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Intercorp Financial Services Inc. (IFS) Q4 2022 Earnings Call Transcript

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Intercorp Financial Services Inc. (NYSE:IFS) Q4 2022 Earnings Conference Call February 15, 2023 10:00 AM ET

Company Participants

Rafael Borja - InspIR Group

Luis Felipe Castellanos - Chief Executive Officer

Michela Casassa - Chief Financial Officer

Bruno Ferreccio - Chief Executive Officer, Inteligo

Gonzalo Basadre - Chief Executive Officer, Interseguro

Carlos Tori - Executive Vice President, Payments

Conference Call Participants

Ernesto Gabilondo - Bank of America

Yuri Fernandes - JPMorgan

Andres Soto - Santander

Juan Recalde - Scotiabank

Operator

Good greeting and invited to Intercorp Financial Services Fourth Quarter 2022 Conference Call. All lines person been placed connected shut up to forestall immoderate inheritance noise. Please beryllium advised that today's convention is being recorded. [Operator Instructions]

It is now my pleasance to move nan telephone complete to Rafael Borja of InspIR Group. Sir, you whitethorn begin.

Rafael Borja

Thank you, and bully greeting everyone. On today's telephone Intercorp Financial Services will talk its 4th fourth 2022 earnings. We're very pleased to person pinch america Mr. Luis Felipe Castellanos, Chief Executive Officer of Intercorp Financial Services; Mrs. Michela Casassa, Chief Financial Officer of Intercorp Financial Services; Mr. Gonzalo Basadre, Chief Executive Officer of Interseguro; Mr. Bruno Ferreccio, Chief Executive Officer of Inteligo; and Mr. Carlos Tori, Executive Vice President of Payments astatine Intercorp Financial Services.

They will beryllium discussing nan results that were distributed by nan institution connected Monday, February 13. There is besides a webcast video presentations to travel chat during this call. If you didn't person a transcript of nan position aliases nan net report, they are now disposable connected nan company's website, ifs.com.pe, to download a copy. Otherwise for immoderate logic if you request immoderate assistance today, please telephone InspIR Group successful New York astatine 212-710-9686.

I would for illustration to punctual you that today's telephone is for investors and analysts only. Therefore questions from nan media will not beryllium taken. Please beryllium advised that forward-looking statements whitethorn beryllium made during this convention call. These are not early economical circumstances, manufacture conditions, nan company's early capacity aliases financial results. As such, nan statements made are based connected respective assumptions and factors that could alteration causing existent results to materially disagree from nan existent expectations. For a complete statement connected forward-looking statements, please mention to nan net position and study issued connected Monday, February 13.

It is now my pleasance to move nan telephone complete to Mr. Luis Felipe Castellanos, Chief Executive Officer of Intercorp Financial Services for his opening remarks. Mr. Castellanos, please spell ahead, sir.

Luis Felipe Castellanos

Thank you very much. Good greeting and invited to our 4th fourth and full-year 2022 net call. Thank to you each for attending today's call. I wanted to commencement by making a little summary of our strategy, nan [indiscernible] that we are deploying connected IFS successful bid to scope [Technical Difficulty] we person shared pinch you before. Our intent astatine IFS is to empower each Peruvians to execute their financial well-being. We're committed to do truthful done our 4 operating business segments.

Our aspiration includes: to summation our customer guidelines by leveraging information and analytics pinch sound rich | guidance skills; to supply nan champion integer acquisition based connected operational excellence, this while building a starring integer financial level to supply profitable solutions successful our cardinal businesses that person a clear strategical attraction connected payments, user financing, wealthiness management, and life insurance.

To execute each these goals, we proceed to activity connected 4 main pillars. We are processing a simple, resilient, and scalable exertion level for existent and early growth. We are becoming a data-driven statement pinch heavy knowing of Peruvians and user preferences.

We are focused connected attracting and processing nan champion talent wrong our remote-first model that allows america to summation productivity and to scope nan champion talent regionally. And we want to go a leader successful sustainability. We're adopting stronger and much wide ESG practices to thrust worth creation for each of our stakeholders. This is our strategy and we proceed to execute it pinch a semipermanent vision.

We cognize that we are operating successful an situation of macro and governmental instability successful our country. However, this should not distract america from reaching our objectives. We are being cautious pinch our operations fixed nan script we're facing, but we stay committed to helping Peru and Peruvians to flooded these challenging times.

Regarding GDP maturation successful Peru, December's monthly fig is expected to beryllium announced today. But looking astatine nan past month's figures and considering that we person had disruption occurred astatine nan extremity of past year, we would expect weakened full-year maturation levels. [Forecast] [ph] for 2023 show astir forecasts pointing to little than 2% maturation this year. Nevertheless, we stay assured that Peru's fundamentals, arsenic good arsenic a debased [Technical Difficulty] problems and nan accelerated inclination of integer payments supply plentifulness of opportunities for our businesses.

As you will spot during this call, IFS continues to show resilience successful its halfway operations. Our banking franchise delivered coagulated results successful 2022 pinch maturation successful nett liking income and fees offsetting nan request of higher provisions, while delivering clear improvements successful efficiency. Our security segments continues to retrieve its finance performance, and nan Wealth Management conception posted affirmative numbers this 4th aft 2 4th of losses related to marketplace conditions. Finally, our payments ecosystem continues to grow and it's successful bully style to activity further growth.

With this, fto maine walk it connected to Michela for a elaborate update of our results. Once again, acknowledgment very overmuch for attending our call.

Michela Casassa

Thank you, Luis Felipe. Good greeting everybody and invited again everyone to Intercorp Financial Services 4th fourth and full-year 2022 net call. This time, we will reappraisal our financial highlights and cardinal messages, but besides our guidance for 2023. All nan results you will spot coming are very overmuch aligned pinch nan strategy that we are deploying, arsenic Luis Felipe has conscionable mentioned, pinch a clear privilege connected integer maturation pinch attraction connected profitability.

I will commencement pinch a little summary of financial highlights connected Slides 3 to 11 of nan presentation. On Slides 3 and 5, IFS had different beardown 4th successful banking and payments, bully results successful insurance, and nan first affirmative 4th for Wealth Management, showing a betterment successful our finance portfolio. With this last quarter, nan full-year shows very beardown halfway results successful banking, insurance, and payments, but still a antagonistic twelvemonth for Wealth Management.

Reported net successful nan 4th came astatine PEN403 million, which represents a 3% summation successful recurring net quarter-on-quarter and shows an important maturation successful IFS net of much than 50% connected a yearly basis. ROE for nan 4th came astatine 16.5%, still impacted by a debased ROE successful Wealth Management of astir 8%, security pinch 13.8%, and arsenic antecedently mentioned, a beardown 4th for banking and payments pinch 20.2% and 22.3% ROE, respectively.

When looking astatine nan full-year figures, reported net reached PEN1,671 cardinal aliases PEN1,448 cardinal erstwhile excluding nan one-off registered successful nan 3rd quarter, owed to nan accounting revaluation from book worth to nan value paid of nan antecedently owned 50% of Izipay astatine Interbank.

In nan yearly comparison, net showed a alteration of 7% successful nan reported figures aliases 20% successful nan normalized figures, which is chiefly owed to nan very beardown and supra mean results connected nan finance portfolio successful security and Wealth Management during 2021, which turned antagonistic successful nan lawsuit of Wealth Management for 2022. This circumstantial inclination connected nan return connected finance portfolio is penalizing nan wide yearly trends.

Reported ROE for nan afloat twelvemonth of IFS was 17.7% and was 15.5% erstwhile excluding nan one-off. The debased normalized yearly ROE was chiefly owed to nan antagonistic effect from investments arsenic ROE for banking, security and payments for nan full-year are each precocious astatine 19.8%, 26.6%, and 26.7%, respectively. In banking, we had a affirmative 4th successful halfway activity pinch immoderate signs of moderation, owed to nan macro scenario. The displacement successful indebtedness operation and repricing proceed to positively effect NIM this 4th up to 5.4%.

As already anticipated successful our erstwhile convention calls and in-line pinch nan alteration successful portfolio mix, costs of consequence has reached 2.5%, ending nan twelvemonth astatine 1.9%. This was a very bully 4th for nan operating leverage of nan bank, which drove ratio ratio down to 38%.

On insurance, net were awkward owed to a stronger subject connected pricing and rates paid for annuities, which somewhat impacted marketplace share, and ROE of 13.8% was beneath mean levels, contempt different beardown 4th and investments pinch return connected nan finance portfolio astatine 7.4%. In Wealth Management, results recovered powerfully than erstwhile quarter, reaching a affirmative consequence pinch a 7.6% ROE, still successful nan way to recovery, nevertheless good beneath sustainable profitability.

Finally, connected our costs business, connected 1 side, Izipay continues pinch a coagulated maturation successful business pinch acquiring fees up 8% connected nan 4th and 32% year-over-year, beardown maturation successful number of merchants and transactional volumes and gaining marketplace stock wrong our volumes successful e-commerce this year. Additionally, Plin and Tunki proceed pinch very beardown maturation of users and transactions arsenic we will spot successful much item further connected successful nan presentation, which should thief america to use from nan adjacent early interoperability and to beforehand pinch our costs ecosystem.

Among nan cardinal capacity indicators for nan 4th successful nan twelvemonth connected Slide 6 and 7, I would for illustration to item nan continuous betterment successful nan NIM of IFS. There has been a 20 ground points betterment successful nan 4th pinch NIM, driving it up to 5.4% and nan full-year up to 5%. Another ratio to item is nan quarterly ratio ratio, which stood astatine 34.8%, going backmost to pre-pandemic levels.

On Slides 8 and 9, full recurring revenues for IFS grew 6% successful nan quarter, acknowledgment to nan maturation registered successful banking of 7%, payments of 15%, and nan betterment successful revenues from Wealth Management from PEN3 cardinal to PEN56 cardinal this quarter. On a full-year basis, IFS revenues accrued 7%, acknowledgment chiefly to nan summation successful revenues of 15% successful banking and 22% successful payment.

On Slide 10, nan ratio ratio of IFS was 34.8% successful nan quarter. The full-year ratio ratio was 36.1% and would beryllium 37.4% erstwhile excluding nan affirmative effect from nan one-off successful revenues. Also, it is important to statement that location is an effect successful nan reported costs interest usage of IFS of 2022, owed to nan consolidation of Izipay figures starting April, which reflects a higher summation successful expenses arsenic they are included this twelvemonth and they are not considered successful [the base] [ph] of 2021.

Normalizing Izipay effect successful 2021, expenses astatine IFS grew 8% connected a quarterly ground and only 3% year-over-year. This is simply a very worldly point, arsenic it makes a beardown quality pinch nan reported figures and represents a cardinal differentiating constituent of IFS profitability. We judge this will beryllium nan lawsuit arsenic revenues proceed to summation faster than cost, frankincense improving nan operating leverage of nan institution further.

In fact, 2022 has been a bully twelvemonth successful position of betterment of nan ratio ratio and nan affirmative operating leverage astatine nan banking business, which is nan main contributor to nan wide costs guidelines of IFS. In nan 4th quarter, nan ratio ratio of nan banks stood astatine 37.9%, down from 42.2% successful nan 4th fourth of 2021. The operating leverage of nan slope for nan 4th fourth of 2022 was very beardown pinch revenues increasing 20% year-over-year and costs increasing only 2%.

When looking astatine nan yearly figures, nan slope costs guidelines has accrued 8%, chiefly owed to 3 reasons. The higher increase, 21%, is nan summation successful exertion costs and caller ventures, which see nan exertion expenses for our integer transformation, arsenic good arsenic caller investments successful payments. A 6% summation successful unit costs, which is chiefly coming from nan summation successful mandatory worker profit sharing in-line pinch nan betterment of nan section GAAP earnings.

An 8% summation successful adaptable costs related chiefly to in installments cards, which is beneath nan percent summation successful in installments and debit cards purchases we make fees and financing volumes. Other expenses person grown single-digit, reflecting our continuous costs ratio efforts. Moreover, we person continued pinch our branch optimization efforts, reaching a full simplification successful number of branches of 43% aliases much than 120 branches from nan highest successful 2016.

On Slide 11, we person a coagulated superior position arsenic evidenced by nan ratios of Interbank, but besides successful Interseguro and Inteligo. Core Equity Tier 1 ratio astatine Interbank is astatine 12% arsenic of December 2022 and nan full superior ratio stands astatine 15.1%, good supra nan industry's mean of 14.4%, contempt nan beardown maturation successful loans registered this year.

Starting January 2023, we will instrumentality immoderate changes to nan calculation of superior ratios in-line pinch caller regulations published by nan superintendency pinch constricted effect for nan banking conception and immoderate changes successful Wealth Management established by nan Central Bank of Bahamas.

Now, I will attraction connected nan six cardinal messages we would for illustration you to return location from this telephone connected Slide number 13. First, nan macro outlook continues to beryllium challenging and impacted by nan governmental uncertainty. Second, we had a beardown twelvemonth successful halfway banking business pinch immoderate moderation successful maturation successful nan 2nd half of nan year. Third, we proceed to activity connected our two-tier integer strategy, showing affirmative developments successful our integer indicators to foster maturation astatine IFS pinch sustainable profitability.

Fourth, milder quarterly betterment successful Wealth Management and supra mean finance results successful insurance. Fifth, we proceed to spot a affirmative improvement successful our payments business; and finally, we proceed to make advancement successful our sustainability efforts arsenic evidenced by our caller 2022 CSA people astatine 62 points improving 9 points from past twelvemonth and a fig that is 16 points supra nan world's manufacture average.

On Slide 14, we are showing nan improvement of immoderate of nan cardinal macro indicators. GDP maturation continues to beryllium debased pinch an estimate of 1.8% for nan yearly maturation of nan 4th quarter. Interest rates person continued to summation pinch nan cardinal bank's reference complaint astatine 7.75% And nan dollar complaint astatine 4.25%. However, location has been a station of nan caller increases successful nan soles rates during nan past week cardinal slope meeting.

The speech complaint has registered nan ups and downs successful nan past weeks and it's now down to 3.81 soles per dollar astatine nan extremity of December. Inflation continues precocious astatine 8.5% arsenic of December, reverting nan first signs of alteration successful inclination owed to nan disruption that’s registered by nan protests successful different parts of nan country, chiefly successful nan south, and nan blockage of highways.

On Slide 16, moving to nan bully news of banking, we person continued to spot a bully capacity successful activity successful nan quarter, contempt continued slowing down successful financing maturation arsenic discussed during nan erstwhile calls arsenic we person conscionable adjusted our in installments underwriting standards successful circumstantial sub pockets of debased income clients which commencement to spot immoderate impacts of nan slowdown of nan system and sustained ostentation and now connected apical of nan disruption of December and besides January.

Moreover, owed to nan disruption successful payments from clients caused by nan protests, particularly successful nan southbound of nan country, but immoderate grade besides successful different regions, we person fixed further costs accommodation to clients by rescheduling immoderate payments successful user finance, and to a insignificant extent, besides successful SMEs. Despite these, in installments cards and debit cards purchases proceed to summation 7% connected a quarterly ground and 28% connected a yearly basis. In nan aforesaid way, balances person accrued 8% successful nan 4th and 29% connected a yearly ground successful statement pinch nan industry.

We proceed to spot important maturation successful purchases arsenic some in installments and debit cards proceed successful their way of accrued penetration successful nan country, which is still low. This maturation has allowed america to summation marketplace stock astir 100 ground points successful nan past 12 months for nan mixed purchases, acknowledgment chiefly to our Interbank use loyalty program, our accrued attraction connected e-commerce and precocious maturation merchandise categories. And finally, besides acknowledgment to our upselling strategy.

New disbursement of individual loans person seen a betterment erstwhile compared to nan erstwhile quarter, has registered little year-over-year maturation of 8%. On nan SME front, disbursement proceed to beryllium beardown successful nan 4th fourth and are 17% supra 3rd 4th and doubly nan level of past twelvemonth and are helping this portfolio to turn nicely during 2022 starting from a very debased guidelines of little than 3% marketplace stock successful nan segment.

On Slide 17, we proceed to spot coagulated double-digit maturation successful banking revenues, acknowledgment to double-digit maturation successful nett liking income and interest income. Net liking income grew 23%, pinch a beardown publication of nett liking income coming from in installments cards and individual loans, but besides from nan repricing of commercialized banking loans. Fee income grew 12%, acknowledgment to nan beardown maturation of in installments cards interest income, owed to nan improvement of in installments and debit cards purchases, but besides to nan sustained beardown maturation successful interest income coming from rate guidance services successful commercialized banking.

Other income astatine nan slope recovered and was up 9% year-over-year. All-in-all, full halfway revenues grew 20% successful nan 4th fourth erstwhile compared to nan 4th fourth of 2021, a very beardown betterment successful banking revenues, which continues pinch a affirmative operating leverage, arsenic antecedently mentioned.

On Slide 18, we proceed to spot a beardown portfolio displacement to higher yielding loans. Retail loans reached 54% of nan full portfolio versus 49% 1 twelvemonth ago. And moreover, in installments cards and individual loans reached 22% of nan full indebtedness book versus 18% 1 twelvemonth ago. Reactiva loans arsenic of December correspond only 5% of nan full indebtedness book, down from 9%, 1 twelvemonth ago.

These effects, together pinch nan summation successful nan SME indebtedness book, still small, and nan summation successful rates is pushing output of loans upwards 70 ground points successful this 4th and 220 ground points successful nan twelvemonth reaching 10.5%, and NIM, 40 ground points successful nan 4th and 100 ground points successful nan twelvemonth reaching 5.4%. Risk-adjusted NIM has remained unchangeable successful nan 4th owed to nan summation successful nan costs of risk.

We person besides seen rising costs of costs arsenic we commencement to spot some nan effect of nan emergence successful nan rates of dollars, funds, and nan continuous raises successful soles rates arsenic shown connected Slide 19. Cost of costs reached 3.2% successful nan quarter, up 40 ground points successful nan 4th and 160 ground points successful nan year. We person nan champion loan-to-deposit ratio among peers astatine 101% arsenic of December versus a strategy mean of 107%.

On Slide 20, arsenic anticipated, we spot expanding levels of costs of consequence in-line pinch nan displacement successful nan indebtedness mix, but besides from nan effect of nan sustained precocious ostentation and nan latest disruption successful nan economy, owed to nan process. Cost of consequence successful nan 4th was up to 2.5%, already supra pre-COVID levels of astir 2%, chiefly owed to nan effect from nan unit portfolio, which has reached a costs of consequence of 4.7%, again supra pre-COVID level.

During this quarter, we person made immoderate adjustments to nan calculation of nan expected loss, which includes an update of nan forward-looking variables, but besides use a much blimpish position connected nan user portfolio, shifting master criteria from commercialized banking to unit banking, which resulted successful an bonzer antagonistic effect successful unit and a affirmative 1 successful commercial.

This is nan main logic why nan reported costs of consequence figures show a 6.1% for unit and a reversion of 1.6% successful commercialized banking. For this reason, nan NPL sum ratio continues to beryllium very precocious successful unit banking astatine 244%, which is overmuch higher than nan 179% that we had recalled.

Now, let's move to nan 3rd cardinal connection connected Slide 23. Our integer indicators show bully trends erstwhile compared to nan erstwhile year. Still, location is simply a measurement to spell successful moving these indicators further. As of December, integer customers reached 71% of customers who interact pinch nan slope during nan past 30 days, up 6 points successful nan past year. Digital acquisition reached 57%, up 19 points from past year, and integer income reached 64%, expanding 6 points successful nan past year, each indicators focused connected retail.

We spot an important number of caller integer accounts being opened, some for individuals and businesses. As of nan extremity of December, 58% of caller unit redeeming accounts were opened digitally, while 94% of caller business accounts were opened digitally. NPS for integer customers continues its way to go a apical NPS successful nan adjacent years, reaching 49 points this quarter, improving 3 points versus nan erstwhile year. Insurance integer indicators show affirmative developments arsenic good pinch SOAT security already astatine 80% and Vida rate life premiums, a integer product, reaching 39% of full life premiums.

On Slide 25, in-line pinch our integer strategy, we proceed to spot an important maturation successful our customer guidelines of 18% successful retail, 29% successful integer unit customers, and 20% successful commercialized banking customers reaching much than 5 cardinal customers arsenic of nan extremity of December.

On Slide 27 and 28, we are showing betterment successful nan Wealth Management portfolio and different beardown 4th successful nan security portfolio. Wealth Management, connected Slide 27, had a affirmative yet mini return connected nan finance portfolio, almost wholly reverting losses from different income and powerfully improving revenues, up to 56 cardinal successful nan quarter. This has helped amended bottommost statement results for nan quarter, but stay successful antagonistic territory successful nan twelvemonth successful figures. Good news for nan security conception pinch different 4th of beardown returns connected nan finance portfolio pinch ROIC astatine 7.4% successful nan quarter, still supra mean humanities levels.

Now, moving connected to payments connected Slide 30. We are showing beardown maturation successful number of merchants and transactional volumes. Merchants accrued 14% successful nan 4th and 73% year-over-year, reaching much than 1 million. Transactional volumes grew 10% successful nan 4th and 33% year-over-year. Moreover, e-commerce transactions are gaining stock wrong our full transactional volumes, reaching 17% arsenic of nan extremity of December and successful statement pinch our strategy. Revenues continued to turn nicely, 15% successful nan 4th and 8% year-over-year, supported by nan summation successful transactional volumes and merchants.

We are besides including info related to EBITDA this 4th to show nan betterment registered this quarter, which reached 26% and 24% year-over-year. We person been moving to accelerate nan maturation of our costs ecosystem by having each our assets activity towards a communal strategy. We are focusing connected expanding transactional volumes, offering merchants further services, proceed to aviator low-risk loans to merchants, and usage Izipay arsenic a distribution web for Interbank products, arsenic good arsenic a root of float.

On Slide 31 and 32, Plin and Tunki proceed pinch their accelerated growth. Plin reached almost 10 cardinal users arsenic of nan extremity of December pinch Interbank information arsenic main slope relationship still supra 40%, and Tunki users reached 2.5 million. Number of merchants proceed to summation arsenic good aliases 91% year-over-year for Plin and 65% for Tunki.

The number of transactions has seen a beardown acceleration successful nan past 3 quarters. This quarter, nan beardown maturation of nan erstwhile 4th has continued, reaching a 33% quarter-over-quarter for Plin and 45% quarter-over-quarter for Tunki. We are presently moving connected getting fresh for Plin and Yape interoperability. This is an important improvement for financial inclusion successful nan country, which nan Central Bank has encouraged and which should thief to bring much group into nan financial system, reducing usage of cash, which continues to beryllium precocious successful nan country. Technical tests commencement adjacent week, and we expect afloat deployment to beryllium fresh successful April.

On Slide 34, moving connected to our sustainability strategy, we person continued to build upon our attraction areas. Our efforts successful nan past 12 months person allowed america to amended our Corporate Sustainability Assessment people this year, reaching 62 points, an betterment of 9 points arsenic we announced during our past convention call. But now we are besides capable to comparison this consequence pinch nan world's manufacture mean for 2022, which was 46 points. Thus, we are 16 points supra that average, which reflects improvements successful nan environmental, societal and governance and economical areas.

Our latest developments successful ESG include, connected nan societal front, being each 4 companies successful nan apical 10 positions of Great Place to Work Peru 2023, further contents and learnings done Aprendemas, our financial services acquisition level pinch almost 700,000 users, and successful nan governance front, we person received nan Number 1 position by Merco connected apical companies, some successful nan estimation class and successful nan ESG class arsenic Interbank [Corporate] [ph].

Now, fto maine move to nan caller guidance for 2023 connected Page 37. And fto maine mention that security figures included successful nan guidance includes preliminary IFRS 17 figures, which are presently nether reappraisal and which whitethorn lead to immoderate adjustments. The guidance reflects a afloat alignment pinch our strategy, which has 3 clear priorities. One, turn customer guidelines and apical statement successful a sustainable and profitable way; two, supply a apical acquisition to clients digitally; three, attraction connected cardinal businesses, including user finance, payments, businesslike funding, security and Wealth Management.

2023 guidance goes arsenic follows. First, we are maintaining nan aforesaid guidance for nan superior ratio, which implies superior ratios to stay astatine sound levels, pinch full superior ratio astatine astir 15% and halfway equity Tier-1 ratio astatine astir 11%. Second, a continued way to betterment successful halfway profitability pinch 2023 IFS ROE astatine astir 18%. In position of indebtedness maturation for 2023, we expect again precocious single-digit maturation successful full loans erstwhile excluding past repayments of Reactiva led by debased double-digit maturation successful user loans.

For 2023, we are focusing nan NIM guidance connected Interbank. We expect Interbank NIM to beryllium betwixt 5.5% and 6% aft closing 2022 astatine an mean 4.9%. Cost of consequence for banking is expected to summation successful 2023 and to beryllium supra pre-COVID levels and scope a number betwixt 2.6% and 3%. Finally, we will attraction connected efficiency, particularly connected affirmative operating leverage.

At this time, we are not fresh to see nan guidance for nan ratio ratio astatine IFS level, which we will do during nan adjacent 4th erstwhile IFRS 17 is afloat reflected successful nan figures. But we are besides adding, arsenic guidance, nan ratio ratio of nan slope arsenic it is 1 of nan main drivers of ratio for IFS. We expect Interbank ratio ratio to beryllium beneath 39% for 2023 arsenic we expect revenues to proceed increasing double-digit while expenses don't.

On Slide 38, fto maine recap nan six cardinal messages of this presentation. First, nan macro outlook continues to beryllium challenging and is impacted by nan governmental uncertainty. Second, we had a beardown twelvemonth successful halfway banking business pinch immoderate moderation successful maturation successful nan 2nd half of nan year. Third, we proceed to activity connected our 2-tier integer strategy, showing affirmative developments successful our integer indicators to foster maturation astatine IFS pinch sustainable profitability.

Fourth, location has been a mild betterment successful Wealth Management successful nan 4th and supra mean finance results successful insurance. Fifth, we proceed to spot a affirmative improvement successful our costs business. And finally, we proceed to make advancement successful our sustainability efforts arsenic evidenced by our caller 2022 CSA people astatine 62, 16 points supra nan world's manufacture average.

Thank you very much. Now, we invited immoderate questions you mightiness have.

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] The first mobility comes from Ernesto Gabilondo pinch Bank of America. Please spell ahead.

Ernesto Gabilondo

Hi. Good morning, Luis Felipe. Michela, convey you for your position and for nan opportunity to return questions. My first mobility is related to nan monetization of nan integer initiatives. We person seen successful nan region that nan integer translator has shifted to profitability versus customer growth. And also, we person detected that nan monetization is really coming from having integer deposits and integer loans, while nan different products for illustration payments, integer insurance, integer wealthiness management, nan physics marketplace are cardinal to build nan ecosystem and nan narration pinch nan client, but are not needfully nan cardinal elements that will monetize nan client.

On nan different hand, we person seen that Peru is not really a state that is facing nan title from fintechs that we're seeing successful Brazil, Mexico aliases Colombia. So, tin you elaborate connected really your integer initiatives would construe into amended efficiencies and a higher ROE astatine a consolidated level? And what would beryllium nan clip statement to execute that?

And past my 2nd mobility is simply a follow-up connected your 2023 guidance. Just really should we deliberation astir nan OpEx maturation astatine a consolidated level? Would it beryllium astatine nan aforesaid gait of maturation that we saw past twelvemonth that's astir astatine double digit aliases do you deliberation will beryllium supra ostentation positive definite integer investments? Any colour connected that will beryllium very helpful. Thank you.

Luis Felipe Castellanos

Okay. Hi, Ernesto, acknowledgment for your question. It's really a very profound mobility that astir apt will require galore minutes of hours of conversation. But fto maine return a ace astatine it to spot if astatine slightest I tin spell to commencement pinch immoderate of your points. I wholly work together pinch you successful position of a alteration successful nan measurement immoderate companies aliases firms are looking astatine their integer efforts, obviously, we've seen what happened successful nan marketplace and now nan hunt for maturation is switching to profitability aliases to much circumstantial income-generating activities.

Luckily, I deliberation that's nan position that we've had since nan beginning. As we've mentioned before, we had a 2-tier integer strategy. And nan first portion of nan integer strategy, what we telephone nan first tier, fundamentally to digitize what we do. Okay. So basically, there's nary magic there. What we are doing is to beryllium capable to supply consumers nan expertise to do successful a integer way, everything they do pinch nan Interbank aliases Interseguro physically today, but digitally.

That has been nan premise astir what we've been doing. So, now for illustration 90% positive of nan things that a customer tin do pinch nan bank, for instance, tin beryllium done digitally. And nan attraction location has been laser crisp connected making judge that that caller proposition has little customer acquisition costs aliases little customer serving costs, while providing what you tin telephone accepted banking products, let's say, but successful a integer way.

And we've made tons of advancement there. As you know, 71% – 70% positive of our customers do not touch a branch successful nan relationship pinch Interbank for nan past 30 days, for instance. So that's moving ahead. And past we person nan different part, while we've sewage nan 2nd part, tier 2 portion of our strategy, which is deploying different things to create nan ecosystem, for illustration payments, for illustration what we did pinch Tunki, for illustration what we've been doing pinch unfastened banking, connecting pinch different players that are not financial related truthful we tin complement and supply our services.

And that portion has besides benignant of two-ways to look astatine it. Some are wholly caller ventures that we are very fresh to termination if we don't spot that traction. Kill aliases pivot, if we don't spot that traction is coming wherever we were expecting. We are not successful nan crippled of conscionable reasoning someday, we will spot really this gets monetized. We are very disciplined successful targeting short-term and mean goals and analyzing precisely really we do.

An illustration of that is what we did pinch Rappi, for instance. We launched Rappi Bank, and location are definite assumptions. And we've been pivoting that effort. We person not scaled it because 1 replacement is to proceed pouring money into nan effort, but different is to support nan scale, small, trying to find its market, its destiny, its segment. So far, we person not been very successful there. That's why we support it arsenic a very mini initiative. We don't moreover talk astir that anymore because we still person not been capable to shingle that initiative. But we person that discipline. That's what we do.

And past we person different types for illustration payments wherever we are investing heavy successful nan ecosystem because, arsenic you mentioned, it will beryllium some an enabler of processing better, much beardown narration pinch customers and merchants, creating caller avenues and caller sources for maturation for us, but besides it will let america to pat successful caller segments that we person not been tapping before, for illustration merchants, for instance. So that's nan measurement we are looking astatine this. We are not based connected nan fintech thought of standard will bring everything and sometime successful nan future, money will travel in.

So, we do person short and medium-term goals successful bid to spot really these ventures are rendering nan results. And you're correct that nan Peruvian marketplace has not seen tons of disruption from caller fintechs aliases integer players. I deliberation it's nan incumbents that are cannibalizing themselves successful position of nan business, immoderate pinch much affirmative results than others. But we are getting ready, arsenic we've discussed before, to person imaginable title from section fintechs, world fintechs aliases integer banks.

They will travel to this market. We're very conscious of that. It's conscionable a matter of time. And what we're doing is [indiscernible] arsenic quickly imaginable to person them, therefore, erstwhile they travel to our Peruvian market. Okay. So I dream that this benignant of addressed your question. By monetization of what we do is very present, what we are deploying our Tier 1 translator aliases nan caller inaugural of Tier 2 transformation.

On number 2, successful position of nan OpEx, I'm going to walk it connected to Michela, who will person evidently our numbers to 2023. She will beryllium capable to springiness you a small much detail. However, I anticipate, arsenic she mentioned, that location mightiness beryllium immoderate changes because of immoderate reclassifications coming from IFRS 17. But she tin supply you a snapshot of really we're approaching subject successful OpEx for adjacent year.

Michela Casassa

Hi Ernesto, convey you for nan question. I tried to beryllium clear connected this effect during nan script, possibly I was not capable to, but we person not had a double-digit cost-based maturation astatine IFS during 2022, okay? In nan reported figures, location is an important effect that is that we are including nan costs of nan costs of Izipay during 2022, but not successful nan guidelines of 2021 because of nan entranceway successful April.

So nan comparison that you spot location of nan reported figures, we show double-digit, it's not comparable. Okay. So what we person tried to do successful nan descent that we show successful nan presentation, nan Slide number 10 is normalize nan bases. So what you spot location astatine IFS level is that expenses are growing. The 4th fourth is increasing only 3% year-over-year. And pinch this caller base, nan ratio ratio of nan 4th fourth is 34.8%.

And we're besides showing that nan bank, which astatine nan end, is nan main contributor, nan afloat twelvemonth costs of nan slope person only grown 8%. And I'm providing nan breakdown there. That 8% is coming from a 20% maturation successful everything related to integer transformation, payments, et cetera, and each nan different numbers are single-digit growth. Okay. And this is nan logic why we expect nan operating leverage for Interbank to proceed to beryllium affirmative adjacent twelvemonth pinch revenues that will proceed to turn double-digit because of rates and everything that we are seeing and expenses increasing only single-digit astatine Interbank.

Now, having said so, nan logic why we are not, astatine this point, fresh to show you aliases to springiness you a guidance pinch nan ratio ratio of IFS arsenic we person ever done, past year, nan guidance was betwixt 35% and 37%, is that arsenic we are finalizing nan implementation of IFRS 17, location are immoderate – I mean, nan definitions successful wherever precisely revenues, antagonistic revenues and costs spell wrong nan P&L.

So, erstwhile we will lick that out, we will beryllium capable to supply that figure, but I deliberation nan important connection present is operating leverage will proceed to beryllium affirmative for nan slope and for IFS. And possibly if I tin conscionable adhd connected nan philosophical chat astir monetization connected everything that we are doing. Sometimes, Ernesto I mean, what we're trying to do present is besides effort to nexus it to nan P&L lines because astatine nan extremity of nan day, this is going to person an effect connected ROE, either it has an effect of revenues aliases risk-adjusted revenues aliases costs.

So, basically, I would opportunity that a beardown portion of nan effect of everything we're doing successful integer and analytics is coming from an effect connected nan apical line, which comes from not only much clients, but much cross-sell and much revenues per client, some connected loans and deposits. And I tin conscionable springiness you 1 mini example. We person been very progressive pinch nan integer opening of SMEs accounts. Those accounts person accrued substantially successful nan past 2, 3 years. And nan balances that we utilized to person there, arsenic I deliberation we showed you connected nan Investor Day, I mean, we went from almost thing to PLN1,500 cardinal deposits.

So that is flow. So that is, if you want, a actual effect of nan opening of integer accounts for SMEs. But also, we are expecting betterment successful nan risk-adjusted figures because everything we're doing pinch integer and analytics should besides person an effect successful amended knowing nan consequence floor plan of clients. And nan past point I would opportunity is that connected nan ratio front, nan marginal costs of everything we are doing are for sure, higher. And this is why we person been capable to double nan customer guidelines of nan slope from 2-point thing cardinal 3-4 years agone to much than 5 cardinal this twelvemonth pinch costs that person been increasing single-digit.

So, I deliberation those 3 components are nan ones that connected everything we do pinch integer and analytics are pointing retired to that, which, astatine nan end, should lead to a affirmative operating leverage and an betterment successful nan numbers and sustainable ROE. Hope that helps.

Ernesto Gabilondo

So, this is ace helpful, Felipe and Michela. Thank you very much.

Luis Felipe Castellanos

Okay, awesome Ernesto. Thank you.

Operator

Your adjacent mobility comes from nan statement of Yuri Fernandes pinch JPMorgan. Please spell ahead.

Yuri Fernandes

Thank you Luis Felipe, convey you Michela. I person a mobility regarding your costs of risk. It should increase, right, arsenic per your guidance? So, if you tin stock for illustration your expectations, possibly you should usage a little GDP and this is fundamentally expected nonaccomplishment exemplary being a small spot much punitive, aliases if you are seeing for illustration much concerning, arsenic you mentioned, for illustration user conception having a somewhat higher costs of risk. I conscionable wanted to understand a small spot wherever this costs of consequence will travel from? And I wholly understand your separator description , right?

So, moreover pinch this costs of consequence moving up, I conjecture your consequence adjusted mean should still beryllium good this year. So, for illustration not ace concerned, but conscionable would for illustration to understand why costs of consequence is moving supra nan humanities level? And if I may, a 2nd mobility somewhat related to nan costs and gross side. We are seeing a very beardown separator description , right? Your guidance implying 50 to 100 bps separator description .

So, your NII this year, assuming your guidance for indebtedness maturation should easy summation [20-plus percent] [ph]. And arsenic you said, you are very cautious connected your G&A. So why not, for illustration – again, you are discussing nan costs to income guidance, I wholly understand this. But shouldn't we not expect a overmuch little ratio for you this twelvemonth connected nan holding level, fixed your NII should beryllium truthful strong? Thank you.

Luis Felipe Castellanos

Okay. Yuri, convey you very overmuch for your question. I'm really going to walk it connected to Michela. Yes, overall, I deliberation she's going to spell into details, but it's fundamentally a operation alteration that we're seeing. Also, we are seeing debased maturation impacting each past twelvemonth and will proceed during nan adjacent year. It is expected to beryllium astir 2% aliases little for Peru this year. And ostentation continues to beryllium high.

We are not seeing tons of investments coming from corporates aliases companies. So we do deliberation it's going to beryllium a slow twelvemonth and that will person a toll successful nan Peruvian user and successful Peruvian companies overall. So it's going to beryllium a matter of some mix, user proceed growing, but besides deteriorating macro variables that will person an effect successful nan costs capacity of Peruvians.

You're taking disconnected a very, very debased – tons of liquidity into nan strategy successful nan past twelvemonth because of what happened pinch nan pension funds, nan thief from nan authorities post-COVID and each that. That is besides being taken retired of nan equation. So, that will person a toll successful Peruvian consumers and obviously, successful nan costs of risk. If you adhd to that, nan governmental turmoil that we've witnessed recently, nan closures of definite regions, nan effect successful nan southbound of Peru wherever we person adjacent to 12% to 14% of our portfolio.

Then we person what is happening successful nan tourism industry, successful nan edifice industry, successful nan proscription industry. It's a small spot reliable to really make correct predictions, but everything evidently points to higher costs of risk, fixed everything that I've mentioned. And so, possibly now I'm going to extremity and walk it connected to Michela to make a mates of precision of this if required and past to talk astir nan separator description and nan effect of usability leverage that you asked. Michela?

Michela Casassa

Hi, Yuri. How are you? Maybe conscionable a mates of additions to what Luis Felipe mentioned successful nan comparison to 2019, okay, specifically why we are expecting a higher costs of consequence successful 2023 versus 2019? I mean first, already nan operation erstwhile you comparison it to 2019, putting together in installments cards and individual loans, now it's already a small spot – it's getting adjacent a small spot higher than what it was 2019, but nan different important constituent is that nan riskiness wrong those 2 portfolios is higher than it was successful 2019. Why? Not because astatine nan very beginning, we wanted not to build it that way, but because of nan sustained inflation, that is simply a large adaptable that we didn't person coming successful 2019. Actually, it was not moreover coming successful our expected nonaccomplishment models. We incorporated it. I deliberation it was successful nan first 4th of 2022.

So, I would opportunity this is simply a large effect because nan sustaining ostentation has been location almost nan afloat 2022, and this has started to person an impact. We anticipated it already. We saw thing successful nan 2nd quarter, successful nan 3rd quarter, now it's moreover bigger. And connected apical of that, we person nan disruption of nan protest. So, we person been doing successful December and successful January, immoderate rescheduling trying to thief clients to flooded this moment.

And of course, everything we are doing now, we person immoderate estimates of really that should amended complete clip successful nan adjacent month, but I deliberation that nan effect is going to beryllium felt and strong, particularly successful nan first quarter. And really it evolves successful nan adjacent quarters of nan year, of course, will dangle connected what happens pinch nan process and pinch nan outcome.

Now, everything that we are envisioning is on, I mean, connected nan ray that nan business benignant of normalize. Normalize meaning, let's say, controlled uncertainty, but this is what we person much aliases little successful mind.

Now moving connected to efficiency. I mean, conscionable to make it clear, what I americium showing successful nan guidance now is only astatine nan slope level. Okay. So, nan slope is nan 1 that will person an ratio ratio beneath 39%. That ratio ratio for nan full-year for nan slope was a small spot supra 40%. Okay. And that is nan consequence of this affirmative operating leverage. But what we are not capable to show you yet, Yuri, is what will hap pinch IFS.

So basically, I mean, conceptually, I work together if location is simply a betterment of nan revenues of Wealth Management, nan slope grows nicely, Interseguro grows nicely, and payments proceed to turn nicely. Revenues and nan costs do not turn that much, location should beryllium a affirmative impact. We conscionable request to make judge that pinch IFRS 17, things do not move, not truthful nan level and that nan comparison, of course, is 1 that makes sense. So I mean, conceptually, I work together pinch you. We will person to cheque nan numbers pinch nan afloat effect of IFRS 17.

Yuri Fernandes

Perfect Michela and Luis. Thank you very much.

Luis Felipe Castellanos

Thank you, Yuri.

Operator

[Operator Instructions] Our adjacent mobility comes from Andres Soto pinch Santander. Please spell ahead.

Andres Soto

Thank you. Good greeting to all. Thank you for nan presentation. My mobility is regarding nan guidance that you are providing successful position of ROE. If you could thief america break that down successful position of your different banking units. What are you expecting for – sorry, I mean nan wide segment. What are you expecting for banking, security from guidance and payments?

Luis Felipe Castellanos

Okay. Thank you, Andres. That I'm going to walk connected to Michela straight.

Michela Casassa

Okay, Andres. Here, I'm going to show you successful nan medium-term that we are expecting that immoderate of them has somewhat changed versus nan past, but what we are expecting is, I mean, nan slope to beryllium betwixt 18%-19%, we are expecting Interseguro to beryllium astir aliases a small spot supra 20%. This, though, has a very large mobility people because of IFRS 17, okay, because IFRS 17 has a beardown effect besides connected nan web of nan security business. So that ROE mightiness beryllium higher, particularly for 2023.Okay. So that 1 we will request to reappraisal during this convention call.

Inteligo should beryllium supra 20%, nan aforesaid arsenic payments. Okay. So 18%-19%, nan bank, Wealth Management and payments supra 20%, and we request to good tune insurance. Having successful mind that past erstwhile you put each those numbers together, location is simply a minus, let's say, connected nan full number of IFS, which is nan holding, that has location immoderate expenses, which see chiefly nan expenses, nan [taxes] [ph] [indiscernible] for nan dividends and immoderate minor, let's say, operating expenses coupon of nan $300 cardinal enslaved that we issued for nan acquisition of Sura. So, a operation of nan 4 subsidiaries positive nan holding, it's what leads you to nan astir 18%.

Andres Soto

Perfect. That's very clear, Michela. And I presume that nan betterment successful Wealth Management is driven by improved marketplace performance. Can you please show america a small spot astir that portfolio, some for nan security and Wealth Management? What is nan duration? And what makes you – what are nan consequence factors for this presumption for betterment of Wealth Management not to happen?

Michela Casassa

And possibly I will walk it first to Bruno for Wealth Management and past to Goncalo for insurance.

Bruno Ferreccio

Yes. So astatine Inteligo, fixed income is astir 65% of nan portfolio. Duration of nan portfolio coming is betwixt 4.5 and 5. What to expect? We deliberation we're getting towards nan second extremity of nan rhythm pinch regards to rates. So that should beryllium beneficial for nan portfolio. We've already seen successful precocious past year, December and opening of this year, fixed income portfolios recovering nicely. And past truthful that should beryllium positive. And again, good hopefully, volatility will travel down connected nan equity broadside arsenic well. So, it should beryllium a overmuch amended twelvemonth we dream for nan finance successful nan portfolio connected nan Wealth Management side.

Gonzalo Basadre

Okay. So, pinch regards to Intersegula, astir 80% of our portfolio is fixed income. The remainder is divided evenly betwixt equity and existent estate. And pinch regards to nan fixed income portfolio, we are really hedged some successful position of long and rate pinch our liabilities. Remember, we waste semipermanent liabilities successful nan shape of annuities. And they person a long of astir 13-14, which much aliases little matches nan long of our portfolio, our fixed income portfolio.

Andres Soto

Okay, convey you.

Luis Felipe Castellanos

Thank you, Andres.

Operator

Your adjacent mobility is simply a follow-up from Yuri Fernandes pinch JPMorgan. Please spell ahead.

Yuri Fernandes

Thank you guys for nan follow-up. Just regarding refinancing loans, I guess, Michela mentioned, being much progressive and we heard this from different banks. How nan proviso useful for refinanced loans? Like you usage to migrate to Stage 2, Stage 3? Like if you had to move immoderate loans to that, for illustration really should we deliberation astir provisions for refinanced loans? Thank you.

Luis Felipe Castellanos

Michela?

Michela Casassa

Yes, fto maine return that. Yuri, I mean actually, nether IFRS, these clients, immoderate of them already had a important summation successful their consequence profile. So, they were already connected Stage 2. Okay. So, nan truth that we person rescheduled them connected immoderate consciousness is not impacting now provisions, of course, if they, astatine nan end, pay. So, what we request to spot is nan behaviour of nan refinance clients because nan information of them that past whitethorn not pay, of course, they will spell to Stage 3 and require much provisions. Okay. And I would opportunity that a large information of them were already connected Stage 2.

And past we besides person nan effect of forward-looking and nan master criteria that we person successful nan user portfolio. Specifically, that is, benignant of a buffer not to screen immoderate of those clients who mightiness not salary those reschedules. Now, I mean, nan volumes that we person rescheduled during December and January, of course, are bigger compared to what we were doing successful nan monthly figures of 2022. That are very acold distant from what we did successful COVID.

We're talking different dimensions now because this is benignant of more, I mean, localized north, southbound of nan state and immoderate different clients. So, location is an impact, but it shouldn't beryllium arsenic large if things spell backmost to normal, let's say.

Yuri Fernandes

Thank you, Michela.

Operator

Our adjacent mobility comes from Juan Recalde pinch Scotiabank. Please spell ahead.

Juan Recalde

Hi, bully greeting and convey you for taking my question. My mobility is related to nan loans to SMEs. So, we saw a very beardown maturation successful position of SME loans divestments increasing much than 100% year-on-year. So, nan mobility location is related to, truthful what portion of this maturation is related to Izipay? And nan 2nd mobility related to this would beryllium looking forward, should we expect acceleration? And what, benignant of maturation should we expect for SME loans successful 2023? Thank you.

Luis Felipe Castellanos

Thanks, Juan, for your question. Yes, we've grown very nicely successful SMEs during nan past year. Remember that we are coming from a very, very mini marketplace stock of astir 2.5%, 3%. So plentifulness of room there. As you recall, we participated very actively successful Reactiva for this type of customers. So, we were capable to get connections and get to cognize them better, heighten our models and nan full state astir participating successful Reactiva for SMEs measurement beyond our earthy marketplace share.

Those loans person been going done their course, guaranteed by nan government, but we've been capable to seizure immoderate customers, clients there. And that's nan consequence of what you've seen past year, and we expect that to proceed successful nan coming months arsenic well. Although we person been a small spot awkward successful nan past mates of months, fixed nan existent business successful Peru.

None of them travel from Izipay. That's still a mini task that we person there. We person a mates of pilots, but fundamentally not important yet. In position of what we would expect for adjacent twelvemonth is thing akin to what we did past twelvemonth successful position of wide disbursements.

Juan Recalde

That’s helpful. Thank you for nan comments.

Luis Felipe Castellanos

Thank you.

Operator

At this time, we will return nan webcast questions. I will now move nan telephone complete to InspIR Group.

Rafael Borja

Thank you, operator. We person immoderate questions from nan webcast. The first mobility is coming from Greg Mitchell from ABP Ventures. There are 2 questions here. Can you please talk really nan efficiencies of little unit branches has led to efficiencies successful headcount? And nan 2nd mobility is, tin you stock really nan building of your organizational floor plan will germinate arsenic you move towards nan 2-tier integer strategy and incorporated caller types of employees?

Luis Felipe Castellanos

Okay. Thanks very much. Hi, Greg. Thanks for your question. It's a awesome question, actually. Let's spot – roughly, let's spell done numbers. In Interbank, we sewage to a constituent wherever we had adjacent to 7,300 aliases 7,400 employees. Today, we're operating pinch astir 6,000 employees. Okay. So, that's nan nonstop effect successful location of efficiency. However, it's not that each branch that we’ve closed gets distant people. We are hiring caller group for illustration for our telephone centers.

Again, nan integer exemplary brings successful places wherever you request to reenforce your narration pinch customers, but that's each successful each nan numbers, astir [1,200] [ph] little labor than what we had erstwhile we had nan full branch network. Okay. And past nan organizational chart, that's a fascinating question. We are presently operating nether like, let's say, 2 types of organizational charts. The normal, nan 1 that everybody knows, nan ones that we still request to spot because it [Technical Difficulty].

We've been deploying an agile methodology of moving passim nan organization. So, we person that type of statement wrong our organization. We are deploying much this into different areas. We started by technology. We expanded from exertion to integer past to retail, and we proceed to grow that. Now, we're connecting pinch consequence guidance and others.

Actually, we person a task called Agility astatine Scale that we are starting to deploy for this year. And past location we are operating based connected agile sales, agile teams, tribes and each that. You return a look, hopefully, we will lucifer much Spotify successful position of nan measurement they run than [Technical Difficulty]. That comes pinch giving nan caller talent much empowerment, much responsibilities, nan expertise to return distant precocious vertical structures and each that to go a overmuch much thin organization.

Luckily, nan civilization that Interbank had was very flexible, not very bureaucratic. So, this is helping america spell done nan transformation. It is simply a situation because, again, [Technical Difficulty] but we're moving towards agility and standard if you want passim our operations. So, I dream this answered your question, but if you want for illustration nonstop maine an e-mail, we tin get a java and talk this and I cognize it's astir apt 1 of your passions arsenic well.

Rafael Borja

We person different mobility from [indiscernible] from Prima AFP. When will nan interoperability Plin-Yape return place? What benignant of services are allowed to connection done nan interoperability?

Luis Felipe Castellanos

Great. Well, acknowledgment very much. That's wide known successful nan news. But I'm going to walk it to Carlos truthful he tin reply that.

Carlos Tori

The interoperability will beryllium starting successful April. And initially, it will beryllium conscionable P2P transfers. There will beryllium a 2nd shape later successful nan year, were – and nan April interoperability will beryllium betwixt Plin and Yape. And past successful June, July, each slope should beryllium capable to interoperate done a compartment phone. But astir – well, astir clients are already present successful Yape aliases Plin, truthful it shouldn't beryllium a large change. And past nan adjacent shape is QR codes. You will beryllium capable to publication QR codes from each other, that should beryllium starting July. So, that's benignant of nan – that's nan interoperability. There's nary different services – talk astir interoperability.

Rafael Borja

The adjacent mobility comes from Daniel Merida from Diviso Bolsa. Could you see immoderate bonzer dividends aliases possibly a buyback programme during 2023?

Luis Felipe Castellanos

Hi, Daniel. I'll reply your mobility and talk besides astir guidance and ROE for adjacent twelvemonth and wherever our banal is trading now. We're ever looking astatine ways to heighten shareholder value. The first [chart] [ph] is executing our strategy and making judge [IFS grows] [ph] based connected halfway strategical pillars, that's what we're doing. Then successful position of bonzer dividend aliases buyback, we're ever analyzing that. We person – we're not – we person not taken immoderate decision. It's evidently nether [indiscernible] erstwhile we spot wherever nan banal trades and nan opportunities that that brings. Obviously, you person to spell by nan book things, but not truthful far, that's not nether chat aliases review, though we usually return a look astatine different alternatives.

Rafael Borja

The adjacent mobility is coming from Fabrizio Enrique Lavalle from Profuturo AFP. Given nan Central Bank precocious stopped hiking rates, really overmuch clip do you expect NIM to still beryllium increasing? And really overmuch lag is location betwixt complaint hikes and NIM description ?

Luis Felipe Castellanos

Okay. Let maine return a ace and past possibly Michela tin complement. Remember that 1 of nan reasons NIM is expanding is because of nan move successful nan mix. Again, COVID deed america very difficult successful position of nan improvement of our user book, and that's increasing nicely, and we expect that to continue. That will person a toll successful our NIM composition. And past nan different portion will beryllium nan summation successful rates.

We really don't cognize if this station that Michela mentioned wherever it will return nan Central Bank. It mightiness really region aliases it could regain successful position of traction for further rates. All depends connected really ostentation happens aliases not. But fto maine walk it connected to Michela to spot if she has a small spot much colour successful position of nan timing.

Michela Casassa

Fabrizio, I mean, first of all, person successful mind that what we're expecting for 2023 is that rates will proceed to beryllium precocious astatine slightest successful nan first half of nan year. And astatine immoderate point, they will commencement to decrease, depending connected which estimates you see. It tin beryllium nan 3rd 4th aliases it tin beryllium successful nan 4th quarter. What we person seen successful nan past – and you tin spot it successful nan improvement of NIM. NIM has improved, I mean, substantially during past year, but it is conscionable a fraction of nan summation successful rates that you've seen. We've had during 2022, much than 500 ground points summation successful soles and besides a very large number successful dollars. And nan summation successful NIM is conscionable a fraction of that.

Why is that? It's because, of course, you tin reprice a information of nan portfolio pinch nan caller disbursement, but not nan stock. And nan aforesaid happens pinch nan liability side, wherever nan repricing really it's a small spot faster. So, for 2023, we are expecting still NIM to amended because nan full-year effect of what has taken spot successful nan expanding rates successful 2022 will go aliases will materialize successful nan numbers during 2023. And that is simply a very large number.

And past if we person nan decreases successful rates successful nan 2nd half of nan year, we will commencement to spot immoderate impacts, first, successful nan costs of costs because of nan information of organization deposits, and past conscionable aft that successful nan plus side. Maybe a small spot faster connected nan commercialized banking side, but it will return immoderate much clip for nan rates connected nan unit banking to spell down pinch nan reference rate. I dream that helps.

Rafael Borja

The past mobility comes from Daniel Mora from Credicorp Capital. What would beryllium nan strategy of indebtedness maturation successful 2023 considering nan uncertainty and economical deceleration? Do you expect to proceed increasing powerfully successful in installments cards contempt nan consequence of higher NPLs? What is nan guidance of in installments paper indebtedness maturation successful 2023 and expectations of NPLs successful this year? And nan adjacent mobility is, tin you supply further specifications regarding nan contraction successful annuities during nan quarter? And what could beryllium nan outlook for nan different security products successful 2023?

Luis Felipe Castellanos

Let's see. Do we expect to proceed increasing in installments cards? Yes, we do expect to proceed increasing some successful our user book. Obviously, astatine a much mean gait that we've witnessed during nan past twelvemonth because portion of nan maturation of past twelvemonth was a re-composition of our full book customers that because of nan business during COVID, conscionable alteration their outstanding balances, and we've been recouping that.

Actually, arsenic you are aware, we've been much disciplined successful position of cutting, underwriting aliases improving underwriting standards. And that has a toll successful growth, particularly for nan 2nd half of nan year, and we expect that to continue. So probably, we'll proceed increasing arsenic a guidance provided by Michela, debased double digits successful position of that. And nan guidance connected costs of consequence is there. We do expect, fixed nan situation, costs of consequence betterment spot and besides NPLs pursuing that way arsenic well. For nan 2nd portion of your question, fto maine walk it connected to Gonzalo truthful he tin talk astir annuities.

Gonzalo Basadre

Sure, thanks. Okay. Regarding annuities, first of all, let's retrieve that correct now, since – successful nan past 5 years, astir of annuities are related to nan disablement and endurance benefits, benignant of annuities. Retirement annuities are practically nonexistent aft nan 95.5 low, which let group to retreat their costs from nan AFP erstwhile they scope retirement. So correct now, it's mostly disablement aliases endurance benefits.

What happened successful 2020 and 2021 was that that marketplace accrued importantly because of nan summation successful decease rates successful nan state owed to COVID. So, what we're seeing this twelvemonth is that nan annuities marketplace is going down backmost to normal to what we had successful 2019. So, we expect a level akin to what we had successful that year.

Now correct now, it's been discussed nan further retirements from nan AFPs. We are not judge yet really this mightiness effect aliases if it's going to effect nan disablement aliases subsister benefits insurance. But again, because we already person nary annuities sold for retirement, that portion of nan business is not impacted.

Now, pinch our different products, life insurance, slope assurance and integer products, they are – we expect to proceed very precocious maturation that we person seen past year. We're talking astir our digit growth, and we expect that to continue. We haven't recovered immoderate de-acceleration successful immoderate of those products.

Luis Felipe Castellanos

Great. Thank you, Gonzalo.

Rafael Borja

At this time, I'm showing nary further questions. So, I would for illustration to move nan telephone complete to nan operator.

Operator

There appears to beryllium nary further questions astatine this time. I would for illustration to move nan level backmost complete to Mrs. Casassa for immoderate closing remarks.

Michela Casassa

Okay. Just to convey you again, everybody, for participating to this call, and we will spot each different again connected our first 4th 2023 convention call. Bye. Stay well.

Operator

This concludes today's convention call. You whitethorn now disconnect.

Editor: Naga



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