Intercorp Financial Services Signals Strong Earnings Momentum

Intercorp Financial Services ((IFS)) has held its Q4 earnings call. Read on for the main highlights of the call.

Intercorp Financial Services struck an upbeat tone in its latest earnings call, emphasizing record profits, recovering margins and disciplined risk management. Management acknowledged volatility from one-off items and macro headwinds, but argued that the core franchise is strengthening, with digital progress, solid capital and improving efficiency setting the stage for steady returns.

Record Net Income and Broad-Based Profit Growth

Intercorp Financial Services reported 2025 net income of 1.9 billion, up 49% year-over-year and marking a new high for the group. Management highlighted that this strong consolidated result reflects contributions from banking, insurance and wealth businesses, despite notable non-recurring charges during the year.

Robust Return on Equity with Upside Ex-Impairment

Reported return on equity reached 16.8% in 2025, already attractive by regional standards. Excluding the Ruta de Lima impairment, pro forma ROE would have been about 18.5%, underscoring resilient profitability and showing what earnings power could look like once one-off effects fade.

Bank Record Earnings and Net Interest Margin Recovery

Interbank delivered record annual earnings, with management citing figures between 1.4 and 1.5 billion for 2025. Net interest margin recovered to roughly 5.3% in the fourth quarter and averaged 5.2% for the year, supported by growth in higher-yielding loans and improving funding costs.

Risk-Adjusted Margins Up and Cost of Risk at Lows

Risk-adjusted NIM climbed by 50 basis points over the year to 4.0% in the last quarter, with the full-year level at 3.7%, up 80 basis points versus 2024. At the same time, cost of risk fell to a four-year low of 1.8% in the quarter and 2.3% for 2025, illustrating both credit discipline and healthier asset quality.

Momentum in Higher-Yielding Loans and Consumer Lending

Higher-yielding loans expanded 8% year-over-year, while the total loan book grew 4% or 6.5% on an FX-adjusted basis. Mortgages were a bright spot, with balances up more than 8% and market share edging above 16%, as consumer lending accelerated with fourth-quarter growth of 2.3% sequentially and 5% year-over-year.

Small Business Strength Lifts Commercial Franchise

Small business lending was a key growth engine, with disbursements up 60% year-over-year and the loan book rising about 25%. This helped commercial loans, adjusted for currency effects, grow around 6% and gain market share, supporting diversification beyond traditional retail products.

Insurance and Wealth Management Deliver Double-Digit Gains

In insurance, Interseguro posted exceptional written premium growth of 661% year-over-year, driven mainly by private annuities, finishing 2025 with around 36% full-year growth. Inteligo also had a strong year, with revenues up 68%, assets under management reaching 9.1 billion and fee income rising roughly 15% or 18% excluding FX.

Digital Ecosystem Expansion and Stronger Funding Mix

Digital usage deepened, with retail digital customers increasing to 84% from 81% and monthly active Plin users reaching 2.6 million alongside higher transaction intensity. Yape flows grew about 60% year-over-year, while deposits rose 5% or 9% ex-FX and efficient, low-cost funding climbed to roughly 40%, helping reduce cost of funds by around 20 basis points year-over-year.

Capital and Efficiency Metrics Support Growth Plans

The group reported a total capital ratio near 16% and a CET1 ratio close to 12.5%, levels that comfortably back its growth ambitions. Efficiency also improved, with a cost-to-income ratio around 36.8% in 2025 and management targeting roughly 37% in 2026, consistent with sustaining high-teens returns on equity.

Ruta de Lima Impairment Weighs but Mostly Behind

An additional impairment at Interseguro tied to Ruta de Lima, noted as 129 million in the fourth quarter commentary, materially affected quarterly earnings and ROE. Management said roughly 80% of expected charges have been recognized and described the remaining exposure as modest, signaling that the worst of this drag should be in the past.

Investment Portfolio Returns Add Earnings Volatility

Results at Interseguro and Inteligo showed meaningful volatility due to swings in investment portfolio performance. The group reported a 5.3% full-year investment return that would have been 6.6% absent the Ruta de Lima impact, while Inteligo’s latest quarter was dented by weaker investment gains despite strong underlying business trends.

Pension Withdrawals Temporarily Restrain Loan Expansion

Late in 2025, pension fund withdrawals and severance deposit releases injected liquidity into households, reducing demand for new borrowing. Management said these flows curbed loan momentum and amortized part of the growth initially seen in November and December, softening headline loan expansion figures.

Higher-Yielding Mix to Lift Margins but Raise Risk Costs

With consumer and small business loans gaining weight in the portfolio, management expects cost of risk to drift higher from 2025’s 2.3% level. They indicated a more normal mid-cycle level closer to 2.5%, arguing that higher yields and wider margins should more than compensate for the gradual increase in credit costs.

Deposit Growth Lagging Loan Ambitions

Total deposits grew around 5% year-over-year or 9% on an FX-adjusted basis, somewhat below the pace of targeted loan growth for 2026. The bank is focused less on absolute deposit growth and more on improving the mix toward low-cost funding, a strategy that could constrain headline deposit expansion but support margins.

Consumer Market Share Trade-Offs Reflect Risk Discipline

The bank ceded about one percentage point of market share in consumer lending over the past year, especially in payroll-deductible and public sector segments. Management framed this as a deliberate, cautious re-entry into higher-risk consumer categories, preferring steady, controlled growth over aggressive volume gains.

One-Offs and Timing Issues Blur Quarterly Picture

Several non-recurring and timing-related items, including provision reversals in earlier quarters and investment impairments, contributed to choppy quarterly results. Executives stressed that these factors complicate short-term comparisons but do not alter the positive underlying trajectory in profitability and asset quality.

Guidance: Constructive 2026 Outlook with Controlled Risk

For 2026, Intercorp Financial Services guided to a consolidated ROE around 17% and high single-digit loan growth, above 2025’s roughly 3.7% or 6.5% on an FX-adjusted basis. Management expects NIM to improve modestly from 5.2%, risk-adjusted NIM to keep recovering, cost-to-income near 37%, cost of risk edging toward 2.5% and funding, capital and AUM metrics to remain supportive of sustainable growth.

Intercorp Financial Services’ earnings call painted a picture of a franchise emerging stronger from one-off hits, with record income, robust capital and a deepening digital and funding base. While some earnings volatility and a gradual rise in credit costs are expected, management’s guidance points to continued recovery and high-teens returns, leaving the stock story anchored in profitable, measured growth.