Peru's Interbank posts record profits as Interseguro consolidates annuities lead
Peruvian financial services group Intercorp's banking unit Interbank saw profits hit a record high in 2018 as insurer Interseguro secured its position as the country's No. 1 annuities player by market share.
Intercorp CEO Luis Felipe Castellanos told a conference call the group had a "strong, solid year" and said the wider economy would expand at a pace of 4% in 2019, spurred on by a US$20bn private investment portfolio.
Peru's economy grew 4% in 2018, driven partly by an increase in public and private investment and growth in domestic demand.
Intercorp posted a profit of 1.09bn soles (US$328mn) for 2018, up 5.6%. It also has a wealth management and broking unit, Inteligo.
INTERBANK
Interbank generated 1.03bn soles in profits, up 13.3% on 2017, driven by growth in net interest and fee income and a fall in provisions.
The lender also increased its loan market share to 12.0% from 11.4% at end-2017, as its portfolio expanded 17.3% to 31.4bn soles, supported by 28.4% growth in the credit card segment.
The NPL ratio fell to 2.9% from 3.2% at the end of 2017, amid an improvement in the quality of its retail and commercial loan books.
Interbank's digital transformation drive also continues, with the proportion of retail clients using digital platforms growing to 52% from 39% at the end of 2017.
The percentage of functionalities available in digital platforms rose to 95% from 93% while the percentage of total sales and self-service operations performed through digital platforms rose to 28% from 16%.
Over the year Interbank introduced a new rewards program and allowed retail customers to open accounts via an app. The bank also reduced friction in the opening of business accounts.
ALSO READ: Interbank reports record earnings amid digital migration push
"Our digital transformation efforts continue to deliver good results, with more capabilities being deployed for the benefit of our customers and increased usage and engagement," Castellanos said.
"We have more than tripled our IT capex in the last three years, with agile cells and operations increasingly gaining traction within our organization."
Castellanos said loan and earnings growth of the wider system was "north of 10%".
INTERSEGURO
While the group's banking unit drove profits, insurance unit Interseguro reported a 61.5m-sol loss for the year, impacted by a one-time adjustment of 145mn soles in technical reserves as a result of the full adoption of new mortality tables. The subsidiary reported a profit of 40.0mn soles for 2017.
Net premiums grew 29.2% to 645mn soles and the company, after fully absorbing Grupo Sura's local insurance businesses, consolidated its lead as Peru's biggest annuities player, with a 30.2% market share, up from 23.6%.
Annuities premiums grew 42.8mn soles in the year.
Net claims and benefits incurred in 2018 were 736mn soles compared with 412mn soles in 2017.
Intercorp was given the green light in 2017 to acquire the assets as part of an estimated US$268mn deal that also included Sura's local mortgage business. The merger happened last year.
Castellanos said Peru's overall insurance system saw total net premiums grow 13.6% and net profits expanded 25%.
WIDER ECONOMY, RISKS
"We expect private investment to have a positive impact on the economy as approximately US$20bn of private investment projects are expected to be executed in the next two years with a large part going to the mining industry," said Castellanos.
Infrastructure projects such as Lima's second metro line should help support growth this year, he said.
In terms of risks, Castellanos said: "An eye should be kept on commodity prices and any natural events that could impact us, such as another El Niño phenomenon."
ALSO READ: IFS reorganizes mutual funds' business from Interbank to Inteligo
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