• Net Income: PEN490 million for the quarter, 71% higher year-over-year.
• Return on Equity (ROE): 18.2% for the fourth quarter.
• Loan Growth: 6.5% year-over-year, with commercial loans growing by 17%.
• Cost of Risk: 2.6% for the quarter, 180 basis points lower than last year.
• Cost of Funds: Improved by 100 basis points year-over-year.
• Assets Under Management: Grew by 17% year-over-year, reaching $7.3 billion.
• Market Share in Retail Deposits: 14.6%, positioning Interbank as the third largest in the market.
• Digital Customers: 82% of retail and 73% of commercial customers are digital.
• Insurance Growth: Individual life and annuities reserves grew by 28% and 22%, respectively.
• Efficiency Ratio: 37% for IFS and 39% for Interbank for the full year.

• Warning! GuruFocus has detected 5 Warning Signs with IFS.

Release Date: February 07, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Intercorp Financial Services Inc (NYSE:IFS) achieved a strong recovery in earnings and profitability, with a net income of PEN490 million in the fourth quarter, marking a 71% increase from the previous year.
• The company reported an ROE of over 18% in the fourth quarter, demonstrating a fast recovery and resilience in operations.
• IFS's banking segment saw a significant improvement in market share, particularly in commercial banking, where it gained over 130 basis points.
• The wealth management segment, Inteligo, reached an all-time high in assets under management, growing by 17% year-over-year.
• IFS continues to focus on digital excellence, with over 80% of retail banking customers and 70% of commercial customers being digital, enhancing customer engagement and primary banking relationships.

Negative Points

• The cost of risk, although improved, remains a concern, with a quarterly rate of 2.6%, which is still above the company's long-term target.
• The company anticipates potential volatility in 2025 due to the pre-electoral year in Peru, which could impact economic stability and growth.
• IFS's consumer loan book has shrunk, and while recovery is underway, it remains a challenge to rebuild this segment efficiently.
• The effective tax rate for 2024 was lower than historical levels, but it is expected to increase in 2025, potentially impacting net income.
• The guidance for 2025 indicates a cautious approach, with an expected ROE of around 16%, which is below the 18% midterm target, reflecting uncertainties in the economic environment.

Q & A Highlights

Q: Considering you're expecting higher loan growth in 2025, how should we think about fee income growth? Will it be supported by Izipay, Inteligo's funds, and cash management? How much of your fees or total revenues are coming from digital channels? A: We expect fees to grow between high single digits and low double digits, driven by recovery in the consumer loan book, particularly credit and debit cards. Most of our fees are already coming from digital channels due to the high incidence of digital plays, with 80% of retail clients and 70% of commercial clients being digital.

Q: What should we expect for the effective tax rate in 2025 compared to 2024? A: The tax rate varies based on the mix of earnings from bank, insurance, and wealth management. In 2024, the tax rate was lower due to a higher portion of tax-exempted instruments. For 2025, expect a slightly higher tax rate as the mix normalizes.

Q: Regarding the Tier 2 bonds of Interbank, will you be calling the 2030s in July following the recent issuance? A: Yes, we plan to execute the call on the 2030 bonds in July. The recent issuance was intended for this purpose.

Q: Your guidance for a 16% ROE in 2025 seems conservative compared to the 18% achieved in Q4 2024. Can you explain this? A: The 18% ROE in Q4 was influenced by seasonality and strong investment results from Inteligo. We are cautious about 2025 due to potential economic volatility and are focusing on rebuilding the consumer book, which will impact cost of risk and ROE.

Q: How do you plan to achieve an 18% ROE at Interbank, given the current cost of risk and margins? A: We aim to rebuild the consumer book, which will increase yields and fee income. We also plan to improve cost of funds and focus on efficiency. These factors should help us achieve an 18% ROE at Interbank.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.