Q3 2025 Intercorp Financial Services Inc Earnings Call
Speaker #4: Good morning and welcome to Intercorp Financial Services . Third quarter 2025 conference Call . All lines have been placed on mute to prevent any background noise .
Speaker #4: Please be advised that today's conference is being recorded . After the presentation , we will open the floor to questions . At this time , instructions at that time , instructions will be given as to the procedure to follow .
Speaker #4: 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 .
Speaker #4: During the question and answer session . Simply type your question in the box and click submit Question . It is now my pleasure to turn the call over to Ivan Peill from is inspire Group .
Speaker #4: Sir , you may begin .
Speaker #5: Thank you and good morning everyone . On today's call , Intercorp Financial Services will discuss its third quarter 2025 earnings . We are very pleased to have with us , Mr. Luis Felipe Castellanos , Chief Executive Officer , Intercorp Financial Services .
Speaker #5: Miss Michaela Casarsa , Chief Financial Officer , Intercorp Financial Services . Mr. Carlos Tori , chief executive officer , interbank . Mr. Gonzalo Basadre , chief executive officer , Inter Seguro .
Speaker #5: Mr. Bruno Ferrechio , chief executive officer in Telugu . They will be discussing the results that were distributed by the company yesterday . There is also a webcast video presentation to accompany the discussion during this call .
Speaker #5: If you didn't receive a copy of the presentation or the earnings report , they are now available on the company's website . IFS .
Speaker #5: Otherwise , if you need any assistance today , please call Enspire Group in New York on six , four , 69408843 . We'd like to remind you that today's call is for investors and analysts only .
Speaker #5: Therefore, questions from the media will not be taken. Please be advised that forward-looking statements may be made during this conference call.
Speaker #5: These do not account for future economic circumstances . Industry conditions , the company's financial performance or financial results . 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 #5: 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 Services , for his opening remarks .
Speaker #5: Intercorp Financial
Speaker #5: Mr. Castellanos , please go ahead , sir .
Speaker #6: Thank you . Good morning and thank you all for joining our third quarter
Speaker #6: . Thank you all for your interest and trust in Ecfs . We appreciate your continued support . We have continued to positive performance in Peru's economy with cumulative growth of 3.3% as of August .
Speaker #6: This momentum has been driven by increased activity in consumption related sectors and sustained private investment , which is projected to grow by 6.5% by year end .
Speaker #6: While we are maintaining a cautious outlook given the international context and a pre-election period , Peru continues to benefit from a low inflation environment and a solid exchange rate , which has appreciated close to 10% this year .
Speaker #6: The country risk remains low even with the latest presidential transition . We haven't seen additional volatility . These factors reinforce Peru's position as one of the most dynamic and stable economies in the region .
Speaker #6: The political transition expected in 2026 does not suggest any major changes in financial stability . Prudent monetary management and strong institutions allow us to forecast continued growth , supported by the resilience of the local market and investors confidence .
Speaker #6: This quarter , IFS has sustained strong core results and profitability , with an ROE of around 16% . Even after a specific investment impact related to Rutas de Lima , with a provision of 78 million soles this quarter .
Speaker #6: As you may be aware , the Rutas de Lima concession has become an ongoing issue between the municipality of Lima and the concessionary .
Speaker #6: What is currently reflected in our books corresponds to the information available as of the reporting date. We are closely monitoring the situation as new developments unfold.
Speaker #6: Local and international legal proceedings will continue in the following months , with final resolution not expected in the short term . Our total remaining exposure after impairments today amounts to approximately $60 million in solids equivalent , which represents less than 1% of our investment book at Ecfs .
Speaker #6: These results confirm our ability to adapt quickly and keep generating value in a challenging environment , reaffirming our commitment to long term sustainability and profitability .
Speaker #6: Interbank continues to grow in higher-yielding loans, particularly in the consumer and small business segments, now representing 22% of our loan portfolio.
Speaker #6: Stronger net interest margin and better than expected cost of risk have driven a solid improvement in risk adjusted Nim , highlighting our discipline in effective risk and profitability management .
Speaker #6: ECB and interbank continue to capture joint business opportunities , while Plin deepens user engagement , fostering more primary banking relationships and driving growth in Seguro continues to grow .
Speaker #6: Its core business with solid performance in private annuities and life insurance . Even after the negative impact from Rutas de Lima . This quarter .
Speaker #6: In addition , Inter Seguro continues to leverage synergies with Intego to expand private annuity sales and collaborating with interbank to advance integrated bancassurance solutions that deliver greater value for our customers in Telugu .
Speaker #6: Our wealth management segment also continues to grow double digit , achieving new record highs in assets under management . Thanks to our clients trust and consistent engagement .
Speaker #6: Ecfs remains committed to our strategy of focus and profitable growth . Keeping our clients at the center of every decision . Our priority is to achieve digital excellence and deepen primary client relationships through comprehensive , data driven services and a differentiated experience powered by our innovation and advanced analytic capabilities .
Speaker #6: As our competitive advantage . Looking ahead , we remain optimistic about Ecfs and Peru's outlook . The company has demonstrated resilience in downturns and is well positioned to continue executing its growth strategy , maintaining profitability and reinforcing our leadership in the Peruvian market .
Speaker #6: Now , let me pass it on to Micaela for further explanation of this quarter's results . Thank you .
Speaker #7: Thank you, Louis-Philippe. Good morning and welcome, everyone, to Intercorp Financial Services Inc.'s third quarter earnings call. We would like to start with our key messages for the quarter.
Speaker #7: We had a very good third quarter as business momentum remains strong . Our accumulated net income is up by 81% compared to the same period last year , accumulating 17.4% .
Speaker #7: ROE , which would have been 18.3% excluding the one offs from Rutas de Lima . Net income from the quarter was 456 million soles , with an ROI of around 16% .
Speaker #7: Second key message . Higher yielding loans accelerated , showing a 7% growth in a year over year basis and 3% in the last quarter .
Speaker #7: Third risk adjusted Nim continues with a positive trend , increasing 40 basis points in the last quarter . Now , at 3.8% . Still , with a low cost of risk of 2.1% , and with some positive signs in the Nim recovering ten basis points in the quarter .
Speaker #7: Fourth , we continue to strengthen primary banking relationships and as a result , our retail primary banking customers grew 6% last year . Fifth , we had double digit growth in our core business in wealth management and insurance with written premiums growing by 15 by 58% year over year .
Speaker #7: Due to the growth in private annuities and life insurance, assets under management in wealth management are at new record highs, with continuous double-digit growth quarter to quarter.
Speaker #7: Let's start with our first key message . Let me share an overview of the macroeconomic environment . Peru's GDP growth accelerated in the third quarter with the central bank revising its 2025 estimate upward to 3.2% , supported by strong non-primary sector activity such as agriculture and mining .
Speaker #7: August growth reached 3.2% , bringing the year to date expansion to 3.3% . Agriculture grew by 6.4% , fueled by high international demand and mining remains strong .
Speaker #7: Construction services and commerce also saw growth above 5% , demonstrating solid domestic momentum . Private spending has been a key factor behind the economic growth throughout the year .
Speaker #7: Macroeconomic fundamentals remain stable , with inflation contained near 1.7% for 2025 . The Peruvian soil has strengthened around 10% this year , and the reference rate lowered to 4.25% , maintaining favorable financial conditions for ongoing growth .
Speaker #7: Overall , with a GDP growth projection of 2.9% for 2026 by the central Bank , Peru is establishing itself as one of the fastest growing economies in the region .
Speaker #7: Despite internal and external challenges . The Peruvian economy holds positive prospects for the coming years as it is well positioned to meet the global demand for commodities .
Speaker #7: Nevertheless , risks remain , particularly those related to political uncertainty and global market volatility . On slide five , high prices for copper and gold continue to be one of the key drivers of Peru's economic growth , boosting export revenues , encouraging investment in mining and related sectors , and supporting job creation .
Speaker #7: As a result , Peru's terms of trade are expected to remain at a historic highs in line with the positive economic environment . Business expectations remain stable within optimistic ranges and consumer confidence continues to improve , supporting domestic demand .
Speaker #7: The internal demand projection for 2025 has been revised upward by the central bank to 5.1% , driven mainly by solid growth in private investment and consumption .
Speaker #7: In the first six months of the year . Internal demand expanded by 6.2% , with private investment up 9% , led by double digit growth in non-mining investments and private consumption rising by 3.7% .
Speaker #7: Looking ahead to 2026 , internal demand is expected to moderate to 2.9% , with private consumption stabilizing at 2.9% and private investment reaching 3.5% .
Speaker #7: Additionally , there is an extensive pipeline of projects in mining and infrastructure scheduled for the coming years . In this environment , while we observe an acceleration in retail lending during the third quarter , we anticipate that this pace will likely moderate during the last quarter of the year .
Speaker #7: Given the expected outflows from the private pension funds . On slide six , during the third quarter , we achieved a 17% year over year increase in earnings , reaching a narrowing close to 16% .
Speaker #7: That said , this ROE marks a slight decrease from the previous quarter , mainly due to two factors . First , the last quarter in Telugu delivered results related to investment portfolio that surpassed expectations .
Speaker #7: And second , this quarter , Inter registered the impact of the Rutas de Lima provision of 78 million . As previously mentioned on the positive note , the bank saw a reversal of provisions related to integrated previously , Telefonica for 20 million souls .
Speaker #7: If we exclude Rutas de Lima and integrated IFS Roe would stand at 17.5% , which brings us closer to our medium term target .
Speaker #7: I want to particularly highlight the bank's strong performance this quarter , which is not only attributed to a lower cost of risk , but also to an improved and improved net interest margin in line with growth of higher yielding loans , fee income and positive results from the investment portfolio .
Speaker #7: Excluding the effect from integrating the bank's ROE would have been 16% , which represents an improvement both year over year and compared to the previous quarter .
Speaker #7: Furthermore , the core business of Seguro and in Telugu continue to post double digit growth on slide seven , I would like to highlight the positive trend of our ROE throughout the year .
Speaker #7: For the first nine months of 2025 , our ROE stands at 17.4% and excluding the Rutas de Roe would have reached 18.3% . This has been a solid quarter across all IFS business lines , with our core operations as the main drivers of profitability .
Speaker #7: This performance positions us well to continue advancing toward our medium term goals . On slide eight , our accumulated earnings are up 81% compared to the same period last year , with an accumulated ROE at 17.4% .
Speaker #7: Both interbank and inter seguro have achieved relevant growth , each posting increases of more than 60% year over year in Telugu . In particular , has seen its earnings more than tripled , which speaks to the strength and resilience of our diversified portfolio .
Speaker #7: Another positive highlight is the growing diversification of IFS earnings in the first nine months of the year . The Bank contributed around 70% of total earnings , showing the increasing relevance of our other segments .
Speaker #7: Now let's turn to slide nine , where we take a closer look at IFS revenues , which grew 9% year over year at the bank level .
Speaker #7: Top line is growing 4% in the quarter . As we are beginning to see a recovery in our net interest margin on top of good results in fee income .
Speaker #7: This is driven primarily by accelerated growth in the higher yielding loans , which starts to positively impact our average yield in our Seguro continued to demonstrate strong revenue trends in line with higher investment valuations .
Speaker #7: While insurance results improved thanks to growth in annuities . Finally , fee income continues to grow and the portfolio results have returned to more normalized levels .
Speaker #7: On slide ten , we wanted to double click on the fee income evolution , which continues to demonstrate good dynamics with a cumulative 8% increase year over year .
Speaker #7: At the bank level , this growth is supported by retail . On one hand , given the increased debit and credit card activity , and by commercial banking and the other reflecting results from our strategy of deepening client relationships and strengthening our ecosystem wealth management also posted notable growth with fee income increasing 17% year over year .
Speaker #7: As a result of the ongoing expansion in assets under management . In line with our strategy , the transformation of our acquiring business model continues positioning Easypay as a key complementary component within our commercial banking product suite .
Speaker #7: This has enabled us to strengthen client relationships and increase float balances . Although it has resulted in a compression of merchant margins impacting fee income , these developments are taking place amid growing competition in the market and the fast adoption .
Speaker #7: Adoption of QR codes with no fees . On slide 11 , I ifs expenses increased by 6% year over year as we continue to make strategic investments to support our long term growth ambitions .
Speaker #7: This includes accelerated investments in technology to strengthen resilience and enhance user experience , improved cybersecurity , expand our capacity and develop AI capabilities alongside ongoing efforts to strengthen leadership within key teams .
Speaker #7: Reflecting our recognition of the pivotal role talent plays in delivering our strategy . Consequently , the cost to income ratio that IFS level stands at 37.7% .
Speaker #7: Now , let's move on to the second key message on slide 13 , we see a positive trend in higher yielding loans . Our total loan portfolio expanded by over 5% year over year , outperforming the market .
Speaker #7: This positive momentum was driven by the acceleration in higher yielding loans , which grew 7% over the past year and 3% in the last quarter .
Speaker #7: The robust macroeconomic activity is reflected in increased disbursements by 34% in cash loans and by 56% in small businesses . In this last case , most of our current disbursements are now traditional loans , which include sales , financing , collateralized loans and unsecured loans , which have higher rates compared to last year's Impulso Peru loans .
Speaker #7: This segment continues to expand , with which , with average rates increasing by over 150 basis points in the past year . Overall , in retail banking , the affluent segment was the one which started the recovery in growth with an 8% growth year over year and 2% in the last quarter .
Speaker #7: But now the mass market segment has now grown for two straight quarters , increasing 3% in the last quarter . And beginning to regain scale on the commercial side , the decline in the quarter is mainly attributable to the corporate segment impacted by loan maturities and by some companies .
Speaker #7: Turning to the capital markets , however , mid-sized companies continue to perform well , up 5% year over year , and small businesses up 33% year over year .
Speaker #7: Now representing almost 4% of our total portfolio , on slide 14 , we wanted to double click on the consumer portfolio , which accelerated in the last quarter in personal loans , we've seen a significant uplift in digital channel performance driven by enhanced personalization of communication journeys and continuous improvements to our website .
Speaker #7: Disbursements rose 51% , supported by increased lead generation and additional loans to existing customers . We also redesigned our pricing strategy with a customer centric approach , enhancing our value proposition and driving higher conversion rates .
Speaker #7: The current mix starts to shift toward higher yielding segments , supported by growth in the mass market . Clients with good risk profile .
Speaker #7: Still , the retail cost of risk is at very low levels in credit cards . Transactional activity continues to grow as turnover rose 9% year over year .
Speaker #7: Looking ahead , we remain optimistic about our growth prospects , although we recognize that challenges persist in particular , pension fund withdrawals will likely affect consumer loan disbursements in the coming quarters .
Speaker #7: Nevertheless , our continuous focus on higher yielding segments and prudent portfolio management position us well to navigate this market conditions as part of our strategy , we continue to strengthen our payments ecosystem with Plin and Easypay .
Speaker #7: On slide 15 , we have continued working to generate further synergies as we drive the growth of our payment ecosystem , focusing on increasing transactional volumes , offering value added services , and leveraging Easypay as both a distribution network for interbank products and a source to increase float in particular , the commercial teams from both Easypay and the Bank are collaborating more efficiently , allowing us to deliver integrated solutions and maximize the value we bring to our clients .
Speaker #7: Transactions grew 38% over the last year , and our digital retail customers reached 83% . We introduced Plin corridors , extending our digital payment services to the transport sector through metropolitan corridors , and we recently launched WhatsApp offering a new digital experience for our clients , which allows them to pay without using the app directly from WhatsApp .
Speaker #7: Both by typing the instructions and through voice . Boosted by AI . This is our first example of conversational banking , and we will continue to evolve this offering with new features in the near future .
Speaker #7: Continue with our strategy. EasyPay continues to show strong momentum in the small business segment, with flows from ECP up 60% over the past year.
Speaker #7: This growth has contributed to the 20% increase in deposits , which now accounts for 10% of wholesale deposits , or 26% of wholesale low cost deposits .
Speaker #7: The float from Easypay expanded by 31% in the same period as interbank share of Easypay flow is around 39% . Following with the third message , we see improvement in risk adjusted Nim on slide 17 , let me share a quick update on asset quality or quarterly cost of risk continues on a low level at 2.1% in the quarter , or 2.3% , including the one off impact related to the integrated provision reversal .
Speaker #7: Previous to Telefonica on the retail segment, the cost of risk continues to decrease, now standing at 4%, representing a decline of 130 basis points compared to the prior year.
Speaker #7: Still below our risk appetite . Our consumer lending portfolio is performing well with cost of risk dropping from around 9 to 7% year over year , supported by healthier customers .
Speaker #7: With new laws, while new loans are showing a good performance in the new vintages on the commercial side, asset quality remains robust.
Speaker #7: The cost of risk stands at approximately 0.4% , excluding integrated and performance has been stable throughout the year . Looking ahead as our consumer and small business portfolios keep expanding , now representing 22% of our total portfolio , we should expect the cost of risk to gradually increase .
Speaker #7: Still , our non-performing loan ratios are holding steady and our coverage levels are solid above 140% . All in all , these results underscore an improving operating environment and demonstrate that our prudent approach to portfolio management is enabling us to deliver sustainable growth .
Speaker #7: On slide 18 , there are some good news to highlight in terms of yields and risk adjusted mean over the past quarter . Our risk adjusted Nim improved by 60 basis points with a notable 40 basis points increase in the last quarter .
Speaker #7: In line with the lower cost of risk . As previously mentioned , the good news is that yields started to recover last quarter , rising by ten basis points .
Speaker #7: This recovery was driven by higher rates in both retail and commercial banking , especially within higher yielding loans , where we observe more than a 30 basis points improvement in the average yield .
Speaker #7: Additionally , part of the improvement in yields can also be attributed to the acceleration in growth of our mass market segment , which continues to gain momentum and contribute positively to our results .
Speaker #7: As a result , Nim saw a ten basis point increase quarter over quarter on slide 19 , the cost of deposits declined by 40 basis points year over year , and ten additional basis points in the quarter , supported by lower market rates and a healthier funding mix with a focus on low cost funds .
Speaker #7: Deposits have also become a more relevant part of our funding structure , representing around 81% . Although there is a seasonal decrease in total deposits , we are expecting a recovery towards year end as we expect to capture a nice part of the pension funds withdrawals similar with what we achieved in the previous withdrawal .
Speaker #7: Cost of deposits continues to show a clear positive trend as we see further potential for reduction going forward . As the portion of efficient funding now at 36% , continues to improve as a result , our overall cost of funds fell by 50 basis points compared to last year , and ten basis points during the quarter , with a loan to the posted ratio at 96% , in line with the industry average .
Speaker #7: Moving on to our digital strategy , we continue to drive meaningful value and strengthen primary banking relationships through our digital initiative , particularly with Plin .
Speaker #7: Over the past year , we have grown a retail primary banking customer base by 6% . Now representing more than 34% of our total retail clients .
Speaker #7: Monthly active users reached 2.5 million each , completing an average of 27 transactions , for a total of 38% more transactions versus last year .
Speaker #7: P to m payments remains a core driver of engagement . Now accounting for 71% of all transactions , within this segment . POS payments expanded to 2.6 million monthly transactions , up 44% year over year .
Speaker #7: Finally , we believe we have solid key performance indicators that continue to improve . For example , our inflow payroll accounts hold around 13% market share .
Speaker #7: Retail deposits are at approximately 15% , and credit cards account for about 26% . All of these metrics are supported by an NPS of 56 , reflecting our commitment to customer satisfaction and loyalty .
Speaker #7: On slide 22 , we continue to see good trends in our digital indicators compared to last year , as we remain focused on developing solutions that meet our customers evolving needs .
Speaker #7: As a result , we've seen steady growth in digital adoption . Our our retail digital customer base increased from 80% to 83% , while commercial digital clients now stand at 73% .
Speaker #7: We've also made progress in self-service and digital sales . Our self-service indicator reached 82% , and digital sales climbed to 68% , while the latest NPS reading we have shown an improvement to 56 and our internal data reflects a clear recovery .
Speaker #7: All year . This progress was reinforced by contextual and automated communications . Also , we developed predictive models with personalized outreach . Finally , we introduced a fully digital onboarding flow through interbank empowering , seamless user and password creation for the app .
Speaker #7: Finally , solid results with double digit growth in the core businesses of wealth management and insurance . On slide 24 , we highlight the strong performance in our wealth management business this quarter in Telugu continues to show solid momentum .
Speaker #7: Assets under management have grown at a double digit pace , reaching new highs . And now totaling $8.1 billion . Fee income continues to improve , up 16% year over year , adding to the positive trend in results , and there is a slight improvement in fees over asset under management .
Speaker #7: Additionally , we would like to highlight the progress we are making in synergies with the bank . We have now launched a dedicated investment sections within the interbank App , enabling clients to conveniently manage the investments directly from the same platform .
Speaker #7: This integration marks another step forward in delivering a unified experience for our customers with offerings converging within business segments . On the digital front , we continue to enhance our inter app with the goal of shifting its role from a transactional platform to a true digital advisor for our mutual fund clients .
Speaker #7: As a result , we have seen a sustained increase in both the app adoption with a five point year over year increase in digital transactions , which grew by two points annually and represents more than half of all client transactions .
Speaker #7: Now moving to insurance on slide 26 . We continue to see good results in the contractual service margin , which grew 19% year over year , mainly driven by individual life .
Speaker #7: In the third quarter results for individual life and annuities increased by 36% and 15% , respectively , supported by strong new business generation that more than offset the monthly amortization of the CSM .
Speaker #7: Individual life remains a key focus for us, given its low market penetration, although traditional channels keep growing at high rates. We've also been diversifying our distribution strategy to include digital options and simplifying the product to reach new segments while continuing to support growth.
Speaker #7: Additionally , short term insurance premiums grew by over 110% , driven by disability and survivorship premiums acquired through a two year bidding process from the Peruvian Private pension system .
Speaker #7: On the investment side , as mentioned before , results were impacted by 78 million impairments from Rutas de Lima . The return on the investment portfolio decreased to 4.1% and would have been 6.1% without this effect , there is still uncertainty around the timing and amount of recovery as little proceedings continue to develop .
Speaker #7: As of today , we have provisioned around 40% . Hence , our expansion net of impairments is around 200 million souls or $60 million .
Speaker #7: Insurance . We continue to focus on enhancing the digital experience as well . And expanding our sales from digital channels . The development of internal capability has allowed us to increase digital self-service to 71% , from 65% of the previous year , and the direct sales to grow 19% in the last year .
Speaker #7: Now , let me move to the final part of the presentation , where we provide some takeaways before we move on to our operating trends .
Speaker #7: We'd like to summarize where we are focusing our growth efforts in commercial banking. We have seen important growth in small business, which increased by 33% year over year.
Speaker #7: Now , with a market share of around 4% , the commercial portfolio as a whole grew 7% year over year , gaining 30 basis points of market share .
Speaker #7: This strong performance is supported by three main strategies . First , deepening relationships with key mid-size company clients where we continue to gain share of wallet and unlock additional cross-sell opportunities .
Speaker #7: Second, we are expanding our position in sales financing, where we have become the second largest player in the system. Third, we are leveraging synergies with Easypay to enhance our value proposition, especially in the small business segment, where our digital and payment capabilities set us apart. In this quarter, the consumer portfolio began to show signs of growth.
Speaker #7: At the same time , the mortgage segment continued its positive trajectory . Achieving a market share of 16% . In insurance . We are maintaining our focus on long term products as individual life has shown encouraging growth .
Speaker #7: This past quarter . Finally , in wealth management , assets under management continue to grow at a healthy pace , up 13% , reaching new record levels at reflection on both market performance and continued client engagement .
Speaker #7: On slide 30 , let me give a review of the operating trends of the cumulated numbers . As of September , capital ratios remain at some levels , with a total capital ratio of around 16% and core equity tier one ratio above 12% .
Speaker #7: Our ROE for the first nine months of the year was 17.4% above our guidance for 2025 , as mentioned before , we expect the last quarter to go back to more normal levels and year end ROE could be closer to 17% , although it remains dependent on the impact of Rutas de Lima and its potential impact on the fourth quarter .
Speaker #7: If any , for loan growth . We grew 5% year over year , a bit below our guidance , but still above the system .
Speaker #7: Year end growth will likely remain at similar levels . We expect a slight recovery in Nim over the remainder of the year . On the positive side , cost of risk is expected to remain well below guidance , helping to offset lower margins .
Speaker #7: As a result , we anticipate a slight improvement in our risk adjusted mean for the full year . Finally , we continue to focus on efficiency at IFS as our cost income was around 37% .
Speaker #7: Within guidance . On slide 31 , we highlight our strong sustainability performance for the third quarter of 2025 on the environmental front , we have made significant progress .
Speaker #7: Our sustainable loan portfolio now exceeds or is around $350 million . Supporting projects with a measurable positive impact , especially in the industrial and agricultural sectors .
Speaker #7: We enhance internal capabilities by providing climate technology training to 30 executives , boosting green finance across agriculture , fishing , energy and mining .
Speaker #7: For the first time , we measure finance , emissions in interbank commercial portfolio following the PCF standard focusing on agriculture , fishing and energy , which represent 18% of the portfolio on the social side , we keep promoting inclusive growth and workplace diversity .
Speaker #7: Interbank was ranked number five in the Great Place to Work sustainable Management ranking with Seguro in Telugu group and ACP also among the best workplaces .
Speaker #7: Interbank Anti-Harassment program . Voces was recognized by the UN Global Compact as a best practice in Governance . Inter Seguro in Telugu Group published their 2020 Sustainability Reports and we strengthened our participation in key ESG assessments .
Speaker #7: Let me finalize the presentation with some key takeaways . First , the business momentum remains strong . Second , we see higher yielding loans accelerating .
Speaker #7: Third , we have improving risk adjusted Nim . Fourth , we continue to strengthen primary banking relationships . Fifth , wealth management and insurance , both core businesses growing double digit .
Speaker #7: Thank you very much . Now we welcome any questions you may have .
Speaker #4: Thank you . At this time , we will open the floor to your questions . We will take questions from the conference call and then the webcast questions .
Speaker #4: If you would like to ask a question , please press the star key , followed by the one key on your touchtone phone .
Speaker #4: Now questions will be taken in the order in which they are received . If at any time you would like to remove yourself from the questioning queue , please press star and two again to ask a question , please press star and one for the webcast viewers , please simply type your question in the box and click Submit question .
Speaker #4: We'll pause momentarily to compile a list of questioners . And your first question comes from Yuri Fernandez from JP Morgan . Please go ahead with your question .
Speaker #8: Hi , Michaela , with everybody . I have a question regarding Lima . I think this is a broader process right ? Brookfield Toro collections concession .
Speaker #8: It's it's it's it's a it's a broad topic . I would like to understand a little bit . The level of impairment you did on your exposure in the insurance company .
Speaker #8: Because I think Michela mentioned in the end that this could or could not be a problem in the fourth quarter, I would like to understand how much of the impairment reflects your exposure already or not.
Speaker #8: And what is your outlook for for that case ? And then the second question regarding the growth for retail , in light of the pension withdrawal , how much the pension withdrawal may impact the growth , or what is your growth expectations for maybe like especially , I think in retail .
Speaker #8: But if you can comment a little bit more broadly , how much that can impact your growth outlook for the near near term .
Speaker #8: Thank you .
Speaker #6: Okay , well , thanks very much for for your two questions , I'm going to give a crack at the answers . And then I'm going to pass it on to the team to complement as Michela mentioned , our exposure right now considers around 40% of impairment already .
Speaker #6: It's tough to give you an outlook given that, as you mentioned, this is a broader issue between Brookfield and the Municipality. There are legal proceedings surrounding that 40%.
Speaker #6: I mentioned it was booked with all the information we had at the moment of the closing of the quarter. Then things have evolved since then.
Speaker #6: So I think it's early to really give you a an expectation . However , we are closely monitoring that situation and regarding the retail growth , it's the pension has a couple of effects .
Speaker #6: It's not only that it curtails growth, but it has short-term positive impacts regarding funding and people bringing money from those funds to interbank.
Speaker #6: So it has an offset , a positive offset in the in the cost of funds and the activity . But for number one , I'm going to pass it on to Gonzalo to see if he wants to compliment anything .
Speaker #6: And then for number two, I'm going to pass it on to Carlos so he can give you a little bit more on his view on the potential specific growth impact of the pension fund release.
Speaker #6: Gonzalo . Sure . Thanks , Felipe . As Luis Felipe .
Speaker #9: Mentioned , we have already reduced the value for of our holdings in Rutas de Lima in 40% . We're still waiting on what happens with the .
Speaker #9: Recurso de amparo . That that Ruth has . Lima has has , has placed will have more information before the end of the fourth quarter .
Speaker #9: Will where we'll be able to give a more precise value of those holdings . Still , the the the the total position of of Rutas de Lima represents less than 1% of of the whole ecfs investment holdings .
Speaker #9: So even though we take a lot of we're taking a lot of time to , to to sort this out . It's , it's , it's it's impact will be will not be it's not important in the total ecfs .
Speaker #6: Thank you , Gonzalo and Carlos , can you help us in the growth question ? Yes . Hello , Yuri .
Speaker #9: And everyone . As mentioned , the the ISP withdrawals .
Speaker #6: Have have several .
Speaker #9: Impacts .
Speaker #6: But to answer your question.
Speaker #10: And then I'll go a little bit deeper . The last few withdrawals have flattened growth or even made the consumer loans in the market decrease 1 or 2% .
Speaker #10: That has been the effect in the past . This one might be a little bit different because there's other factors going on . The first one is in Peru , all salaried workers get a double salary in December .
Speaker #10: So December traditionally is very liquid . And that helps . Obviously consumption reduces a little bit of outstandings , but helps with a collections .
Speaker #10: So, so, so this year in December we will have that, and we will have a large portion of the AFP.
Speaker #10: So it will be a very liquid . We expect a lot of transactions . We don't know exactly if if the , the , the , the amount of loans will increase or stay flat , but for sure it will have a good impact in collections and cost of risk .
Speaker #10: In December , the AFP withdrawals have four parts , right . You get it in four different months . But the first month is the largest in terms of the system because the people that don't have the full amount to withdraw get it in the first one .
Speaker #10: So the first one is the largest one . And in addition to all of that , in November , salaried workers in Peru also get long term compensation .
Speaker #10: Let's call it . And that has also been released . So there will be liquidity in November . And December . So there's a lot of moving parts .
Speaker #10: But again , it will be liquid that is good for collections and for funding . There will be a lot of consumption and transactions .
Speaker #10: And then the , the effect on the amount of loans probably is , is a flat or negative for 1 or 2 months .
Speaker #10: And then we will resume a growth .
Speaker #8: Thank you . Thank you guys . Thank you Carlos Gonzalo Luis . Felipe . So basically marginally negative . Good asset quality . Good for deposits .
Speaker #8: Maybe 1 or 2% down . And then we should see a recovery . In retail . Right . That's that's basically the message .
Speaker #10: Yes . I don't know if it's 1 or 2% or flat to tell you the truth . We will see . It depends on the amount of consumption .
Speaker #10: But yeah , that's ballpark . No , it's a short term effect though .
Speaker #8: Perfect . Thank you very much everyone .
Speaker #4: Once again , if you would like to ask a question , please press star and then one to withdraw your question . You may press star and two again that is star .
Speaker #4: And then one to ask a question . In addition , for the webcast , viewers , as a reminder , you may simply type your questions in the box and click submit Question .
Speaker #4: Once again , we will pause momentarily to assemble the list of questioners . And at this time , we will take the webcast .
Speaker #4: Questions I would like to turn the floor over to Mr. Ivan Peill from Enspire Group .
Speaker #5: Thank you . Operator . The first question comes from Daniel Mora of Credicorp Capital . Can you provide more details about the expected loan growth for 2025 and 2026 , specifically , I want to understand whether the acceleration of credit card loans this quarter should be maintained throughout 2026 .
Speaker #5: What is the expected growth of credit cards for the next year and the effect on the net interest margin?
Speaker #6: Okay , great . Thank you , Daniel , for your question . Let me pass straight to Carlos . Actually , he's working budget right now .
Speaker #6: I don't know if he's going to be able to answer all the questions, but probably he has a deeper understanding on that front right now.
Speaker #10: We're working on our budget . We so , so bottom line is the third quarter we accelerated growth in credit cards and consumer finance .
Speaker #10: And we expect to continue accelerating having I mean , having the impact of the of the AFP in the short term . But but in 2026 we expect to continue to accelerate the way we look at it or the way we we we look at this is usually the system grows at two times a to 2.5 , two times GDP .
Speaker #10: So consumer loans grow at two times GDP . That's a multiplier . And we want to gain market share . So we will probably grow a little bit ahead of that .
Speaker #10: Our risk appetite has also increased slightly due to the good performance of our portfolio over the last few quarters . But also due to the expectations of the macro environment in Peru .
Speaker #10: So that's kind of what we expect . The this will not be linear as I just explained , the AFP will have a short term effect probably at the end of November , a little bit , definitely in December .
Speaker #10: And some in January . But but then growth should resume and then Nim will be will , will will grow in line with our growth in credit cards and SMEs .
Speaker #10: A and also will be positively affected marginally by lower cost of funds . So that's kind of the the the expectation .
Speaker #6: Thank you Carlos .
Speaker #11: So, I think we're done.
Speaker #7: There is one more question in the webcast . Inspire . You can help .
Speaker #11: Us .
Speaker #5: The next question comes from Ellen. Good morning. What is your expectation for corporate-level disbursements in Peru regarding 2026 as a presidential election year?
Speaker #5: Thank you .
Speaker #6: Okay , so if I understand correctly , the expectations is of corporate level disbursements . I understand that corporate banking activity again it's it's it's a election year activity depending on how how how the situation evolves should continue to pick up .
Speaker #6: If there are continued investment perspective materialize . So , so I guess that loan book growth and corporate activity should continue on a mild we don't see any big projects coming in line in the in the coming months .
Speaker #6: So it's going to be probably more replenishment of working capital or small CapEx and some refinancings . So probably growth is not going to be great in that front .
Speaker #6: But let me pass it on to Carlos , or he can compliment to see what he's seeing .
Speaker #10: No , I agree , I agree . There's no large projects coming in line . There has been some bond offerings over the last couple of weeks of Peruvian corporate .
Speaker #10: So , so that obviously becomes prepayment for the bank's interest rates are more attractive for , for for corporates . And they have they have been they've evolved downwards .
Speaker #10: So there's a lot of refinancing of short term loans to to longer . But we don't foresee a high growth in that segment for the next few quarters .
Speaker #10: Yeah .
Speaker #11: Great .
Speaker #6: Thank you Carlos .
Speaker #5: At this time there are no further questions from the webcast . I would like to turn the call over to the operator .
Speaker #4: And there appear to be no further audio questions at this time . I'd like to turn the floor over to management for closing remarks .
Speaker #7: Okay . Thank you very much . And thanks again , everybody , for joining the call . And we'll see each other back again to discuss our year end results for 2025 .
Speaker #7: Thanks again . Stay safe . Bye .