initiatives aimed at enhancing the value added services provided to clients.
Speaker Change: Example, the synergies what do you see base have enabled us to walk her a more comprehensive service to our clients, thereby increasing the flow of interest received from ECP and getting everything right.
Speaker Change: And deposits.
Speaker Change: Additionally, the growth of new clients to improve slightly better program has also positively impacted midsized and small compact.
Speaker Change: All this contributes to a 15% increase in commercial loan growth.
Speaker Change: Yeah.
Speaker Change: We do local funding has also seen an 11% decrease year over year driven by similar strategies. Firstly, we captured 20% of the private pension funds. We draw was successfully retaining some 10% of these balances like ear and secondly, we are working on providing additional data.
Speaker Change: So clients, who have uncle codes, such as payroll accounts and finally, we are continuously enhancing the fact OSP to foster primary banking relationship.
Speaker Change: As a result, we achieved a 16% year over year in Greece, and a 12% compounded annual growth rate from 2016 in a low cost finally, raising its share of funding from 28% in trading 90, 276% in 2024.
Speaker Change: Now moving to insurance on slide 18 on a yearly basis, we see an increase in the contracted on Saturdays finding of 18% and that was mostly driven by individual life and annuities, partially offset by credit life due to a clean up in the database in the fall.
Speaker Change: Walter we observe growth in diesel light annually. This reserve of 28% and 22% respectively, driven by the generation of new business, which surfaces. The monthly amortization of this GSM.
Speaker Change: Results from investments increased in the last quarter of the year to six 1%, mainly due to bad debt real estate valuation.
Speaker Change: The other from the year over year reduction is mainly explained by the extraordinary gains of the fourth quarter of 2023.
Speaker Change: Finally in wealth management, we continue to see growth in assets under management with a yearly growth of 17% and a quarterly growth of 2% reaching their games.
Speaker Change: At a maximum of $7 $3 million, which have led to the recoveries in fee income.
Speaker Change: And therefore, those had an important year and the digital development early have allowed us to grow more than 45% in the last year outperforming our peers and gain market share, which is now at 16, 5%.
Speaker Change: Additionally, likelihood of DVT and PE interest in shifting from Baby Bond market Association has also Sweden the recovery of fee.
Although the income shows 28% year over year growth and 17% full year growth.
Speaker Change: Now, let's move on to the day he does.
Speaker Change: On slide 21, we have a fully scaled digital platform with world class scalable digital proposition continuously developing solutions to meet our clients' needs Green zones, a guy who can open fully developed gums and you'll see nice being advanced features for savings. They can also use easy pay.
Speaker Change: Are you seeing for payments and some defensibility could be in the app to adjust it very convenient complementing the C D and e-commerce business offerings, we do need it.
Speaker Change: In terms of insurance are offering each diverse including travel insurer need that so nice mature.
Speaker Change: And credit card issuance among others.
Speaker Change: Beckman enemy enables our clients to onboard and subscribe to mutual funds inside easy anybody finally, our clients have access to the shops are market based and there is no yes.
Speaker Change: On slide 32, we continue to highlight the positive trends in our digital indicators compared to the previous year.
Speaker Change: There was news that experience is defined as everything you need in a single that we have made significant progress in our journey towards becoming more digital developing necessary capabilities to meet our customers needs and providing them with the best experience as a result, we have seen substantial growth in more recent nickel.
Speaker Change: And did you just have to learn increasing from 75% to eight 2% and from 69% and 73% respectively.
Speaker Change: Days of treatment the number of digital customers has increased by 17%.
Speaker Change: Did he does serve Saturday.
Speaker Change: Okay.
Speaker Change: 80%.
Speaker Change: Always telecommunications action, which focus on educating customers about new self service functionality to the app in our Venezuelan assets.
Speaker Change: Finally in the last quarter, we experience and they doesn't depend on Acs in the yearly analysis you want to.
Speaker Change: One thing Nishu without samsonite.
Speaker Change: However, we had already seen a recovery in January occurring right now is to be above 60 points in M. P.
Speaker Change: As part of our digital then let a couple of seizure exactly fleet. We believe we have created significant value and primary banking relationship to me.
Speaker Change: Leanne says comes in it.
Speaker Change: Hum and accelerator evidenced by the fact that 60% of the other is mostly transactional customers that youll see the rundown there primarily that I've explained by transactions sent and received with B.
Speaker Change: We have been implementing commercial actions focused on increasing usage and transaction for babies campaign, which has resulted in accelerated growth of the.
Speaker Change: The number of transactions increased two three times and a full year comparison with active users increasing by more than 22% and the average number of transactions per user pricing by 77%.
Speaker Change: And in the right proportion of primary banking clients increased to approximately 34% for retail clients in 2024.
Speaker Change: These clients one six time more photos, one four times more the bulk is 97% less churn and three times higher M Dias.
Speaker Change: We have continued working to generate further synergies as we encourage the growth of our payment ecosystem focusing on increasing transactional volumes offering not just value added services and gives us an easy pay as a distribution network for interbank drugs as well.
Speaker Change: <unk> to increase strip aside.
Speaker Change: As such the different share of.
Speaker Change: Hello is above 40% the results are evident as we follow for key figures are around 30% yearly increase in easy pay cash flow coming from Iran coming through into bank accounts and 79% increase in flows from that.
Speaker Change: Two seven times yearly increase in transaction volumes and 63% gross inflow from my collections safe to ECB.
Simon: Simon in this section on slide 25 insurance and wealth management digital indicators show positive development of live at least.
Speaker Change: The increase in.
Speaker Change: Sure you end this year, we have focused on enhancing the digital experience for our clients and expanding our distribution network through new digital channels.
Speaker Change: What time, they never missed a beat there.
Speaker Change: We debated this has allowed us to increase is that self service to 69% from 59% of the previous year.
Speaker Change: See me, Larry So I mean, it does say halfway to 85%.
Speaker Change: Moreover, the life premiums.
Speaker Change: It's an important role.
Speaker Change: Although slowly gaining relevance reaching 15%.
Speaker Change: In wealth management in the forms of digital transactions reached 53% and they have any users now account for 27% of total in their own those persons to achieve these results. We have focus and will continue to work on enhancing communication and sell through digital channels and in the development of photos and space.
Speaker Change: Characteristics stay goes from digital guidance.
Speaker Change: And as mentioned before we saw some of the digital strategy are reflected also in higher asset under management and higher fees.
Speaker Change: Now, let me move to the final part of the presentation, we will provide some takeaways in the guidance for 2025.
Speaker Change: Okay I thought he said it led me.
Speaker Change: And easier to Digest for me here.
Speaker Change: The first point is on coffee those capital ratios should remain at some level, we have total capital ratio above 60% and the core equity tier one ratio above 11%.
Speaker Change: Our guidance for 2025, I believe is to be around 16% expecting a significant improvement compared to the full year 'twenty than before.
Speaker Change: Okay.
Speaker Change: Closer to the 18% Mi desktop maybe end of the year.
Speaker Change: Although the I believe for the last quarter of 2020 for what's above 18%.
Speaker Change: This was due to some positive impact from the level of seasonality in banking results and.
Speaker Change: The good performance of the debt investment portfolio, which we don't expect to be repeated in each one.
Speaker Change: Overall, we expect a high single digit growth, surpassing 2020 for growth driven by our commercial banking and the recovery of the consumer portfolio. We expect these to be above system average growth is to continue gaining market share in Tvs.
Speaker Change: In that line, we expect a slight recovery of me on eastern part to me about five 4% of the cost of funds continued to improve due to a better funding mix in the yield of loans. We go over it in 90, the consumer portfolio growth.
Speaker Change: Cost of risk for banking is expected to remain remained solid at around 3% below the 346% of full year place any four in line with our meet there.
Speaker Change: We continue to focus on efficiency and how you get there as we expect our cost income ratio of around 37% driven by the movement in the top line.
Speaker Change: Let me finalize the presentation with some key takeaways.
Speaker Change: The strong recovery of earnings and profitability for our defense.
Speaker Change: Second low cost of risk at advancing segment third better funding mix and cost of funds.
Speaker Change: We have strengthened our commercial and payments ecosystem.
Speaker Change: Yes.
Speaker Change: Double digit growth in you need loan life, and annuities and see a strong increase in assets under management in wealth management, gaining market share in that form.
Speaker Change: Additionally, we would like to provide you with an update of the buyback program that we have.
Speaker Change: You are aware, we have a buyback program in place is what's approved by the international partners may be 2023 for up to 100 million dollar amount, which we have already purchased approximately $75 million.
Speaker Change: The board has currently approved a new buyback program, which is subject to be discussed and approved in the next Gen asking Congress.
Speaker Change: Thank you very much now we welcome any questions you might have.
Speaker Change: Thank you.
Speaker Change: This time, we will open the floor for your questions.
Speaker Change: We will take two questions from the conference call.
Speaker Change: Sure.
Speaker Change: If you'd like to ask a question. Please press the star followed by the one key on your Touchtone phone now.
Speaker Change: Questions will be taken in the order in which they are received.
Speaker Change: If at any time, you would like to remove yourself from the question queue. Please press star two.
Speaker Change: To ask a question please press star one.
Speaker Change: So the webcast viewers simply type your question in the box and click submit question.
Speaker Change: Pause momentarily to compile a list of questioners.
Speaker Change: Today's first question comes from Ernesto <unk> with Bank of America. Please go ahead.
Speaker Change: Thank you Hi, Good morning News for me Good luck, Carlos and good morning to all of your team.
Speaker Change: Congrats on your first quarter results.
Speaker Change: Five guidance.
Speaker Change: My first question would be fine.
Speaker Change:
Speaker Change: So considering youre expecting higher loan growth in 'twenty, five and how should we think about the fee income growth.
Speaker Change: You'd also be supported by.
Speaker Change: But even strong cash management.
Speaker Change: How much of your fees total revenues are coming from digital channels.
Speaker Change: And I don't know if you have like a medium term target or how much digital revenues represent of total revenues.
Speaker Change: So that's where my first one.
Speaker Change: My second one will be on the wealth management business.
Speaker Change: As you pointed out we continue to see a recovery.
Speaker Change: So just wondering what would be the variables that we should monitor.
Speaker Change: These further recovery in 25 I don't know.
Speaker Change: Placement rates anything that you can provide us some color.
Speaker Change: It will be very helpful.
Speaker Change: And my last question.
Speaker Change: Effective tax rate. So it was kind of long term for compared to historical levels. So what.
Speaker Change: What should be the level, we should expect in 'twenty five the next few years. Thank you.
Speaker Change: Okay.
Speaker Change: Okay. Thank you Ernesto for your kind words.
Speaker Change: I'm also very happy with that.
Speaker Change: Recovery outperformance in the fourth Q, we expect to continue to consolidate in this trend in the coming year and Red Bull and the number wasn't going to get up.
Bruno Rachel: Sure that'd be a go to Bruno please for the wealth management business.
Andy: And then Andy can touch upon our number one and three.
Speaker Change: Yes, okay.
Speaker Change: We're learning a Nashville, and first of all stocking and about six.
Speaker Change: We are expecting fees to grow I mean between high single digits, maybe low low double digit and this is mainly due to the composition of our fees as you have seen where you'll see I didn't take a whole space has been growing nicely in some of the business segments like for example in San Diego.
Speaker Change: And they have also been growing nicely.
Speaker Change: And commercial bank.
Speaker Change: A portion of it that's what's affecting you in 2020 for Watson one related to the.
Speaker Change: The consumer loan book, so credit and debit cards now given that now we are expecting a recovery of that business no. We aren't thinking that person will cease to be the one that impacts both in D. C and in makeup growth.
Speaker Change: You have seen during 2020 for you you talked about in D. C ideas and for US it is difficult to explain it because most of the piece that we have today are coming from D. That'd be because of the higher ETF of disease, our phase of field testing only be 80% read their values.
Speaker Change: 8%.
Speaker Change: Commercial guidance and I saw the tax rate is concerned.
Speaker Change: I mean, that's great actually varies a little bit depending on the weight, while still things not the weight of bond insurance wealth management I wanted to talk to the impact of the tax rates are higher but the second one other person practice, specifically if that's right off the bat is aim.
Speaker Change: It makes between the let's say the the portion of the early for holiday angle. The bank that's gone from X attendance. It is bookings, okay. So basically, especially at the beginning of the year that that's great for intermodal.
Speaker Change: It wasn't a result, because of the need if that have been going up to more.
Speaker Change: Normalized level as of the fourth quarter. So I guess when when you look at the tax rate as a whole is doing 2025, you should see a slightly higher tax rate when you put everything together in Mexico for a year or so with a high ratios of the bank as a whole and on the core business.
Speaker Change: Eric.
Speaker Change: Yes, maybe moving through that wealth management question Suraj.
Speaker Change: Character.
Speaker Change: So good morning.
Speaker Change: With regard to wealth management.
Speaker Change: We've already seen good growth in fees. All 2024, we expect that to continue to be the case during 2025.
Speaker Change: The first half was a little slower in terms of portfolio returns with a with a good performance on the second half. So we would expect a normalization on that end.
Speaker Change: I'm sure you know, but.
Speaker Change: The last probably 18 months were.
Speaker Change: Very volatile lines.
Speaker Change: A couple of quarters.
Speaker Change: Affecting results, but again in the fourth quarter was very solid and we expect that to normalize during the during the year, perhaps the one thing that <unk>.
Speaker Change: Wasn't that great during 24, what naeem.
Speaker Change: We were expecting rates to fall or.
Speaker Change: Fed rates to come down a little bit faster than we saw last year.
Speaker Change: But as.
Speaker Change: Those rates.
Speaker Change: To go down a little bit we expect NIM to recuperate and do better this year as opposed to that so I would say continued growth in lease.
Speaker Change: NIM and more stable results in the portfolio should should be the explanation for this years results.
Speaker Change: Okay. That's very helpful. Thank you very much.
Speaker Change: Thank you. Thank you goodbye.
Nicolas Riva: Next question today comes from Nicolas Riva with Bank of America. Please go ahead.
Speaker Change: Thanks, Mika language pretty powerful that sounds prudent.
Nicolas Riva: I have only one question about the tier two bonds of interbank.
Nicolas Riva: So last week, you raised the 325 million.
Nicolas Riva: $50 million.
Nicolas Riva: With our new 2035 months I wanted to ask about the plan for the regarding the call option.
Nicolas Riva: On the 23rd tier twos in July I would assume given the.
Nicolas Riva: The new issue last week that you are going to be calling the 20 therapies in July but if you can discuss your thoughts on that.
Nicolas Riva: Thanks.
Nicolas Riva: Yes.
Yeah, well victory vertical.
Nicolas Riva: Yeah, we're planning to execute geico.
Nicolas Riva: That's the reason of.
Nicolas Riva: The use of proceeds of the issuance with it so you're right.
Nicolas Riva: Thanks.
Nicolas Riva: Thank you.
Speaker Change: Thank you and our next question today comes from Yuri Fernandes with JP Morgan. Please go ahead.
Yuri Fernandes: Hey, guys. Thank you good morning, and congrats also for or the 18% that are weak.
Speaker Change: I have a question actually on these on your guidance for ROE.
Yuri Fernandes: The 60%.
Yuri Fernandes: I understood the cost of risk was very low this quarter and you also have to do they they tend to kind of grow help on how you are we are.
Yuri Fernandes: About 60% for next year.
Yuri Fernandes: Embedding a lot of recovery right like I know versus the full year, yes, it's a recovery versus the base. We are still in the fourth Q.
Yuri Fernandes: So I'm trying to understand it probably be a little bit more conservative.
Speaker Change: If it is the tax rate going up a little bit the cost of risk in your approach to that is not a a good a safeway and should converge to the 2% up to your guidance I'm just trying to understand because let's say, 60% is not bad but I know you are your goal at some point towards two or 33, 2% in Idaho.
Speaker Change: I, just would like to understand a little bit more towards.
Speaker Change: Towards like a higher.
Speaker Change: How your teams are.
Speaker Change: How do we think that.
Speaker Change: Okay.
Speaker Change: Okay. Thanks very much.
Speaker Change: That's a very good question so.
Speaker Change: Alright.
Speaker Change: Absolutely, we're very happy with the results of these fire obviously.
Speaker Change: You know there is some seasonality in the results of <unk>, especially at the bank interbank is usually wraps up.
Speaker Change: The last quarter, especially in December.
Speaker Change: Normally the highest points over a year in terms of returns.
Speaker Change: And as you mentioned in general had very strong investment soles.
Speaker Change: So I think they look like a 38% ROE you were targeting more like 20% is.
Speaker Change: Our sustainable in principle, we are looking at so if you go through those types of adjustment and.
Speaker Change: Do get $2 Anders and the AG than we strategically built on the specific quarter.
Speaker Change: However.
Speaker Change: Can you do it well, we all need to understand we are rebuilding.
Speaker Change: The consumer book.
Speaker Change: That happens faster in a more efficient way in terms of cost of risk depending on the performance of it.
Speaker Change: Probably we have some.
Speaker Change:
Speaker Change: Chuck risk potential in terms of the numbers that we have guided that that will be.
Speaker Change: <unk>.
Speaker Change: Extremely conservative I think we are being cautious because there are some unknowns are around next year.
Speaker Change: But obviously, we'll be trying to get around to each opportunity that catch up.
Speaker Change: The combination of that seasonality the way that they were going to run up a recovery on the strongest sold from from investments are the ones that.
Speaker Change: Blaine and it'll be why we are still guiding have you built that way.
Speaker Change: What we do see is that got lost.
Speaker Change: Finally, the last part of the year, we will be a dose.
Speaker Change: 18% levels. However.
Speaker Change: A question on that would be how we built into the first half of next year.
Speaker Change: Got it so a 2% to the target maybe for Dave or Scott talked to next year is that.
Correct understanding.
Speaker Change: Okay.
Speaker Change: So it's lower in the first half and it will be building up into the second half.
Speaker Change: No Super clear I can also provide some guidance when they are the leader of the subsidy. If you average the 20% for the telco like us as a member of my license is a good guy, but if you can just say on the insurance and the basic vision, how does shipyard reasonable units also.
Speaker Change: Yes.
Speaker Change: Welcome to your medium term targets and maybe I can pass it on to me definitely strategic.
Speaker Change: We don't want that detail I think our guidance for games like our medium.
Speaker Change: Medium targets for ROE is.
Speaker Change: As for <unk> as a whole.
Speaker Change: <unk> and that will be built up by like training and dragging for in Debbie went into single row 18 interact.
Speaker Change: But I.
Speaker Change: I do want to say that we are going to like year by year in detail.
Speaker Change: The overall number that you should focus.
Speaker Change: No no I'm not super clear.
Speaker Change: Understood and just a.
Speaker Change: Second topic here just slow growth.
Speaker Change: Pretty good high single digits, but I wouldn't I'd like to understand how do I see the competition you should see other players also like a little weakness ambition to grow high single digits.
Speaker Change: Basically I would say is getting market share like trying to understand the competitive or can you keep it.
Speaker Change: Thank you.
Speaker Change: Yeah, obviously that competitive landscape is we feel these very strong brew I think we've proven year in year out.
Speaker Change: Built a franchise that can gain non stable to gaming scratch, if I could share from competitor store solar idea.
Speaker Change: In our system that that drove that aggressive mid east to continue scratching.
Speaker Change: Market share on a reasonable and sustainable way.
Speaker Change: That's our only that'd be instances, where we have a higher chance of doing that.
Speaker Change: Others, where we already have.
Speaker Change: That footprint it will be a leader.
Speaker Change: It'll be more difficult, but our aim is to continue to grow market share.
Speaker Change: Over 80 George.
Speaker Change: This is particularly.
Speaker Change: Our balance sheet and also maybe I can pass it onto Carlos if you want a complement anything on how you, particularly with the FCA.
Speaker Change: People.
Speaker Change: Yeah. Thank you Andrew.
I would tell you the same thing I don't know.
Speaker Change: We would enter and discuss each competitor, but the way we look at these as we were expecting.
Speaker Change: The market to two role for only around the system not to grow around somewhere between 5% to 7%, which is a two things went to player or or are expecting GDP.
Speaker Change: And we've been growing higher than that.
For the last several years.
Speaker Change: <unk>.
Possibly as Philippe mentioned, we aim to recover a bit of the consumer finance book.
Speaker Change: A little more growth there.
Speaker Change: We've seen in 2024, we grew more in commercial banking, where the system didn't grow.
Speaker Change: We aim to continue to grow a little bit higher than the system.
Speaker Change: So yes, we will grow we will gain market share, but that is our aim it wont be crazy it will probably be it.
Speaker Change: I leave you at both.
Speaker Change: The market, particularly in consumer.
Speaker Change: Yes.
Speaker Change: No Super clear, thanks, and congrats again.
Speaker Change: Yeah.
Speaker Change: Thank you.
Speaker Change: Thank you and our next question comes from Alonso Aramburu with BTG. Please go ahead.
Alonso Aramburu: Yes, hi, good morning, and thank you for the call.
Alonso Aramburu: Two questions from my end the first one a little bit of a follow up on the previous question just trying to reconcile a little bit higher.
Speaker Change: How you get to a 19% of our OE, specifically I think you hit it.
Alonso Aramburu: You had a 16% ROE this quarter.
Alonso Aramburu: With a cost of risk of two six so if you're saying that your cost of risk is going to be 3%.
Alonso Aramburu: It seems like something that comes to improve materially for the Aero to go to 18%. So I'm just wondering whether that is a.
Alonso Aramburu: Margins as a man efficiency I mean, what how do you get there and.
Alonso Aramburu: And then my second question is if you're going to give us some color on the mark to market gains I can tell you, specifically, which securities were the ones that.
Alonso Aramburu: Huddled screens. Thank you.
Alonso Aramburu: Okay. So yeah, so too.
Alonso Aramburu: The first question.
Alonso Aramburu: It's basically just seeing how our consumer book has shrunk so by rebuilding that consumer group and bringing in the yields of the consumer group and more activity you'll have.
Alonso Aramburu: What is the impact of higher yielding.
Alonso Aramburu: Loans flat.
Alonso Aramburu: More fee income because of activity.
Alonso Aramburu: I'll begin with a bunch of us will be that this changing mix will increase cost of risk, but obviously when we're back to you that the equation has to be positive that will bring it up.
Alonso Aramburu: Then we have some space for.
Alonso Aramburu: A quick improved cost of funds a bit more I think we are still in a recovery phase of going back to both our parts of where we had.
Alonso Aramburu: Some years ago.
Alonso Aramburu: I haven't focused on efficiency as well I think.
Alonso Aramburu: There's still some room.
Alonso Aramburu: Got.
It will be more evident regime because of the increase in revenues, but still.
Alonso Aramburu: We would like to continue.
Alonso Aramburu: So that equates.
Alonso Aramburu: Sure sure to bring back.
Alonso Aramburu: I've always felt good about it.
Speaker Change: Hey at the levels that we've seen before of around 18%.
Speaker Change: And then one in Denver.
Speaker Change: I think it's tough to draw a specific in terms of what instruments.
Speaker Change: Where are we.
Speaker Change: Where are the ones that drove the strong results. However, I would say the overall market sentiment for investments in basketball was positive both for fixed income and what we have been able to do so so it has been across the board maybe.
Speaker Change: I don't know if you can complement.
Speaker Change: Any particular.
Speaker Change: But I think that the overall setup, we have on the plate.
Sure.
Speaker Change: Yes so.
Speaker Change: You were saying Philip it was.
Speaker Change: Pretty much across the board I think.
Speaker Change: On in the fourth quarter there was.
Speaker Change: The main contributor was the equity part of our portfolio.
Speaker Change: And we have some investments in.
Speaker Change: And financials on technology stocks that performed well in the fourth quarter and those those had a good contribution to the overall performance of our portfolio.
Speaker Change: Okay.
Speaker Change: Hopefully we answered your questions that awesome.
Speaker Change: Yes, thank you very much.
Speaker Change: Thank you thank you and our next.
Speaker Change: Our next question today comes from Andres Soto Santander. Please go ahead.
Speaker Change: Good morning, Thank you for the opportunity to ask questions.
Speaker Change: My question is simple.
Speaker Change: Rob I want to make your.
Speaker Change: Numbers that you suggested in terms of the ROI for the business units.
Speaker Change: Is that what you expect in 2025 40.
Speaker Change: The medium term number on it specifically for 2025 what will be.
Speaker Change: Mostly par according to the bank.
Speaker Change: Yeah.
Speaker Change: I referred to was a medium.
Speaker Change: Medium term targets.
Speaker Change: So that's the way we build it.
Speaker Change: The addition of our sustainable 18% <unk> so that's a.
Speaker Change: Jeremy I think we're not going specifically.
Speaker Change: Subsidiary by subsidiary and maybe we can do a follow up on that Mike.
I'll have that info right down there when we get into the average.
Speaker Change: I mean, just to say you know we have always and.
Speaker Change: We have always started in the 18% that really need them, there, which was a combination of 20% even if it went up to 80% in daily holding around 18%. So you'll see it what has what has happened in the fourth quarter of each year. The number that we have in the slides there it seems like 5% of <unk>.
Speaker Change: It is a combination of a higher ROE. We also wrote off I believe in digital banking demand steel only 16% thoroughly nine despite the seasonality that we have discussed so basically due to the mix of the portfolio independent dealers.
Speaker Change: In the recovery phase of that business is that easy I don't believe that is still not where they need them range. If you look at the numbers that we have already provided to you and when we bought them at a 16% early of next year I mean, what I can say is that if.
Speaker Change: If mean, because they are not yet in our meet them early.
Speaker Change: That's the way how it works and that should get to the 18% full year not a most likely next to that because on the hook for recovery.
Speaker Change: Maybe that kind of can be explanation.
Speaker Change: Okay. That's clear. Thank you. Thank you both on when when I look at your NIM guidance for next year.
Speaker Change: They look a little bit conservative considering the improvement in the funding cost.
Speaker Change: Do you expect it might be a recovery in consumer lending so the mix sure.
Speaker Change: Sure lease remained the same.
Speaker Change: What what are your thoughts about the name is there any structural change in the in the system in the bank that prevents you to have a higher.
Speaker Change: It means that the ones that are currently cap or already.
Speaker Change: The driver that is going to take the arrow to be 18% over the medium term.
Speaker Change: The R&D is related to the pace of recovery of the consumer book now almost we're happy the economy is improving and there is we're seeing no doubt about it salaries of the lawyers.
Speaker Change: But this is a process its not going to be a dramatic so it's not that big.
Speaker Change: First quarter of next year, we're going to see it.
Speaker Change: Super growth in our consumer group now we.
Speaker Change: Again, we've been through cycles, we know that we're seeing.
Speaker Change: Hey.
Speaker Change: South indicators, both a recovery however, we're still being very cautious in our approach to going back with more strength into into the market.
Speaker Change: Need to see more indicators of this consolidated and then our book.
Speaker Change: We will start to grow.
Speaker Change: And then in the second half.
Speaker Change: We have to be cautious because of.
Speaker Change: Potential that PVC coming up from the.
Speaker Change: Pre.
Speaker Change: Pre electoral year, you're also.
Speaker Change: Still early to tell that.
Speaker Change: Usually we know how this moves in terms of <unk>.
Speaker Change: Investments being delayed until there is more dragged into picture. So again, we're cautiously optimistic but we're being cautious.
Speaker Change: And even in the way, we're seeing we'd whenever it.
Speaker Change: If things turn out this year that we get processes. So in fact as always we will be ready to deploy more resources into growing our work with faster. However, we.
Speaker Change: Coming from from the fact that as a great tactical that we we've gone through we'd rather be careful rather that that's been aggressive at this point.
Speaker Change: Yeah.
Speaker Change: That's great. Thank you so much and congratulations on the results.
Speaker Change: Thank you.
Speaker Change: Thank you there appear to be no further questions at this time, so I'd like to turn the floor back to Mr. <unk> for closing remarks.
Speaker Change: Okay. Thank you and thank you everybody for being with US today, we will see everybody I gave you in our first quarter claims any types of lease up.
Speaker Change: Thank you. This concludes today's conference call you May now disconnect your lines and have a wonderful day.