Intercorp Financial Services Inc. Common Shares

Good morning and welcome to Intercorp Financial Services first quarter 2023 conference call. All lines have been placed on mute to prevent any background noise. Please be advised that today's conference is being recorded. After the presentation, we will open the floor for questions. At this time, instructions will be given as to the procedure to follow if you would like to ask a question. Also, you can submit online questions at any time today using the window on the webcast, and they will be answered after the presentation during the Q&A session. Simply type your question in the box and click Submit Question. It is now my pleasure to turn the call over to Rafael Borja of Inspired Group. Sir, you may begin.

Thank you, and good morning, everyone. On today's call, Intercore Financial Services will discuss its first quarter 2023 earnings. We are very pleased to have with us Mr. Luis Felipe Castellanos, Chief Executive Officer of Intercor Financial Services, Mrs. Miquela Casasa, Chief Financial Officer of Intercor Financial Services, Mr. Gonzalo Basadre, Chief Executive Officer of Interseguro, Mr. Juan Pablo Segura, Chief Financial Officer of Interseguro, Mr. Bruno Ferrecho, Chief Executive Officer of Intelligo, and Mr. Carlos Tori, Executive Vice President of Payments at Intercore Financial Services. 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, to download a copy. Otherwise, for any reason, if you need any assistance today, please call Inspire Group in New York at 212-710-9686. 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 may are based on several assumptions and factors that could change causing actual results to materially differ from the current expectations. 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 Intercall Financial Services, for his opening remarks. Mr. Castellanos, please go ahead, sir.

Thank you. Good morning and welcome to our first quarter 2023 earnings call. Thank you all for joining us today. Let me start by giving you a brief overview of the macro situation in our country. As you may be aware, we continue to operate in a challenging environment with GDP growth expectations for the year at 2.5% according to the Ministry of Finance. Economic activity was affected during December 22 and January this year by certain episodes of social unrest, and most recently by heavy rainfalls and flooding impacting Peru's coast. The possibility of an El Niño phenomenon later this year has not been ruled out. On the other hand, the 12-month inflation rate is slowing down below the 8% mark, yet the sustained high inflation is still negatively impacting Peruvian businesses and consumers with pressure on margins and families purchasing power. Inflation expectations for 2023 remain above the central bank's target range. Internationally, market conditions continue to be volatile and inflation continues to be a source of concern for global central banks. Moving to our business, we continue to experience higher interest rates in both soles and dollars, contributing to higher margins this year as we were expecting. However, cost of deposits have also increased sharply, slowing margin expansion. We have seen an increase in the cost of risks, mainly in the retail portfolio. We had anticipated cost of risk to increase. However, sustained inflation and the above-mentioned factors are putting additional pressure in our portfolio. The Banking Superintendency announced a new loan risk scheduling program to provide relief for debt holders. We have been very proactive in using this facility to help our customers. We're closely monitoring payment behavior and being cautious with our operations, given the scenario that we are facing. And we have taken a conservative approach to loan loss provisions this quarter. We remain committed to helping Peruvians overcome these challenging times. On a different note, we have started to report our insurance business under IFRS 17 accounting this quarter. The first time adoption impact equity by over 640 million, and it will normalize in time. Our wealth management segment is slowly recovering its investment performance with a second consecutive positive quarter after a challenging 2022 due to market conditions. Finally, our payments ecosystem continues to show solid growth and is well positioned to take advantage of opportunities presented by interoperability as we go after additional growth. In all, we are pleased to continue to see double-digit growth in IFS's recurring revenues and world-class efficiency levels. We remain optimistic about IFS's outlook going forward. Even though we are facing challenging conditions, We believe that once the dust settles, we will return to our paths of sustainable profitability and growth. We continue to execute our strategy across our four business segments. We're confident that our current people, our efficient operations, our digital capabilities, and our ability to adapt to changes are our core pillars to achieve our objectives. On a final note, as you are aware, in our last shareholders meeting, Assure's repurchase program was approved. We are in the process of finalizing details on the institution that will help us in this effort. Now, let me pass it on to Miquela to update you on the results of this quarter and to give you a detailed review of our operations. Thank you very much.