Intercorp Financial Services Inc. Common Shares

Good morning, and welcome to the InterCorp Financial Services fourth quarter 2025 conference call. 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, and at that time, instructions will be given as to the procedure to follow if you could 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 question and answer session. Simply type your question in the box and click submit. It is now my pleasure to turn the call over to Mr. Ivan Peel from Inspire Group. Sir, you may begin.

Ivan Peel Thank you, and good morning, everyone. On today's call, Intercorp Financial Services will discuss its fourth quarter 2025 earnings. We are pleased to have with us Mr. Luis Felipe Castellanos, Chief Executive Officer, Intercorp Financial Services. Ms. Miquela Casasa, Chief Financial Officer, Intercorp Financial Services. Mr. Carlos Torre, Chief Executive Officer, Interbank. Mr. Gonzalo Posadre, Chief Executive Officer, Interseguro. And Mr. Bruno Ferrecho, 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 Otherwise, if you need any assistance today, please call Inspire Group in New York on 646-940-8843. 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 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. 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.

Thank you. Good morning, and thank you all for joining our fourth quarter 2025 earnings call. Thank you for your interest in IFS. We appreciate your continued support. I'm going to start with the microphone. We continue to observe a macroeconomic and political environment in Peru marked by a positive mood. The Peruvian economy maintains its growth momentum with expected growth of 3.3% for 2025, mainly driven by dynamic consumption-related sectors, sustained private investment, and a favorable performance of commodity prices, which continues to support the country's external accounts. Although we maintain a prudent perspective amid the international context and the election period, exchange rate strength and low country risk reflect market confidence in Peru. Dassault has appreciated by approximately 10% in the year and inflation remains stable, positioning Peru as one of the most dynamic economies in the region. Looking ahead to the political transition this year, we do not expect major changes in financial stability. Some monetary management and strong institutions related to economic resilience and prudence allow us to have a base case scenario of sustained growth, supported by the resilience of the local market and investor confidence. This provides a solid foundation for long-term decision-making, broadened risk management, and sustained investments in innovation. Moving into IFS results for 2025, We delivered record net income of 1.9 billion soles, with recovering core results and solid profitability, with our ROE of around 70%, even after considering the impact of the Rutas de Lima impairment. These results confirm our ability to adapt quickly and keep generating value despite some headwinds in a disciplined and sustained way, aligned with our long-term strategy and reaffirming our commitment to long-term profitability and sustainability. Interbank achieved a record year with 1.4 billion soles in net income. This was supported by a decrease in cost of risk and a risk-adjusted NIL. Our consumer segment is showing signs of recovery, even in the face of pension funds with troubles, although we recognize that there is still progress to be made to reach our targets. Overall, Interbank has consolidated as the third largest bank in the system, reflecting our strong performance and disciplined approach to risk and profitability management. EasyPay and EnterBank continue to capture joint business opportunities, reinforcing our payments ecosystem, while Plin deepens user engagement, fostering more primary banking relationships and driving growth. Interseguro, our insurance company, continues to grow its core business with solid performance in private annuities and life insurance. In addition, Interseguro continues to leverage synergies with Inteligo to expand private annuity sales and to collaborate with Interbank to advance integrated bank assurance solutions that deliver greater value for our customers. It maintains leadership in regulated annuities and has achieved the leading position in private annuities. Intelligo, our wealth management segment, continues to grow double-digit, achieving new record high in assets under management, thanks to our clients' trust and consistent engagement. In all, IFS remains committed to our focused and profitable growth strategy, always placing our customers at the center of every decision we make. We continue to reinforce this approach by prioritizing digital excellence and deepening primary customer relationships through comprehensive data-driven services and differentiated experiences. Investments in technology, GenAI, and innovation are key to maintaining our competitive advantage by enabling more personalized, efficient, and secure experiences, while strengthening productivity and delivering greater value to our customers. Looking ahead, we remain optimistic about IFS's outlook. Our platform has demonstrated resilience in downturns and is well positioned to continue executing its growth strategy, maintaining profitability and reinforcing our leadership in the dynamic Peruvian market. Now, let me pass it on to Miquela for further explanation of these quarter results. Thank you.

Thank you, Luis Felipe. Good morning, everyone, and welcome to Intercorp Financial Services' fourth quarter results. We would like to start with our key messages for the year. In 2025, we delivered a solid performance across all segments. Net income reached a record $1.9 billion, marking a 49% increase compared to the prior year. Our return on equity was also strong, standing at 16.8%. Second key message, higher yielding loans continue the positive trend, showing an 8% growth on a year-over-year basis. Third, risk-adjusted NIM increased 50 basis points over the year, reaching 4% in the last quarter, while we maintain a low cost of risk at 2.1% and cost of funds near 3%. Fourth, we continue to strengthen primary banking relationships, and as a result, our retail primary banking customers grew 11% last year. Fifth, our insurance business continues to deliver solid double digit growth with written premiums growing by 61% year over year, mainly due to the growth in private annuities. And sixth, our wealth management business delivered double digit growth in our core business with asset under management at new record highs. Let's start with our first key message. Let me share an overview of the macroeconomic environment. The central bank has raised its GDP estimate for Peru in 2025 to 3.3%, driven by stronger than expected performance in primary sectors such as agriculture and mining, followed by primary manufacturing, construction, and commerce. Looking ahead to 2026, central banks' projections have been revised upward to 3%, driven by stronger private spending. Macroeconomic fundamentals remain stable, with inflation contained around 1.5% for 2025. The Peruvian sol has strengthened more than 10% this year, and the reference rate remains low at 4.25, maintaining favorable financial conditions for ongoing growth. Overall, Peru is establishing itself as one of the fastest growing economies in the region, supported by solid domestic momentum, despite internal and external challenges. Additionally, the Peruvian economy holds positive prospects for the coming years, as it is well positioned to meet the global demand for commodities. Nevertheless, we remain cautious due to the political cycle and global market volatility. On slide five, driven by a favorable macroeconomic environment, private investment continues to expand at solid levels, growing almost 10% in the first nine months of the year and projected to reach 9.5% in the full year. This momentum is sustained primarily by the rebound in mining investment, as well as the strong performance of the non-mining sectors. For 2025, we are expecting internal demand to expand by 5.4%, with private consumption rising to 3.6%. Looking ahead to 2026, internal demand is expected to moderate to 3.5%, with private consumption stabilizing at 3% and private investment reaching 5%. These upward adjustments reflect a resilient domestic market and continuing Optimism among both businesses and consumers. Business expectations remain in optimistic ranges and consumer confidence is stable, supporting domestic demand and employment generation. Private employment and wage are both increasing fueling consumption. Additionally, a strong pipeline of mining and infrastructure projects is planned for the coming years, further supporting growth. In this context, retail lending continues to lead system-wide loan growth. On slide six, it is noteworthy that our accumulated earnings for the year have reached an all-time high, marking a relevant increase of 49%. This is reflected in our 2025 ROE of close to 17%, demonstrating strong profitability across all business lines. If we exclude the RUTAS de Lima impairment, ROE would have been 18.5% for the year. This year, our three key business segments delivered exceptional growth. The bank achieved record earnings of $1.5 billion, driven by a combination of lower cost of risk, reduced funding costs, increased fee income, among other factors. Intelligo reported a strong 68% increase in revenues and an outstanding ROE of 21.5%. This performance was driven by growth in corporations and solid results from the investment portfolios. Finally, Interseguro grew by 36% despite the Rutas de Lima effect due to ongoing core business growth and higher investment results, which highlights the company's strength and resilience. Regarding Rutas de Lima, in the year, we have made 205 million soles in permits, leaving the residual value at 74 million soles, or around $22 million. At this point, and with the information we have, we do not expect any further material impairments. On slide 7, during the last quarter of the year, we achieved an additional 1% quarter-over-quarter increase in earnings, reaching an ROE of around 15%. However, this ROE was impacted by the additional provisions for RUTAS de Lima as 129 million was recognized by Intersegur. Excluding this impact, IFS ROE for the quarter would have reached 19.1%. Furthermore, if we set aside the effect of RUTAS de Lima overall, net income would have increased by 11% quarter over quarter. On the banking side, the performance is driven not only by a lower cost of risk, but also by an improved net interest margin supported by better funding costs and robust growth in fee income. Particularly when excluding the impact of the provision reversal from Integratel ex Telefonica in the third quarter, net income has increased 6% compared to the previous quarter. The bank's ROE remains stable at 16%. Both Interseguro and Intelligos core businesses continue to deliver double-digit growth. Interseguro achieved an ROE of 32.5% in line with higher real estate valuations. Meanwhile, Intelligos' results this quarter were impacted by a lower return from the investment portfolio. On slide eight, we would like to highlight the positive trend of our earnings and ROE throughout the year. As mentioned before, for the full year 2025, our ROE stands at 16.8%. However, if we exclude the Ruta de Lima effect, ROE would have reached 18.5%. Overall, this has been a solid quarter and year across all IFS business lines, with our core operations serving as the primary driver of profitability. Let's turn now to slide nine, where we take a closer look at IFS revenues, which grew 13% year over year. At the bank level, top line growth has increased by 6% this year. We are beginning to see a recovery in our net interest margin, which reached 5.3% in the last quarter. This improvement is mainly driven by accelerated growth in higher yielding loans and continued optimization of our cost of funds, together with stronger fee generation, and improved FX results fully aligned with our strategy to deepen customer relationships. This year, Interseguro has demonstrated robust revenue growth of 33%, supported by an increase in insurance results of life and annuities, but also by favorable investment results. Meanwhile, Intelligo grew top-line 29%, thanks to a steady growth of key income, which aligns with the positive trend in asset under management. The investment portfolio has delivered a strong 12-month return of 13.4%, marking a very good year overall. On slide 10, IFS expenses increased by 11% in 2025 as we continue to make strategic investments to support our long-term growth ambitions. This includes accelerated investments in technology to strengthen resilience, enhance user experience, improve cybersecurity, expand our capacity, and develop GenAI capabilities alongside ongoing efforts to strengthening leadership within key teams, reflecting our recognition of the pivotal role talent plays in delivering our strategy. Consequently, the cost-to-income ratio stands at 36.8% at IFS. Now let's move to our second key message. On slide 12, we see increasing dynamism in higher yielding loans. Our total loan portfolio expanded by 4% year over year, which would have been 6.5% excluding the FX effect. This positive momentum was driven by the acceleration in higher yielding loans, which grew 8% over the past year. The robust macroeconomic activity is reflected in increased disbursement by 23% in cash loans and by 60% in small businesses. Overall, in retail banking, the mass market segment has grown steadily through the year, positively impacting the average yield, recovering around 20 basis points in the last six months. It is also worth highlighting our mortgage portfolio, which has expanded by more than 8% over the past year, surpassing market growth. As a result, we gained 10 basis points in market share, now exceeding 16%, firmly establishing ourselves as the third largest player in the system. On the commercial banking side, performance was strong across all segments, corporate, mid-size, and small businesses. Notably, the small business segment stood out, achieving a solid 25% growth over the year, which means we have not only replaced all of the impulse home in Peru maturities, but also expanded more than threefold beyond that, increasing the average yield by more than 200 basis points over the past year. Excluding FX effects, overall commercial growth reached 6%. On slide 13, we wanted to double click on the consumer portfolio, which accelerated in the last quarter. Credit card activity continued to strengthen, supported by higher transaction volumes that reflect improved customer engagement and growing consumption trends. Overall spending increased by 8% quarter over quarter and 13% year over year, driven by more personalized communication efforts and the effective execution of targeted campaigns across key spending categories, such as grocery stores, retail e-commerce, and cross-border. Personal loans delivered solid balance growth alongside a sharp improvement in profitability in the fourth quarter. Total balances accelerated in the last quarter at 2.3%, despite excess liquidity in the market due to pension fund withdrawals, severance deposit releases, and the December seasonality. On a year-over-year basis, balances grew 5%, highlighting resilient demand and strong commercial execution. Looking ahead, we remain optimistic about our growth prospects. Following with the third message, we see improvement in risk-adjusted NIM. On slide 15, there is some good news to highlight in terms of this indicator. Over the past year, we achieved a substantial improvement in our risk-adjusted NIM, which rose by 50 basis points to 4% in the last quarter and accumulated 3.7% for the full year. This marks an increase of 80 basis points compared to last year's 2.9%. Notably, the last quarter contributed a 20 basis points uplift driven by lower cost of risk. On the funding side, we have positive news to share as our cost of funds further declined by 10 basis points over the past quarter. While the average yield slightly decreased this past quarter, retail rates improved by 15 basis points supported by both mass market and affluent segments. These segments continue to build momentum and make meaningful contributions to our overall performance. Furthermore, within higher yielding loans, we observed an increase of more than 40 basis points in the average yield during the quarter. As a direct result, our NIM increased by 10 basis points quarter over quarter. On slide 16, Let me share a quick update on asset quality. Our quarterly cost of risk continues the trend to lower levels at 1.8% in the quarter, reaching the lowest level in four years with a full year cost of risk of 2.3%. Still, current loan mix supports a low cost of risk. On the retail segment, the cost of risk continues to decrease, now standing below 4%, representing a decline of 150 basis points compared to the prior year, still below our risk appetite. Our consumer lending portfolio is performing well, with cost of risk dropping from around 9% to below 7% year over year, supported by healthier customers, while new loans are showing a good performance in the new vintages. On the commercial side, asset quality remains strong, with performance holding steady throughout the year. On top of this, the adjustment of forward-looking parameters has enabled us to release some provisions. Overall, our non-performing lungs ratio continue to be healthy and our coverage levels remain solid at approximately 140%. Looking ahead, as our consumer and small business portfolios keep expanding, now representing 22% of our total loan portfolio, we should expect the cost of risk to gradually increase. All in all, these results underscore an improving operating environment and demonstrate that our prudent approach to portfolio management is enabling us to deliver sustainable growth. On slide 17, I'd like to highlight some positive developments regarding our funding structure. Deposits remain a key component, accounting for approximately 81% of our total funding. Over the past year, total deposits increased by 5% and by 9% when excluding the impact of FX. Retail deposits continue their positive momentum, outpacing the overall system, particularly in savings and transactional accounts, in line with the pension fund release. On the commercial side, deposit growth has been further supported by the expansion of our payment ecosystem, resulting in a 15.5% increase in efficient commercial deposits. As a result of these trends, our cost of funds declined by 20 basis points year over year and by an additional 10 basis points in the last quarter, driven by increased deposit flows that were in line with pension funds withdrawal. The cost of deposits has shown a consistent improvement with a 30 basis points reduction throughout the year. Importantly, there remains further potential for reduction as the share of efficient funding, now at 40%, continues to grow with a positive impact on the fourth quarter of the additional liquidity coming from the market. Our loan-to-deposit ratio stands at 92%, which is in line with the industry average. Moving on to our digital strategy, our payment ecosystem in slide 19 with P-Link and EasyPay is driving our growth in low-cost funding. We have continued working to generate further synergies as we drive the growth of our payment ecosystem, focusing on increasing transactional volumes, offering value-added services, and leveraging EasyPay as both a distribution network for interbank products and as a source to increase flow. In particular, the commercial teams from both EasyPay and the bank are collaborating more efficiently, allowing us to deliver integrated solutions and maximize the value we bring to our clients. EasyPay continues to show strong momentum in the small business segment, with flows from EasyPay up 60% over the past year. This growth has contributed to the 26% in deposits, which now account for 11% of wholesale deposits or 33% of wholesale low-cost deposits. The flow from EasyPay expanded by 35% in the same period, as Interbank's share of EasyPay flows is around 40%. Over the past year, Plin transactions increased by 48%, and our digital retail customer base now stands at 84%. In 2025, we further enhance our offering by launching Plin Corredores, Plin WhatsApp, and Plin eCommerce, reflecting our ongoing commitment to continuously introduce new features that add value to our customers. We continue to drive meaningful value and strengthen primary banking relationships throughout our digital initiatives, particularly with Blink. Over the past year of Slide20, we have grown our retail primary banking customer base by 11%, now representing more than 35% of our total retail clients. Monthly active Pling users reached 2.6 million, each completing 33% more transactions versus last year. P2M payments remain a core driver of engagement, now accounting for 60% of all transactions. Additionally, we 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 as a retail digital customer base increased from 81 to 84%, while commercial digital clients now stand at 74%, while the latest NPS reading was 51 for retail customers and 68 for commercial clients. Investments include the fully redesigned payments area, the launch of customizable QR codes and dynamic CVV for Visa credit and debit cards, as well as the integration of investment management. Additionally, the ability to perform sales directly within the app further streamlines customer interactions. These initiatives reflect our commitment to security, convenience, and innovative financial solutions, underscoring our role as a leader in shaping the future of financial services. On slide 21 in insurance, we continue to focus on enhancing the digital experience for our clients and expanding ourselves from digital channels. The development of internal capabilities has allowed us to increase digital self-service to 71% and the digital premiums to grow 25% in the last year. In wealth management, we are committed to continually improve our Interfondos app, aiming to transform it from a simple transactional tool into a comprehensive digital advisor for our mutual fund clients. This has led to a steady rise in app engagement with a number of digital users increasing by seven points year over year. Additionally, digital transactions now represent 55% of all activity on the platform. Moving on, to the fifth message with double digit growth in insurance. On slide 23, we continue to see an increased stock of the contractual service margin, which grew 22% year over year, mainly driven by individual life, which grew 23% in the last year, supported by strong new business generation that more than offset the monthly amortization of the CSM. 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 new channels and adjust the product to reach new segments and keep supporting growth. Additionally, short-term insurance premiums grew by over two-fold, driven by disability and survivorship premiums acquired through a two-year bidding process from the Peruvian private pension system. On the investment side, as mentioned before, the solid results were impacted by additional impairment from Rutas de Lima. Despite this impact, the return on the investment portfolio reached 5.3% for the whole year and would have been 6.6% without this effect. Finally, wealth management continues to deliver double-digit growth. On slide 25, we highlight the strong performance in our wealth management business this year. Intelligo continues to show solid momentum. Assets under management have grown at a double-digit pace, reaching new highs and now totaling $9.1 billion, including deposits. The income continues to improve up 15% year over year, which would have been 18% excluding the effects adding to the positive trend in results. Now, let me move to the final part of the presentation where we provide some takeaways. On slide 27, before we move on to our operating trends, we'd like to summarize where we are focusing our growth efforts. In commercial banking, we have seen important growth in small businesses, which increased loans by 25% year over year. We continue to see a strong potential in this business given our current small market share. The commercial portfolio as a whole grew 8% year over year when adjusted by FX, gaining 10 additional basis points of market share. This strong performance is supported by our strategy to deepen relationships with key mid-sized company clients, unlocking additional cross-sell opportunities and leveraging synergies with EasyPay to enhance our value proposition, especially in the small business segment where our digital and payment capabilities set us apart. The consumer portfolio has had three consecutive quarters showing growth. At the same time, the mortgage segment continued its positive trajectory, achieving a market share above 16%. In insurance, we're maintaining our focus on long-term products as individual life has shown encouraging growth this year. Finally, in wealth management, asset under management continue to grow at a healthy pace, up 16% year over year, reaching new record levels, a reflection of both market performance and continued client engagement. On slide 28, let me give you a review of the operating trends of 2025. Capital ratios remained at some levels with a total capital ratio of 16% and core equity tier one ratio at 12.5%. Our ROE for the year was 16.8%, surpassing our guidance for the year. For loan growth, we grew 3.7%, but 6.5% if we adjust for the FX appreciation. NIM had a slight recovery over the last quarter with a full year ratio of 5.2%. Finally, we continue to focus on efficiency at IFS as our cost to income ratio was around 37%. On slide 29, let's go through our expectations for 2026. For 2026, we expect ROE to be around 17%, an improvement with respect to the full year 2025 and closer to our 18% midterm target. For loan growth, we expect a high single-digit growth above 2025 growth driven by both commercial banking and the recovery of the consumer portfolio. We expect this to be above the system with the aim to continue gaining market share in key businesses. Finally, we will continue to focus on efficiency at IFS and we expect to maintain a cost-income ratio of around 37%. Let me finalize the presentation with some key takeaways. First of all, we saw solid performance across all businesses and our corporations. Second, our higher yielding loans continue with a positive trend in both consumer and small business financing. Third, we continue to see improvement in the risk-adjusted NIM, helping profitability. Fourth, we are strengthening primary banking relationships with our retail clients. Fifth, our insurance business keeps delivering solid double-digit growth. And finally, our wealth management business continues to deliver double-digit growth as well. Thank you very much, and now we welcome any questions you may have.

At this time, we will open the floor for your questions. First, we will take the questions from the conference call and then the webcast questions. If you would like to ask a question, please press star followed by the one key on your touchtone phone. Questions will be taken in the order in which they are received. If at any time you would like to remove yourself from the questioning queue, please press star then two. Again, to ask a question, please press star then one now. And for the webcast viewers, simply type your question in the box and click Submit Question. We will pause momentarily to compile our questionnaires. And our first question will come from Ernesto Gavilando with Bank of America. Please go ahead.

Ernesto Gavilando Thank you. Hi, good morning, Mr. Felipe, Carlos, Michaela. Good morning to all your team. And congrats on your results. My first question will be on Ruta de Lima. I'm just wondering if we should continue to see further impact in 2026, or is this almost done? My second question will be on loan growth and asset quality. So as you said in the presentation, in the results, you have started to see more credit appetite towards credit cards and personal loans. So can you give us some color on what is the type of role you're expecting for each segment? And how should that will be translated into asset quality, MPLs, and cost of risk this year? Then I have a question on expenses. In 2025, you have like a high single-digit growth. You have been putting efforts in terms of technology, personal, marketing. So how should we think about OPEX growth this year? And my last question is on your sustainable ROE. I believe in the past, your ROE used to be at the same level of Credit Corp, which now is targeting to be around 20%. I believe you are targeting a midterm ROE of 18. So I'm just wondering if there is an opportunity to get your ROE more close to your peer at some point, or is something that you are not considering. And also this 18%, you're expecting it to be achieved probably likely in 2028. That will be all for me. Thank you.

Okay, Ernesto, thank you very much. And again, also apologies from our side for technical difficulties. We're looking into what happened, but going back to your question, Ernesto, thanks again. I'm going to go briefly, like a summary, and then we'll pass it on to the team members so they can make more specific comments. On Ruta de Lima, based on the info that we have, I think this is, again, we've done close to 80% in provision or impairment Right now, with information we have, where the legal proceedings are, what we expect is going to happen going forward, we feel pretty comfortable should be the effect, and 2036, we shouldn't see anything else. There might be some positive developments that change this in the medium term, but for the short term, I think that's, we feel pretty confident that this is the impact that will go through our books related to this name. In terms of loan growth, I think it's, It's encouraging what we've seen in the last queue. Again, especially higher yielding loans are starting to pick up. We do expect this trend to continue through next year. And overall, if those loans start picking up as we hope, then obviously the cost of risk related to those higher yielding loans will come with that trend. portfolio. Then in terms of expenses, I think we will continue to invest. So overall, in the three businesses, we keep strengthening our teams, we keep investing in technology, we're seeing more volume overall. So probably the trend is going to be very similar to to this year okay and lastly in terms of the roe our midterm view is again 80 plus no we're not getting married to any specific number obviously if the peruvian system evolves away we expect we should see similar numbers to pre-pandemic but we're taking it slowly because Again, the nature of volatility that has impacted the system because of some political issues has made the nature of growth in Peru not as strong as we had before. So while that continues to to unveil, we have kind of an optimistic conservative approach towards growth. But obviously, if 30% ROE is achievable, we do think we have a platform, but that could take advantage of that. Now, let me stop, and I'm going to pass it on specifically for your question one and two, and Carlos afterwards to see if If there's anything that they want to compliment. First, Gonzalo, anything more that you would like to say on Ruta de Lima? You're muted, I think, Gonzalo.

Yes. Hi, everybody. During our last call, we mentioned that after the closing of the TOLS, we will do an additional charge on Rutas de Lima in the fourth quarter, and we reviewed, and we think we have a very conservative value in what's left on the investment. It's around 20%. With the information we have now, we think that there won't be any additional charges on that investment.

Okay. That's good. Now, Carlos, can you help us learn a little bit more in terms of loan growth and asset quality as asked by Ernesto?

Yeah, thank you. Absolutely. Hello, Ernesto. Thanks for your question. So regarding loan growth, particularly higher yielding loan growth, which is credit cards and personal loans and SMEs. We have started growing that in 2025, I would say more on the second half of 2025. However, the market kind of, it's been mixed because of the AFP's withdrawals. So a lot of the growth that we had was amortized by the clients towards November and December. That was an effect that kind of curtailed our growth, but we still grew in personal loans and credit cards around 2.3%, 2.5% on the last quarter. We expect that to continue and accelerate in 2026 based on the things that we're doing and our risk for appetite, but also on the... on the fact that this is liquidity that Miquela mentioned from the FDC. What this will do, it will probably increase cost of risk slightly, not because we want to increase cost of risk per se, obviously, but because it's a more efficient frontier in terms of profitability and risk. probably go closer. The last quarter was below 2% our cost of risk, and we would probably get closer to 2.5 or something around our historic environment. So I think that answers the, I don't know, Ernesto, if you have any follow-up questions on that.

No, no, yes, excellent. So cost of risk around 2.5% for this year. And in terms of longer, as you were saying, more gradual increase with these high yield loans. What about corporate loans? I believe maybe after the election, they can start to pick up. So just wondering how you're seeing that segment.

All right. Just to be clear, the cost of risk is not a target. It's probably, it's a trend that will happen as you get higher yielding loans. Corporate loans, as you know, we have good relationships with the main clients in Peru. We work closely with them in short term and long term. Corporate growth will depend on mainly two things. The amount of capex that goes home. And probably there has been good capex in 2025. It will probably slow a little bit until we have more vision in the elections. But there's a lot of things coming in. and then bond offerings, right? As long as there's more bond offerings, the banks kind of shrink. So we foresee some growth just because the economy will grow and there will be investment, but it won't be necessarily our leading portfolio.

Perfect. Thank you very much. Just to follow up in terms of the ROE, in the comment about the ROE, it was like it stopped the audio. So if you can repeat again how you see the evolution of the ROE and if you think at some point the 20% could be reachable.

Yeah, thank you, Ernesto. So again, the ROE, if you see the way we look at ROE, okay, and so Inteligo and Interseguro are already operating at ROE's north of 20%. The one that is growing and recovering is the bank, and that pace of recovery will depend on how fast we can rebuild more relevance of the consumer and higher yielding book. Okay. So again, we do see an 18% plus ROE in the medium term as this book continues to evolve. And as we continue gaining efficiency scale, the 20% plus is, I think it's achievable as long as the Peruvian economy continues to perform Well, so yeah, we're not saying it's not achievable. However, in the medium term, we do need to see the higher yielding book to recover. So the ROE of the bank with that improvement to be able to push towards north of 18% ROEs. Perfect.

Now, very helpful. Thank you very much.

Thank you, Ernesto.

The next question will come from Daniela Miranda with Santander. Please go ahead.

Good morning. Thanks for taking my question. Two very quick ones from my side. The first one is we noticed there was no formal guidance provided on NIM. Could you share some additional cover on how you're thinking about NIM in 2026? And also we continue to see volatility in the results of Interseguro and Delivo. What is your medium-term profitability outlook for these businesses? And are there any specific initiatives on the way to help mitigate these earnings volatility?

Okay, thank you. I'm going to start by your question number two. Again, our medium term and our structural profitability for both businesses is 20%. Obviously, especially Interseguro is like in investment related. So whatever happens with the market, will have an influence in the results. That's why you see a little bit more volatility. The same happens, especially with the prop book of Intelligo, that we have a mixed strategy there. As you know, we do have a nice fee business growing in, very stable, but then Our book brings in some volatility that is dependent on the evolution of market in terms of investment results. But we do see 20% ROEs for those businesses year in, year out and going forward. And that's kind of the structural view that we have on it. In terms of NIM, again, I'm going to let Miquela go over that answer, but as long as the higher yielding book continues to get more relevance, NIM should continue to improve. So that's what we're expecting for next year, but maybe Miquela can help us with a little bit more detail on that.

Yeah, just to add that as the higher yielding loan portfolio grows, that should positively impact yield on loans. And we also expect an additional improvement of cost of funds, not as big as we have seen in 2025, because I guess... A portion of that was also related to decreasing rates, but we still see potential for further decreasing cost of funds as we continue to improve the mix of the efficient funding with all the things that we're doing both in retail banking, but also with the payment ecosystem with EasyPay and commercial banking. So, NIM should slightly increase during 2026. Now, we saw it already in the last quarter, 10 basis points. So, we should see a further improvement in NIM and in risk-adjusted NIM throughout 2026. Thank you, Miguel.

Very clear. Thank you.

Thank you. The next question will come from Yuri Fernandez with JP Morgan. Please go ahead.

Thank you. Good morning and congrats for the quarter or for the year. I have a question regarding your deposits. For you to deliver a higher single-digit loan growth, how do you imagine your funding also growing, right? And this year, deposits, they are growing less, right? They are growing, I don't know, five above loans, but I think this is not enough for a nine-year. So just checking here, like in the years, I guess there was a good improvement in funding cost, right? Like more expensive institutional funds were growing or more retail deposits. So basically we're focusing in cheaper funding lines. And now the message from Michaela from the past answer was that margins will expand on the asset side, right? On the mix. So just checking the liabilities, you know, should we see maybe for you to deliver the funding growth you need a higher funding cost for you into 2026. And then just a follow-up on Ernesto, many questions just on the ROE. This was a quarter of 19% ROE, right? If you adjust for Ruta de Lima, that hopefully it's getting over, given the amount of exposure you have. Why not more than 17 ROE for the next year? If insurance and the other business are running already at 20, it's a better year. Thank you. Okay.

Thank you, Yuri, for your questions. Let me go over the last one again. Again, it will depend on – if you see the bank is around to continue to recover, okay? The ROE of Interbank is the one that – Obviously, Intel had a soft ROE quarter, very strong year. But again, it will depend on the pace of recovery of the higher yielding book of the bank. So more than 70% is achievable. It is achievable, but it depends on many situations. So that's why we're guiding at around 70 percent. It's an electoral year. So the pace of recovery is still to be seen. Again, we've seen that we've had releases of pension funds that is curtailing our ability to grow as strong as we want. So we are probably in the conservative side in terms of what will happen if the opportunity for growth are there in the book, we will take advantage of that. And that should have a positive impact in NIM as well, in ROE as well, and in NIM for the bank. But again, we feel more comfortable in, looking at a smooth recovery, not an aggressive recovery, okay? And then in terms of deposits, yeah, we are focusing very much on low-cost deposits, I guess our retail banking platform allow us to continue growing there. And also the strategy that we're deploying with EasyPay is key for that. So we do expect this to continue growing in the next year and having an impact in our cost of funds base. But let me pass it on to Carlos so he can connect this with the strategy that we are deploying so you can have a more ample picture.

Thank you, Felipe. And Yuri, yes, I mean, a little more detail on what Luis Felipe said, but as you can see, our loan to deposits is low. The fourth quarter was 92%. We've been growing deposits, but more than focusing on overall deposits, we've been focusing on low funding or low cost deposits. And that has grown more this year than the last. And that, as Luis Felipe mentioned, comes from two reasons. in two ways. Retail continues to grow well across the years, really. And 2025 wasn't an exception. Obviously, at the end of the year, helped by the pension fund. But we also get some of that in January and February. So we will continue getting that. And the other source of funding is the payments ecosystem. It's clean. It's easy. the funds that come from ECP to the accounts at the bank, and expect that to continue. So we will continue to grow low-cost funding. Maybe the overall size of the postage will continue to grow, but we're more focused on the mix. And that is what would help the cost of funding and NIM. So that's kind of the strategy.

No, no. Thank you very much, Carlos and Luis Felipe, for the answers.

Thank you, Yuri.

The next question will come from Carlos Gomez with HSBC. Please go ahead.

Good morning. Congratulations, and thank you for taking my questions. The first one is actually another way of asking the same thing everybody has asked you. We are obviously in an upswing for retail and for demand. And I guess my question is, to what extent do you think this is temporary because of releases from the pension funds or other factors, or it's a permanent upswing? Essentially, how long do you think that the good times are going to last? You probably don't have an answer, but I would like to know what your best guess is. Second, referring to clean, I was trying to find some numbers, but I don't see them in the presentation. What would you say the market share of clean is today, and what is your market share within clean? Thank you.

Okay. We hope that good times last for many months or years going ahead. But, Carlos, what we think is – let's see. Again, the pension fund releases and the severance deposit releases actually is a stopper to loan growth, okay? Because people use those funds, obviously for some consumption of their activity, but also to repay debt or not get into more personal loans. So when that dries up, and we do expect that to happen, starting the second quarter of this year, then probably we will going to see a more strong demand for personal loans in the portfolio and in the system as a whole. So it's a little bit cumbersome, but the releases of funds actually stop a little bit the growth profile of the portfolio. Now, we are seeing good macro numbers in Peru. The sentiment is positive. The confidence index are at high levels. The labor numbers are looking good. The consumption indexes are also stronger. So there's a structural improvement in Peru's macro front that is having a positive impact in terms of growth as well. And we do expect that to continue during this year. And hopefully it will flow through to 2007 and moving forward again. The big question mark is, is Peru going to have noise on the elections of April? Is it going to be something similar to what we had before? We don't think so. Our base case is that that is not going to be the situation, but again, We know Peru and we cannot discard that the volatility for the political situation will be there. And let's see how elections at the end evolve. There's some noise right now actually in the political front. Peru has become a surprise in terms of political instability. That is not affecting economic numbers, but obviously, given that it's an electoral year, there could be some investments being delayed, investor confidence coming down, consumer sentiment changing routes because of this potential noise. So that's the only question mark that we have, but we do see that the structural improvement of the macro front coupled with the strong commodity prices position Peru to continue having strong currency, low inflation, and accelerated growth. On that backdrop the financial system and IFS and Interbank itself should continue to benefit from that environment. And then regarding Plin, let me pass it to Carlos that has a little bit more detail on that. Carlos.

Excellent. Yeah. The reason we don't disclose market shares in PLEAN and JAPA is because there's no official source for market shares. We build an estimation based on what our competitors say in the market. So we kind of, we believe PLEAN currently has about 15% of the P2P and P2M market. So P2P is person to person and then also using PLEAN to pay at a merchant, we will be somewhere around 15%. And Interbank is a little bit over half of that. That's our estimation. I think it's well-founded, but there's no definite source on it. We do see growth above 40%, 50% per year. We continue to see very healthy growth in terms of users and in terms of transactions per user. So it's been growing and it's contributing to our ecosystem. So yeah, I think that's as much as I can share. I don't think I can share more, but that should give you a sense of where we're at.

Could you remind us, I mean, There's no official information, but as far as we know, there are two of you, and you have your numbers. So as long as JAPE gives theirs, you should have a full picture. Or are we missing somebody? Are we missing some other operator? And over time, is the market share of Plin increasing or decreasing? How do you see this market evolving?

Okay. So is there a – A few, like there's other banks that are not part of PLIN or IAPE. That's one. And they go through the CCE and we're all interconnected. So that's one part. It's a small part. It's main are IAPE and PLIN. What I don't get to see, and I only get to see on the reports, is when YAPE sends to another YAPE user. We don't see that. We only see when YAPE sends to PLEAN and when PLEAN sends to YAPE. That's the reason we don't see the exact share. So there's a mix of the players that are not And then there's on us or on them transactions. And then in terms of share, yes, we are growing. It's still small, so we think there's a lot more potential to grow faster and to continue to grow. But yeah, we're growing.

Yeah. And I think that something very, very positive is that we do see that our customers that use Splint have much more activity with us, more principality. We've become a principal bank. NPS is higher, and obviously churn is smaller. So the numbers are adding up nicely in terms of building up on the strategy that the bank is deploying. Absolutely. Thank you. Thank you.

Thank you, Carlos. The next question will come from Alonzo Aramburu with VTG. Please go ahead.

Yes, hi. Good morning, and thank you for the call. I wanted to maybe double-click on the performance on consumer loans. Dynamics clearly are better than at the last couple of quarters. But if you look at your market share, you've been losing market share, roughly one point in the last 12 months. So maybe you can comment. On the competitive dynamics, what are you seeing? Who's gaining share? Is it related to payroll loans where you've seen negative growth over the past 12 months? And have you seen any change in this trend for 2026? Thank you.

Yeah, thank you. Thank you, Alonso. Yeah, I think payroll deductible loans to public sector employees, that's a market that for us is not growing that much. You have identified it well, and it obviously has an impact. And then I think that we've been digesting what happened in 2023 and 2024. So we're coming back to market again. It's probably a little bit later than some of the competitors, but again, we've been in this business for many years. We know how cyclicality can be, and we've been working in making sure that the equation adds up. So we're returning with a little bit more of risk appetite, but obviously we've been strengthening our underwriting standards and working through our models in order to make sure that we don't face any issues in the near term or medium term. So that's probably adding all up. You'll see the results that we have seen, especially in the first half of the year. But as Carlos mentioned, we've seen acceleration in the third and especially in the fourth quarter in terms of velocity of growth. But I'm going to pass it to Carlos so he can complement a little bit more on that specific competitive dynamics that we're seeing. Carlos?

Oh, absolutely. I think there's two different, so convenio, not payroll loans, have their own environment. We're the leaders there. We obviously, it's a good market, but it grows slower than the rest of the market. Being the leader, we're looking at keeping the relationship with our clients, the economics, and that has a much different relationship or performance compared to loans and credit cards. So where we stopped in 2023, 24 was loans and credit cards. And as Luis Felipe mentioned, we started to grow again and increase our risk appetite in 2025. We will continue to do that, but we want to do it in a very responsible way. As you know, in the consumer book, big spikes in growth never turn, never become, never, So we've been doing it well. We've been growing. You would have seen a lot more growth if it wasn't for the AFP withdrawals. I think that's a little. something that set us back a little bit in terms of growth, but not in terms of usage of our credit card and usage of our payment solutions. We continue to see growth and engagement there. So we're very positive that over the next couple of months, we will have growth and recuperate some market share. As we mentioned earlier, we're at the beginning of this cycle and it's early and we will, We know how to do this, and we feel comfortable that the engagement and our value proposition is working well. And it's a matter of increasing the risk in the portfolio slightly, and you will see the growth. So that's kind of the way we're looking at it. The convenience portfolio has a whole different environment that should be more stable. The other portfolio that's growing is SMEs, and that's higher yielding as well. And that kind of at the end of the day takes a little bit or brings in a little bit of the yield that is not growing with the payroll loans portfolio.

Great. Thank you for the call. Thank you, Alonso.

The next question. The next question will come from Banyan Mora with Credit Corp Capital. Please go ahead.

Hi. Good morning, and thank you for the presentation. I have just one follow-up question. The normalized ROE in 2025 was close to 18.5%, so I'm wondering, or I will just to clarify, what is stopping IFS from reaching similar a similar figure and achieve an 18% ROE besides the Ruta de Lima, which we don't expect more additional impairment, what will be those factors that do you expect that will not repeat this year and that favor 2025 results? And thus, what will be the ROE expectations for each company in the 17% ROE scenario for this year? Thank you so much.

Thank you, Daniel. Yeah, well, I'm going to go again. So it was a very strong year for some of our investments, especially in Teligo, and also some investment we have at holding company level, that's closer to there. So that was very positive. And again, the more stable, sustainable, higher ROE will have to come from the continued recovery of the bank, while the consumer and higher yielding loans book recover. For instance, if you see that last QROE for Interbank itself was like around 16%. So that needs to continue into a more positive way. And that will come again as a result of a higher yielding loans building up in our portfolio. And that's a process that Carlos just explained. So that's what's holding us back a little bit in terms of how fast we can achieve that medium term objective. So I hope that answers your question.

Yeah, perfect. Thank you so much. Thank you.

At this time, we will take webcast questions. I will now turn the call over to Mr. Ivan Pail from Inspire Group.

Thank you, operator. The first question comes from Shane Matthews of White Oak Investors. Hello, congratulations on the results. As you increase the share of higher risk loans, do you expect to maintain the same level of coverage of 2025?

Okay, thanks for your question. I'm going to pass it on to Miguel. I'm assuming, yes, the coverage comes in line with higher higher provisions due to the cost of risk improving because of those loans. But mathematics in terms of coverage, Miquela, maybe can help me.

No, no, yes. Not much to add, actually. Yes, as Carlo mentioned before, with increasing the high yielding loan portfolio, we should see an increase in cost of risk. And the levels of coverage should remain very similar to the ones that you see in 2025.

The next question comes from Anand Bhavnani, also of White Oak Investors. Given it is election year, what are the key risks that you would watch out for?

Okay, Anand, thanks very much for that question. I guess I'm going to put it in two fronts, okay? Yes, it's an election year. We don't see big disruptions coming into the market. Again, our base case is of continued stability through growth, whatever. What we've seen in previous elections is some candidates that are not market friendly start to rise up in terms of the polls. And then people start losing confidence, and investments start getting delayed. So that's kind of a risk that we see to growth in the coming months, that something changes in terms of the political environment, and some radical proposal or not market friendly type of disruption becomes a risk in the in the political scenario. And so that is the election period itself. And so people will delay and companies will delay some decisions because of this. And then the second frame is what actually happens, who gets elected. And again, the risk is for someone that is not market friendly being elected and trying to change certain things that support growth or stability, the currency being stable or issues that will come with inflation. So basically, that's the risk. It's a political risk of somebody changing the rules of the game. The probability is not But again, we're in Peru and we've gone through some volatility because of this before. So that is kind of the way we see it. So we need to see what happens in elections and what happens in the actual candidate being elected as president. Now, again, our base case is of continued stability, continued growth, continued strength. I guess Peru has proven that their economic related institutions are very solid, very well respected. They do their work pretty well, even under the previous election and when President Castillo was elected, that was not touched, that did not change. So we feel very confident on that continue to work it out, strong superintendency, strong central bank, strong minister of economy and finance. But again, those are the political risks that we are looking at. So I hope that answered your question on that front.

We have a follow-up question from Anand Bhavnani of White Oak Investors. Given the boom in copper and lower price of oil, do you anticipate GDP growth to have upside risk and inflation to have downside potential? Can both of which be a tailwind to help you do better?

Yes, obviously, those are positive factors that could influence a stronger performance of the Peruvian economy. Obviously, that would help the currency to continue in its strong pattern. As Miquela mentioned, the Peruvian soil has appreciated 10% this year. We don't foresee if the commodity prices continue to be strong, probably the soul will continue to follow that path. Inflation will continue under control and having good export results and low cost of energy would help improve some productivity and that should have a positive wind towards our economic performance as a whole. And the Peruvian financial system should be a multiplier of that. And again, Interbank and Intersegura, I tell you, we have a platform that can definitely improve look at the opportunities that that positive situation approach. So there's an upside risk on that front that we are prepared to take advantage of. And obviously, we're looking very detailed on those opportunities. Now, again, the big question mark can be the political situation, but that's going to clear up in a couple of months. So we'll have a more clear picture probably for the next quarterly call.

At this time, there are no further questions. I would like to turn the call over to the operator.

Thank you. And we are not showing any audio questions as well. So I would like to turn the floor back to Ms. Casasa for any closing remarks.

Okay. Thank you very much, everyone, for being with us today. Sorry again for the inconvenience. And we hope to see you all on the next quarterly conference call. Thanks again. Bye, everybody.

This concludes today's conference call.

You may now disconnect.