Sentiment Analysis of the earnings transcript to help figure out if there are any bullish or bearish sentiments that could be gathered from it. We're doing ML and AI based analysis on the earnings call to get some more insights.
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| Statement |
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| Individual life and private annuities business lines continued to grow nicely quarter-over-quarter, or 6% and 40% respectively, increasing their contribution to total premiums |
| And I think that that, together with some other things that we have been doing in the mid-corporate segment, has allowed us to reach the number three position in the market as of year-end |
| Now, where in the P&L can you see the positive or the benefits of all these digital strategies that we have been deploying? I think that it is in all of the lines of the P&L, because if I start to think of all the things that we have done in digital, it has boost for sure, number of clients, but it has also boost digital sales |
| The volume of transactions has continued its strong growth, reaching 2.4 times the volume registered the same quarter one year ago |
| Coverage ratio for the retail portfolio remains strong at 194% and above pre-COVID levels |
| First, after a weak 2023, macro sentiment for 2024 is relatively positive with minor disruption expected from El Nino |
| Despite this challenging environment, IFS continues to show resilience in its core operations |
| Second, good performance in insurance business and positive investment results in wealth management |
| At Interbank, market shares across key business lines remain strong despite moderation in consumer loans as we are still digesting increased levels of cost of risk, mainly in the consumer finance segments |
| Despite of the challenging conditions, Interbank remains well-provisioned and well-capitalized |
| Revenues continued to grow 1% on a yearly basis and 13% in the quarter, supported by the increase in transactional volumes and merchants with some pressures on MDRs coming from increased competition |
| Investment results continued to be solid in the company |
| But what was really positive news from that was that the number of clients increased substantially in that segment, and also the float with that segment, so deposits |
| In the case of IzipayYa, our solution for micro-merchants growth in merchants was 35% and was very strong in transactional volumes or 70%, all of which are linked to an Interbank account |
| The Izipay acquisition has put us very close to merchants, and that creates an avenue of growth for our customer segment that that company knows very well |
| Good news in wealth management with the yearly growth in asset under management and 4% growth on a quarterly basis |
| The push that we did during the pandemic working with Reactiva was very positive for us |
| Cost of funds stabilizing on soles rates outlook and we are strengthening our digital positioning and presence in payments |
| And lastly, more political stability which should positively impact private investment |
| So the growth potential for the Peruvian system remains as strong as it has been in the last years |
| This is very good news for the country as the economic recovery could speed up if no further disruption takes place in the coming months |
| On the social front, IzipayYa in our financial services education platform Aprendemas are positively contributing to financial inclusion |
| We continue to see good efficiency levels both at IFS and at the bank level as we are strictly monitoring and managing cost, especially at the bank which has reached a cost-income ratio around 37% as of year-end, a strong improvement versus last year mainly due to the good operating leverage |
| Positive news is that the deposits continue to increase its share in total funding and that retail deposit market share has continued to increase |
| There are a couple of things that we have been working hard in the past month and that are bringing nice results as shown in the market share increase to 14.7% in payroll inflows from 13.6% one year ago and the 17.7% market share in sales financing, up from 11.7% just 12 months ago |
| This quarter though, we have positive news in the insurance business which posted solid investment results |
| On Slides 11 and 12, good news in top line as total revenues continued to grow, 4% in the quarter and 10% for the full year, thanks to the growth register in banking of 10%, wealth management growing more than 8 times from a low base in 2022, insurance growing 1% and payments 5% |
| It has boost not only volumes, because we have increased the capability to do loans, both in -- more in retail, but also in fees, because we have been able to do much more things in a digital way, fees, but also trading income |
| You know that our aspiration includes: to become the leading digital financial services solution for clients, providing profitable products and services in our key businesses with the best digital experience for our customers, based on operational excellence and levered on advanced analytics and the best talents are our competitive advantage |
| Having said that, we do expect the second half to be better than the first half |
| Statement |
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| Regarding economic environment, 2023 was a challenging year in Peru with virtually no GDP growth, and a contraction in domestic demand which translated into a deterioration of the payment capabilities of our retail customers |
| EBITDA has seen a contraction in the quarterly figures due to margin compression in a more competitive landscape |
| Obviously, we are undergoing a negative credit cycle right now, given economic conditions and the overall environment |
| IFS ROE for the full year 2023 stands at 11.3%, impacted by cost of risk at Interbank and soft investment results at Inteligo slightly above the latest guidance |
| Why is that? And we have discussed in the previous conference call, is specifically the consumer lending portfolio, the unsecured portion, and specifically related to the fact that with no GDP growth and sustained inflation, there has been a deterioration of the payment ability of Peruvian families |
| Premiums were down 4% in the quarter and market share of annuities was 26.4% as of November '23 |
| MPS has seen a deterioration for the first time in many quarters, mainly impacted by the actions related to risk profiling |
| This quarter, we saw a negative impact from investment results, but the core business continues growing |
| Reduced activity in banking and increased costs of risk in the consumer portfolio had impacted the banking earnings and ROE, while investment returns impacted wealth management results |
| But there are also some negatives related to yield on loans |
| Finally, on payments, despite growth in merchants, volumes have moderated in 2023 and this has taken a toll in anticipated (ph) results |
| Austerity in our operations |
| On Slide 23, there has been a decrease in yield on loans of 30 basis points reaching 11.3% and NIM decreased 10 basis points to 5.5% |
| So even though --again, the rainfall will be more moderate or not very important, we do see some disruption there |
| The El Nino still impacts many of the industries of work in Peru, like fishing, like agriculture, in certain ways |
| On Slide 3, complementing what Luis Felipe mentioned, the decrease in GDP and in inflation for four quarters in a row has triggered the first cuts in the soles rate, driving it down from the peak of 7.75% to 6.25% as of today |
| With this, total expenses for the full year have only increased 2% at IFS, maintaining the efficiency ratio below 37%, and has increased only 1% at Interbank, driving the cost-income ratio down more than 300 basis points to 37.3% |
| On Slide 8, in line with a previously mentioned macro scenario in previous quarter, we have further moderated banking activity by tightening credit standards which had an impact in credit and debit card purchases as well as in retail and SME loan disbursements |
| After that, we should expect, or we are expecting downward trends in the cost of risk |
| I'm sorry, I had some problem with my microphone |
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