Intercorp Financial Services Inc Stock

Good morning, and welcome to the Intercorp Financial Services' Third Quarter 2026 Conference Call. [Operator Instructions] Please be advised that today's conference call is being recorded.

[Operator Instructions] It is now my pleasure to turn the call over to Mr. Ivan Peill of InspIR Group. Sir, you may begin.

Thank you, and good morning, everyone. On today's call, Intercorp Financial Services will discuss its third quarter 2026 earnings.

We are very pleased to have with us Mr. Luis Felipe Castellanos, Chief Executive Officer, Intercorp Financial Services; Ms. Michela Casassa, Chief Financial Officer, Intercorp Financial Services; Mr. Carlos Tori, Chief Executive Officer, Interbank; Mr. Gonzalo Basadre, Chief Executive Officer, Interseguro; and Mr. Bruno Ferreccio, Chief Executive Officer, Inteligo. 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. Otherwise, if you need any assistance today, please call InspIR 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 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 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 us on our third quarter 2026 earnings call. Let me start with the macro environment.

In the first half of 2026, private investment grew 15%, its fastest growth since 2012, and domestic demand grew almost 6%, which is the highest since 2013. Exports have reached new historical records, and all of this has come with a prudent fiscal deficit and debt-to-GDP ratio. Business confidence is also at its highest level in recent years.

On the political front, we see the executive pushing forward its investment agenda, which is consistent with expectations for a stronger private investment and should help bring Peru back to its medium-term growth potential. All in all, we are optimistic about what lies ahead for Peru, and we believe the coming years should be positive.

In the short-term, we are especially focused on the El Nino event, which we are now assuming that will be an extraordinary magnitude. We expect that impact to be temporary, mainly affecting primary sectors such as agriculture and fishing and -- extending into the first half of 2027. Depending on the strength of the rains, infrastructure primarily in certain regions of the North will be affected. Even so, we continue to expect GDP growth of around 3% next year. We believe the country is well-positioned to return to its medium-term growth path once these effects fade.

In this context, IFS net income was PEN 457 million with an ROE of 14%. These results mainly reflect the provisions that were booked in anticipation of El Nino at Interbank and to a lower extent at SIP, in line with our prudent approach to risk management. Excluding these provisions, net income would have been PEN 543 million with an ROE of close to 17%. As mentioned, we see the impact of El Nino as short-term, while our medium-term view has actually improved. We see our medium-term ROE target to be above 20% now.

At Interbank, the underlying business continued to show positive trends. Excluding El Nino provisions, risk-adjusted NIM expanded to 3.9% from 3.5% last quarter. Loan growth accelerated in consumer and in small businesses, both higher-yielding segments, which is contributing to the NIM expansion.

Asset quality is also performing very well with a positive trend. Year-to-date cost of risk, excluding El Nino provisions, is 1.8% and NPLs is at 2%, reflecting the quality of our portfolio and our risk management capabilities. As a result, we believe the bank is better positioned as we enter this El Nino period as compared to the previous ones.

We continue to strengthen our payments ecosystem through Izipay and PLIN. These platforms are important levers to deepen our relationships, increase engagement, and support the growth of low-cost funding. Interseguro maintained strong momentum in its core business while preserving its leadership in annuities. The business continues to leverage synergies with Inteligo and Interbank to advance more integrated solutions for our customers.

Inteligo continued to grow at double-digit rate, reaching a new record in assets under management, supported by healthy client engagement and strong advisory model. The investment portfolio had more moderate quarter, but this does not change the trend of its core business.

Overall, this quarter shows that we remain on-track in terms of results and profitability, supported by a diversified platform, clear growth opportunities across businesses and a disciplined execution of our model. El Nino event should be a short-term effect.

Our strategy remains focused on profitable growth with the customer at the center of our decisions and continued investments in the capabilities that support long-term value creation, including digital solutions, data analytics, cybersecurity, and GenAI. Looking ahead, we believe IFS is well-positioned to continue growing with discipline while sustaining profitability and strengthening our leadership in Peru over the long term.

Now let me pass it on to Michela, who will walk you through this quarter results in more detail. Thank you.

Thank you, Luis Felipe. Good morning, and welcome again, everybody, to Intercorp Financial Services' Third Quarter 2026 Earnings Call. I would like to begin with our key messages for the quarter.

First, Peru remains resilient ahead of El Nino. Even after incorporating a stronger El Nino, the Central Bank projects GDP growth of 3% for 2027. Second, core earnings maintained a positive growth trajectory. Excluding El Nino-related provisions, net income was PEN 544 million with an ROE of around 17%. Third, accelerating momentum in higher-yielding loans, which grew 21% year-over-year and 10% in the quarter alone. Fourth, NIM recovery on a better asset mix. NIM expanded 20 basis points to 5.1% and risk-adjusted NIM, excluding El Nino provisions, improved 40 basis points quarter-over-quarter to 3.9%. Finally, insurance and wealth management continued to deliver strong growth with written premiums up 30% in the first 9 months and assets under management up 13% year-over-year.

Let's start with our first key message, which is that Peru remains resilient ahead of El Nino. On Slide 4, let me update you on the macro environment. The economy is regaining speed. GDP is tracking around 3.4% in the third quarter based on data through August, up from 2.6% in the previous quarter. Nonprimary sectors continue to support growth.

The Central Bank now expects GDP to grow 3.2% this year and 3% in 2027, below its previous estimates of 3.4% and 3.2%, as it incorporates a stronger El Nino. Growth remains supported by commerce, services, and construction, with exports at record levels.

Looking ahead to 2027, we expect a more challenging first half as El Nino would weigh on activity during the summer months. However, we anticipate a significant recovery in the second half, supported by reconstruction spending and the fiscal response.

The impact will not be the same everywhere. The North, the most exposed region, would contract in the first half and rebound in the second, while other regions would be less affected, limiting the impact on overall annual growth.

Inflation reached 5.3% in October, remaining above the Central Bank's target range. Core inflation is lower at 4.6%. And excluding transportation, which was affected by fuel prices increases, it would be close to 2%, consistent with the target range. That said, the reference rate has remained at 4.25% over the past year and a rate increase over the next 6 months cannot be ruled out.

Overall, Peru continues to stand out for the strength of its macroeconomic fundamentals. Public debt remains among the lowest in Latin America. Country risk is one of the lowest in the region, and financing conditions remain favorable across the yield curve, supporting a constructive medium-term outlook.

On Slide 5. For a bank, what matters is whether this macro recovery translates into credit demand, and we are beginning to see clear signs that it does. Business confidence rose to 69, its highest level in recent years, while consumer confidence reached 50 points. This improving sentiment is translating into stronger spending in investment decisions. In fact, the Central Bank expects domestic demand to grow 6.2% this year and private investment 14%, one of its strongest expansions in more than a decade, with private investment remaining resilient at 8.5% in 2027.

Supporting this outlook is a robust investment pipeline for 2026-2030, totaling USD 124 billion. Mining represents 52% of the total and infrastructure, another 28%, led by projects such as Tia Maria, Trapiche, Pampa de Pongo, Anillo Vial Periferico, de la Sierra Tramo 4. Beyond their direct impact, these projects should continue supporting employment, business activity and financing needs across sectors.

We can already see this momentum in the financial system. As of September, loans grew 11.8% year-over-year with retail expanding 13.8%. We are seeing a similar trend in our own portfolio, which reinforces our view that renewed confidence is translating into stronger credit demand.

On Slide 6, before turning to the results, let me spend a moment on El Nino. ENFEN's October update raised the probability of an extraordinary cost at El Nino in the first quarter of 2027 to 55% from 9% in June. So we are facing the possibility of an extraordinary event, and therefore, we decided to provision in line with this scenario.

Around 11% of our loan portfolio is flagged as potentially exposed with about 8% through direct exposure to agriculture and fishing, which we consider very low risk, and about 3% through consumer and small business loans in the affected zones, which we consider medium risk. The 8% is made up entirely of commercial clients with direct exposure and all of them already have sent clauses that allow them to refinance or defer payments. So we do not expect the agriculture and fishing exposure to generate provisions for the bank. On the 3%, retail clients do not have these clauses, which is why we see it as medium risk, but we are ready to support them through rescheduling programs allowed by the superintendency.

This quarter, Interbank set aside PEN 185 million in total provisions for El Nino, comprising PEN 81 million of already held under expert criteria and PEN 104 million of additional provisions. SIP recorded PEN 37 million as well, of which 50% or PEN 18.5 million was recognized by IFS. Including our share of SIP, the after-tax impact on IFS net income was PEN 86 million. This provisioning reflects the scenario we see today, which assumes a stronger El Nino than previously expected, but we will reassess as the event evolves.

We are already acting by tracking the exposed portfolio on a daily basis, tightening underwriting standards in the affected areas and supporting our employees in those areas. Once the event has passed, we will be there to support recovery in the affected regions.

On the government side, the Ministry of Economy has announced a broad support package that includes additional fiscal funding, cash transfers to affected families, state-backed loan guarantees for SMEs and accelerated public work programs. Together with reconstruction spending, these measures should help mitigate the economic impact of El Nino and support a stronger recovery in the second half of 2027.

Let's now turn to our second key message, which is that core earnings maintained a positive growth trajectory. On Slide 8, in the context of what we just discussed, our core earnings are on the right track. Excluding El Nino-related provisions, net income was PEN 544 million, up 19% year-over-year with an ROE of 16.6%.

Compared to last quarter, net income was down 7%, mainly because investment results at Inteligo and Interseguro normalized after a strong second quarter. Once we include the El Nino provisions at Interbank and SIP, reported net income was PEN 457 million with an ROE of 14%. Overall, setting El Nino aside, the underlying trends remain solid year-over-year and the bank is leading the way.

At the bank, the net income, excluding El Nino was PEN 439 million, up 10% from last year and 9% from last quarter, with an ROE of 16.4%. This was driven by higher loan income and lower funding costs, which are also behind the NIM recovery.

At Interseguro, net income was PEN 97 million with an ROE above 30%. That's below an exceptionally strong second quarter, but 2.6x what we reported a year ago when the results included a credit loss provision on financial investments.

At Inteligo, net income was PEN 38 million with an ROE of 13.5% as investments return normalized after a very good first half of the year. Importantly, the recurring part of the business is on-track, and fees and assets under management continue to grow.

On Slide 9. Looking at the first 9 months of the year, net income excluding El Nino was PEN 1,731 million, up 17% year-over-year with an ROE of 18.1%. Including El Nino, reported net income was PEN 1,644 million, up 11% year-over-year with an ROE of 17.2%. The important point is that even after absorbing El Nino, we remain in line with our full year ROE guidance of around 17%.

On Slide 10, revenues grew 8% year-over-year to PEN 2.1 billion and flat versus the previous quarter. At the bank, the trend is encouraging. Revenues were up 4% in the quarter and 8% year-over-year with NIM recovering to 5.1%, in line with our strategy to grow in higher-yielding loans. We also benefited from lower funding costs, partly offset by lower FX results.

At Interseguro and Inteligo, revenues declined versus the previous quarter by 3% and 30%, respectively, due to investment results, which were very strong in the previous quarter. The underlying trend is moving in the right direction as revenues grew 12% year-over-year at Interseguro, driven by the insurance result and 8% at Inteligo.

On Slide 11. Expenses for the first 9 months grew 10% year-over-year, and our cost-to-income ratio was 37.8% compared with around 37% a year ago. The main driver was technology, up 15% versus last year as we continue to invest in cybersecurity, infrastructure, and data and analytics. Personnel expenses are up 14%, reflecting the expansion of Interseguro sales force and key talent that we are adding across the platform.

Now let's turn to our third key message, which makes us most optimistic about the coming quarters. On Slide 13. Our higher-yielding loans, consumer and small businesses are accelerating, growing 21% year-over-year and 10% in the quarter, almost doubling the pace of the previous quarter.

In consumer loans, the recovery we anticipated in our last two calls is now materializing. Excess liquidity is normalizing and activity is coming back, supported by better confidence. As a result, consumer loans are up 18% year-over-year and 10% in the quarter, outperforming the market and gaining 20 basis points of market share versus last quarter. In September, cash loan disbursements grew 44% year-over-year and credit card turnover 21%. And so far, we have not seen a pause due to El Nino.

In small businesses, growth continues at an accelerated pace with loans up 34% year-over-year and disbursements up 63% in September. Our business banking app, which brings together Interbank and Izipay, the acquiring business, strengthens our value proposition, and we still see room to continue gaining share.

Together, these segments now represent 23% of the performing loan book, which supports NIM recovery. That said, these segments are also the most sensitive to El Nino. So we want to be very clear that we are growing conservatively. We are focusing our growth on zones that we do not expect to be affected by El Nino and on low-risk clients and we have already tightened origination in the exposed areas.

On Slide 14. Our performing loan book grew at a double-digit pace or 10% year-over-year, up from 6% last quarter. In the quarter alone, it grew 4% with good momentum in both retail and commercial. What we like about this growth is that it is broad-based and led by segments with attractive risk-adjusted returns.

Starting with retail, we are growing more than 9% year-over-year. Consumer, as previously mentioned, is leading with 18%, and mortgages continue to grow steadily at 8%. The good news is that now mass market is the fastest-growing segment at more than 10%, while the affluent segment is growing as well, but at a more moderate pace.

In commercial, we are growing 11%, led by small businesses at 34%. And I would also highlight midsized companies, which are growing more than 14%. Deepening our relationships and complementing our value proposition with Izipay is helping us grow both in small businesses and midsized companies.

Turning to our fourth key message, a NIM recovery on a better asset mix. On Slide 16. The NIM story is positive, and it is driven by lower funding costs and a better asset mix with a higher weight of loans that should keep building in the coming quarters. NIM increased 20 basis points to 5.1% with contributions from both assets and funding.

On the asset side, the return on interest-earning assets rose 20 basis points to 7.7%. Importantly, this came mainly from loan yields, which rose to 9.7%. This marks a change in trend driven by the shift towards consumer and small business loans, which now represent 23% of the performing loan book. At the same time, our asset mix is improving with loans now representing close to 70% of the interest-earning assets. Excluding El Nino provisions, risk-adjusted NIM was 3.9%, which is 40 basis points above last quarter, reflecting our strategy to grow in higher-yielding loans. Including El Nino provisions, it was 3.4%.

Looking ahead, we expect the shift in mix towards higher-yielding loans to become a larger driver of NIM together with lower funding costs. Given the possibility that the Central Bank raises rates, it is worth sharing our sensitivity. For every 100 basis points increase in the soles reference rate, we estimate a negative impact of around 7 basis points on NIM.

On Slide 17. Excluding El Nino, cost of risk was 1.9%, below the 2.1% of both last quarter and a year ago. Including it, cost of risk was 2.7%, so El Nino explains the entire increase. The underlying indicators all improved. Delinquencies are declining mainly due to better payment behavior of customers, in line with stronger economic activity.

Our recent vintages are also performing well across the portfolio, even with the growth we mentioned in higher-yielding loans. In retail, excluding El Nino, cost of risk was 3.4%, slightly above the 3.3% of last quarter. That increase reflects the growth of the portfolio. Commercial remained very low at 0.5%, which, together with an NPL ratio of 1.3% shows the portfolio is performing well.

El Nino provisions were booked based on expert judgment as we decided to provision for the scenario we see today. We will reassess as the event evolves. Excluding El Nino, we would expect a slight increase in line with portfolio growth in higher-yielding segments while continuing to improve risk-adjusted returns.

On Slide 18. The improvement in funding is the other half of the NIM story. Cost of funds fell 10 basis points in the quarter and 20 basis points from a year ago. This is a result of the mix, which is moving in the right direction as low funding costs increased to 39% of total funding, reflecting our focus on the payments ecosystem, primary banking and transactional deposits. Retail and commercial deposits now represent 85% of funding and the loan-to-deposit ratio is at 93%.

On Slide 19, our payments ecosystem connects directly with the funding trends we just discussed. More transactional activity brings more low-cost deposits and creates cross-selling opportunities. In payments, flow from the Interbank Izipay relationships grew 58% year-over-year and Interbank's share of Izipay flows increased to 48%. In small business, deposits grew 30% alongside 34% growth in loans. Engagement continues to rise.

PLIN transactions are up 43% year-over-year and 86% of our retail customers are now digital, which is the engine behind our lower cost of funds. PLIN also keeps expanding its use cases. PLIN TC or PLIN credit cards, which lets customers send money using their credit card line, has already surpassed 100,000 active customers.

On WhatsApp, we cut transactions time by 1/3 and transactions per user increased by 17%, reflecting stronger customer engagement and higher recurrence. We are also making the app more useful and safer with tools like Modo Calle, which helps reduce fraud from phone theft. Clients are noticing with retail NPS reaching 64 points. We are growing while improving the customer experience, which makes that growth sustainable.

Let's now turn to our fifth key message on insurance and wealth management, where growth remains healthy. On Slide 21. At Interseguro, the key metric is the contractual service margin, or CSM, which represents the stock of future profits from our long-term insurance business. It reached PEN 1.2 billion, up 8% year-over-year, driven by annuities and individual life, and short-term insurance grew 10% year-over-year.

Investment results were PEN 278 million, a 6.6% return, well above last year's 4%, when we recorded credit loss charges on financial investments. Compared with last quarter, the return is broadly stable, excluding inflation effects. The 7.1% return in the second quarter would have been 6.7%, very much in line with this quarter. Overall, the business is performing well as expected.

On Slide 22. At Inteligo, assets under management, including deposits, reached USD 10.1 billion, up 13% year-over-year, supported by market performance and net inflows from clients. Fee income reached PEN 53 million, up 5% year-over-year and 3% in the quarter. This is the recurring part of the business, and it continues to grow alongside assets under management. Overall, Wealth Management continues to deliver resilient growth, supported by a strong advisory model and healthy demand for investment solutions.

On Slide 23. We are bringing the same digital approach to insurance and wealth management. At Interseguro, direct digital sales grew 25% year-over-year to PEN 40 million and 74% of client interactions are now self-service, improving both customer experience and cost to serve.

At Interfondos, we are turning the app into a digital adviser. Digital users went from 30% to 42% of customers in a year, supported by accelerated app adoption, which added more than 11,000 new clients versus the same quarter last year. Digital transactions now represent 64% of platform activity, up from 55% last year, while physical transactions continue to decline. Our renewed website and richer content also strengthened our digital ecosystem.

Now let me move to the final part of the presentation, where we bring everything together. On Slide 25. Let me bring together what we have discussed on growth. Our growth is broad-based with retail loans up 9% year-over-year and commercial loans up 11%. Within the bank, our focus is on consumer and small businesses, and this is where growth is accelerating with consumer loans, excluding payroll deductible loans up 18% and small business loans up 34% year-over-year. Beyond the bank, long-term insurance and wealth management keep growing with the CSM of insurance up 8% and assets under management up 13% year-over-year.

On Slide 26. I'd like to close with our 9-month operating trends and how they compare with what we commented at the beginning of the year. On profitability, ROE for the first 9 months is 18.1%, excluding El Nino, or 17.2% on a reported basis. We continue to expect a full year ROE of around 17%, even after absorbing El Nino provisions.

On loans, growth is 10% year-over-year, a little bit above the high single-digit growth we expect for the full year. The acceleration in higher-yielding segments gives us confidence. On efficiency, our cost-to-income ratio is around 37%, within our guidance range even as we continue to invest for growth.

Let me close the presentation with our key takeaways. First, Peru remains resilient ahead of El Nino. Second, core earnings maintained a positive growth trajectory. Third, we are accelerating and we have a momentum in higher-yielding loans. Fourth, NIM recovery on a better asset mix. Finally, insurance and wealth management continued to deliver strong growth.

Thank you very much. Now we are ready and welcome any questions you might have.

[Operator Instructions] The first audio question will come from Ernesto Gabilondo with Bank of America.

My first question will be on El Nino. So you mentioned that total exposure to El Nino represents roughly 11% of your total loan book. So just wondering how much additional provisions would you require in the fourth quarter and maybe in the first quarter of next year? Just wanted to have an idea on what should be the total provisions that you should consider to El Nino.

Ernesto, thanks very much. Yes, you're right. It's -- 11% is -- as Michela mentioned, is potentially exposed, of which 8% is basically commercial loans targeted to fishing and agro industry. As Michela mentioned, that we consider low risk. Those are like solid, experienced, well-capitalized corporations. So we do not expect significant provisions coming there from El Nino.

The other 3% potentially exposed is more in consumer and SMEs, also mentioned by Michela. Based on the scenarios we're running and as was mentioned, we're running -- today, we know it's going to be an extraordinary El Nino event. That's what we are considering in our numbers. So with the information that we have now, that's the level of provisions that we consider we will have.

As Michela mentioned, we need to continue monitoring because news continue to change. But if we do have an extraordinary El Nino, as has been mentioned and analyzed during the last couple of months by the analysts, this is what we should have. If conditions change, maybe we, like, overbook provisions if it's not as strong or if something happens that becomes stronger than extraordinary, probably have to reassess at that time. But with the information we have now, that's what we think covers up based on the exposure that we have.

Okay. So just to understand, I believe you have created provisions of PEN 185 million to El Nino and that you should not expect additional provisions in fourth quarter for the moment. You will have to evaluate how is El Nino evolving. I just want to double-check these figures.

That's correct. PEN 185 million of provisions allocated to El Nino and Interbank, and around PEN 37 million allocated to SIP, which, as you know, has also a consumer book.

Perfect. And then just in terms of your cost of risk, if we consider the provisions related to El Nino, how should we think about your cost of risk guidance for this year? And also, you mentioned that even with this impact of El Nino, you expect ROE of around 17% this year. And then how should we think about the ROE trajectory over the next years?

Okay. I'm going to pass it on to Michela or Carlos for a deeper view on the cost of risk, particularly. But you're right, even with the El Nino provisions that were unexpected that we have booked already, our expectation is that this year will continue to be at around 17%. So we're not changing our views at the beginning of the year. As you saw, we were having an overperformance. We knew El Nino was coming at -- some time during the year, we figured that out. But we're not changing our view that we will be around 17% for this year.

And as mentioned before, the trajectory of the profitability of IFS will be continuous recovery based on how fast we can rebuild what we've already seen during the second half of this year, the consumer book and the SMEs proportion of loans weighting more over the overall portfolio and maintaining the profitability of the other businesses as we have been doing during the last month. But now, maybe let me pass it on to Carlos or Michela, so they can -- to Michela, so she can walk you a little bit more in detail on the cost of risk evolution and expectations.

Thank you, Luis Felipe. Good morning, Ernesto. Let me just comment, Ernesto, that cost of risk throughout the year, excluding, of course, these extraordinary provisions for El Nino has been, I mean, below our expectations. We had 2.1% in the last quarter, and it would have been 1.9% this quarter without El Nino. So basically, what we have been looking at quarter-by-quarter is a better performance of the portfolio than expected given the strong macro backdrop that we have.

We commented in the past quarter that as long as the higher-yielding loans continue to represent a higher proportion of the total book, we should start to see that cost of risk to increase. And we never gave a guidance in terms of cost of risk, but we said we should be getting closer to 2.5% and in the medium term, maybe even above that, okay? So basically, we should see, excluding El Nino, a cost of risk that gradually increases to those levels during next quarter and most likely 2027. That's the story I think we've been discussing in the past quarters. But the positive surprise has been also this quarter that taking aside El Nino phenomenon, no cost of risk did not increase but it was even 20 basis points better than the previous quarter, which is good news because it means that we are, let's say, facing El Nino, which -- with a much healthier credit portfolio.

No, no, perfectly understood in terms of the cost of risk without El Nino, but just to forecast our estimates in the model, cost of risk, including the provisions for El Nino was around 2.7% in this quarter. So for the full year, how should we think about it, including the provisions for El Nino?

I couldn't tell you a number, Ernesto, at this point because we need to see what happens in the fourth quarter both without El Nino and with El Nino.

I guess if you just add those PEN 185 million to your base number, you will kind of have a good proxy of what the number could be, Ernesto.

The next question will come from Yuri Fernandes with JPMorgan.

I have a -- first one. I'll try to move away from El Nino because it has been all the topic, and it's the most important topic. I'm pretty sure other analysts will also ask you more about this. But just on funding, guys, your margin, they were good, but the funding cost was down. And it was not clear for me what is driving that. I'm not sure if it was the excess bonds you had in the previous quarters. But the funding cost was down and not that clear why. So if you can explain what happened and if the funding cost for the bank is recurring or not?

And then I have a question regarding capital because I think this quarter, there were some OCI headwinds. You are accelerating loan growth and your RWAs are following the loan growth. But your capital has been coming down, right? Your core capital is now at 11.6%. So if you can remind us how to think about capital, again, given El Nino, all this uncertainty. And I get it that you already did some provisions, but if you want to keep a higher capital position or not into El Nino or not? And if yes, if we should see any change on dividends or any other policy because I think you also did more buybacks this quarter. So first question, funding. The second question, what should we expect on capital?

Okay. Thank you, Yuri, for your questions. I'm going to pass it on to Michela, and then maybe Carlos can complement. But on funding, the quick short answer is our strategy is working. We've been discussing this for a while, but then Michela can give you a little bit of the detail.

Thank you, Luis Felipe. Yuri, talking about funding, as you see from the slide, cost of funds was down 10 basis points in the quarter, but also cost of deposits was 10 basis points below the previous quarter. There are a number of reasons, but I would say that the main one is what Luis Felipe mentioned. We continue to grow faster on the low-cost funding elements on the funding base, which comes from retail deposits, transactional deposits, but also small business and midsized companies deposits, which are nonremunerated. So those components are growing double digit and faster than the rest of the funding base.

There was also a small impact because of the -- what you mentioned, the double carry of the bond that -- starting the full October, we don't have. That also helped. But I guess the more medium-term trend is what I mentioned about the strategy. Now of course, going forward, we have some pressure on cost of funds because of what is happening with rates. So we are trying to balance those two forces.

Now talking about capital. You described the situation perfectly. And one of the things that kind of changed in the OCI is the non-realized losses that the previous quarter were non-realized gains on the portfolio of sovereign bonds that we have at the bank, okay? Now just to remind you about our internal policy for both core equity tier 1 and total capital ratio. There are new regulatory limits that go fully in place December 2026 that for Interbank are around 9% core equity tier 1 minimum capital ratio and around 14.2% total capital ratio, okay? So with the levels that you see, we are okay, we are comfortable and we are above our internal buffers.

It is important to mention also that with this new regulation in place from the superintendency, there is a much broader differentiation, if you want, in terms of the capital requirements for the different banks in the system. And that I think is important because as the systemic buffer is different among banks, you will also see minimum regulatory requirements, which are very different between us and the other top banks in the country, okay? In our case, we are in the first bucket of that buffer, which is 50 basis points. But in the case of other banks, that goes up to 150 basis points to 200 basis points. So I think it's important to consider that you will start to see different total capital ratios in the system, but also because the minimum regulatory requirements have a difference of around 150 basis points, okay?

So now in any case, we are growing faster than expected. So we continue to assess our plan -- our medium-term plan in terms of funding. We have more space in the core equity tier 1. As you can see, we are a little bit tighter in the total capital ratio. So we are, of course, in any case, looking at our strategy for 2027.

And just to round up, you're right, we completed our approved buyback program, I think, at the beginning of last year or at some point last year. So we completed that program. We have purchased equivalent to around $200 million of IFS shares equivalent. And...

Sorry, Luis. I just wanted to complement Michela on the funding part. She explained like the reason for the growth. But what's behind it is the strategy with Izipay and PLIN. As we grow the flows from Izipay, that brings funding, and same with PLIN, we're growing 40%, 50% per year on PLIN transactions, and that translates in more funding. So that's kind of the -- when we speak about the strategy is working, I think that's where it starts. And then obviously, the NPS and everything that we're building in our app helps with the funding.

No. Great. Super clear answers. If I may, just a final follow-up on the buybacks. You completed the program. Any plans of opening new programs on buybacks?

Yes. That's being reviewed right now. Yuri, as you know, we have a positive view on the potential evolution of the shares. So management is ready to recommend that, but we have to balance growth, liquidity to capital as well. So that has not been defined yet, but it's an alternative that we will definitely evaluate at the right time.

And liquidity, right? Sometimes people ask about the share liquidity as well.

Liquidity -- the good thing is that liquidity has improved significantly even after the buybacks. We used to trade, like, as I call it, by appointment. And today, we see like $10 million to $15 million of average daily trading volume in NYSE. So that has come back a long way during the last, I'd say, 3 years.

The next question will come from Carlos Gomez with HSBC.

I have two. And like Yuri, I want to move beyond El Nino. So the first one refers to PLIN. It's obvious that as a platform, it is running behind its competitor today. I mean, this can change in the future. What can you do to make PLIN more competitive in the market? And where do you see this kind of business going forward?

And second, more generally, as a management team, you have a public profile, you write in the newspapers. We have a new administration. We have the prospect of stability in government over the next 5 years. What is it that we should be looking for? What -- are you excited about in terms of changes that we can see with this administration? And what could worry you if it doesn't happen?

Sure. For your strategic question, I would like to pass it on to Carlos, who I'm sure can give you a little bit more detail on exactly how we see this.

Thank you, Luis Felipe. Hello, Carlos. So on PLIN, the first thing that's important to understand is when you talk about the competitor, I'm assuming you're speaking about Yape. And it's very important to understand that we're not comparing apples-to-apples, right? PLIN is a brand and it's, let's call it, a highway through which payments go through. It's not an app. It's not a separate app. It's not a transaction. So when we talk about PLIN vis-a-vis Yape, most of the things that we do at Interbank, PLIN helps all the other things that we do at Interbank. For example, the micro loans that Michela mentioned through PLIN TC, that's not something that you're going to see when we speak about PLIN. It's something that you see at the Interbank app, right? When we pay services, you see it in Interbank. When we do digital loans, we see it in Interbank. So what PLIN has helped us with is a lot of engagement and growth in terms of transactions and the -- how deep our relationship with our clients are, but you don't see everything when we talk about PLIN.

In terms of transactions, Yape has grown a lot, and they are definitely larger than PLIN. But our growth over the last couple of years has been 40% in the last 12 months and almost 100% the year before. So we continue to grow. We continue to have deposits coming from this strategy, and we're looking to accelerate constantly. Probably, what's coming in from the Central Bank with TAPP, which is somewhat similar to Pix, is going to be an accelerator, not necessarily for PLIN, but for Interbank and new customers coming in and more transactions. For example, anything we do through TAPP will not be PLIN, but will be Interbank, it's the same customer. So I would say we are very bullish in terms of the next few quarters in terms of payments. We are waiting -- TAPP should come in line in the first and second quarter of next year and should accelerate. So that's a little bit of how we look at it, the way how we profit from PLIN and how much we invest in growing those transactions.

Does that answer your question, Carlos?

No, and well, perhaps to follow-up. I mean, obviously PLIN, you do together with the other banks. Are there any new initiatives or new way of doing the business going forward that is different from what you are doing today, or the way it is working with your partners is fine at the moment?

So there's a lot of things that we are doing in our app, for example, security for our clients. We're doing Modo Calle. But that's just Interbank, it's not PLIN. I would look at PLIN sort of when you talk about Visa or Mastercard or Amex, it's a rail, okay, through which you do the transaction. So most of the innovation and the strategy and relationship goes through what we do in our app, and there's separation from that. So transactions are running smoother. We've got steps to the transactions, and we're building additional things to that engagement, not necessarily on PLIN, okay?

And then one thing that I forgot to mention, and it's very important, there's a lot of growth coming in from SIP. So SIP is the other subsidiary for IFS, which has a different value proposition, which also uses PLIN, so they can send and receive money from PLIN customers, but that's where probably most of the quick growth will come over the next couple of quarters. So I don't see many new things coming on PLIN because at the end of the day, it is just a transaction rail. There are a lot of things that we're building in our app that is better for our customers and obviously improves the value proposition and helps us to grow at Interbank.

Thank you, Carlos. Just to add, like, probably based on what Carlos was mentioning, it's more like apples-to-apples view will be Yape to SIP than Yape to PLIN. So we can go deeper over that in a different moment.

In terms of our views of the political scenario, again, as mentioned before, we're positive. I think that, first, it's a government that has market-friendly view orientation. They're fostering investments, trying to recoup Peru's growth potential as fast as possible and reduce the poverty levels, understanding that there's lots of investments that need to be done, both from the public and the private sector. And that growth is the way to go around the economy in order to reduce the gaps that the social landscape of Peru has. So that's kind of the overall understanding. We have a constructive view on the way Congress is working now with two chambers. I think that's positive. That brings stability towards what we've seen compared to what we've seen in the last years. So that's also a positive. We do expect this government to remain in place for the next 5 years with Keiko Fujimori to remain in place over the next 5 years given the landscape now.

And again, we were hoping for some stability. It's tough when you have so many changes coming in. So this stability has resulted in increased business and consumer confidence, which translates into a positive view towards more investments and unlocking Peru's growth potential because we have many industries that have significant potential. We can discuss mining. We can discuss energy. We can discuss all the infrastructure that is required. There's always risks, obviously, but we are on the positive side.

We're optimistic about what's to come. There's lots of work to do. There's some reforms that need to pass. But overall, our sentiment as expressed before, but also shown in the indicators of the business confidence and consumer confidence I mentioned, is positive. So I think we are on the right track with lots of work to do for both the public and the private sector.

[Operator Instructions] Our next question will come from Andres Soto with Santander.

I have just one question. When I look at your loan book composition, consumer and SME loans now represent 23% of the total portfolio. This has been an important driver for your NIM expansion recently, 20 bps this quarter, if I'm not wrong. But you had mentioned in this call that you are tightening your underwriting to linear exposed regions and expect an impact in terms of loan growth in 2027. How much could this more cautious origination affect the pace of portfolio shift and NIM expansion? And what is -- what are your expectations, generally speaking, regarding NIM also considering the potential for higher rates in 2027?

Yes. Okay. Thank you very much for your question. Just to sum up, I mentioned in the previous question, I mentioned consumer and business confidence. But yesterday, Peru had a significant vote of confidence from investors as well, the sovereign placed bonds, $4.5 billion with a demand, like, 5x to 7x that. So that's another view on the confidence that the government is raising towards what we can do in the future.

In terms of the specific question about loan growth, NIM expansion and what we see in SMEs and consumer, let me pass it on to Carlos.

Thank you, Felipe. Hello, Andres, thank you for your question. Yes, we're at 23%. As Michela said a little bit earlier and we've been saying, we want to go above 25% in higher-yielding loans. We have been growing over the last 2 or 3 months at the rates that we were aiming at. And being able to focus on regions that won't be affected or higher credit ratings. So we should continue with the performance that we've had in terms of growth. It shouldn't affect, El Nino shouldn't affect. Obviously, we need to be very careful in how our models work and how our leads are developed and stuff like that. But we've been doing that fairly well over the last couple of months, and that shouldn't change in the next few years. So our -- in the next few months, our expectation is for NIM to continue to expand and our growth to be as we have shown in the last couple of months. So short answer is, yes, we can continue to grow at this rate.

Andre, just a matter of perspective. This is on the backdrop of very solid economic performance of Peru. In the -- last time, we've had a strong El Nino, extraordinary El Nino close to recession. This time, we do expect Peru will continue to grow at around 3% despite El Nino. So that situation is very different. So we are being cautious, but we do see many avenues of potential growth.

In that same line ...

Thank you, Felipe. Just to complement, sorry, Andres, we're going into El Nino with a very strong portfolio, with very low cost of risk over the last couple of quarters. So a very good portfolio as well, and that helps compared to previous El Nino. So it's a strong backdrop for the country, but also for Interbank in specific. So yes, that will help as well.

Absolutely. Two follow-ups there. The first one. Based on this scenario, do you think a double-digit loan growth in 2027 is doable given the strong macro backdrop? And the second, once you reach this 25% participation of SME and consumer loans, do you have any idea of what is the NIM that the Interbank or IFS should have?

Yes. On your first question, this is not guidance, but the answer is yes, it's doable over strong GDP. We've always said the system should go up between 2x and 3x. So -- and Interbank has always, like, been focused and proven with results that we scratch market share overall.

And then on the second part, maybe let me pass it on to Michela, so she can give you a little bit more on that.

Thank you, Luis Felipe. And just on the same line of not giving guidance yet, I will not be able to give you an exact NIM number, Andres. But you have seen the first results of the NIM expansion this quarter. So as we have, like, the full year effect during 2027 of what we are building in the portfolio now, and we continue to outgrow, if you want the rest of the credit loan book with the higher-yielding loans, we should continue to see an expansion of NIM even if we don't expect a lot of contribution from cost of funds given the trends of increase in interest rates, okay? But given yield on loans and the overall return on the interest-earning assets, we should continue to see a NIM expansion. And even if we will also see an increase in cost of risk because of the loan needs, we should also see an expansion of risk-adjusted NIM.

As there are no further audio questions, I would like to pass the call over to Mr. Peill for any webcast questions.

Thank you, operator. No questions have been submitted via the webcast. So I'd like to turn the call back over to you.

Thank you, sir. And we will conclude the question-and-answer session today. We'll pass the call back over to Ms. Casassa for closing remarks.

Okay. Thank you very much. Thank you, everybody, for joining our call. We continue to be positive on the backdrop of El Nino and the macro scenario, and we will see you again in the last quarter conference call in February. Thank you very much.

This concludes today's conference call. You may now disconnect.

Good morning, and welcome to the Intercorp Financial Services Second Quarter 2026 Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]

It is now my pleasure to turn the call over to Mr. Ivan Peill from InspIR Group. Sir, you may begin.

Thank you, and good morning, everyone. On today's call, Intercorp Financial Services will discuss its second quarter 2026 earnings. We are very pleased to have with us Mr. Luis Felipe Castellanos, Chief Executive Officer, Intercorp Financial Services; Ms. Michela Casassa, Chief Financial Officer, Intercorp Financial Services; Mr. Carlos Tori, Chief Executive Officer, Interbank; Mr. Gonzala Basadre, Chief Executive Officer, Interseguro; Mr. Bruno Ferreccio, Chief Executive Officer, Inteligo.

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. Otherwise, if you need any assistance today, please call InspIR 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 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 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.

Good morning, and thank you all for joining our second quarter 2026 earnings call. First, let me start with the macro and political environment. In the second quarter, economic activity in Peru moderated after the strong momentum seen earlier this year. Even so, the underlying picture remains constructive, supported by resilient domestic demand.

Private investment is expected to grow 17.5% in the quarter, its strongest pace since 2012, excluding the post-pandemic rebound. At the same time, employment indicators continue to improve, supporting consumption.

On the political front, as you are all aware, Peru now has a new administration in place. The new government has set out a clear agenda for the coming months, focused on reinforcing the preparedness for El Nino phenomenon, strengthening security, reactivating economic growth through private investment, modernizing the public sector and improving health care and social programs. These measures are consistent with the expectations for stronger private investment and consumption and support our view of GDP growth of above 3.4% in 2026.

While the international backdrop remains volatile, we are especially focused on El Nino-related risks in the country. We see it as a relevant risk for Peru with potential effects on primary sectors, infrastructure, supply chains and certain customer segments.

At IFS, we are monitoring this closely and maintaining a prudent approach to risk management. Based on our analysis, we expect any potential impact on our results to materialize starting in the second half of the year.

In this context, IFS delivered another solid quarter. Net income remained strong at PEN 585 million and ROE reached 18.5%, above our midterm target. While earnings were lower than in the previous quarter, this mainly reflects a normalization of certain investment results and a gradual normalization in cost of risk as expected, following an exceptionally strong first quarter.

At Interbank, quarterly net income remained strong, and the underlying business continued to show positive trends. Loan growth was positive across segments with particularly strong momentum in consumer loans, where the pace of growth accelerated and in the small business, where we continue to grow above the market.

Overall, these higher-yielding segments are now expanding at a double-digit rate. We continue to strengthen our payments ecosystem through Izipay and PLIN. These platforms are important levers to deepen relationships, increase engagement and support the growth of low-cost funding. Interseguro maintained strong momentum in long-term insurance, supported by annuities and life while preserving its leadership in annuities.

The business continues to leverage synergies with Inteligo and Interbank to advance more integrated solutions to our clients. Inteligo continued to grow at double-digit rate, reaching a new record in assets under management, supported by healthy client engagement and a strong advisory model.

Overall, this quarter confirms that we remain on track in terms of results and profitability, supported by a diversified platform, clear growth opportunities across businesses and disciplined execution of our model. Our strategy remains focused on profitable growth with the customer at the center of our decisions and continued investments in the capabilities that support long-term value creation, including investments in digital channels, data analytics, digital products, cybersecurity and Gen AI.

Looking ahead, we believe IFS is well positioned to continue growing with discipline while sustaining profitability and strengthening our leadership in Peru over the long term.

Now let me pass on to Michela, who will walk you through this quarter's results in more detail. Thank you.

Thank you, Luis Felipe, and good morning, and welcome, everyone, to Intercorp Financial Services second quarter 2026 earnings call.

Let me begin with our quarterly key messages. First, we continue to consistently deliver strong profitability. In the second quarter, IFS reported net income of PEN 585 million, an ROE of 18.5%, remaining above our midterm target and supported by solid performance across all of our businesses.

Second, higher-yielding loans accelerated during the quarter, growing 12% year-over-year and almost 6% in the quarter. Third, risk-adjusted NIM remained resilient at 3.5%, up 10 basis points year-over-year, while cost of risk normalized to 2.1% still below our risk appetite, but with a lower impact from the excess liquidity from the release of the private pension funds, which took place until February this year.

Fourth, we continue to deepen primary banking relationships. As a result, our retail primary banking customer base grew 16% and our Net Promoter Score remained strong at 61 points.

Finally, Insurance and Wealth Management continued to deliver strong growth with premiums up 9% year-over-year, mainly driven by annuities and life and assets under management up 14% year-over-year.

Let's start with our first key message. At Slide 4, entering into a brief update of the macro environment, GDP growth for the second quarter is expected at around 2.8%, reflecting a more moderate pace after the strong momentum seen in late 2025 and early 2026. This lower growth in GDP is mainly due to the fishing sector, which has impacted -- which was impacted by the global El Nino.

Even so, we expect activity to improve in the second half, supported by resilient domestic demand, private spending, favorable commodity prices and greater political stability. For the full year, GDP is expected to grow 3.4% in 2026 and 3.2% in 2027 already incorporated the impact -- the expected impact from El Nino, which most analysts estimate at between 0.7 and 1 percentage point of GDP.

Growth should continue to be supported by non-primary sectors, particularly construction, commerce and services. Inflation rose to 4.1% year-over-year in July and monetary policy remains supportive with the reference rate at 4.25%. We expect inflation to remain around these levels throughout the year before returning to the Central Bank's target range in 2027.

At this point, we do not expect additional rate cuts. Peru continues to offer strong fundamentals and attractive long-term opportunities with growth expected to remain above 3% over the next 2 years and with an upside potential given the new government leading the region.

On domestic demand, the outlook has improved. The Central Bank revised its 2026 projection upward to 5.9% from 4.9%, mainly reflecting stronger expectations for private consumption and investment. This is consistent with confidence indicators. Business confidence climbed to 69% at the end of the second quarter and with the result of the election and is the highest level in the past year, while consumer confidence recovered to 51% in July.

Together with solid fundamentals and better terms of trade, this gives us a constructive view on growth for the coming years. Having said that, we are also preparing for the potential impact of El Nino. Water temperatures have continued to increase and the probability of a strong to extraordinary event has risen from almost 0 to a combined probability of 80% for the fourth quarter 2026.

We are maintaining a prudent risk management approach with constant portfolio monitoring by segment, sector and geography while staying close to clients more exposed to potential El Nino-related disruption in specific areas, including agriculture and fishing where we have Nino clauses in place.

We have successfully navigated previous El Nino episodes and have a comprehensive contingency plan that allows us to respond quickly and support customers when needed through working capital solutions, grace periods and reschedulings while preserving disciplined risk standards.

Finally, we are already seeing this better backdrop reflected in credit demand. Banking system loans accelerated to 8% year-over-year as of June, mainly led by retail loans, which is consistent with the recovery we are also seeing in our own consumer and small business portfolios growth.

On Slide 6, IFS delivered another solid quarter with net income of PEN 585 million and ROE of 18.5%. Compared to last quarter, earnings declined 3%, mainly due to the normalization versus the first quarter of strong financial transaction results and a gradual normalization in cost of risk with the effects of the excess liquidity from private pension funds withdrawals fading away.

On a year-over-year basis, it is important to remember that the comparison includes extraordinary investment results recorded last year at both Inteligo and at the holding company level. At the bank, last quarter benefited from sovereign bond gains, strong FX results, dividends from IFS and an unusually low cost of risk.

Year-over-year, however, earnings recovered 23%, supported by lower provisions, higher income from loans, stronger fees with ROE at 15.6%. At Interseguro, performance remains strong, mainly supported by a solid insurance result, particularly in annuities as well as higher interest income, excluding inflation effect and the absence of impairments during the quarter.

At Inteligo, results remained solid, supported by good performance from the investment portfolio, which delivered a 9.4% return over the last 12 months. The year-over-year decline mainly reflects the strong portfolio return achieved in the second quarter of last year.

Overall, it was a solid quarter across all IFS business lines with core operating performance as the main driver of profitability.

On Slide 8, IFS revenues increased 3% year-over-year and declined slightly versus last quarter. The year-over-year comparison is again affected by the unusually strong investment gains recorded in the same quarter of last year of both Inteligo and the holding company, which created a high comparison base.

At the bank, revenues declined modestly quarter-over-quarter, mainly due to lower financial transaction results after a particularly strong first quarter and some funding cost pressure. Year-over-year, revenues increased 9%, supported by higher loan volume income and stronger fees.

At Interseguro, revenues improved year-over-year, mainly supported by better insurance results in annuities and life. Compared to last quarter, revenues were lower, reflecting the inflation adjustment during the period. Excluding these effects, revenues would have increased 3% quarter-over-quarter.

At Inteligo, fee income remained stable, while investment portfolio results continue to normalize with returns of approximately 9% over the last 12 months.

On Slide 9, expenses increased 11% year-over-year, broadly in line with the investments we continue to make to support the growth and transformation of our businesses. The increase was mainly driven by personnel expenses, partly associated with the expansion of Interseguro sales force as well as investments in key talent to support execution and by technology as we continue strengthening digital capabilities, cybersecurity, infrastructure and data and analytics. The year-over-year increase in the ratio also reflects positive nonrecurring revenue effects recorded last year, which created a higher revenue comparison base.

Despite this increase, we continue to sustain best-in-class efficiency with the cost-income ratio at 37%. Overall, this continues to reflect our ongoing focus on expense discipline while investing in the capabilities needed for long-term growth.

Now let's move to our second message on Slide 11. We are seeing higher-yielding loans regain momentum, growing 12% year-over-year and close to 6% during the quarter. The encouraging news this quarter is the acceleration in consumer lending.

Consumer loans grew 9% year-over-year in June compared to 5% in March. This was supported by stronger activity with cash loans disbursement up 37% year-over-year and credit card turnover up 21%, in line with improving confidence and a more constructive macro backdrop.

Small businesses continue to grow steadily or 31% year-over-year with disbursements up 54%. This remains an attractive segment for us, supported by our combined value proposition of banking and acquiring.

Overall, the combination of consumer and small business growth is supporting the recovery of higher-yielding loans, which now represent 22% of total loans. We are encouraged by this momentum, but we remain cautious, particularly given the higher probability of El Nino and the greater exposure of consumer and small business clients to potential weather-related disruptions in certain areas of the country.

On Slide 12, loans grew 6% year-over-year or 7% when adjusted for FX, reflecting a positive trend in both commercial and retail banking. In retail banking, consumer loans with a 9% year-over-year growth previously mentioned, supported by the acceleration we just discussed, while mortgages continue to grow steadily and payroll deductible loans remained broadly stable.

On the commercial side, the portfolio also continued to expand, supported by growth in small business and also commercial loans, in line with our strategy to deepen relationships with key clients and continue capturing opportunities in segments where we see attractive returns.

Turning to our third key message on risk-adjusted margins remained resilient. On Slide 14, cost of risk is normalizing while asset quality remains sound. Cost of risk increased to 2.1% from the unusually low 1.4% reported last quarter, but remain well below the risk appetite and the 2.5% recorded a year ago.

We see this as a normalization towards more typical levels, not as a deterioration in credit quality. Around 30 basis points of the increase versus last quarter came from normalization, while roughly 10 basis points were related to portfolio growth and mix, particularly toward higher-yielding segments. This is consistent with the portfolio mix we are building. Higher-yielding segments naturally carry higher cost of risk upfront, but also higher yields and attractive risk-adjusted returns.

On the retail side, cost of risk increased from 2.7% to 3.3%, which remains comfortably within our risk appetite. Consumer credit quality continues to perform broadly in line with expectations and recent vintages continue to show healthy behavior.

In Commercial Banking, cost of risk increased to 0.8%, which remains within the range we consider normal for the business and is still consistent with healthy asset quality trends across the portfolio. At the same time, given the higher probability of El Nino, we are doing detailed monitoring and follow-up across the portfolio, staying close to clients and sectors that may be more exposed to potential weather-related disruptions.

So far, we are not seeing signs of deterioration in asset quality. Our focus is preventive to anticipate potential risk pockets, stay close to clients and take timely actions if conditions change.

On Slide 15, let me spend a moment on NIM and risk-adjusted NIM. Started with reported NIM, we saw some pressure during the quarter, mainly explained by 2 factors. First, funding costs increased 20 basis points quarter-over-quarter. Around half of this increase was related to higher treasury funding associated with our forward arbitrage strategy and inflation-related adjustments, which we view as mostly temporary.

The remaining 10 basis points reflected a change in the deposit mix as funds related to pension fund withdrawals began to decline, together with keeping extra liquidity as a conservative measure during election and also the full effect of the bond issuance that we did during the first quarter.

Second, yield on assets declined 10 basis points, reflecting a larger cash position associated with treasury forward strategy. But on the positive side, yield on loans remained stable during the quarter for the first time, which is encouraging as growth continues to shift towards higher-yielding segments, particularly also in the mass market segment of retail.

Moreover, during the month of July, we have already seen a partial recovery of NIM and an increase in yields. In terms of risk-adjusted NIM, we still see a slight improvement year-over-year. However, the decline versus the last quarter was mainly explained by the normalization of cost of risk after the unusually low level recorded in the first quarter. But with NIM recovering in the next quarters, we should also see a recovery in risk-adjusted NIM.

On Slide 16, as discussed on the previous slide, cost of funds reached 3%, 20 basis points higher than the last quarter. Efficient funding declined to 37% as funds related to pension funds withdrawals started to decrease, although it remained above the 34% reported a year ago.

On the Commercial side, efficient deposits continued to grow strongly, up 22% year-over-year, supported by our payment ecosystem and deeper transactional relationships with clients. Importantly, deposits continue to represent more than 80% of total funding, which remains a key strength of our balance sheet.

At the same time, the year-over-year trend remains favorable. Cost of funds is still 20 basis points below last year's 3.2%, while cost of deposits declined 20 basis points year-over-year to 2.4% supported by a better funding mix.

Looking ahead, we expect the funding mix to continue improving gradually, supporting a lower cost of funds over time and contributing to the recovery in margins.

Moving on to our digital strategy on Slide 18. We continue to build more transactional relationships with our clients and support the growth of low-cost funding. Our payments ecosystem, mainly through Izipay and PLIN remains a key part of this strategy, helping us increase transactional volumes, offer value-added services and deepen the use of Interbank products across our client base.

We continue to see strong traction from the synergies between Izipay and Interbank. Izipay float to Interbank increased close to 50% year-over-year, while total float to Interbank accounts grew 40%, reinforcing the value of our integrated ecosystem for business clients.

In parallel, deposits in small business grew 32% and now represent around 36% of wholesale low-cost deposits. The One App Negocios is also becoming an important lever to strengthen our value proposition and drive greater transactionality.

Transaction volumes in the app increased 117% from January to June, equivalent to 7% quarter-over-quarter, showing encouraging early traction in usage. PLIN also continued to gain traction, reaching 2.8 million monthly active clients and monthly transactions up 45% year-over-year. P2M payments remain a key driver of recurrence, now representing 60% of transactions while pure POS payments grew 65% year-over-year.

On Slide 19, we continue to strengthen primary banking relationships with retail primary banking customers growing 16% year-over-year. Interbank PLIN transactions reached 234 million, up 44% year-over-year, reinforcing higher engagement and daily usage.

Digital engagement also continued to improve. Retail digital customers reached 86%, while commercial digital customers increased to 76%, supported by more targeted digitalization initiatives.

This quarter, our digital assistant, AI became a first digital point of contact for clients not yet using the app, helping digitalize over 16,000 clients. All of this reinforces our commitment to delivering a simpler, safer and more convenient experience for our customers.

Finally, Net Promoter Score remained strong at 61 in retail and 76 in commercial, up 10 and 11 points versus December, supported by the agility and simplicity of our apps and consistently strong service quality.

In insurance, we continue to enhance the digital experience for our clients and expand sales through digital channels. Internal capabilities have helped increase digital self-service to 73%, while direct digital sales grew 27% year-over-year.

And in Wealth Management, we continue improving in the Interfondos app with the goal of evolving it from a transactional tool into a more comprehensive digital adviser for mutual fund clients. Engagement continues to increase with digital users reaching 39% and digital transactions representing 60% of total platform activity.

Let's now move to Insurance and Wealth Management, where both businesses continue to deliver strong growth. On Slide 22, Interseguro continued to deliver strong growth in long-term insurance with contractual services margin increasing 10% year-over-year. This was mainly supported by annuities and individual life, which remain key growth engines for the business.

Short-term insurance premiums also grew 8% year-over-year, reflecting steady performance across the portfolio. On investments, results increased 28% year-over-year with ROI at 7.1%. The quarter-over-quarter normalization was mainly related to inflation adjustments in the portfolio. Excluding this effect, the return would have been 6.7%. Overall, Interseguro continues to show strong execution and a well-diversified insurance platform.

On Slide 23, Inteligo continues to show solid momentum with assets under management, including deposits, reaching a new record high, close to $10 billion, up 14% year-over-year. This growth was supported by market performance and continued client engagement.

Fee income remained broadly stable and when adjusted for FX increased 7% year-over-year. Overall, Wealth Management continues to deliver strong growth, supported by an important advisory model and healthy demand for investment solutions.

Now let me move to the final part of the presentation, where we provide some takeaways. And before moving to our operating trends, let me summarize where we are focusing our growth efforts. In banking, growth is focused on segments where we see attractive risk-adjusted returns. Consumer loans grew 9% year-over-year, while small businesses continued to expand strongly, up 31%, supported by solid disbursement trends and our combined digital value proposition of banking and acquiring through the One App Negocios. Commercial loans also showed positive momentum, growing 7% year-over-year on an FX-adjusted basis as we continue deepening relationship with key clients and leveraging Izipay synergies to strengthen transactionality.

In Insurance, long-term products remain the main growth driver with CSM stock increasing 10% year-over-year, supported by annuities and individual life. And in Wealth Management, assets under management, including deposits, reached a new record high, close to $10 billion, up 14% year-over-year. Overall, these trends reinforce our ability to grow in attractive segments across IFS while maintaining a disciplined approach to profitability, funding and risk.

On Slide 26, let's go through our first semester operating trends. Our ROE for the first semester reached 18.9%, above our guidance. While we are encouraged by this performance, we are not changing our guidance at this point and continue to expect full year ROE above 17%. We believe this is the prudent approach, particularly as we monitor potential El Nino-related risks during the second half of the year.

In terms of loan growth, as of June, we were up 6% or close to 7% adjusting for FX appreciation. We continue to expect high single-digit growth for the full year. And finally, we remain focused on efficiency at IFS. Our cost/income ratio is around 37%, well in line with our guidance range.

Let me close with the presentation with our key takeaways. First, we are consistently delivering strong profitability. Second, our higher-yielding loans are accelerating. Third, we see a resilient risk-adjusted NIM. Fourth, we are strengthening primary banking relationships. And finally, Insurance and Wealth Management continue to deliver healthy growth. Thank you very much.

Now -- we welcome any questions you may have.

[Operator Instructions] And the first question will come from Ernesto Gabilondo with Bank of America.

Congrats on your results. My first question will be on this potential threat of El Nino. We believe some of your peers will be already creating upfront provisions related to El Nino in this quarter. So can you remind us how much provisions you created for El Nino 2 years ago? And how are you evaluating this time the potential impact of El Nino? That's my first question.

And for my second question is on your ROE expectations. As you mentioned, the first half, the ROE is already above the 17% guided. You mentioned that you don't want to increase it because you want to be prudent because of El Nino. But if you created additional provisions in the second half, do you still think you can achieve your 17% ROE? And looking beyond this year, how should we think about the sustainable ROE of IFS in the medium term?

Okay. Ernesto, thank you very much for your questions. Let me start by the latter one. Yes, we do -- we -- again, you mentioned it right, we want to be prudent. There are a lot of moving parts even though we're very pleased with the way the platform and the businesses are performing, we're taking a prudent approach because not only inflation is remaining sticky high, and that could have an impact in the second half. But also El Nino is something that we are evaluating.

As Michela mentioned, we are monitoring our first interest is to remain close to our customers to be able to help them pass through whatever comes. So that prudent approach take us that even though we have not finalized our analysis in terms of potential impact to think that despite potential provisions coming from El Nino effect, we could continue guiding towards the 17% plus ROE that we have been discussing. And then in terms of the specifics of the El Nino effects and numbers, let me pass it on to Carlos, who obviously being at the bank has been much closer to building on this analysis. So Carlos, if you can help us with the first question, please.

Yes. Thank you, Luis Felipe. Ernesto, thank you for your question. El Nino, we're closely monitoring it. Obviously, it will have an impact, but there's -- so we don't expect a large impact in the corporate clients. The agri industrial clients and fishery will probably have less sales and less production, but they will be able to overcome it. There will be less activity, but all of them have an El Nino phenomenon clause in their financing. So what this does is they don't have to pay capital on a year of El Nino, which allows them to manage their finances.

So we don't expect a big effect in the large companies. We do expect some impact in the consumer book, particularly in the areas where there will be rains and stuff like that. We will probably see some forward-looking credit provisions in the third quarter and fourth quarter as we get closer to that.

We've been looking obviously at what happened in 2023 and 2017. But I don't think we're in the same scenario as 2023. 2023, El Nino came really fast. It was a coastal El Nino we found out probably a week or 2 weeks before. And the country was recovering from post-COVID high inflation. There were a lot of problems in 2023 in addition to El Nino. So I don't think it's representative, Plus we had a much higher risk portfolio back then.

We're going into this El Nino with a more lower risk portfolio. So I would say probably 2017 is closer to what we expect, but we were a much smaller bank as well. So we're monitoring. I think the focus right now is to be close to our clients during these next couple of months, the larger fishing agricultural clients and then probably when the rains start in December, January, February, being very close to our consumer clients and being able to work through their loans. I don't know if that answered your question, Ernesto.

Yes. This is very, very helpful, especially as you were saying, it's a different economic situation like 2 years ago in 2023, you have the recovering of post-COVID, high inflation, have a riskier portfolio. So all of that, you don't have it today. But still being prudent, are you evaluating to create upfront provisions in the fourth quarter as usually the El Nino effect is usually materializing during January, February. So how much did you created last time? Do you think you need to create the same amount for this time or it will be different because of what you mentioned? Just to have an idea of how you're thinking about this potential impact of El Nino.

We don't want to commit to a number right now. We'll do that in the third quarter and the fourth quarter. As we're seeing it today, probably the El Nino, the phenomenon will be stronger than 2023 in terms of the amount of rain that we're going to receive. I believe the impact in our portfolio will be lower based on everything that we mentioned -- that I mentioned before. So plus the expectations of growth, how that country is doing, we believe there will be an impact. There will be a short-term impact. in terms of what we're building and what the expectation of what the country will do in the next couple of quarters. So we will have a number, obviously, in the third quarter. We're monitoring. We have an idea, but I don't think we should share it until we have it finalized.

Yes. But sorry, to sum up, you're right. Even though the impact will come probably closer to January, February, next year, we do see a scenario where we will be booking the forward-looking provisions in the second half of next year.

Yes, absolutely, yes.

The next question will come from Yuri Fernandes with JPMorgan.

I will ask just one question regarding margins. Michela already mentioned a little bit the funding and the other moving pieces. But I guess a highlight for me here that I was not expecting was margins coming down and the funding cost going up in a more stable outlook. So if you can help us with some explanation, some guidance here, what should we expect on margins? And also refresh what drove this weakness this quarter?

Yuri, thanks very much for your question. I think you're right, those -- we've seen pressure this quarter by very specific reasons. And we do expect a recovery for the latter part of this year in line with the actions that we're taking, the rebuilding of the higher-yielding loans and getting out certain pressures that we've had at the end of this quarter. So to go into detail, I guess, Carlos or Michela can go a little bit more in the explanation that you're looking for. So I guess it's Carlos.

Okay, Perfect. Yes. So on the cost of funds side, there were a couple of effects that weren't that big, but they're accumulating in the second quarter. The first one, which we were not expecting is we have some funding that is inflation picked and April was a very high inflation month. So that impacted cost of funds for the quarter.

The other impact that we had is, as you know, we issued bonds in the first quarter, and the second quarter was the first quarter that we had the full impact of those bonds. We are amortizing or paying out the old bonds in the fourth quarter. So that also will be a short-term effect. So the inflation was short term. The bonds was short term.

Also, we found in the market -- we saw in the market opportunities for forward arbitrage, which was profitable and came in, in terms of fees, but that required more funding. So that increased the cost and affected NIM, but overall income obviously was positive. And the other impact that we had in cost of funds is that we had the elections period, and we were conservative in terms of the liquidity we held in May and June. And obviously, that's also a short-term impact. So yes, it was affected. I don't believe there's anything structural. And as Luis Felipe and Michela mentioned, we expect that to recover in the next couple of months and quarters.

In terms of margins, we've been growing the higher-yield portfolio well. Credit cards and loans have grown over the last 3 months consistently. We expect that to continue, small businesses as well. So we should see a recovery on both sides of that equation. I don't know, Michela, if you have anything to add, but I think that's probably the gist of it.

Yes. Just one more piece of information is that the positive impact of the forward arbitrage strategy, we see in the results of financial operations. And if you see the accumulated income coming from that has grown as of June, 26% year-over-year. So that -- the negative you see in NIM, the positive you see in another line of the total revenues of the company, only that.

The next question will come from Carlos Gomez with HSBC.

Congratulations on the quarter. We are entering a new presidency in Peru. And I guess what I would like to know is, I mean, obviously, the environment is very good. There are high hopes. What in particular are you expecting from this administration? What should we be looking at in terms of positive or negative news for the sector?

The second thing is in this new environment, would you consider entering businesses in which you are not currently present? I'm thinking in particular about microfinance or pension fund management. Is that something that interests you?

And finally, again, to go back to the margin, and thank you for the detailed explanation. Should we understand that those pressures coming from the elections and perhaps tighter liquidity have eased in the third and fourth quarter? I think you have already answered, but still.

Thank you, Carlos, for your question. political environment or the macro environment overall, we have a positive sentiment regarding the Peruvian economy evolution as a whole. Obviously, what we've seen from the government, it's a market-friendly government. It has -- it's very early days in terms of -- they just took over at the end of July. However, I think they've appointed a good set of ministers that are a mix of experienced people with lots of technical expertise as well.

The focus is concentrated in fighting in security, promoting investments, trying to make structural reforms. So in terms of the team that they put together and in terms of the announcement they've done in the inaugural -- inaugural speech from the President before Congress. The expectation is positive.

I think that the next step -- we have to take it day by day, the next step will be the way they present before Congress, the action plan and the legislative actions they want to take. One very important focus is organizing the country to be able to face El Nino in a better situation. So again, the sentiment and it's expressing the confidence level, both of the consumers and the business community that we've seen late July in terms of the indicators. So overall, positive. but obviously, very early in that situation.

In terms of looking at different businesses, okay, we're always open for business and looking at new alternatives. The time will come when we decide to continue expanding our operation. And it's not only a matter of the change of presidency. We've been very active throughout the years, even after COVID, through COVID, a couple of years ago as well in buying businesses and expanding as long as the equation of risk profitability pays off and we can bring something to the table, we can help the Peruvian clients, the consumers, along with our purpose of making sure that they can achieve what they're looking for in their life, achieve the dreams of the call, will be there.

Anything related to financial services is something we're exploring. Obviously, we don't have something specifically in mind right now that we can comment. But IFS is one of the leading platforms in the region and one of the leading platforms in Peru. So we're always looking at different alternatives. And in terms of margin, I think lots have been said, but maybe I can like pass it on again to Carlos so he can double point some of the things that he mentioned, so you can get a little bit more of the feeling in terms of how are we looking into it.

So yes, in terms of margin, what we're seeing is we're growing on the higher-yielding segments, and that should continue to happen over the next couple of months. We have good traction in our credit card portfolio and our loans as well as our small businesses. So that's something that as a mix changes, the income is going to improve. It's not immediate. No, we've already seen some growth, but it hasn't -- you haven't seen it for the whole quarter. You probably see a little more impact the next quarter with higher levels. But -- and then on the cost, I went through it pretty -- I think there's a couple of one-timers that will take care of themselves. And obviously, we continue to be very disciplined and focused on both our cost of funds and our pricing on our loans. So yes, that's, I think, I don't know, if you have a more specific question on one of those.

Sure. So I was specifically asking about what you mentioned in the -- in the original presentation about higher funding costs ahead of the election, again, not unusual because we had a very contested election the previous time. So that should be over right now. So I was wondering if there is less liquidity pressure. That's one question. And the other that I did not ask is what would you assess your current sensitivity to policy rates would be in case that the Central Bank in Peru moves up or down or your sensitivity to Fed rates?

Yes. Just to answer the first one, I'll let Michela help me with the sensitivity. It's not necessarily that rates went up before the elections, but we did carry more liquidity. We had more deposits to be able to manage any changes. At the end, thankfully, we didn't need anything, but I think it was good looking forward that we had all the liquidity that we need and excess. So we didn't need it and maybe it was a little bit inefficient for a couple of days, but that's why we had it. But there was no increase in cost necessarily. It's just a mix. And then in terms of sensitivity to the rate, Michela, if you can tell us the exact number, please?

Yes. The theoretical number that we have for the sensitivity is that for each 100 basis points increase in rates, we have close to 10 basis points negative impact on NIM due to the fastest repricing of liabilities in our balance sheet. Then as I always mentioned, in all the things that we've seen that has never taken place because there are a number of factors that come together that make things different, but the theoretical number is the one that I mentioned.

And that is sensitivity to Sol rates, presumably right?

See, dollar is actually more neutral. It's very marginal.

[Operator Instructions] And our next question will come from Andres Soto with Santander.

Given the probability of a strong El Nino, should we expect you guys to take more cautious approach to loan origination over the next few quarters, particularly in the consumer and SME business? Or are you comfortably comfortable maintaining the current growth trajectory and managing the risk primarily through provisions and selective underwriting?

Yes. Thank you, Andres, and thanks for your questions. I think we -- we are comfortable with the approach we have. Obviously, we're looking at certain areas that could be impacted. But here, we have like a double role. We're not only conservative in terms of growth. We need to help our customers. So that's kind of the approach. We're close to our customers to help them pass through this. Again, this will be a short-term effect, and we are building towards the medium and long term.

So I guess the trajectory of growth should not change that much. Maybe a couple of adjustments, but the overall sentiment that we have is we need to be there for customers. Carlos mentioned the view we have on corporate and companies. And for consumer and SMEs, it depends on the situation. It's going to be focused very specific on certain regions and the mindset is to help them and be next to them. I don't know if Carlos, you want to complement something on that.

Absolutely. I mean we're monitoring right now, I think the impact in the consumer will come with a range in December, January, February, and we will be close to our clients. We'll give them what they need to get over it, and it will be a short-term impact as it has been in the past. So we are looking -- we are going into this El Nino with a much lower risk profile than we have before. So that's also helpful. And yes, I think we're looking -- I mean, we're spending a lot of time and analysis on this. But overall, our guiding star is that we want to be close to our clients and help them get through it.

Taking advantage of those comments, Carlos, if you remember from your 2023, 2024 cycle, you built provisions equivalent to 1% additional -- 1 percentage point additional cost of risk for the full year in 2023. Can you help us understand, was this related to the SME and retail portfolios? Or those were provisions related to specific corporates exposed directly to El Nino such as fishing and agriculture?

Yes. Okay. So back in 2023, we had a very small SME portfolio. So there probably was some of those provisions were related to SMEs, but it was small. It was mostly related to our consumer portfolio. Again, in 2023, I don't think it's necessarily comparable. There were many other things happening in 2023, post-COVID, post inflation, no growth. So I don't think it's comparable, but it did come from the consumer book. We didn't have any provisions from the corporate or business book back then.

Carlo, just to complement, '23, you're right. It was not only -- it was a small recession. And we had social unrest at the beginning of the year, which had a real strong impact on activity during that year. So '23, as Carlo mentioned, is a different animal because it was like the perfect storm, everything came together.

Yes. That's very clear. The other question that I had was related to margins. You already mentioned some recovery in NIM in July. Can you help us quantify this recovery after the sharp decrease in the second quarter, given that part of the origination in the loan portfolio was tilted to the end of the quarter, I imagine that's going to help. But can you give us a sense of how much of recovery can we expect for the third quarter?

Maybe let me take that, Carlos Felipe. And how are you? Listen, the projections that we have, we see a recovery of NIM above not the levels of June. But that is like [Foreign Language], okay? What happens is that as what has happened during the second quarter, for example, with the forward arbitration strategy, we have increased cost of funds, but then we've had interesting income coming from other financial transactions. That is one element, which, for example, depending on market conditions, I'm not sure whether or not it's going to take place again during the second half.

But if you see, for example, yield on loans, I guess that number, which if you see the trend in the past 12 months, it was like slightly decreasing because of, I mean, decreasing rates and the mix of the portfolio, et cetera. We have seen this quarter yield on loans stable. So what should happen is that due to the recomposition of the portfolio, yield on loans should gradually increase. And the other portion, if you want of the interest-earning assets, which has to do with the percentage of cash investment and other things is maybe the one that is a little bit more volatile. But yield on loans, you should see a positive trend up until the end of the year and going forward during 2026, that should help.

Your next question will come from Alonso Aramburu with BTG.

I wanted to ask about cost of risk, which increased in the quarter. Just wondering if this is the normal level we should expect for the second half of the year, excluding whatever provisions you decide to do for El Nino.

[Foreign Language] Thank you very much for your question. I think Michela is eager to jump into answering that question. So please.

[Foreign Language] Listen, we will expect -- I mean, cost of risk should still gradually increase going forward, okay, as the portfolio high yield continues to increase, okay? Remember that in IFRS, we need to do this upfront provision. So as consumer loans and small businesses continue to grow double digit, I guess we should see a slightly higher cost of risk going forward despite El Nino.

Now remember that when we have discussed this before, pre-COVID, we used to be close to 3% cost of risk. No, we are not saying that we want to get there. But for sure, this number will continue to go, I don't know. I don't know exactly in which time, but closer to 2.5% and even maybe a little bit above that. So because of the mix of the portfolio, only because of the mix of the portfolio, we should see a gradual increase in cost of risk that should come together with yield on loans so to have a positive impact overall in NIM and risk-adjusted NIM.

Just to complement that. Michela. So I mean, if you grow in consumer or higher-yielding portfolios, even if the loans perform well, you get a front effect on provision because it's forward-looking. So that's what Michela was referring to. It doesn't necessarily mean that there will be a credit deterioration. But the way the accounting works is front loaded.

Right, right. That makes sense. On the -- I had a question also on the loan yields because you grew more on credit cards, and I would have expected loan yields to increase in the quarter. and they were flat. So I do not know if that is a timing issue, or how do you explain that?

Yes. I mean it's mostly a timing issue. You grow, you see the end balance, but not the average. So you -- we would expect to see the impact of that growth in the following full quarter that you'll get the full impact.

Especially Alonso because the acceleration we've seen was not that present in April, where there was lots of liquidity still in the system, but we've seen the acceleration at the latter part of the quarter.

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

Thank you, operator. The first question comes Daniel Mora of Credicorp Capital. Where should the risk-adjusted net interest margin land in the second half of 2026 and in 2027, considering that the cost of risk is normalizing faster than the expansion of loan yields, along with a marginal increase in the cost of funding.

Yes. So thank you, Daniel. I think we've begun lots of explanations around NIM. Just to reinforce the fact that, again, in IFRS, when you book consumer loans or even SMEs, the provisions get front-loaded and the yield will show up through time. So I guess that's a concept that Carlos just mentioned, and that reinforces the position. I think we'll discuss also the cost of funding that should, if you want, normalize during the second half of the year. So the impact on the NIM for the second half should be positive. question, please.

The next question comes from Tejkiran. Could you please explain again why cash balances grew strongly at 25% year-over-year? Is this a conscious strategy? That's Tejkiran of White Oak Capital Management.

Yes. Okay. Thank you, Tejkiran. I think that also was addressed by Carlos and Michela. By the end of the quarter, we were conservative in terms of the potential outcome of the political scenario of the elections. We've seen what happened 5 years ago, and we wanted to be with lots of liquidity. So that was the situation, but that has already been normalized.

And the next question comes from Johan Clavijo of Sagil Capital. Could you please provide more details on your treasury forward strategy to better understand the impact of NIMs, both on interest income and interest expense and the other factors that impacted net interest income this quarter. Are these impacts expected to be temporary?

Yes. Again, I guess these questions enter early into the roster of questions. I think we've expanded significantly and explained both the NIM impact, the potential evolution. I don't know, Carlos, if you want to comment specifically on the treasury forward strategy point, but I guess we've touched upon most of these points.

Yes. Yes, we touched on most. The treasury forward strategy, we don't take a forward position. But we -- if we see an arbitrage opportunity, we take it. So there is there's nothing right now. And if it appears, we'll probably take it. Obviously, it has to be a profitable position. So we don't have anything in the pipeline. It's something that we continue to monitor daily and our treasury looks at the positions and what our clients need. So for now, we don't see anything in the short future.

At this time, there are no further questions from the webcast. I'd like to turn the call over to the operator.

Thank you. And as we're showing no more audio questions, I would like to pass the call back over to Ms. Casassa for closing remarks.

Thank you very much. Thank you, everybody, for a very active Q&A session and conference call. We will see each other again for the third quarter results. Bye. Stay safe.

Thank you, everyone.

Thank you.

This concludes today's conference call. You may now disconnect.

Good morning, and welcome to Intercorp Financial Services First Quarter 2026 Conference Call. [Operator Instructions]

Please be advised that today's conference is being recorded.[Operator Instructions]

It is now my pleasure to turn the call over to Mr. Ivan Peill from InspIR Group. Sir, you may begin.

Thank you, and good morning, everyone. On today's call, Intercorp Financial Services will discuss its first quarter 2026 earnings. We are very pleased to have with us Mr. Luis Felipe Castellanos, Chief Executive Officer, Intercorp Financial Services; Ms. Michela Casassa, Chief Financial Officer, Intercorp Financial Services; Mr. Carlos Tori, Chief Executive Officer, Interbank; Mr. Gonzalo Basadre, Chief Executive Officer, Interseguro; Mr. Bruno Ferreccio, Chief Executive Officer, Inteligo. 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. Otherwise, if you need any assistance today, please call InspIR 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 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 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 first quarter 2026 earnings call. Let me start on the macro front. 2026 started better than expected with first quarter GDP growth of around 3.6%, supported by private spending and favorable commodity prices. However, going forward, the outlook remains subject to certain risks. The international environment has become more volatile with higher energy prices and external uncertainty potentially pressuring inflation and growth outlook.

In addition, the potential impact of El Nino could affect activity in the coming quarters if weather-related disruptions materialize. While Peru's monetary framework and macro fundamentals continue to provide support, we believe it is appropriate to remain prudent and closely monitor how both domestic and external risks evolve.

Turning to IFS' first quarter results. We delivered record quarterly net income of PEN 602 million and an ROE above 19%. These results reflect disciplined execution across our platform and the benefits of our model. At Interbank, we also delivered record quarterly net income, supported by low cost of risk and improving risk-adjusted NIM. Loan growth has been more measured due to pension fund withdrawals, although higher-yielding segments continue to grow at a high single-digit pace.

In parallel, we are making progress with Izipay, strengthening our merchant franchise and capturing joint business opportunities with the bank. We are also enhancing our small business value proposition through our recently launched business app, while PLIN continues to deepen engagement through new features such as PLIN credit card. Interseguro continues to grow in its core business, supported by private annuities and life insurance. It is also leveraging synergies with Inteligo to expand private annuities and with Interbank to advance integrated bancassurance solutions.

Inteligo, our Wealth Management segment, continues to grow at double-digit rate, reaching a new record in assets under management, thanks to our customers' trust and consistent engagement. IFS remains committed to focused profitable growth with customers at the center of our decisions. We are reinforcing this through digital excellence, deeper primary relationships and continued investments in technology, Gen AI and innovation to improve productivity and customer experience.

A highlight of this quarter was our strategic partnership with InRetail. As announced in April, IFS and InRetail agreed to acquire InFinance XP, formerly Financiera Oh!, through the purchase of IXP Holding for $130 million. We believe this transaction will strengthen our consumer finance and payments ecosystem by combining IFS' capabilities with InRetail's reach, a powerful combination to create a superior value proposition to enhance customer experience in everyday uses through a scalable digital platform. We are committed to do the investments required to make this possible.

Looking ahead, we remain focused on executing our strategy in an environment that may continue to be volatile. Our platform and diversified sources of revenues have proven resiliency across cycles. We believe we are well positioned to keep executing our growth strategy with discipline, sustaining profitability and continuing to strengthen our leadership in Peru. We maintain a strong focus on risk management, efficiency and disciplined investments.

Now let me pass it on to Michela for further explanation of this quarter's results. Thank you.

Thank you, Luis Felipe. Good morning, and welcome, everyone, to Intercorp Financial Services First Quarter Earnings Call. We'd like to begin with our quarterly key messages. In the first quarter of 2026, we see a robust start to the year, delivering a solid performance across all segments, as mentioned by Luis Felipe. Net income reached a quarterly record of PEN 602 million, marking a 35% increase compared to the prior year and a return on equity of 19.4%.

Second key message is that higher-yielding loans continue with a positive momentum, showing a 9% growth on a year-over-year basis. Third, risk-adjusted NIM increased 90 basis points over the year, reaching 4.2% in the last quarter, while we maintained a low cost of risk at 1.4% and cost of funds below 3%. Fourth, we continue to deepen primary banking relationships and as a result, our retail banking primary customers grew by 14% and our NPS reached 68 points. Fifth, our Insurance and Wealth Management business continues to deliver double-digit growth with written premiums growing by 35% year-over-year, mainly due to the growth in private annuities and with assets under management growing 13% year-over-year.

On this slide, I'll start with a quick update on our latest acquisition. InRetail Peru Corp. and Intercorp Financial Services announced the acquisition of InFinance XP, formerly Financiera Oh!. We executed the transaction through the purchase of IXP Holding Corp. from IFH Retail Corp. for $130 million, implying a 1.19x price over book value multiple. Following the closing InRetail and IFS each own 50% of IXP Holdings.

Additionally, we wanted to mention that as part of InFinance digital strategy, they've recently launched SIP, an app that brings together financial products, payments and the loyalty program in one application.

On Slide 4, we wanted to highlight 3 key points. First, this is a strategic partnership to strengthen our consumer finance and payments ecosystem. We are building on InFinance XP's scale with close to 3 million customers, PEN 1.8 billion in loans and PEN 1.5 billion in deposits. Second, we're combining IFS' solid financial position and integrated capabilities with InRetail's leading retail platform, which has more than 4,000 stores nationwide to accelerate adoption and distribution.

Third, we are enhancing the customer value proposition through a scalable digital platform, expanding access and convenience and making everyday payment and consumer credit simpler and more seamless.

Now let's start with our first key message. On Slide 6, let me start with a brief update on the macro environment. We entered 2026 with stronger momentum than expected. GDP growth for the first quarter is tracking around 3.6%, following a solid finish to 2025, supported by private spending and still favorable commodity prices. That said, the near-term outlook has become more challenging.

Inflation has picked up above the Central Bank's target due to temporary supply shocks and global conditions have turned more volatile, particularly with higher energy prices. Looking ahead, growth should remain close to 3%, supported by non-primary sectors such as construction, commerce and services, even though political uncertainty related to the presidential elections could slightly slow the pace.

Nonetheless, monetary policy remains supportive with the reference rate at 4.25%, which is 50 basis points above -- below the Fed. At this point, we do not expect rate cuts from the Central Bank.

Moreover, while the sol has shown an appreciation trend over the last 12 months, more volatile global conditions and domestic political dynamics have led to a depreciation of 2.2% year-to-date as of May. In sum, Peru continues to offer strong fundamentals and attractive long-term opportunities even as we navigate a more volatile environment in the near term.

In terms of domestic demand, growth continues to be led by private investment, which is expected to expand by around 7% this year. This reflects a mining project pipeline of over $60 billion across more than 60 projects, together with the infrastructure works already underway, particularly in transportation and energy. This momentum is clearly visible in strong construction activity.

Private consumption remains solid, supported by real wage growth and a still tight labor market with the formal wage bill expanding by over 5% in real terms. While consumer and business confidence softened in April as the electoral cycle intensified, this has not yet translated into fundamentals. Business confidence has remained in the positive part of the range on the back of record copper and gold prices.

There are still some risks to monitor. Weather conditions, including a higher probability of a moderate coastal El Nino could affect sectors such as fishing and trade, while higher global energy prices may continue to pressure costs. That said, current momentum and underlying fundamentals point to resilient domestic demand even as the electoral process adds uncertainty. In this context, credit growth remains slightly positive, led by retail lending, which continues to outpace commercial credit.

On Slide 8, we delivered a very strong start to the year with record quarterly net income at IFS. Earnings were up 35% year-over-year and ROE above 19%. Earnings also improved substantially versus last quarter. At the bank, results were supported by lower cost of risk and strong financial transaction results, including gains on our sovereign bond portfolio and dividends received from IFS, which we net of IFS consolidation as well as strong FX gains. Net income increased 44% versus last year, and the bank's ROE improved to 19.5%. Interseguro and Inteligo also posted another quarter of double-digit growth, supported by healthy core trends. At Interseguro, results were mainly supported by a stronger insurance result, excluding the impact of inflation, mainly in annuities and life.

At Inteligo, results benefited from a stronger return on the investment portfolio with ROE reaching 22%. Overall, it was a solid quarter across all IFS business lines with core operating performance as the main driver of profitability.

On Slide 9, you can see that IFS revenues grew 10% year-over-year. At the bank, top line growth was up 8% this year, supported by ongoing improvements in our cost of funds, stronger fee generation and better investments and FX results. Interseguro also showed strong revenue growth of 18%, driven by better insurance results in life and annuities.

And at Inteligo, revenues increased 34%, reflecting steady fee growth in line with higher assets under management. Investment performance also improved in the quarter, partly reflecting a softer fourth quarter comparison as the portfolio delivered a 12-month return of above 12%.

On Slide 10, IFS expenses increased 13% year-over-year, reflecting the investments we are making to support our long-term growth. This includes accelerated spending in technology to strengthen resilience, enhance the user experience, improve cybersecurity, expand capacity and advance our Gen AI capabilities.

We are also investing in leadership and talent across key teams because people remain central to executing our strategy. As a result, the cost-to-income ratio at IFS level stands at 36.6%.

Now let's move on to our second key message. On Slide 12, we are seeing consistent growth across products and segments with a 9% growth in our higher-yielding loans. Our total loan portfolio grew around 6% year-over-year or 7%, excluding FX. Growth was driven by mortgages, midsized companies and small businesses with this last one up nearly 30% over the past year.

In retail banking, we continue to see healthy momentum across segments. Mass market remains our core retail franchise, representing roughly 66% of the retail portfolio, while affluent continues to expand as well. Consumer balances were broadly stable quarter-over-quarter, reflecting the expected excess liquidity, yet still grew 5% year-on-year with disbursements growing 15% year-over-year during the month of March.

Good news come in April, where growth came in very strong, showing an acceleration. Mortgage lending also continued to outperform, growing more than 8% year-over-year. We gained 20 basis points of market share, reaching 16.2%, which is more than 100 basis points above the fourth bank, hence, firmly positioning us as the third largest player in the system.

In Commercial Banking, performance was strong across corporate, midsized companies and small business. Small business stood out again, growing almost 30% year-over-year and disbursements more than doubling year-over-year during the month of March. This means we not only replaced all Impulso MiPerú maturities, but expanded our book to more than 3x that level.

Over the past year, disbursements have doubled, reflecting the strength of our enhanced value proposition. And we've recently launched our new business banking app for small business, which now brings together both Interbank and Izipay functionalities in one place. This is a key step to make our clients more digital, improve day-to-day interactions with the bank and ultimately deepen primary banking relationships. Following with the third message, we continue to see improvement in risk-adjusted NIM.

On Slide 14, let me share a quick update on asset quality. Our quarterly cost of risk continued to improve, reaching 1.4% this quarter, the lowest level in the past 4 years. This reflects a healthier loan mix and a more supportive credit environment, together with the positive impact from the excess liquidity in the retail portfolio. In retail, cost of risk is now below 3%, down 100 basis points versus last quarter and well below our risk appetite.

Consumer lending continues to perform better with cost of risk improving from around 7% to below 5% year-over-year, supported by healthier customers and the positive impact of recent liquidity events. Importantly, new vintages are also tracking well.

On the commercial side, asset quality remains strong with cost of risk stable. Overall, nonperforming loan ratios remain healthy, and our coverage ratio is solid at around 140%. Looking ahead, as our consumer and small business portfolios continue to grow and now represent around 22% of total loans, we would expect cost of risk to gradually normalize from these very low levels. Even in a volatile environment, these trends point to a healthier operating backdrop and reinforce that our disciplined risk management is supporting sustainable growth.

On Slide 15, there are some good news to highlight in terms of risk-adjusted NIM. We continue to make meaningful progress on a risk-adjusted basis. The risk-adjusted NIM is up 90 basis points year-over-year, reaching 4.2%. The last quarter alone added another 20 basis points, mainly driven by the lower cost of risk. On the asset side, average loan yields were slightly lower. This mainly reflects the risk mix of the portfolio.

On the funding side, our cost of funds declined by another 20 basis points quarter-over-quarter, reflecting continued improvement in our deposit mix and pricing and offsetting the impact from yield on loans. As a result, reported NIM declined by 10 basis points versus last quarter, but it remained stable year-over-year. It's worth noting that the bond issuance completed in January added a negative impact of around 20 basis points to NIM, which will disappear later this year.

On Slide 16, I want to spend a moment on funding as the trends are moving in the right direction. Deposits continue to be our main source of funding, representing about 82% of the total. Total deposits grew 8% year-over-year or 9% excluding FX effect. Retail deposits continue to grow, up more than 13% with savings and transactional balances up over 20%, supported by the pension fund release.

On the commercial side, the continued expansion of our payment ecosystem led to a 27% increase in efficient commercial deposits. All of this is translating into lower funding costs as our cost of funds is down 40 basis points year-over-year and a further 10 basis points over the last quarter. Cost of deposits improved by 20 basis points just in the quarter. With efficient funding now at about 40% of the mix, we still see additional room for improvement.

Moving on to our digital strategy. Our payment ecosystem with PLIN Izipay is driving our growth in loss 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 Izipay as both a distribution network for Interbank products and a source to increase float.

As mentioned, one key development has been the new banking app for small business, which allows us to deliver an integrated solution and maximize the value we bring to our clients. As such, the flows from Izipay were up 60% over the past year for the segment, contributing to a 14% increase in deposits, which now account for 12% of wholesale deposits or 33% of wholesale low-cost deposits.

Additionally, the flows from Izipay to Interbank expanded by 16% in the same period, as Interbank share of Izipay flows is around 40%.

PLIN continues to gain scale and deepen engagement. PLIN WhatsApp, the first bank-led payments experience on WhatsApp in Peru, reached almost 7,000 affiliates by the end of March. Usage keeps accelerating with [indiscernible] per user up 44% quarter-over-quarter. In March, we launched PLIN Credit Card, our buy now, pay later solutions, where we already have more than 30,000 active clients.

Our digital initiatives continue to create tangible value and deepen primary banking relationships with PLIN playing a central role. Over the past year, our retail primary banking base grew 14% and now represents more than 35% of total retail clients. PLIN closed the quarter with 2.7 million monthly active clients and more than 70 million monthly transactions with 60% going to merchants.

We also continue to see encouraging trends in our digital indicators. Retail digital adoption increased to 84% and commercial digital clients now stand at 75%. The good news is that NPS improved quarter-over-quarter, reaching 68% in retail, a record high, and 73% in commercial, supported by the agility, simplicity of our app and consistently strong service quality.

Finally, we are upgrading the app experience with a clear focus on security, speed and self service. We added antifraud alerts on the home screen and piloted temporary credit card blocking, increasing alert contactability by over 40%. In addition, we enabled digital tracking of customer requests, helping reduce customer assistance by 20%, and we reduced physical debit card issuance by 30%. All of this reinforces our commitment to delivering the best possible experience for our customers.

In insurance, we continue to focus on enhancing the digital experience for our clients and expanding our sales from digital channels. The development of internal capabilities has allowed us to increase digital self-service to 70% and the digital premiums to grow 25% in the last year.

In Wealth Management, we are committed to improve our Interfondos app, aiming to transform it from a simple transactional tool into a comprehensive digital adviser for our mutual fund clients. This has led to a steady rise in app engagement with a number of digital users increasing to 38%. Additionally, digital transactions now represent 58% of all activity on the platform.

Moving on, solid results with double-digit growth in Insurance and Wealth Management. On Slide 22, we continue to build contractual service margin, which increased 15% year-over-year. Growth was mainly driven by annuities, up 19%, followed by individual life, up 17%. Individual Life remains a key priority for us given its low penetration and high profitability.

While our traditional channels continue to perform well, we are also broadening distribution and refining the product offering to reach new segments and sustain growth.

On investments, results were affected by higher inflation, which impacted a portion of the portfolio linked to inflation. This same effect flows through insurance results, largely netting out at the bottom line. Excluding this impact, the investment portfolio return would have been 6.3% in line with our historical levels.

On Slide 23, Inteligo continues to show solid momentum. Assets under management have grown at a double-digit pace, reaching again new highs and now totaling $9.5 billion, including deposits. Fee income continues to improve at 9% year-over-year, adding to the positive trend in results.

Now let me move to the final part of the presentation, where we provide some key takeaways. Before we move on to our operating trends, we'd like to summarize where we are focusing our growth efforts. The consumer portfolio was flat quarter-on-quarter, yet it posted 5% year-over-year growth. April has seen a clear acceleration in growth, which we expect to continue in the coming months. At the same time, the Mortgage segment continued its positive trajectory with 8% growth, continuing to gain market share, now above 16%.

In Commercial Banking, we have seen important growth in small business, which increased by 29% 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. This strong performance is supported by our strategy to deepen relationships with key midsized company clients and leveraging synergies with Izipay to enhance our value proposition.

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 continues to grow at a healthy pace at 13% year-over-year, reaching a new record level, a reflection of both market performance and continued client engagement.

On Slide 26, let's go through our first quarter operating trends. Our ROE for the first quarter was 19.4%, above our guidance for 2026. Given this report -- this result, we see our year-end ROE above 17% rather than around 17% as stated in the previous call. In terms of loan growth, we were up 5.6% or close to 7% adjusting for FX appreciation. We continue to expect high single-digit growth for the full year.

Finally, we remain focused on efficiency at IFS. Our cost/income ratio was below 37%, within our guidance range.

Let me finalize the presentation with some key takeaways. First, we saw a robust start to the year. Second, our higher-yielding loans continued with a positive momentum, especially in the small business segment. Third, we continue to see sustained improvement in the risk-adjusted NIM helping profitability. Fourth, we are strengthening primary banking relationships with our retail clients. And finally, our insurance and wealth management business continued delivering double-digit growth.

Thank you very much. Now we welcome any questions you may have.

[Operator Instructions]

The first question will come from Ernesto Gabilondo with Bank of America.

Congrats on your results. My first question will be about the political outlook. Can you provide us more color on the latest update on the Presidential elections? When is the court expecting to decide on who will be the second candidate? And what is the next date we should be following?

My second question is on the weather phenomenon of El Nino. So also, you can provide us like the latest news on the probability of having a moderate or a strong El Nino this year? And what should be the date or what should we be monitoring to think about this phenomenon of El Nino?

And my third question is on your cost of risk outlook. As you pointed out, it behaved much better than expected. You also mentioned that you have this risk appetite over higher loans, credit cards and SMEs, and we should be thinking a gradual higher cost of risk. But I remember last time, you were guiding around 2.5% for the year. So after a very, very good first quarter, just wondering how do you see the cost of risk in 2026? And then how should we be in the next years?

Okay, Ernesto, thanks very much for your questions. Let me go over some of them, and then I'll pass it on to the team. On the political outlook, actually, it's not exactly clear when. There's an expectation that probably by the 15th of this month, the 100% of the account will be completed. Right now, it's very close. It's at 99.755%. So it's very close. The difference is only like around 15,000 votes. So I guess it will be prudent to wait until everything is counted. So I guess the next day to really get important news is when this 100% is completed. Again, as mentioned, I've heard that it could be as early as this Friday, the 15th, but the entities are doing their work. So I guess that's what we need to pay attention.

And then that second round is scheduled for June 7. So that's probably another important date what we need to focus on because obviously, that will define who comes in office afterwards. So that's what we have on the political outlook so far.

In terms of El Nino, I was looking at some numbers and the chances of a moderate El Nino have increased as we reported in the presentation. They were around 21% probability in January and has increased to 43%. However, that situation can change. We've seen this changing over the years, but we're preparing. We have lots of experience in terms of managing this in terms of what we need to do with our customers, our clients. And the effect will probably not be very -- it felt very strong during the course of this year, but probably we'll see some additional hot weather, maybe some droughts on the south of Peru, hot weather on the north of Peru.

But really, the impact should come more towards the latter part of the year or early next year. That's when the actual weather phenomenon should see. But something that we're paying attention and obviously getting ready to be prepared.

And then in terms of cost of risk. Yes. I guess also it was mentioned during the presentation, like the system as a whole is behaving very well in terms of cost of risk. And in particular, Interbank is having a very good result given all the measures that we have been taking. For the outlook of the year, let me pass it on to Carlos. Maybe he can elaborate a little bit more around our strategy for continue growing in higher-yielding growth, which is the one that is going to, at the end, impact how fast the cost of risk should go back to more normal levels.

So Carlos, you can help me there, it would be great.

Yes. Thank you, Felipe. Ernesto. So the way we look at it is not that we have -- obviously, we don't have a target to increase the cost of risk. The way we look at it is the yield on loans, usually, when you go higher-yielding loans, the cost of risk goes up together and you manage that spread. So we've been obviously getting better with our models and being able to assess risk better.

But also, as Felipe mentioned, the whole system has had low cost of risk over the last, I would say, 5 or 6 months because of end of year ratifications, the AFP withdrawals. So it's been a very liquid system for consumers. And that has 2 effects, okay? So one is, obviously, overall risk goes down, but also on credit cards, on revolving credit cards, not only risk goes down, but our customers repay a larger amount of their credit card bills. So the balance goes down as well.

So in terms of that, it kind of hurts the yield a little bit, but also improves the risk. As long as the equation is that the yield is still there, and we are -- it's a profitable loan, we're fine with that, and that's what has been happening. What we foresee over the next couple of months is that risk will go up a little bit as liquidity kind of wears away, and we will continue to see growth. That's what we have seen in April. April, we have seen more growth than what we saw in the previous months, but risk is still controlled.

So those are the 2 levers that we look at, and we would expect a little bit more growth and that it won't be a fast increase to cost of risk, but our appetite to risk is in the 2.5% or 2.8% range, long term, not in the short term. I don't know if that answers your question.

Excellent. Perfect. So just the last question in your ROE expectations. As you mentioned, this year, the ROE could be above your previous guidance and now could be above 17% for the year. I know that the quarter was also favored by financial transactions, especially market-related revenues and other income. So I just wanted to know or to understand if that could be recurring? And also, what will be the drivers behind your new guidance?

Okay. Thank you, Ernesto. Well, the driver is basically the strong start to the year. As mentioned during the call, we are cautiously optimistic. The risk for the ROEs to the upside. As Michela mentioned, we were guiding at around 17%. Now we feel more comfortable saying that it's going to be higher than 17%. However, it's early in the year. There are lots of moving parts still. We have the international environment that creates some volatility. We have the political situation. And obviously, we need to see what happens with El Nino. So we wouldn't want to move strongly around that.

But obviously, the beginning of the year and the trends that we're seeing put us in a very optimistic situation in terms of what can 2026 deliver for us. The drivers that are the low cost of risk that we're seeing. The economy of Peru is growing and expected to grow at around 3%. Commodity prices continue to be very strong. That creates a positive momentum for Peru as a whole. Business confidence and the investment environment started very positive in the year.

Let's see how that evolves as the political landscape starts to clarify. So those indicators are the ones that are driving the increase in expectation of our ROE.

The next question will come from Yuri Fernandes with JPMorgan.

Congrats, Michela, Luis Felipe. I'll try to explore some of the topics that Ernesto didn't touch in his few questions here. Maybe on margins, if you can provide a little bit of more color. I think the mix towards more consumer loans may help the NIMs to move up. And I think that's part of the explanation, right, risk-adjusted NIMs going up. So if cost of risk moves up, NIM should also go up. Can you help us quantify the magnitude of that? Are we talking about kind of 10 bps risk adjusted going up over the years, 20 bps, 30 bps? Just trying to understand how powerful the combination of margins minus cost of risk may be here for the company? And then I can ask a second question.

Yes, you're right. In terms of trends, that's correct. As cost of risk goes up, yields should go up and the overall impact should be positive. To go over specific numbers, let me pass it on to Michela to see if she has like the model or more detail on the numbers, if we can provide them. Michela?

Yuri. Listen, we did have a budget now with NIM, cost of risk and risk-adjusted NIM. But as you can see from the numbers that we are showing this first quarter, the numbers have been substantially better, especially in terms of cost of risk. So at the end of the day, the risk-adjusted NIM is better than what we expected. What we expect, let's say, for the rest of the year is a gradual, let's say, recovery in NIM, which has not happened this quarter because still the portfolio mix has not changed that much before -- because of the excess liquidity and the private pension funds withdrawal.

So one thing that we should see in the coming months at a certain moment is that yield on loans should start to pick up because of the mix. And at the same time, also cost of risk. So risk-adjusted NIM will be like stable or roughly going above the level that you see there, but the components should start to go up. So both yield on loans and cost of risk.

No, super clear, Michela, Felipe. And if I may, a second one, just on insurance, I think that was a highlight this quarter. There was, I guess, some help on inflation. But thinking ahead, what should we expect about this business unit? When I look to your premiums, they are growing, but the number of insurance clients, I think there is a slide on your presentation about this. It caught my attention that the number of clients is mostly stable, growing, I think, 1% year-over-year. That is a little bit less than what we see on wealth and banking.

So again, it was a good quarter. Premiums are fine. You had like financial income. But looking ahead, like how should we think about insurance? I guess part of my concern is maybe this subsidiary is not doing as good as the other ones, given the number of clients, but maybe I'm just wrong because the pension withdrawals, maybe they explain part of the annuities weakness here. So if you can help me understand what should we expect for insurance, I would appreciate.

Yes, Yuri. So yes, I see you are referring to the fact that we closed March 2025 with 3.2 million customers in insurance and 3.3 million in March '26. So probably that's what you're referring. We have Gonzalo Basadre here, which will help us. The drivers of insurance overall are very strong. As you see, premiums are growing double digit. The results from investment can do very, very well as well, and it's a very efficient operation. But in order to address specifically your question, Gonzalo can help us with that.

Yuri. I think that the confusion lies in that total number of clients, as you have seen, is not growing very fast, but that's because a big proportion of our clients are bancassurance clients, which are very big in number, but very small in individual revenues. What's growing very fast is private annuities, life insurance, which have a smaller number of clients with a much bigger premiums.

In total, as you have seen, premiums are growing very fast. So what we should expect for the following months is premiums growing very fast, but number of clients not so much just because most of them come from bancassurance. But that doesn't mean that the business is not growing at a very healthy pace. I don't know if I explained it.

No, no, it helps. That was exactly like premiums growing 35%, clients not growing, but it's clear. So basically, the growth of bank clients in the end also help you to grow your premiums on the insurance division, right? So you don't need to have like, let's say, proper insurance clients for you to keep delivering the premium growth. That's basically it, right?

I mean, bank clients are not growing as fast as our private annuities and life insurance clients. And that's why total number of clients is not growing very fast, but premiums do grow very fast just because average premiums of private annuities and life is much bigger than the bank insurance clients.

The next question will come from Carlos Gomez with HSBC.

Congratulations on the results and thank you for your detail presentation as always. So I have 2 questions more for the long term. The first one is regardless of the outcome of elections, what do you think that we should expect in terms of growth in your planning for the medium term for the next, let's say, 3, 5 years? What is it that you're expecting in terms of asset growth, perhaps returns, but mostly asset growth for the medium term?

And second, are there any regulatory changes that affect PLIN or the relationship between PLIN and Yape that you expect in the next year or 2 years?

Carlos, thanks very much for your question. Regarding medium, long-term growth, the way we see it is specifically for loans, let's say, or assets. Our take is that the system should be growing between 2x and 3x GDP, okay? So as long as GDP continues to grow 3% plus or recovers, we should see low single digit or starting to get into low double digit -- sorry, high single digit or starting to get into the low double-digit growth.

And particularly, Interbank, for instance, has always focused on gaining a little bit market share given that we have opportunities in certain specific segments. So probably our growth will be above what we have as an expectation for the system as a whole. Premiums on the contrary, probably growing faster because the level of penetration of premium in Peru opportunities that bring insurance businesses in Peru, particularly in life and annuities, which is our area of focus, has strong underpenetration.

So we expect that for some years, we'll continue to see double-digit growth. And then in terms of our private bank as well, all these years of continued growth are creating an emerging wealthy class, which is the segment that we are catering specifically for our Wealth Management segment, and that also should bring low double-digit growth at least for the years to come. So that's kind of our take on the way we see growth for the upcoming years, medium to long term.

And then in terms of PLIN and Yape, I didn't get very well your question. I think that the dynamic is as we've seen, both getting traction. Peruvians using more and more digital solutions and the payment ecosystems are being reinforced. PLIN continues to get traction. We are starting to move some use cases into our PLIN solutions like what Michela mentioned, like that rate or credit card related to PLIN.

So we see this as a very important opportunity for us as well. I don't know, Carlos, if you want to complement anything specific around this dynamic.

Too many Carlos in the call. Carlos...

Go ahead.

No, Felipe was talking about PLIN. So yes, the other avenue of growth for PLIN is the instant payments on WhatsApp. So PLIN WhatsApp is obviously something that only Interbank has, and we've been growing with that as well. But I understand, Carlos, your question was more related to regulation that affects Yape and PLIN. I don't know if that was your question.

Yes, yes, that's my question. I mean as both companies start to monetize the strong network that both of you have created, I would expect that perhaps at some point, the regulator might want to have a look at how that monetization takes place and there might be new rules or force you to share things in a way that you have not in the past. If you expect to encounter any constraints as you deepen your monetization of PLIN?

So the regulation regarding PLIN and Yape was given, I believe, it like 2 years ago or 2.5 years where it asked us to interoperate. So PLIN can send to Yape, Yape to PLIN. And that's the regulation, that's a framework. And there's updates to that in terms of SLAs and stability and stuff like that, and they continue to monitor and revise and the regulator is a central bank, and that is working.

In terms of new regulation, we don't foresee anything in the short term. What will possibly -- and this is something that we'll see what happens, but what possibly may affect the way we interact is that the Central Bank will start offering a new, let's call it, highway. So they're starting with TAPP, which is a service provided by UPI from the Indian central government. So the Central Bank will offer a highway where we can interconnect. So if PLIN wants to send to Yape or Yape to PLIN or other players in the market, we can go through this and calling it highway in the Central Bank. But it will not be, as far as we know, subject to regulation.

There will be informed in terms that we all will have to be connected, but we don't necessarily have to use it. The idea of the Central Bank is to offer this highway in better terms or better or more use cases to incentivize that the different issuers use the highway, but it should not be -- or as far as we know, there will be no regulation saying we have to go through it. So it's not -- I wouldn't consider additional competition, but it will be an additional rail or highway through which we can interact.

And just to complement that, it will probably be the first use of open banking. So the idea is that the rail will be able to source funds from different accounts to send your transaction. That's the idea that should come online I think the target date is December, probably most banks will not go into production in December because it is a very high transactional month, probably January of 2027 is a more realistic time frame.

The next question will come from Alonso Aramburu with BTG.

Just following up on your comments on loan growth in April that you're seeing acceleration. Just curious, I mean, where are you seeing that? Is it broad-based? Or are you referring more to your consumer and credit card book? And what's driving that? Is it really more appetite from the bank? Or is a normalization of liquidity or maybe a combination of the two and then a second question regarding your acquisition of InFinance XP. Just curious, I know it's only a month since the acquisition, but if you can provide some comments on the initial reaction to the seat up from the public. How is that -- how that launch is going?

Okay. So thank you, Alonso. On your first question, yes, I think it's a combination of both. I think the money from the pension funds is starting to be used already. So demand is starting to get back into the system. So we're seeing that growth in the consumer financing, particularly in our small business segment for us, it's more driven by the fact that we are building value proposition and going out to look for clients given the low market share that we have over there.

And then in terms of commercial banking, the activity is mixed. So we have not seen strong growth there, but it's very seasonal. So let me pass it on to Carlos, so he can complement this part of the question, and then I'll return to go over your SIP question.

Thank you. I think you mentioned most of it, Alonso how are you? So yes, it's a mix. There's a little bit less liquidity. So we're having as I think mentioned over the calls, our value proposition has been having traction, and we've been seeing more transactions and increase. What has happened over the last few weeks is maybe prepayment of our credit card isn't as high. So that gives you a little bit of growth.

But also, we have put in line 1 or 2 good models that target the high risk or the lower segment, which has allowed us to have a little bit more penetration there without increasing risk too much, and we've started to see some of that. So it's a little bit appetite, I would say 50% appetite and 50% market. And we will -- we expect to continue to see that over the next couple of weeks and months.

So yes, and what mentioned in commercial banking in Brazil, as we mentioned, but we continue to see good growth in the lower segment of banking. So Banca Negocios is doing well as well, good growth. Felipe, do you want to take...

Yes. On the SIP, you're right, Alonso, not only the transaction has been recently executed, but also the launch of SIP has been very recent as well. It's having good traction. It's a couple, both it's acquiring new customers and new customers are coming in better than we expected. And then it's a matter of migration of people that used to have the Oh solution, Financiera Oh! solution and then you had some people that use Agora.

So now this new app consolidates like basically 3 things: loyalty, consumer financing and also a payment solution. And we had certain expectations in terms of what we were willing to achieve at launching of the new brand and new solution. What I can tell you, it is surpassing the expectations that we had.

So I think we are in a good start. And as we discussed, this is an early stage. It's probably a very interesting digital solution that we are bringing to market to bear within retail. It will require still time and investments in order to pursue the growth that we are thinking it could have. So it's more like a medium to long term where we will start seeing the actual results of what we are imagining on this front. But to go over your specific question, the launching has been successful in our view and the traction that is getting is exceeding the expectations that we had.

[Operator Instructions]

The next question will come from Andres Soto with Santander.

My question is regarding your digital strategy and the question has two components. One, a philosophical one. I understand there is an app and the InFinance, which is the one that those users used to go to the stores. And then you mentioned in the call there is another app under Izipay, which is the one that I guess you are giving to your SME customers. And then you have PLIN, which is the one that you used to interconnect with other banks.

My question is, is this by design? Are you planning to continue keeping those apps separate? Or is it the plan for at some point to migrate to an ecosystem where your customers can go to cover all the financial needs? And the other part that is not philosophical from the question is regarding investments. I would like to understand what point in the cycle are we in terms of digital investment? You reiterate your guidance for cost to income of 37%, are you expecting some additional pressure into 2027? Or you believe that your expenses in digital can be covered under this very stringent efficiency ratio?

Andres, thanks very much for your philosophical question and your other question. On the philosophical side, part of the strategy actually -- well, PLIN is not an app, as you know, PLIN is like a highway that connects payment possibilities within customers. So that's not making a highway. You have to see it that way. And we've talked about it is like in the U.S., okay? And then you have In-Finance app or SIP is a different play. It's a consumer financing. It's a joint venture between us and in retail has its own customers. It's probably going to be integrated at some point through the ability of doing certain things that move you through different apps.

But right now, the way it works and the way it's structured, it's a different solution, serving specific customers that have very specific needs that we see that is boosted by the opportunities and potential that having in retail as a partner brings.

And then you have the small business app, which is a separate app, which caters to its own segment with other specific solutions, more related to merchants and there the Izipay and the Interbank app for those types of customers is being integrated as a single one.

So yes, philosophically, we have different place for different segments and different strategies. That's the way we are designing this. If they are going at some point, all be converted into a single app, I don't see it right now based on the information that I'm seeing, but probably we'll build communication ways in order to provide different services through APIs or something like that. But that's the way we are designing the future so far.

And then in terms of investments, that's a very interesting question. I do see that pressure for investments in digital, in technology, in cybersecurity, in Gen AI will continue. This is not something that we do digital transformation and it ends at some point. I think the -- what we're doing is basically following customers' expectations. And customers' expectations are basically increasingly demanding. So the level of investments that we need to continue deploying in all of our segments, including banking, including insurance, including wealth management and payments is very demanding as well.

So I think that the ability to manage the efficiency ratio at around 37% will be what guides us for the next couple of years. And then at some point, we'll get another level of scale that will probably allow us to think about levels below 35%. But that's not in the medium term. That's probably more a long-term view.

That's very clear, Felipe. And if I may ask a follow-up on PLIN. Once the Central Bank UPI system is up and running, is there still a place for PLIN? What will be the use case for this, which is, as you mentioned, just connecting with other banks?

There's a space for PLIN. Probably our strategy might change. But I guess it's having 2 highways, probably we will need to see which one is more efficient and which one is the one that serves our purposes better. But I don't see that one will completely replace the other. Probably that will be complementary. Carlos has been very involved in our payment strategy. Maybe he can complement it to you as well. Carlos?

No, I agree. So first, we start with the fact that PLIN is not an app. It's a brand and the highway, as Luis Felipe mentioned. Within that highway, technologically, you can send funds, can use PLIN and send funds through Visa Direct or you can send it through the local chamber exchange chamber. Those are the 2 highways we can use today technologically. UPI will add a third one. So we can go through UPI, and we can brand it PLIN or we can brand it.

The transaction will still be from the Interbank app to a customer or another Interbank customer that receives either Interbank or at a different bank. So that will not change. But the fact that there will be additional use cases and the Central Bank is very ambitious on how they will grow this in the next couple of years. We will continue to assess our strategy and see what we do. But as Luis Felipe mentioned, this -- at least the first round will be absolutely complementary to what we have now. It's an additional highway.

Congratulations on the results.

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

Thank you, operator. The first question comes from Shane Matthews of White Oak Investors. What should we expect cost of risk for the banking business for the year? And were there any large recoveries in Q1, which led to lower provisions for the bank? Or is this the normal run rate going forward?

Okay. I think we kind of answered this question throughout the course of the presentation, but just to summarize, I don't think we've had any specific one-timer recovery. I think that, as was mentioned throughout the call, is that the system as a whole is behaving better in terms of risk. The low cost of risk is particular for Interbank, but also we're seeing in the business as a whole. And then the level of cost of risk for the year will depend on the speed basically that our higher-yielding book is built. So that is the expectation that we have.

As mentioned, our budget has been outbeat by what we're seeing in the first quarter. And we do expect that probably as the book in higher-yielding loans continues to build up, cost of risk should marginally start to go up. And the next question...

There are no further questions at this time. I'd now like to turn the call over to the operator.

There appear to be no further questions on the audio side. I would like to turn the floor back to Ms. Casassa for any closing remarks.

Okay. Thank you very much. Thank you again, everybody, for joining our call, and we'll see each other again for the second quarter results. Stay safe. Bye-bye.

This concludes today's conference call. You may now disconnect.

Good morning, and welcome to the Intercorp Financial Services Fourth Quarter 2025 Conference Call. [Operator Instructions] Please be advised that today's conference call is being recorded. [Operator Instructions]

It is now my pleasure to turn the call over to Mr. Ivan Peill from InspIR Group. Sir, you may begin.

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. Michela Casassa, Chief Financial Officer, Intercorp Financial Services; Mr. Carlos Tori, Chief Executive Officer, Interbank; Mr. Gonzalo Basadre, Chief Executive Officer, Interseguro; and Mr. Bruno Ferreccio, Chief Executive Officer, Inteligo. 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. Otherwise, if you need any assistance today, please call InspIR 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.

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 macro front. 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 the 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. The soles 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. Sound 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, prudent risk management and sustained investments in innovation.

Moving into IFS results for 2025. We delivered record net income of PEN 1.9 billion with recovering core results and solid profitability with an ROE of around 17% 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 PEN 1.4 billion in net income. This was supported by a decrease in cost of risk and risk -- and a risk increase in risk-adjusted NIM.

Our Consumer segment is showing signs of recovery even in the face of pension funds withdrawals, 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. Izipay and Interbank 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 bancassurance solutions that deliver greater value for our customers. It maintains leadership in regulated annuities and has achieved the leading position in private annuities. Inteligo, 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 focus on 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, Gen AI 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' 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 Michela for further explanation of this 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 PEN 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 continued 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 maintained 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 assets 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 Bank's 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 5, driven by a favorable macroeconomic environment, private investment continues to expand at solid levels, growing almost 10% in the first 9 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 continued 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 6, 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 3 key business segments delivered exceptional growth. The bank achieved record earnings of PEN 1.5 billion, driven by a combination of lower cost of risk, reduced funding costs, increased fee income, among other factors. Inteligo reported a strong 68% increase in revenues and an outstanding ROE of 21.5%. This performance was driven by growth in core operations and solid results from the investment portfolio.

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 PEN 205 million impairment, leaving the residual value at PEN 74 million 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 PEN 129 million was recognized by Interseguro. Excluding this impact, IFS ROE for the quarter would have reached 19.1%. Furthermore, if we set aside the effect of Ruta 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 Inteligo's core businesses continue to deliver double-digit growth. Interseguro achieved an ROE of 32.5%, in line with higher real estate valuations. Meanwhile, Inteligo's results this quarter were impacted by a lower return from the investment portfolio.

On Slide 8, 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 Rutas 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 9, 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 relations. 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, Inteligo grew top line 29%, thanks to a steady growth of fee income, which aligns with the positive trend in assets 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 6 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, midsize 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 Impulso MyPeru 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 balanced 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 4 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 nonperforming loans ratio continued 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 continued 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 PLIN and Izipay 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 Izipay as both a distribution network for Interbank products and as a source to increase float. In particular, the commercial teams from both Izipay and the bank are collaborating more efficiently, allowing us to deliver integrated solutions and maximize the value we bring to our clients. Izipay continues to show strong momentum in the small business segment with flows from Izipay 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 float from Izipay expanded by 35% in the same period as Interbank's share of Izipay 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 enhanced our offering by launching PLIN Corredores, PLIN WhatsApp and PLIN e-commerce, 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 PLIN. Over the past year, on Slide 20, we have grown our retail primary banking customer base by 11%, now representing more than 35% of our total retail clients. Monthly active PLIN 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 our 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 our 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.

Advancements 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 our sales 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 in our -- to improve our Interfondos app, aiming to transform it from a simple transactional tool into a comprehensive digital adviser for our mutual fund clients. This has led to a steady rise in app engagement with a number of digital users increasing by 7 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 twofold, driven by disability and survivorship premiums acquired through a 2-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. Inteligo 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. Fee income continues to improve, up 15% year-over-year, which would have been 18%, excluding the FX effect, 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 midsized company clients, unlocking additional cross-sell opportunities and leveraging synergies with Izipay 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 3 consecutive quarters showing growth. At the same time, the mortgage segment continued its positive trajectory, achieving a market share above 16%. In Insurance, we are maintaining our focus on long-term products as individual life has shown encouraging growth this year.

Finally, in Wealth Management, assets under management continued 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 sound levels with a total capital ratio of 16% and core equity Tier 1 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 33% -- 37%, sorry.

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% mid-term 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 core operations. 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.

[Operator Instructions] And our first question will come from Ernesto Gabilondo with Bank of America.

Congrats on the results. My first question will be on Rutas de Lima. 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 and in your 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 growth you're expecting for each segment? And how should that will be translated into asset quality, NPLs 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, personnel, 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 Credicorp, which now is targeting to be around 20%. I believe you are targeting a midterm ROE of 18%. So just wondering if there is an opportunity to get your ROE more close to your peer at some point? Or is it something that you are not considering? And also, this 18%, you're expecting it to be achieved probably likely in 2028.

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 Rutas 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 that this should be the effect and 2026, 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 encouraging what we've seen in the last Q, 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 portfolio.

Then in terms of expenses, I think we will continue to invest. So overall, in the 3 businesses, we keep strengthening our teams. We keep investing in technology and we're seeing more volume overall. So probably the trend is going to be very similar to this year, okay?

And lastly, in terms of the ROE, our midterm view is, again, 18% plus. No, we're not getting merit to any specific number. Obviously, if the Peruvian system evolves the way 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 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 that could take advantage of that.

Now let me stop, and I'm going to pass it on specifically for your question 1 and 2 to Gonzalo and Carlos afterwards to see if there's anything that they want to complement. First, Gonzalo, anything more that you would like to say on Rutas de Lima? You're on mute, Gonzalo...

Yes. Hi, everybody. During our last call, we mentioned that after the closing of the tolls, 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 doesn't -- there won't be any additional charges on that investment.

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

Yes. Thank you. Absolutely. 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 '25, I would say, more on the second half of 2025. However, the market kind of -- it's been mixed because of the AFP. 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 fact that this is liquidity that Michela mentioned from the AFPs. 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. So we will probably go closer -- the last quarter was below 2% our cost of risk, and we will 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 loan growth, you were saying a more gradual increase for 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 2 things: the amount of CapEx that goes on and probably there has been good CapEx in 2025. It will probably slow a little bit until we have more vision on 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. Just a follow-up in terms of the ROE because the talking about the ROE, it was like stopped the audio. So if you can repeat again how you're seeing the evolution of the ROE? And do you think at some point, the 20% could be reasonable?

Yes. 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 ROEs 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 at scale, the 20% plus is -- I think, is achievable as long as the Peruvian economy continues to perform well. So yes, 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.

The next question will come from Daniele Morando with Santander.

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 color on how you're thinking about NIM in 2026? And also, we continue to see volatility in the results of Interseguro and Inteligo. What is your medium-term profitability outlook for these businesses? And are there any specific initiatives underway to help mitigate this earnings volatility?

Okay. Thank you. I'm going to start by your question #2. Again, our medium term and our structural profitability for both businesses is 20%. Obviously, especially Interseguro is like 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. Same happens, especially with the prop book of Inteligo 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 the 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 Michela 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 Michela can help us with a little bit more detail on that.

Yes. 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 decrease in cost of funds as we continue to improve the mix of the efficient funding with all the things that we are doing both in retail banking, but also with the payment ecosystem with Izipay and commercial banking. So NIM should slightly increase during 2026. 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.

The next question will come from Yuri Fernandes with JPMorgan.

For the quarter or for the year. I have a question regarding your deposits for you to deliver a high single-digit loan growth. How do you imagine your funding also growing, right? And this year, deposits, they are growing less, right? They're growing, I don't know, 5% above loans, but I think this is not enough for [indiscernible]. So just checking here, like in the past years, I guess there was a good improvement in funding cost, right, like more expensive institutional funding were growing more retail deposits. So basically, we're focusing in cheaper funding lines. And now the message from Michela from the past answer was that margins will expand on the asset side, right, on the mix -- so just checking the liabilities. 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 part of 19% ROE, right? If you adjust for Rutas 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. Why not a high ROE for the year?

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, Inteligo 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 17% that is achievable, it is achievable, but it depends on many situations. So that's why we're guiding at around 17%. 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 it. So we are probably in the conservative side in terms of what will happen. If the opportunities for growth are there in that book, we will take advantage of that, and that should have a positive impact in ROE as well and 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, yes, 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 Izipay 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, Luis 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 2 -- in 2 ways. Retail deposits continued to grow well across the years, really, and 2025 was 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 PLIN, it's -- the funds that come from Izipay to the accounts at the bank, I expect that to continue. So we will continue to grow low-cost funding. Maybe the overall size of deposits 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.

The next question will come from Carlos Gomez with HSBC.

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 PLIN. I was trying to find some numbers, but I don't see them in the presentation. What would you say the market share of PLIN is today? And what is your market share within PLIN?

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 stopper to loan growth, okay, because people use those funds, obviously, for some consumption of those 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 a little bit the growth profile of the portfolio, okay?

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 2027 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 a 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. Yes. The reason we don't disclose market shares in PLIN and Yape 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 PLIN currently has about 15% of the P2P and P2M market. So P2P is person to person and then also using PLIN to pay at a merchant. We believe PLIN is somewhere around 15%. And Interbank is a little bit over half of that. That's our estimation. I think it's well founded, but it's not -- 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 yes, I don't know -- 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 not a official information, but as far as we know, there are 2 of you and you have your numbers. So as long as Yape gives theirs, you should have a full picture? Or are we missing somebody? Are we missing some other operator? And over time, is your -- is the market share of PLIN increasing or decreasing? How do you see this market evolving?

Okay. So yes, there are a few -- like there's other banks that are not part of PLIN or Yape. 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 Yape 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 PLIN and when PLIN 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 PLIN or Yape and then there's on us or on the 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 yes, we're growing.

Yes. And I think that something very, very positive is that we do see that our customers that use PLIN have much more activity with us, more principality, we become a principal bank. NPS is higher. And obviously, churn is smaller. So the numbers are adding up nicely in terms of building upon the strategy that the bank is deploying.

The next question will come from Alonso Arambur� with BTG.

I wanted to maybe double-click on the performance on consumer loans. Dynamics clearly are better than the last couple of quarters. But if you look at your market share, you've been losing market share, roughly 1 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 if you're seeing any change in this trend for 2026?

Thank you, Alonso. Yes, I think payroll deductible loans to public sector employees, that's a market that for us, it's not growing that much. You have identified it well, and it obviously has an impact. And then I think that we've been digesting the -- what happened in '23 and '24. So we're coming back to market probably a little bit later than some of the competitors. But again, we've been in this business for many years. We know how the cyclicality can be. And we've been working in making sure that the equation adds up. And so we are 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?

No, absolutely. I think there's 2 different -- so [ convenience ], not payroll loans have their own environment. We are 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 relations 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 -- never become -- never end up well. 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, 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 the 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, and 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.

The next question will come from Damian Mora with CrediCorp Capital.

I have just one follow-up question. The normalized ROE in 2025 was close to 18.5%. So I'm wondering or I would -- just to clarify what is stopping IFS from reaching a similar figure and achieve an 18% ROE besides the Rutas 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, Daniel. Yes, I'm going to go again. So it was a very strong year for some of our investments, especially Inteligo and also some investments we have at the holding company level, the disclosure is 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 the last Q ROE 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 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.

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

Thank you, operator. The first question comes from Shane Matthews of White Oak Investors. 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 Michela. I'm assuming, yes, the coverage comes in line with higher provisions due to the cost of risk improving because of those loans. But the mathematics in terms of coverage, Michela, maybe can help me.

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

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

Okay. And thanks very much for that question. I guess I'm going to put it in 2 fronts, okay? Yes, it's an election year. Again, we don't see big disruptions coming into the market. Again, our base case is of continued stability or 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 political scenario. 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 front 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 high. But again, we are 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 has not changed. So we feel very confident on that continue to working out strong superintendency, strong Central Bank, strong Minister of Economy and Finance. But again, it's -- 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 WhiteOak 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 strength. It's not a strong pattern as Michela mentioned, the Peruvian sol has appreciated 10% this year. We don't foresee if the commodity prices continue to be strong, probably the sol 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 win towards our economic performance as a whole.

And the Peruvian financial system should be a multiplier of that. And again, Interbank and Interseguro, Inteligo, we have a platform that can definitely 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. Casassa 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.

Good morning, and welcome to Intercorp Financial Services Third Quarter 2025 Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] It is now my pleasure to turn the call over to Ivan Peill from InspIR Group. Sir, you may begin.

Thank you, and good morning, everyone. On today's call, Intercorp Financial Services will discuss its third quarter 2025 earnings. We are very pleased to have with us Mr. Luis Felipe Castellanos, Chief Executive Officer, Intercorp Financial Services; Ms. Michela Casassa, Chief Financial Officer, Intercorp Financial Services; Mr. Carlos Tori, Chief Executive Officer, Interbank; Mr. Gonzala Basadre, Chief Executive Officer; Interseguro; Mr. Bruno Ferreccio, Chief Executive Officer; Interseguro.

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. Otherwise, if you need any assistance today, please call InspIR 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 may be made during this conference call. These do not account for future economic circumstances, industry conditions, the company's financial 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 third quarter 2025 earnings call. Thank you all for your interest and trust in IFS. We appreciate your continued support. We have continued to observe positive performance in Peru's economy with cumulative growth of 3.3% as of August. This momentum has been driven by increased activity in consumption-related sectors and sustained private investment, which is projected to grow by 6.5% by year-end. While we are maintaining a cautious outlook, given the international context on the pre-election period, Peru continues to benefit from a low inflation environment and a solid exchange rate which has appreciated close to 10% this year.

The country risk remains low. Even with the latest presidential transition, we haven't seen additional volatility. These factors reinforce Peru's position as one of the most dynamic and stable economies in the region. The political transition expected in 2026 does not suggest any major changes in financial stability. Prudent monetary management and strong institutions allow us to forecast continued growth supported by the resilience of the local market and investors' confidence. This quarter, IFS has sustained strong core results and profitability with an ROE of around 16%, even after a specific investment impact related to Rutas de Lima with a provision of PEN 78 million this quarter.

As you may be aware, the Rutas de Lima concession has become an ongoing issue between the municipality of Lima and the concession. What is currently reflected in our books corresponded to information available as of the reporting date. We're closely monitoring the situation as new developments unfold. Local and international legal proceedings will continue in the following months with final resolution not expected in the short term. Our total remaining exposure after in payments today amounts to approximately $60 million in sole equivalent, which represents less than 1% of our investment book at IFS. These results confirm our ability to adapt quickly and keep generating value in a challenging environment, reaffirming our commitment to long-term sustainability and profitability.

Interbank continues to grow in higher yielding loans, particularly in consumer and small business segments, now representing 22% of our loan portfolio. Stronger net interest margin and better-than-expected cost of risk have driven a solid improvement in risk-adjusted NIM, highlighting our discipline in effective risk and profitability management. Izipay and Interbank continue to capture joint business opportunities, while PLIN deepens user engagement, fostering more primary banking relationships and driving growth.

Interseguro continues to grow its core business with solid performance in private annuities and life insurance, even after the negative impact from Rutas de Lima this quarter. In addition, Interseguro continues to leverage synergies with Inteligo to expand private annuity sales and collaborating with Interbank to advance integrated bancassurance solutions that deliver greater value for our customers.

Inteligo, our Wealth Management segment also continues to grow double digit, achieving new record high in assets under management, thanks to our client, trust and consistent engagement. IFS remains committed to our strategy of focused and profitable growth, keeping our clients at the center of every decision. Our priority is to achieve digital excellence and deepen primary client relationships through comprehensive data-driven services and a differentiated experience, powered by our innovation and advanced analytic capabilities as our competitive advantage. Looking ahead, we remain optimistic about IFS and Peru's outlook. The company has demonstrated resilience in downturns and is well positioned to continue executing its growth strategy, maintaining profitability and reinforcing our leadership in the Peruvian market.

Now let me pass it on to Michela for further explanation of this quarter's results. Thank you.

Thank you, Luis Felipe. Good morning, and welcome, everyone, to Intercorp Financial Services Third Quarter Earnings Call. We would like to start with our key messages for the quarter. We had a very good third quarter as business momentum remains strong. Our accumulated net income is up by 81% compared to the same period last year, accumulating 17.4% ROE, which would have been 18.3%, excluding the one-off from Rutas de Lima. Net income from the quarter was PEN 456 million with an ROE of around 16%. .

Second key message, higher-yielding loans accelerated, showing a 7% growth in a year-over-year basis and 3% in the last quarter.

Third, risk-adjusted NIM continues with a positive strength, increasing 40 basis points in the last quarter, now at 3.8%, still with a low cost of risk of 2.1% and with some positive signs in the NIM recovering 10 basis points in the quarter.

Fourth, we continue to strengthen primary banking relationships. And as a result, our retail primary banking customers grew 6% last year.

Fifth, we had double-digit growth in our core business in wealth management and insurance with written premiums growing by 58% year-over-year due to the growth in private annuities and life insurance and wealth management assets under management are at new record highs with continued double-digit growth quarter-to-quarter.

Let's start with our first key message. Let me share an overview of the macroeconomic environment. Peru's GDP growth accelerated in the third quarter with the Central Bank revising its 2025 estimate upward to 3.2%, supported by strong nonprimary sector activity such as agriculture and mining. [ August ] growth reached 3.2%, bringing the year-to-date expansion to 3.3%. Agriculture grew by 6.4%, fueled by high international demand and mining remains strong. Construction services and commerce also saw growth above 5%, demonstrating solid domestic momentum. Private spending has been a key factor behind the economic growth throughout the year. Macroeconomic fundamentals remain stable with inflation contained near 1.7% for 2025. The Peruvian sole has strengthened around 10% this year and the reference rate lowered to 4.25%, maintaining favorable financial conditions for ongoing growth.

Overall, with a GDP growth projection of 2.9% for 2026 by the Central Bank, Peru is establishing itself as one of the fastest-growing economies in the region despite internal and external challenges. The Peruvian economy holds positive prospects for the coming years as it is well positioned to meet the global demand for commodities. Nevertheless, risks remain, particularly those related to political uncertainty and global market volatility.

On Slide 5, high prices for copper and gold continue to be one of the key drivers of Peru's economic growth, boosting export revenues, encouraging investment in mining and related sectors and supporting job creation. As a result, Peru's [ stance ] of trade are expected to remain at historic highs. In line with the positive economic environment, business expectations remain stable with seeing optimistic ranges and consumer confidence continues to improve, supporting domestic demand. The general demand projection for 2025 has been revised upward by the Central Bank to 5.1%, driven mainly by solid growth in private investment and consumption.

In the first 6 months of the year, internal demand expanded by 6.2%, with private investments up 9% led by double-digit growth in non-mining investments and private consumption rising by 3.7%. Looking ahead to 2026, internal demand is expected to moderate to 2.9%, with private consumption stabilizing at 2.9% and private investment reaching 3.5%. Additionally, there is an extensive pipeline of projects in mining and infrastructure scheduled for the coming years. In this environment, while we observed an acceleration in retail lending during the third quarter, we anticipate that this pace will likely moderate during the last quarter of the year, given the expected outflows from the private pension funds.

On Slide 6, during the third quarter, we achieved a 17% year-over-year increase in earnings, reaching an ROE close to 16%. That said, this ROE marked a slight decrease from the previous quarter, mainly due to 2 factors. First, the last quarter, Inteligo delivered results related to investment portfolio that surpass expectations. And second, this quarter, Interseguro registered the impact of the Rutas de Lima provision of PEN 78 million, as previously mentioned. On the positive note, the bank saw a reversal of provisions related to Integratel, previously Telefonica for PEN 20 million. If we exclude Rutas de Lima and Integratel, IFS ROE would stand at 17.5%, which brings us closer to our medium-term target.

I want to particularly highlight the bank's strong performance this quarter, which is not only attributed to a lower cost of risk, but also to an improved net interest margin in line with growth of higher-yielding loans, fee income and positive results from the investment portfolio. Excluding the effect from Integratel, the bank's ROE would have been 16%, which represents an improvement both year-over-year and compared to the previous quarter. Furthermore, the core business of Interseguro and Inteligo continued to post double-digit growth.

On Slide 7, I would like to highlight the positive strength of our ROE throughout the year. For the first 9 months of 2025, our ROE stands at 17.4%. And excluding the Rutas de Lima effect, ROE would have reached 18.3%. This has been a solid quarter across all IFS business lines with our core operations as the main drivers of profitability. This performance positions us well to continue advancing towards our medium-term goals.

On Slide 8, our accumulated earnings are up 81% compared to the same period last year with an accumulated ROE at 17.4%, both Interbank and Interseguro have achieved relevant growth, each posting increases of more than 60% year-over-year. Inteligo, in particular, has seen its earning more than triple, which speaks to the strength and resilience of our diversified portfolio. Another positive highlight is the growing diversification of IFS earnings. In the first 9 months of the year, the bank contributed around 70% of total earnings, showing the increasing relevance of our other segments.

Now let's turn to Slide 9, where we take a closer look at IFS revenues, which grew 9% year-over-year. At the bank level, top line is growing 4% in the quarter as we are beginning to see a recovery in our net interest margin on top of good results in fee income. This is driven primarily by accelerated growth in the higher-yielding loans, which starts to positively impact our average yield. Interseguro continued to demonstrate strong revenue trends in line with high investment valuations while insurance results improved thanks to growth in annuities. Finally, at Inteligo, fee income continues to grow and the portfolio results have returned to more normalized levels.

On Slide 10, we wanted to double click on the fee income evolution, which continues to demonstrate good dynamics with a cumulative 8% increase year-over-year. At the bank level, this growth is supported by retail on one hand, given the increased debit and credit card activity and by commercial banking on the other, reflecting results from our strategy of deepening client relationships and strengthening our ecosystem. Wealth management also posted notable growth with fee income increasing 17% year-over-year as a result of the ongoing expansion in assets under management.

In line with our strategy, the transformation for acquiring business model continues, positioning Izipay as a key complementary component within our commercial banking product suite. This has enabled us to strengthen client relationships and increase float balances, although it has resulted in a compression of merchant margins impacting fee income. These developments are taking place and the growing competition in the market and the fast adoption of QR codes with no fees.

On Slide 11, IFS expenses increased by 6% year-over-year 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 AI capabilities alongside ongoing efforts to strengthen leadership within key teams, reflecting a recognition of the [indiscernible] role talent place in delivering our strategy. Consequently, the cost-to-income ratio at IFS level stands at 37.7%.

Now let's move on to the second key message. On Slide 13, we see a positive trend in higher-yielding loans. Our total loan portfolio expanded by over 5% year-over-year, outperforming the market. This positive momentum was driven by the acceleration in higher-yielding loans, which grew 7% over the past year and 3% in the last quarter. The robust macroeconomic activity is reflected in increased disbursement by 34% in cash loans and by 56% in small businesses. In this last case, most of our current disbursements are now traditional loans, which include sales financing, collateralized loans and unsecured loans, which have higher rates compared to last year in [ Pulser ni Peru ] loans.

This segment continues to expand with average rates increasing by over 150 basis points in the past year. Overall, in retail banking, the [ Assurant ] segment was the one which started the recovery in growth with an 8% growth year-over-year and 2% in the last quarter. But now the mass market segment has now grown for 2 straight quarters, increasing 3% in the last quarter and beginning to regain scale. On the commercial side, the decline in the quarter is mainly attributable to the corporate segment, impacted by loan maturities and by some companies turning to the capital markets. However, midsized companies continue to perform well, up 5% year-over-year and small businesses, up 33% year-over-year now representing almost 4% of our total portfolio.

On Slide 14, we wanted to double click on the consumer portfolio, which accelerated in the last quarter. In personal loans, we've seen a significant uplift in digital channel performance, driven by enhanced personalization of communication journeys and continuous improvements to our website. Disbursement rose 51% supported by increased lead generation and additional loans to existing customers. We also redesigned our pricing strategy with a customer-centric approach, enhancing our value proposition and driving higher conversion rates. The current mix starts to shift towards higher-yielding segments, supported by growth in the mass market clients with good risk profile. Still, the retail cost of risk is at very low levels.

In credit cards, transactional activity continues to grow as turnover rose 9% year-over-year. Looking ahead, we remain optimistic about our growth prospects, although we recognize that challenges persist. In particular, pension fund withdrawals would likely affect consumer loan disbursements in the coming quarters. Nevertheless, our continuous focus on higher-yielding segments and prudent portfolio management position us well to navigate these market conditions. As part of our strategy, we continue to strengthen our payments ecosystem with PLIN and Izipay.

On Slide 15, 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 Izipay as both a distribution network for Interbank products and a source to increase growth. In particular, the commercial [ things ] from both Izipay and the bank are collaborating more efficiently, allowing us to deliver integrated solutions and maximize the value we bring to our clients.

PLIN transactions grew 38% over the last year, and our digital retail customers reached 83%. We introduced PLIN [ Corredores ], extending our digital payment services to the transport sector through Metropolitan and Corredores, and we recently launched PLIN [ webchat ] offering a new digital experience for our clients, which allows them to pay without using the app directly from webchat, both by typing the instructions and through voice, boosted by AI. This is our first example of conversational banking, and we will continue to evolve this offering with new features in the near future.

Continuing with our strategy, Izipay continues to show strong momentum in the small business segment with flows from Izipay up 60% over the past year. This growth has contributed to the 20% increase in deposits which now accounts for 10% of wholesale deposits or 26% of wholesale low-cost deposits. The flow from Izipay expanded by 31% in the same period as interim share of Izipay flow is around 39%. Following with the third message, we see improvement in risk-adjusted NIM.

On Slide 17, let me share a quick update on asset quality. Our quarterly cost of risk continues on a low level at 2.1% in the quarter or 2.3%, including the one-off impact related to the Integratel provision reversal previously Telefonica. On the retail segment, the cost of risk continues to decrease, now standing at 4% representing a decline of 130 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 7% year-over-year, supported by healthier customers with new loans -- while new loans are showing a good performance in the new vintages.

On the commercial side, asset quality remains robust. The cost of risk stands at approximately 0.4% excluding Integratel and performance has been stable throughout the year. Looking ahead, as our consumer and small business portfolios keep expanding, now representing 22% of our total portfolio, we should expect the cost of risk to gradually increase. Still, our nonperforming loan ratios are holding steady, and our coverage levels are solid above 140%. All in all, these results underscore an improving operating environment and demonstrate our prudent approach to portfolio management is enabling us to deliver sustainable growth.

On Slide 18, there are some good news to highlight in terms of yields and risk-adjusted NIM. Over the past quarter, our risk-adjusted NIM improved by 60 basis points with a notable 40 basis points increase in the last quarter, in line with the lower cost of risk as previously mentioned. The good news is that yields started to recover last quarter, rising by 10 basis points. This recovery was driven by higher rates in both retail and commercial banking, especially with the higher yielding loans where we observed more than a 30 basis points improvement in the average year. Additionally, part of the improvement in yield can also be attributed to the acceleration in growth of our mass market segment, which continues to gain momentum and contribute positively to our results. As a result, NIM saw a 10 basis point increase quarter-over-quarter.

On Slide 19, the cost of deposits declined by 40 basis points year-over-year and 10 additional basis points in the quarter, supported by lower market rates and a health care funding mix with a focus on low-cost funds. Deposits have also become a more relevant part of our funding structure, representing around 81%. Although there is a seasonal decrease in total deposits we are expecting a recovery towards year-end as we expect to capture a nice part of the pension funds withdrawal similar with what we achieved in the previous withdrawals. Cost of deposits continues to show a clearly positive trend as we see further potential for reduction going forward as the portion of efficient funding now at 36% continues to improve. As a result, our overall cost of funds fell by 50 basis points compared to last year and 10 basis points during the quarter with a loan to deposit ratio of 96%, in line with the industry average.

Moving on to our digital strategy. We continue to drive meaningful value and strengthen primary banking relationships through our digital initiatives, particularly with PLIN. Over the past year, we have grown our retail primary banking customer base by 6%, now representing more than 34% of our total retail clients. Monthly active PLIN users reached 2.5 million, each completing an average of 27 transactions for a total of 38% more transactions versus last year. P2M payments remains a core driver of engagement now accounting for 71% of all transactions. Within this segment, QR POS payments expanded to 2.6 million monthly transactions, up 44% year-over-year. Finally, we believe we have solid key performance indicators that continue to improve. For example, our inflow payroll accounts hold around 13% market share, retail deposits are at approximately 15%, and credit cards account for about 26%. All of these metrics are supported by an NPS of 56%, reflecting our commitment to customer satisfaction and loyalty.

On Slide 22, we continue to 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. Our retail digital customer base increased from 80% to 83%, while commercial digital clients now stand at 73%. We've also made progress in self-service and digital sales. Our self-service indicator reached 82% and digital sales climbed to 68%. While the latest NPS reading, we have shown an improvement to 56% and our internal data reflects a clear recovery all year. This progress was reinforced by contextual and automated communications. Also, we developed predictive models with personalized outreach. Finally, we introduced a fully digital onboarding flow through interbank.pe, empowering seamless user and password creation for the app.

Finally, solid results with double-digit growth in the core businesses of Wealth Management and Insurance. On Slide 24, we highlight the strong performance in our wealth management business this quarter. Inteligo continues to show solid momentum. Assets under management have grown at a double-digit pace, reaching new highs and now totaling PEN 8.1 billion. Fee income continues to improve, up 16% year-over-year adding to the positive trend in results, and there is a slight improvement in fees over assets under management. Additionally, we would like to highlight the progress we are making in synergies with the bank.

We have now launched a dedicated mine investment sections within the Interbank app, enabling clients to conveniently manage their investments directly from the same platform. This integration marks another step forward in delivering a unified experience for our customers with offerings converging within business segments. On the digital front, we continue to enhance our Interfondos app with the goal of shifting its role from a transactional platform to a true digital adviser for our mutual bank clients. As a result, we have seen a sustained increase in both the app adoption with a 5-point year-over-year increase and digital transactions, which grew by 2 points annually and represents more than half of all client transactions.

Now moving to insurance on Slide 26. We continue to see good results in the contractual service margin, which grew 19% year-over-year, mainly driven by individual life. In the third quarter, sales for individual life and annuities increased by 36% and 15%, respectively, supported by strong new business generation that more than offset the monthly amortization of the 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 digital ones. In simplifying the product to reach new segments and keep supporting growth. Additionally, short-term insurance premiums grew by over 10% driven by disability and survivorship premiums acquired through a 2-year bidding process from the Peruvian private pension system.

On the investment side, as mentioned before, results were impacted by 78 million impairment from [ Butadelin ]. The return on the investment portfolio decreased to 4.1%. It would have been 6.1% without this effect. There is still uncertainty around the timing and amount of recovery as legal proceedings continue to develop. As of today, we have provisioned around 40%. Hence, our exposure net of impairment is around PEN 200 million or PEN 60 million. In insurance, we continue to focus on enhancing the digital experience as well and expanding ourselves from digital channels. The development of internal capability has allowed us to increase digital self-service to 71% from 65% of the previous year and the direct sales to grow 19% in the last year.

Now let me move to the final part of the presentation where we provide some takeaways. 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 business, which increased by 33% year-over-year, now with a market share of around 4%. The commercial portfolio as a whole grew 7% year-over-year, gaining 30 basis points of market share. This strong performance is supported by 3 main strategies: first, deepening relationships with key midsized company clients, where we continue to gain share of wallet and unlock additional cross-sell opportunities.

Second, expanding our position in sales financing where we have become the second largest player in the system. And third, leveraging synergies with Izipay to enhance our value proposition, especially in the small business segment where our digital payment capabilities set us apart. In this quarter, the consumer portfolio began to show signs of growth. At the same time, the mortgage segment continues its positive trajectory, achieving a market share of 16%. The -- in insurance, we are maintaining our focus on long-term products as individual life has shown encouraging growth this past quarter. Finally, in wealth management, assets under management continued to grow at a healthy pace, up 13%, reaching new record levels and reflection on both market performance and continued client engagement.

On Slide 30, let me give a review of the operating trends of the accumulated numbers as of September. Capital ratios remain at sound levels, with a total capital ratio of around 15% and core equity Tier 1 ratio above 12%. Our ROE for the first 9 months of the year was 17.4%, above our guidance for 2025. As mentioned before, we expect the last quarter to go back to more normal levels and year-end ROE could be closer to 17%, although it remains dependent on the impact of Rutas de Lima and its potential impact on the fourth quarter, if any. For loan growth, we grew 5% year-over-year, a bit below our guidance but still above the system. Year-end growth will likely remain at similar levels. We expect a slight recovery in NIM over the remainder of the year.

On the positive side, cost of risk is expected to remain well below guidance, helping to offset lower margins. As a result, we anticipate a slight improvement in our risk-adjusted NIM for the full year. Finally, we continue to focus on efficiency at IFS as our cost income was around 37% within guidance.

On Slide 31, we highlight our strong sustainability performance for the third quarter of 2025. On the environmental front, we have made significant progress. Our sustainable loan portfolio now exceeds or is around PEN 350 million, supporting projects with a measurable positive impact, especially in the industrial and agricultural sectors. We enhanced internal capabilities by providing climate technology training to 30 executives, boosting green finance across agriculture, fishing, energy and mining. For the first time, we measure finance emissions in Interbank's commercial portfolio following the PCAF standard focusing on agriculture, fishing and energy, which represent 18% of the portfolio.

On the social side, we keep promoting inclusive growth in workplace diversity. Interbank was ranked #5 in the Great West towards sustainable management ranking with Interseguro, Inteligo Group and Izipay, also among the best workplaces. Interbank's antiharassment program poses was recognized by the UN Global Compact as a best practice. In governance, Interseguro Inteligo Group published their 2024 sustainability reports, and we strengthened our participation in key ESG assessments.

Let me finalize the presentation with some key takeaways. First, the business momentum remains strong. Second, we see higher yielding loans accelerating. Third, we have an improving risk-adjusted NIM. Fourth, we continue to strengthen primary banking relationships. Fifth, wealth management and insurance, both core businesses growing double digit. Thank you very much. Now we welcome any questions you may have.

[Operator Instructions] And your first question comes from Yuri Fernandes from JPMorgan.

Michela, Luis, everybody. I have a question regarding Rutas de Lima, I think this is a broader process, right, Brookfield, to collections, concession. It's a broad topic. I would like to understand a little bit the level of impairment you did on your exposure in the insurance company. Because I think Michela mentioned in the end that this could or could not be a problem in the fourth quarter. So I'd like to understand how much of the impairment reflects your exposure already or not? And what is your outlook for that case? .

And then a second question regarding the growth for retail in light of the pension withdraw. How much the drop impact the growth? What is your growth expectations for maybe like especially I think in retail, but if you can comment a little bit more broadly, how much that can impact your growth outlook for the year near term?

Okay, Yuri. Well, thanks very much for your 2 questions. I'm going to give answers, and then I'm going to pass it on to the team to complement. As Michela mentioned, our exposure right now considers around 40% of impairment already. It's tough to give you an outlook, given that this, as we mentioned, this is broader thing between Brookfield and municipality, there's legal procedures going around. That 40% I mentioned was booked with all the information we have at the moment of the closing of the quarter, then things have evolved since then.

So I think it's early to really give you an expectation. However, we are closely monitoring that situation. And regarding the retail growth, it's the pension has a couple of effects. It's not only that is growth, but it has short-term positive impacts regarding funding and people bringing money from those funds to intervene. So it has an offset -- a positive profit in the cost of funds and the activity but for number one, I'm going to pass it on to Gonzala to see if he wants to complement anything.

And then for number two, I'm going to pass it on to Carlos so he can give you a little bit more on his view on the potential specific growth impact of the pension fund release. Gonzala?

Sure. Thanks, Felipe. As Felipe mentioned, we have already reduce the value of our holdings in Rutas de Lima in 40%. We're still waiting on what happens with the [indiscernible] that Rutas de Lima has placed. We'll have more information before the end of the fourth quarter. Where we'll be able to give a more precise value of those holdings. Still, the total position of Rutas de Lima represents less than 1% of the whole IFS investment holdings. So even though we take a lot of -- we're taking a lot of time to sort this out. It's its impact will be -- will not be -- it's not important in the total IFS.

And Carlos, can you help us in the growth question?

As Felipe mentioned, the ISP withdrawals have several impacts. But to answer your question, and then I'll go a little bit deeper. The last few withdrawals have flattened growth or even made their consumer loans in the market decrease 1% or 2%. That has been the effect in the past. This one might be a little bit different because there's other factors going on. The first one is in Peru, all salary workers get a double salary in December. So December traditionally is very liquid, and that helps, obviously, consumption reduces a little bit of outstandings but helps with collections. So this year, in December, we will have that, and we will have a portion -- a large portion of the ASP.

So it will be a very liquid. We expect a lot of transactions -- we don't know exactly if the amount of loans increase or stay flat. But for sure, it will have a good impact in collections and cost of risk in December. The ASP withdrawals have 4 parts, right? You get it in 4 different months. But the first month is the largest in terms of the system because the people that don't have the full amount to withdraw get it in the first one. So the first one is the largest one. And in addition to all of that, in November, salaried workers in Peru also get long-term compensation, let's call it. And that has also been released. So there will be it in November and December. So there's a lot of moving parts. But again, it will be liquid -- that is good for collections and more funding. There will be a lot of consumption and transactions and then the effect. On the amount of loans probably is flat or negative for 1 or 2 months and then we will resume growth.

So basically, marginally negative, with asset quality, good for deposits maybe 1%, 2% down, and then we should see a recovery in retail, right? That's basically the message.

Yes. I don't know if it's 1% or 2% or flat. So to tell you truth, we see. It depends on the amount of consumption. But yes, that's one part now it's a short-term effect.

[Operator Instructions] And at this time, we will take the webcast questions.. I would like to turn the floor over to Mr. Ivan Peill from InspIR Group.

Thank you, operator. The first question comes from Daniel Mora of CrediCorp Capital.

Can you provide more details about the expected loan growth for 2025 and 2026. Specifically, I want to understand whether the acceleration of credit card loans this quarter should be maintained throughout 2026. What is the expected growth of credit cards for the next year and the effect on the net interest margin?

Okay. Great. Thank you, Daniel, for your questions. Let me touch straight to Carlos. Actually, he's working butcher right now. I don't know if he is going to be able to answer all the questions, but probably have more deep sense on that front right now.

Exactly. We're working on our budget. So bottom line is in the third quarter, we accelerated growth in credit cards and consumer finance, and we expect to continue accelerating having -- I mean having the impact of the AFPs in the short term, but in 2026, we expect to continue to accelerate. The way we look at it or the way we look at this is usually, the system grows at 2x to 2.5x, 2x GDP. So consumer loans grow at 2x GDP, as a multiplier, and we want to gain market share.

So we will probably grow a little bit ahead of that. Our risk appetite has also increased slightly due to the good performance of our portfolio over the last few quarters, but also due to the expectations of the macro environment in Peru. So that's kind of what we expect. This will not be linear as I just explained, the AFPs will have a short-term effect, probably the end of November a little bit definitely in December and some in January but then growth should resume. And then NIM will be -- will grow in line with our growth in regards and also will be positively affected marginally by lower cost of funds. So that's kind of the expectation.

The next question comes from [ Elan Comite ].

What is your expectation for corporate level disbursements in Peru regarding 2026 as a presidential election year.

Okay. So if I understand correctly, the expectations is the corporate level disbursements understand that corporate banking activity. Again, it's an election year activity depending on how the situation evolves should continue to pick up is the continued investment perspective materialize. So I guess, low book growth and corporate activity should continue in a milestone. We don't see any big project coming in line in the coming months. So it's going to be probably more replenishment of working capital or is more CapEx and some refinancings. So probably growth is not going to be great in that front. But let me pass it on to Carlos so he can complement to see what he's seeing.

No, I agree. I agree. There's no large projects coming in line. There has been some bond offense over the last couple of weeks of Peruvian corporate. So that obviously becomes prepayment for the banks. Interest rates are more attractive for corporate, and they have been evolved downwards. So there's a lot of refinancing of short-term loans to longer, we don't foresee a high growth in that segment for the next few quarters.

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

And there appear to be no further audio questions at this time. I'd like to turn the floor over to management for closing remarks. .

Okay. Thank you very much, and thanks again, everybody, for joining the call, and we'll see each other back again to discuss our year-end results for 2025. Thanks again.

This concludes today's conference call. You may now disconnect your lines.