Intercorp Financial Services Inc (IFS) Q2 2025 Earnings Call Highlights: Strong Growth in Key ...

Net Income: PEN580 million, with an ROE of around 21%. Market Share in Commercial Banking: Increased by more than 90 basis points year-over-year. Cost of Risk: 2.5%, which is 150 basis points below last year. Cost of Funds: Improved by 40 basis points year-over-year. Retail Primary Banking Customers: Grew 10% year-over-year. Other Income in Wealth Management: Grew 5.3 times year-over-year. Written Premiums in Insurance: Increased by 77% year-over-year. Revenue Growth: 19% year-over-year. Expenses Growth: 10% year-over-year. Consumer Portfolio Cash Loan Disbursements: Increased by 80% year-over-year. Credit Card Turnover: Rose 15% year-over-year. Total Loans Growth: 6% year-over-year. Deposits Growth: 7.4% year-over-year. Assets Under Management in Wealth Management: Grew 14% year-over-year. Contractual Service Margin in Insurance: Grew 17% year-over-year.

Warning! GuruFocus has detected 6 Warning Sign with IFS.

Release Date: August 12, 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) reported a strong year-over-year recovery with an ROE exceeding 20%, driven by solid performance in core businesses and strong investment returns. Interbank gained 90 basis points in market share within the commercial banking segment, focusing on midsized companies and synergies with Izipay. The Wealth Management segment, Inteligo, delivered strong results with assets under management reaching new highs, growing 14% year-over-year. IFS's insurance business, Interseguro, saw significant growth in private annuities and life insurance, maintaining its market leadership. IFS's digital strategy is advancing, with retail primary banking customers growing by 10% and digital retail customers reaching 83%.

Negative Points

The growth of the consumer portfolio has been slower than expected, impacting the average yield and NIM. Loan growth in the financial system remains below expected levels, with total loans growing around 5%, mainly driven by retail lending. The cost of risk is expected to increase slightly as the consumer loan book resumes growth, although it remains below pre-COVID levels. Expenses at IFS grew 10% year-over-year due to strategic investments in technology and personnel, impacting the cost-to-income ratio. The pace of recovery in the consumer loan portfolio has been slower than initially expected, reflecting both supply and demand dynamics.

Q & A Highlights

Q: Can you elaborate on your NIM expectations for the second half of the year and the trend for next year, especially if the retail segment starts to accelerate? A: Michela Casassa Ramat, CFO, explained that NIM was pressured in the first half due to a portfolio mix skewed towards mortgages and commercial banking, and extra liquidity in preparation for a bond repayment. They expect NIM to improve in the second half as the consumer portfolio resumes growth and the liquidity impact is resolved. For 2026, they anticipate continued positive impact on yields from consumer loans and further improvement in the cost of funds.

Story Continues

Q: What are your expectations for asset quality and cost of risk, especially as you resume growth in the retail segment? A: Michela Casassa Ramat, CFO, noted that the current cost of risk is at a low 2.5%, compared to pre-COVID levels of around 3%. As the consumer loan book grows, a slight increase in cost of risk is expected, but the speed of this change is uncertain. The portfolio mix, with a lower share of high-yield loans, is also influencing asset quality.

Q: How should we think about OpEx growth for the second half and next year? Will it align with inflation or exceed it? A: Carlos Jose Tori Grande, EVP - Payments, stated that OpEx growth is driven by technology investments, personnel, and business growth. While the rate of increase may slow, it will likely remain slightly above inflation, depending on business growth. Investments in analytics and technology will continue, impacting OpEx.

Q: Looking beyond this year, how should we think about OpEx growth in 2026? A: Carlos Jose Tori Grande, EVP - Payments, indicated that while there has been a step-up in OpEx this year, future growth will depend on business and transaction growth. Investments in analytics and technology will continue, but the rate of increase should align more closely with past trends.

Q: Can you provide more details on the impact of technology investments on expenses? A: Luis Felipe Castellanos Lopez Torres, CEO, emphasized that technology investments are crucial across all subsidiaries, including Interseguro and Inteligo, to enhance digital platforms. The focus is on ensuring these investments align with income growth, maintaining efficiency targets of 40% for the bank and below 37% for IFS.

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

This article first appeared on GuruFocus.

View Comments