Intercorp Financial Services Q2 2025 Earnings Report

Intercorp Financial Services EPS Results

• Actual EPS: N/A
• Consensus EPS: $1.07
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Intercorp Financial Services Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $1.42 billion
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Intercorp Financial Services Announcement Details

• Quarter: Q2 2025
• Date: 8/11/2025
• Time: After Market Closes
• Conference Call Date: Tuesday, August 12, 2025
• Conference Call Time: 10:00AM ET

Intercorp Financial Services (NYSE:IFS), together with its subsidiaries, offers banking, insurance, wealth management, and payment services for retail and commercial clients in Peru. The company provides loans, credit facilities, deposits, and current accounts; life annuity products with single-premium payment and conventional life insurance products, as well as other retail insurance products; and brokerage and investment management services. It engages in the development, management, operation, and processing of credit and debit cards; facilitation of payments and services through commercial stores; and installation and maintenance of infrastructure for transactions through electronic commerce modality and networks of payment methods processors. The company was incorporated in 1897 and is based in Lima, Peru. Intercorp Financial Services Inc. operates as a subsidiary of Intercorp Perú Ltd.

Intercorp Financial Services Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Net income reached $580 million with an ROE of ~21%, up 2.4x YoY and 30% QoQ, driven by strong investment returns and core business recovery.
• Positive Sentiment: Total loans grew 6% YoY (3× system growth), helping IFS gain 30 bps market share overall and 90 bps in midsized company lending.
• Positive Sentiment: Wealth Management’s AUM rose 14% YoY to $7.8 billion, fee income +19%, other income +5.3×, and ROE of 31%, marking new highs across metrics.
• Positive Sentiment: Cost of risk fell to 2.5% (150 bps below last year), with NPL coverage >140%, contributing to an 80 bps YoY improvement in risk-adjusted NIM.
• Negative Sentiment: Consumer loan growth remains muted, up only 0.6% QoQ as liquidity from severance withdrawals reduces demand, delaying retail portfolio expansion.

Presentation

[Operator]

Thank you for holding for IFS Second Quarter twenty twenty five Conference Call. The conference will begin in a few minutes. Appreciate your patience. In the meantime, refresh your screens in order to update the webcast presentation. Good morning, and welcome to the Intercorp Financial Services Second Quarter twenty twenty five Conference Call.

[Operator]

All lines have been placed on mute to prevent any background noise. Please be advised that today's conference call is being recorded. After the presentation, we will open the floor for questions. At that time, instructions will be given as to the procedure to follow if you would like to ask a question. Also, can submit online questions at any time today using the window on the webcast, and they will be answered after the presentation during the question and answer session.

[Operator]

Simply type your question in the box and click Submit Question. It is now my pleasure to turn the call over to Mr. Ivan Peel from Inspire Group. Sir, you may begin.

[Ivan Peill, Managing Director at InspIR Group]

Thank you, and good morning, everyone. On today's call, Intercorp Financial Services will discuss its second quarter twenty twenty five earnings. We are very pleased to have with us Mr. Luis Felipe Castellanos, chief executive officer, Intercorp Financial Services miss Michela Casasa, chief financial officer, Intercorp Financial Services mister Carlos Torre, chief executive officer, Interbank Mr. Consalo Besadre, Chief Executive Officer, Inter Seguro and Mr. Bruno Frecho, Chief Executive Officer, Intelligo. 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. If you didn't receive a copy of the presentation or the earnings report, they are now available on the company's website, ifs.com.pe. Otherwise, if you need any assistance today, please call Inspire Group in New York on (646) 940-8843.

[Ivan Peill, Managing Director at InspIR Group]

I would like to remind you that today's call is for investors and analysts only. Therefore, questions from the media will not be taken. Please be advised that forward looking statements may be made during this conference call. These do not account for future economic circumstances, industry conditions, the company's future 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.

[Ivan Peill, Managing Director at InspIR Group]

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 Intercorp Financial Services, for his opening remarks. Mr. Castellanos, please go ahead, sir.

[Luis Felipe Castellanos López-Torres, CEO at Intercorp Financial Services]

Thank you. Good morning and welcome to our twenty twenty five second quarter earnings call. First, I want to thank you for attending our call today. We continue to see a positive performance of the Peruvian economy with an accumulated growth of 3.1% as of May. This momentum is driven by increased dynamism in sectors linked to consumption and sustained private investment, which is projected to grow by 5% this year.

[Luis Felipe Castellanos López-Torres, CEO at Intercorp Financial Services]

We continue to operate in a low inflation environment with a very stable exchange rate and with positive momentum for investment projects expected for the following months. We remain moderately optimistic about Peru's growth outlook as both private investment and consumption continue to trend positively. Consequently, the Central Bank has changed its internal demand forecast from 3.5% to 4.5% with a GDP growth of 3.1% for 2025. While the international context and next year's presidential elections in Peru could introduce some volatility, we expect persistently high commodity prices to help offset external pressures. In this environment, Peru remains well positioned in the region as one of the fastest growing economies.

[Luis Felipe Castellanos López-Torres, CEO at Intercorp Financial Services]

Now talking about IFS. At IFS, we delivered a strong year over year recovery with an ROE exceeding 20%. This quarter's results were driven by solid performance in the core businesses across our subsidiaries with particularly strong investment returns. These gains have allowed us to maintain a healthy ROE and reinforce our long term targets. Interbank continues to show solid momentum in Commercial Banking with a clear focus on mid sized companies and strong synergies with EasyPay, resulting in a gain of 90 basis points in market share within the segment.

[Luis Felipe Castellanos López-Torres, CEO at Intercorp Financial Services]

In line with improved internal consumption, we're seeing greater dynamism in consumer activity reflected in higher cash loan disbursements and increased credit card turnover. These trends signal early signs of growth in the consumer portfolio, although the pace remains slower than expected. As a result, NIM has remained stable, while cost of risk is performing better than anticipated in line with improved household purchasing power, contributing to an increase in risk adjusted NIM. EasyPay and Interbank continue to seize business opportunities together, while Plym keeps increasing the engagement of users, fostering more primary banking relationships and supporting growth. Interseguro continues to grow its business with notable expansion in private annuities and life insurance as we continue to be market leaders.

[Luis Felipe Castellanos López-Torres, CEO at Intercorp Financial Services]

Our Wealth Management segment through Intelligo delivered very strong results this quarter. The continued positive engagement with clients led assets under management to reach new highs growing 14% year over year. In addition to this, investment results were particularly strong driving ROE to high levels. We remain committed to place our customers at the center of our decisions. As you know, our key strategic priority at IFS is to achieve digital excellence for our customers, fostering private relationships.

[Luis Felipe Castellanos López-Torres, CEO at Intercorp Financial Services]

Our ambition is to become the leading digital platform in the country with a clear focus on key businesses and profitable growth, providing a comprehensive suite of services powered by a top tier customer experience and advanced analytics as our competitive advantage. Looking ahead, we remain optimistic about IFS' prospects. The company has demonstrated resilience during the down cycle and the ability for a fast we are confident in our delivery to continue executing our long term strategy. Now let me pass it on to Michela for further explanation of this quarter results. Thank you.

[Michela Casassa Ramat, CFO at Intercorp Financial Services]

Thank you, Luis Felipe. Good morning, and welcome, everyone, to Intercorp Financial Services Second Quarter twenty twenty five Earnings Call. We would like to start with our key messages for the quarter. We had a strong second Q, continue with the positive trends in our core businesses. Moreover, second Q was boosted by solid investment results.

[Michela Casassa Ramat, CFO at Intercorp Financial Services]

Our net income reached $580,000,000 at IFS with an ROE of around 21%. Second key message, our commercial and payments ecosystem is growing as evidenced by a number of indicators, one of which is our market share in commercial banking growing more than 90 basis points in the last year. Third, our quarterly cost of risk stood at 2.5%, which is 150 basis points below last year, stable at low levels while maintaining a relatively stable NIM. Fourth, the cost of funds remained stable this quarter, although showing an improvement of 40 basis points on a year over year basis, primarily due to a better funding mix. Fifth, we are strengthening primary banking relationships.

[Michela Casassa Ramat, CFO at Intercorp Financial Services]

And as a result, our retail primary banking customers grew 10% in the last year. Last, we had solid core results in Wealth Management boosted by investments performance with other income growing 5.3x in the last year. Additionally, insurance continues in a solid path of growth as written premiums increased by 77% year over year due to the growth in private annuities and life insurance. Let's start with our first key message. Let me share an overview of the macroeconomic environment.

[Michela Casassa Ramat, CFO at Intercorp Financial Services]

GDP growth showed a slight deceleration in second quarter, though it remains above consensus with an expected rate around 3%. May growth was 2.7%, bringing year to date expansion to 3.1%. Primary GDP contracted by 0.3%, while nonprimary GDP grew 3.2%. Sector performance includes construction led with 6% growth, followed by agriculture, services and commerce, especially lodging and restaurants, all above 5%. Inflation continues under control, and the reference rate stands at 4.5% aligned with the Fed, and it is the lowest and most stable currency in the region.

[Michela Casassa Ramat, CFO at Intercorp Financial Services]

With a real rate near 2.2%, the Central Bank has room to ease, though it's likely to wait for the Fed to move first. In 2024, Peruvian sold depreciated less than 1% and has since appreciated by around 5% amid global uncertainty. GDP forecast is at 3.1%. The 2026 projection holds up 2.9%, keeping Peru among the region's fastest growing economies. On the same line, business expectations remain stable in the optimistic range, while consumer confidence continues to improve, supporting domestic consumption.

[Michela Casassa Ramat, CFO at Intercorp Financial Services]

In fact, the Central Bank revised its 2025 internal demand forecast upward from 3.5% to 4.4%, driven by strong private consumption and investment. Private investment is supported by self construction, improved financial conditions and higher business confidence on top of the extensive pipeline of projects to come in mining infrastructure. Private consumption remains dynamic, fueled by wage growth and employment recovery, which is helping households perceive tangible improvements in their economic situation. While labor market growth has moderated, it remains positive. Formal job creation continues across sectors with notable growth in services, 4%, commerce, 4% and agriculture, 26%.

[Michela Casassa Ramat, CFO at Intercorp Financial Services]

Despite this, loans have yet to show significant growth with year over year and year to date expansion at system level below 2%. Liquidity events such as severance funds withdrawals have not supported credit growth, and banks remain cautious. The second quarter was slightly more dynamic for commercial lending, but still below expected levels given the macro backdrop. We expect a more dynamic second half for the financial system with total loans growing around 5%, mainly driven by retail lending, although momentum may soften due to further withdrawals. On Slide six, we have some positive news to share.

[Michela Casassa Ramat, CFO at Intercorp Financial Services]

In the second quarter, we delivered strong earnings of $580,000,000, double what we reported a year ago and 30% higher than the last quarter. This drove our ROE to 20.7%. On the banking side, results continue to improve with earnings growing 1.5 times over the past year. While the growth of the consumer portfolio has been slower than initially expected, the current portfolio mix continues to positively influence cost of risk, which remains at low levels. Additionally, increased client transaction volumes is contributing to fee generation.

[Michela Casassa Ramat, CFO at Intercorp Financial Services]

On insurance, we continue to deliver strong results with good trends in its core business, especially in private annuities, which benefited from synergies with Intelligo and in mandatory annuities and finally, due to the disability and survivorship portfolio. Finally, our Wealth Management business delivered a very strong performance this quarter. The core business continues to grow steadily, supported by consistent asset under management expansion. Additionally, we benefited from strong investment results this quarter. All in all, this was a strong quarter across IFS with investment gains and resilient core operations driving profitability.

[Michela Casassa Ramat, CFO at Intercorp Financial Services]

On Slide seven, we show you the continuous positive quarterly earnings and ROE trends. Since early twenty twenty four, we've seen a positive trend in both earnings and ROE. As of the 2025, earnings are 2.4x higher than the same period last year, and our accumulated ROE stands at 18.4%. At the bank, the recovery remains on track, While NIM and consumer loan growth are progressing slower than planned, we are seeing encouraging trends in other areas, particularly low levels of cost of risk and improvement in fees. Moreover, Intelligo has delivered very strong results along with good performance from Interseguro's real estate portfolio.

[Michela Casassa Ramat, CFO at Intercorp Financial Services]

Another positive highlight is the growing diversification of IFS earnings. In the first half of the year, the bank contributed less than 70% of total earnings, showing the increasing relevance of our other segments. Let's now turn to Slide eight, where we take a closer look at IFS revenues, which grew 19% year over year. At the bank level, we continue to see stability of NIM, mainly due to slower than expected growth in the consumer portfolio, which impacts average yield, offset by ongoing improvement in the cost of funds and by a low cost of risk aligned with the portfolio mix. On the fee side, the bank posted 14% growth, supported by both commercial banking fees and increased retail activity, particularly higher credit card purchases.

[Michela Casassa Ramat, CFO at Intercorp Financial Services]

Intelligo also delivered a 17% increase in fees, reflecting continued AUM growth and the strength of its core business. Interseguro and Intelligo have both strong revenue trends as mentioned before. On Slide nine, expenses at IFS grew 10% year over year, reflecting strategic investments aimed at supporting long term growth. These include accelerated spending in technology focused on resilience, user experience, cybersecurity, increased capacity and AI as well as efforts to strengthen leadership across key teams, recognizing the importance of talent in executing our strategy. As a result, the cost to income ratio at the bank level reached 42%, while at the IFS level, strong top line performance kept the ratio at a benchmark level of 36%.

[Michela Casassa Ramat, CFO at Intercorp Financial Services]

Now let's move on to our second key message. On Slide 11, we wanted to give you an update on the consumer portfolio. The current mix continues to lean towards lower risk segments supported by growth in affluent clients and improved risk profile in the mass market segment, while this has helped keep the retail cost of risk at low level. As of June 25, cash loan disbursements increased by 80% year over year. In credit cards, transactional activity continues to grow as turnover rose 15% year over year, although this hasn't translated into higher balances.

[Michela Casassa Ramat, CFO at Intercorp Financial Services]

The share of full payers increased from 22% in the second quarter twenty twenty four to 30% in the second quarter this year. We started to see some growth in the overall consumer portfolio, which expanded by 0.6% in the last quarter, a trend that has accelerated in July. However, the pace remains lower than expected, reflected both supply and demand dynamics. On the supply side, we've maintained a cautious approach to ensure healthy growth. On the demand side, ongoing liquidity events such as the severance funds withdrawals have provided extra liquidity to clients.

[Michela Casassa Ramat, CFO at Intercorp Financial Services]

While consumption remains active, many clients are still not ready to take on additional credit. That said, we continue to explore higher yielding segments, but always with a prudent approach. On Slide 12, we show you the evolution of loan growth and market share. Total loans grew 6% year over year, outperforming the system by a multiple around 3x and resulting in a gain of 30 basis points in total market share. In Commercial Banking, we gained 90 basis points of market share supported by three key drivers.

[Michela Casassa Ramat, CFO at Intercorp Financial Services]

First, sales finance remains a strategic focus, growing by 20% year over year, consolidating our position as the second largest player in the system. Second, we continue to deepen customer relationships, offering more products and growing our balances with our most relevant clients, reflected in a two forty basis point gain in midsized companies' market share. And third, our synergy with EasyPay is helping us reach more clients with a strong value proposition, both in midsized companies and in small companies through EasyPay Yard, where we have gained 30 basis points market share and still see room to grow. On the retail side, loans were up 1.2 year over year, led by high income segments. Mortgage continues to grow steadily, while consumer lending remains more challenging, especially in a more competitive environment.

[Michela Casassa Ramat, CFO at Intercorp Financial Services]

As part of our strategy, we are strengthening our payment ecosystem with Plin and EasyPay. We have continued working to generate further synergies as we encourage the growth of our payment ecosystem, focusing on increasing transactional volumes, offering merchants value added services and using EasyPay as the distribution network for internal products as well as a source to increase float. In this manner, Plin active users grew 13% over the last year, and our digital retail customers reached 83%. Moreover, Isipayya and Isipay continued to gain traction with volumes from Isipayya increasing 1.7x, resulting in more flow coming to Interbank. Consequently, small businesses deposits have grown by 20%, now representing around 10% of our wholesale deposits and 24% of our wholesale core deposits.

[Michela Casassa Ramat, CFO at Intercorp Financial Services]

Finally, Interbank share of easy pay flows now stands at around 39%. Following with the third message, we continue to see a low cost of risk and relatively stable NIM. On Slide 15, we'd like to highlight the continued strength of our asset quality metrics. Cost of risk remains low across segments. In retail, it stands at 4.2%, a level that is 300 basis points below last year.

[Michela Casassa Ramat, CFO at Intercorp Financial Services]

In Commercial Banking, cost of risk remained stable at around 0.6%. These trends reflect both an improving macroeconomic environment and healthier client payment behavior. In fact, the 2.5% consolidated cost of risk for the second quarter is aligned with the first quarter, excluding the one off impact from Telefonica. In Commercial Banking, that effect drove a temporary decline in the quarter. Without this effect, we see a slight increase in cost of risk still within expected level.

[Michela Casassa Ramat, CFO at Intercorp Financial Services]

In Retail, we stand at 4.2%, mainly driven by the portfolio mix, which has shown a meaningful improvement versus last year, with the consumer portfolio going down from 11.7% cost of risk to 7.2%. This aligns with improved client risk profile and product mix discussed earlier. New vintages are also showing stable early indicators. Within the total portfolio, credit cards and payroll loans have maintained an 18% share for three consecutive quarters. Finally, NPL ratios remain stable and coverage levels are solid above 140%.

[Michela Casassa Ramat, CFO at Intercorp Financial Services]

On Slide 16, we show the evolution of yields and margins. Loan yields declined 70 basis points year over year, reaching 9.9% in the second quarter, but stable versus the first quarter. This was mainly due to the lower market rates and loan book mix. That said, the good news is that yields stabilized during the last quarter, supported by some improvement in consumer portfolio and a positive trend in small business lending. Despite the pressure on yields, NIM has remained relatively stable in the last year, thanks to the reduction in cost of funds, which offset the decline in asset yields.

[Michela Casassa Ramat, CFO at Intercorp Financial Services]

It's also worth noting that we carried additional cash during the quarter in preparation for the call of Interbank subordinated bond, which had an eight basis point impact on NIM this quarter. Thus, we will start to see an improvement in NIM in the coming quarters. All in all, risk adjusted NIM improved 80 basis points year over year, in line with the lower cost of risk we mentioned earlier. On a quarter over quarter basis, risk adjusted NIM improved 10 basis points. Now we will deep dive into the cost of funds and funding mix.

[Michela Casassa Ramat, CFO at Intercorp Financial Services]

On Slide 18, the cost of deposits declined by 60 basis points year over year, supported by lower market rates and a healthier funding mix. Cost of deposits remained stable quarter over quarter, but the annual trend is clearly positive, and we see further potential for reduction going forward. Deposits have also become a more relevant part of our funding structure now at around 80%. Growth has come from both retail and commercial segments with total deposits up 7.4% year over year, well above the system's 4.8%, resulting in a market share gain reaching 13.9% of total deposits. As a result, our overall cost of funds fell by 40 basis points compared to last year, although it remained stable during the quarter.

[Michela Casassa Ramat, CFO at Intercorp Financial Services]

Finally, our loan to deposit ratio stands at 96%, in line with the industry average. On Slide 19, we take a closer look at Interbank's low cost funding strategy. Our approach focuses on capturing saving deposits and current accounts with low or zero interest rates, supported by initiatives that enhance the value added services we offer to clients. Synergies we dissipate have played a key role, allowing us to deliver a more comprehensive service and increase the float retained in interbank accounts. This has contributed to a 12% increase in commercial banking low cost funding.

[Michela Casassa Ramat, CFO at Intercorp Financial Services]

Institutional accounts have also supported this growth, benefiting from personalized services and efficient funding solutions. On the retail side, we continue to strengthen customer engagement and improve the customer experience to foster primary banking relationships. As a result, retail low cost funding grew 8% year over year and the share of time deposits over total retail deposits declined from 34% to 32%. Altogether, these efforts led to a 12% year over year increase in total low cost funding raising its share from 32% to 34%. Moving on to our digital strategy.

[Michela Casassa Ramat, CFO at Intercorp Financial Services]

On Slide 21, we continue to create significant value in primary banking relationships through our digital developments and play. Over the last year, we have been able to increase our retail primary banking customers by 10%, now representing more than 33% of our retail client base. Plien reached 2,400,000 active customers monthly, each making an average of 25 transactions, up 25% compared to last year. In total, we closed the second quarter with a 44% increase of monthly transactions year over year. A key driver of this engagement is our focus on P2M payments, which now represent 70% of total transactions.

[Michela Casassa Ramat, CFO at Intercorp Financial Services]

Within these, QR POS payments grew steadily, reaching 2,200,000 monthly transactions, up 51%. We also launched Pling Metropolitano, expanding our use cases and accelerating adoption. Additionally, we believe we have solid key performance indicators that continue to improve. For example, our inflow payroll accounts hold around 14% market share, retail deposits are at approximately 15% market share and credit cards about 26%. All of these metrics are supported by an NPS of Retail Banking of 54%, reflecting our commitment to customer satisfaction and loyalty.

[Michela Casassa Ramat, CFO at Intercorp Financial Services]

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. As a result, we've seen steady growth in digital adoption. Our retail digital customer base increased from 80% to 83%, while commercial digital clients now stand at 74%. We've also made progress in self-service and digital sales. Our self-service indicator reached 78% and digital sales climbed 71%.

[Michela Casassa Ramat, CFO at Intercorp Financial Services]

These improvements are supported by our always on communication strategy, which focuses on educating customers about new self-service features through the app and our virtual assistant. With while the latest NPS reading we have corresponding to April showed a drop, our internal data fully reflects a clear recovery. Finally, solid results with growth in the core business of Wealth Management and Insurance. On Page 24, we highlight the strong performance in our wealth management business this quarter. Intellio continues to show solid momentum.

[Michela Casassa Ramat, CFO at Intercorp Financial Services]

Assets under management have grown at double digit pace, reaching new highs and now totaling $7,800,000,000 Fee income continues to improve, up 19% year over year, adding to the positive trend in results. Additionally, other income grew 5.3 times year over year and 2.4 times quarter over quarter, supported by a twelve month return on investments of 17%. That said, for the second half of the year, we anticipate a normalization towards more typical levels. As of June, Intelligo's accumulated ROE stands at 31%. For the full year, we expect results to normalize and remain within our guidance range.

[Michela Casassa Ramat, CFO at Intercorp Financial Services]

On the digital front, we continue to enhance our Interfondos app, which is our mutual funds app, with the goal of shifting its role from a transactional platform to a true digital adviser for our mutual funds clients. As a result, we have seen a sustained increase in both the app adoption with a seven point year over year increase and digital transactions, which grew by six points annually and now represent more than half of all client transactions. Now moving to Insurance on Slide 26. We continue to see good momentum in the contractual service margin, which grew 17% year over year, mainly driven by Individual Life. In the second quarter, reserves for Individual Life and annuities increased by 3114%, respectively, supported by strong new business generation that more than offset the monthly amortization of the CSM.

[Michela Casassa Ramat, CFO at Intercorp Financial Services]

Individual Life remains a key focus for us given its low market penetration. Although traditional channels keep growing at high rates, we've been also diversifying our distribution strategy to include digital ones and simplifying the product to reach new segments and keep supporting growth. Additionally, short term insurance premiums grew by over 110%, driven by the disability and survivorship premiums acquired through a two year bidding process from the Peruvian private pension system. On the investment side, results remained stable. The return on the investment portfolio reached 6.1%, primarily supported by interest increase from fixed income portfolio and investment funds.

[Michela Casassa Ramat, CFO at Intercorp Financial Services]

In insurance, we continue to focus on enhancing the digital experience as well for our clients and expanding ourselves from digital channels. The development of internal capabilities has allowed us to increase digital self-service to 68% from 66% of the previous year and the direct sales to grow 11% in the last year. Now let me move to the final part of the presentation where we provide some takeaways. Before we move on to our operating trends, we'd like to share where we are focusing our growth efforts. On the retail side, we continue to see growth in mortgages as we continue to gain market share now at 15.8%.

[Michela Casassa Ramat, CFO at Intercorp Financial Services]

We're beginning to observe early signs of recovery in the consumer loan portfolio. That said, the pace of recovery has been slower than we initially expected. In Commercial Banking, we are seeing solid progress supported by three main strategies. In Insurance, we are maintaining our focus on long term products. While the market remains challenging, Individual Life has shown encouraging growth this past quarter.

[Michela Casassa Ramat, CFO at Intercorp Financial Services]

Finally, in Wealth Management, asset under management continues to grow at a healthy pace, up 14% year over year, reaching a new record level, a reflection of both market performance and continued client engagement. On Slide 30, let me give you a review of the operating trends of the first half. Capital ratios remained at some levels with a total capital ratio of around 17% and the core equity Tier one ratio close to 12%. Our ROE for the first half of the year was 18.4%, above our guidance. As mentioned before, we expect the second half to go back to more normal levels and the year end ROE to be closer to 17%.

[Michela Casassa Ramat, CFO at Intercorp Financial Services]

For loan growth, we grew 6% as of June, in line with our guidance and above the system. We expect a slight recovery in NIM over the remainder part of the year, although it continues to face some pressure. On the positive side, cost of risk is expected to remain well below guidance, helping to offset lower margins. As a result, we anticipate a slight improvement in our risk adjusted NIM for the full year. Finally, we continue to focus on efficiency at IFS as our cost to income was around 36% within guidance.

[Michela Casassa Ramat, CFO at Intercorp Financial Services]

On Slide 32, we highlight our strong sustainability performance for the second half of twenty twenty five. On the environmental front, our sustainable loan portfolio reached 400,000,000, supporting projects with measurable environmental benefits. We also advanced our renewable energy efforts with 33 financial stores now IREC certified. Additionally, all corporate banking executives managing the agricultural portfolio have been training climate technologies, an important step in our sustainable finance strategy. On the social side, we continue to promote inclusive growth.

[Michela Casassa Ramat, CFO at Intercorp Financial Services]

Interbank ranked number two in the Great Place to Work Diversity, Equity and Inclusion ranking with Interseguro and Interseguro Group also recognized. Interbank and Interseguro were also ranked among the top 10 best places to work for women. Through ICPedia, we are supporting over 1,200,000 entrepreneurs, while more than 1,600 Peruvians are now covered by our inclusive insurance products, VidaCash and Roomba. Additionally, over 3,600 entrepreneurs have received financial training through Exquela, EasyPay's education platform. Finally, we published our Equator Principles report reaffirming our alignment with international standards for responsible environmental and social risk management in project finance.

[Michela Casassa Ramat, CFO at Intercorp Financial Services]

Let me finalize the presentation with some key takeaways. First, we had a strong second quarter. Second, growing commercial and payment ecosystem, while consumer portfolio is starting to slowly recover. Third, low cost of risk continues and stably. Fourth, there is a positive trend in funding mix.

[Michela Casassa Ramat, CFO at Intercorp Financial Services]

Fifth, we are strengthening primary banking relationships. And sixth, we've had solid results in wealth management and insurance. Thank you very much. Now we welcome any questions you may have.

[Operator]

Thank you. At this time, we will open the floor for your questions. Second, we will take the questions from the conference call and then the webcast questions. And our first question will come from Ernesto Gabilondo with Bank of America. Please go ahead.

[Ernesto Gabilondo, Director - LatAm Financials Bank of America at Bank of America Merrill Lynch]

Thank you. Hi, good morning, Luis Felipe, Michela, Carlos and good morning to all your team. Congrats on your results and the recovery of the wealth management business and the good asset quality trends. And thanks for the opportunity to ask questions. My first question will be on your NIM expectations.

[Ernesto Gabilondo, Director - LatAm Financials Bank of America at Bank of America Merrill Lynch]

You were saying we can expect some NIM expansion in the second half. So can you elaborate a little bit more on that? And how do you see the trend next year, especially if credit card or the retail segment starts to accelerate? My second question will be on asset quality. As you mentioned, you expect it to remain below the guidance.

[Ernesto Gabilondo, Director - LatAm Financials Bank of America at Bank of America Merrill Lynch]

I just want to double check if the guidance is around 3% for this year. And how should be the trend for cost of risk through the next years, especially as you resume growth in the retail segment? And my last question is on expenses. We saw they came at double digit, as you mentioned, you have been investing in technology. But how should we think about the OpEx growth for the second half and for the next years?

[Ernesto Gabilondo, Director - LatAm Financials Bank of America at Bank of America Merrill Lynch]

Next year should be growing more in line with inflation or 100 basis points above inflation? Just also wanted like to have an idea of the trend on expenses. Thank you.

[Luis Felipe Castellanos López-Torres, CEO at Intercorp Financial Services]

Okay, Ernesto. Thanks very much. All your the first part of your questions are obviously related and the velocity of recovery of our consumer book that will touch upon NIM and asset quality. But let me pass it on to Michele and Carlos, so they can complement the answers given that they are mostly related to that.

[Michela Casassa Ramat, CFO at Intercorp Financial Services]

Okay. Morning, Ernesto. Let me start with NIM and asset quality, and then I'll pass it on to Carlos. I mean, two main reasons pressuring NIM in the first half of the year. The first one is the portfolio mix.

[Michela Casassa Ramat, CFO at Intercorp Financial Services]

As you have seen, we have been growing nicely three times the market, though the mix of that growth has been slightly skewed towards more mortgages and commercial banking. So this is the first thing that has been pressuring NIM. We expect that trend to change a little bit in the second half of the year and I think more evident during 2026 as the consumer portfolio resumes growth. We've seen a 0.6% growth in the second quarter. We have seen in July a little bit of acceleration on that.

[Michela Casassa Ramat, CFO at Intercorp Financial Services]

So that is the first thing that should change a little bit the trend in NIM. A second factor that has impacted NIM in the first half of the year is the fact that we've had some extra liquidity as we were preparing also to pay the sub bond that we had maturing on July. So we have calculated impact which is, I mean, close to 10 basis points of impact on NIM because of that. That has been repaid during July, so we should see that impact in the third quarter. So from the number you see today, we are expecting an improving an improvement in NIM in the second half of the year.

[Michela Casassa Ramat, CFO at Intercorp Financial Services]

Not sure whether we will reach the target, the 5.4%, but we should be close to that. And what we expect for 2026, although we don't have the exact number as we have not given any estimates yet, we expect the trend of the portfolio mix with more consumer loans to continue to positively impact yields, thus NIM, as we still see some further, even if less than before, but we still see some further room for improvement also in the in the cost of funds. And asset quality goes hand in hand with that explanation. 2.5 is a very low level of cost of risk, no, when you compare that with the levels that we have pre COVID, which were closer to three percent. At that point in time, the if you want the the high yield portfolio, so credit cards, personal loans and and small businesses accounted for more than 20%, close even to twenty five percent.

[Michela Casassa Ramat, CFO at Intercorp Financial Services]

As of today, that accounts for eighteen percent. So the portfolio mix is having also a say in the asset quality. Guidance was to be around 3%. We have had stable cost of risk of 2.5 excluding Telefonica in the first quarter and in the second quarter. As the consumer loan book resumes growth, we should see a slight increase in the cost of risk in the coming quarters and in 2026.

[Michela Casassa Ramat, CFO at Intercorp Financial Services]

But I guess that the doubt we have today is the speed at which that is going to take place quarter by quarter. And maybe let me stop there and pass it to Carlo, whether he wants to complement and also answer the expenses part.

[Carlos Tori Grande, EVP - Payments & CEO - Interbank at Intercorp Financial Services]

No. That's that was very, very detailed. Thank you, Mikaela. I mean, we will we have already started to grow the consumer book slowly, and that will continue. The good news is that credit card turnover and cash loan disbursements have increased.

[Carlos Tori Grande, EVP - Payments & CEO - Interbank at Intercorp Financial Services]

So 15% increase on card turnover, which eventually will become interest earning assets. Takes a while, but that's good news. As Michela mentioned earlier, we the cost of risk is low, but that will increase slightly. At the end of the day, what we need to look at is income net of risk. No?

[Carlos Tori Grande, EVP - Payments & CEO - Interbank at Intercorp Financial Services]

So so risk adjusted NIM is probably the the better measure, and that that will continue to to increase slightly. So so that on on that front, I think that's a lot of it. On on the expenses, as as Michela mentioned on her presentation, we we separated the increases in three different parts. No? So technology is one, personnel is the second one, and the third one is just marketing and others.

[Carlos Tori Grande, EVP - Payments & CEO - Interbank at Intercorp Financial Services]

I'll start with the third one. That's the easiest one. That will continue to increase with the business. No? So we see 15% increase in in credit card turnover that has some costs, miles, some points and and and marketing.

[Carlos Tori Grande, EVP - Payments & CEO - Interbank at Intercorp Financial Services]

So it it won't it all always grows slower than what the turnover increases, and and we'll continue to grow with that business. There's no change there. Then in personnel, we had some senior positions open at the end of last year, and we have been filling those. Basically, there's some positions in technology, analytics, and and both in in a commercial banking and and and risk and and retail banking as well. So those positions have been filled, and and we will continue to look for for for talent in analytics and and technology.

[Carlos Tori Grande, EVP - Payments & CEO - Interbank at Intercorp Financial Services]

So the the rate of increase won't be the same. It will probably be lower, but there is some probably a little bit above inflation and mostly related to to how the business grows. And then in technology, we're undergoing a good investment program, which is not only investment, has some expenses both in personnel and and just a process that will continue through the second half of the year. And, also, we've been seeing a lot of transactions increase. No?

[Carlos Tori Grande, EVP - Payments & CEO - Interbank at Intercorp Financial Services]

We we're growing a PLIN at 50% per year. PLIN didn't exist four years ago. No? So that's and that's probably the largest transaction that we have. So we continue to see an increase in transactions.

[Carlos Tori Grande, EVP - Payments & CEO - Interbank at Intercorp Financial Services]

So technology puts a little bit of pressure on on expenses, but our target remains 40% efficiency ratio in the medium term, probably not for the second half of this year, but going forward. That's what we're looking at and we need to grow the income so so to to cover the expenses that we're we're doing in technology.

[Luis Felipe Castellanos López-Torres, CEO at Intercorp Financial Services]

Yeah. So just to confirm that sorry. That's a to confirm Carlos' points about personal and technology go through also to the other subsidiaries. So in in that's the and and in Telio are also heavily investing in improving their valuable position for for for the digital platform. So so that's a pressure that we're seeing all across that subsidiaries of IFS.

[Luis Felipe Castellanos López-Torres, CEO at Intercorp Financial Services]

Our focus is to be very diligent in in how we do those investments and expenses and making sure that the business cases come aligned with relevant income. So that's kind of the target. So as Carlos mentioned, the medium target of efficiency for the bank, which is 40% and for IFS, which is to be around below 37%, continues.

[Ernesto Gabilondo, Director - LatAm Financials Bank of America at Bank of America Merrill Lynch]

Thank you very much. Just a follow-up on this one, as you were explaining the trends for the second half. But looking beyond this year and thinking more in 2026, how should we think about the OpEx growth? Similar to the trends of the second half? Or do you think it should start to normalize a little bit more growing a little bit above inflation? How are you seeing that?

[Carlos Tori Grande, EVP - Payments & CEO - Interbank at Intercorp Financial Services]

So we've clearly had a step up this year. So it probably won't be the same rate of increase, but it will continue to increase. It has a lot to do with how the business and the transactions increase rather than necessarily. No? So if we continue to grow, the OpEx will continue to grow.

[Carlos Tori Grande, EVP - Payments & CEO - Interbank at Intercorp Financial Services]

We we will we are investing in in a lot of analytics and GenAI That is more efficient than doing it in another way, but it brings additional OpEx. So it should be closer to the rate of increases that you have seen in the past. But, yeah, it it will depend on how our business grows.

[Ernesto Gabilondo, Director - LatAm Financials Bank of America at Bank of America Merrill Lynch]

Okay. No. Perfect. Thank you very much.

[Carlos Tori Grande, EVP - Payments & CEO - Interbank at Intercorp Financial Services]

I don't Mikaela. Sorry. I I think I cut cut you off. I don't know if you have something else to add there.

[Michela Casassa Ramat, CFO at Intercorp Financial Services]

No. No. No. No. Absolutely. That that that was it.

[Luis Felipe Castellanos López-Torres, CEO at Intercorp Financial Services]

Thank you, Ernesto.

[Ernesto Gabilondo, Director - LatAm Financials Bank of America at Bank of America Merrill Lynch]

Thank you.

[Operator]

And at this time, we will take the webcast questions. I would like to turn the call over to Mr. Ivan Peel from Inspire Group. Please go ahead, sir.

[Ivan Peill, Managing Director at InspIR Group]

Thank you, operator. We don't have any questions at this time. We'd like to briefly prompt investors and analysts to submit questions via the webcast, if you have any, please.

[Operator]

There appear to be no further questions on the audio side or the webcast. I would like to turn the floor back over to Ms. Casassa for any closing remarks. Please go ahead.

[Michela Casassa Ramat, CFO at Intercorp Financial Services]

Thank you very much. Thank you, everybody, for attending our conference call today. And hopefully, we will see again during our third quarter results conference call. Be safe. Bye bye.

[Operator]

This concludes today's conference call. Thank you for your participation. You may now disconnect.

Participants

Executives

• Luis Felipe Castellanos López-Torres, CEO
• Michela Casassa Ramat, CFO
• Carlos Tori Grande, EVP - Payments & CEO - Interbank

Analysts

• Ivan Peill, Managing Director at InspIR Group
• Ernesto Gabilondo, Director - LatAm Financials Bank of America at Bank of America Merrill Lynch