Intercorp Financial Services 6K Third Quarter 2023 Earnings | IFS 8 Nov 23


Exhibit 99.1

Intercorp Financial Services Inc.

Third Quarter 2023 Earnings

Lima, Peru, November 8, 2023. Intercorp Financial Services Inc. (Lima Stock Exchange/NYSE: IFS) announced today its unaudited results for the third quarter 2023. These results are reported on a consolidated basis under IFRS in nominal Peruvian soles.

Intercorp Financial Services: 3Q23 earnings of S/ 195.2 mm impacted by CoR and investment results

• Total revenues grew 3.8% QoQ, banking NIM stable at 5.6%

• Deceleration in fees due to decreased level of activity

• Solid efficiency levels, IFS C/I ratio at 33.8%

• ROE impacted by CoR and investment results

Banking: 3Q23 profitability still affected by rising cost of risk in retail

• NIM remains stable at 5.6%, as rising funding costs offset increasing yields

• Tight management of expenses further improves efficiency ratio to 36.5% in 3Q23

• Contained NPLs and strong coverage despite high growth in provisions

• Increasing market shares with moderation in consumer loans

Insurance: 3Q23 earnings of S/ 35.5 million

• Negative translation result in 3Q23 spoiled an otherwise good quarterly performance in insurance income

• ROIP of 6.0% in 3Q23 was flat compared to 2Q23, but lower than the 7.9% registered in 3Q22

• Market leader in annuities with a 30.5% share in 3Q23

• For periods prior to 2023, a reconstruction of results appropriate to the first adoption of IFRS17 has been performed for comparative purposes

Wealth Management: Results affected by negative impacts on investment portfolio

• Investment income still impacted by market conditions

• Slight quarterly growth in fees from financial services

• AuM grew 6% QoQ

Payments: Resilient business activity

• Payments acquirer fees increased 4% QoQ and 8% YoY

• Number of affiliated merchants and transactional volumes continue to expand

• Share of e-commerce transactions within Izipay slightly grew from 16.6% to 16.9% YoY

Intercorp Financial Services

SUMMARY

Intercorp Financial Services’ Statement of financial position (1)


S/ million	09.30.22			06.30.23			09.30.23			%chg 09.30.23/ 06.30.23			%chg 09.30.23/ 09.30.22
Assets
Cash and due from banks and inter-bank funds		12,941.6			11,159.1			11,106.4			-0.5	%		-14.2	%
Financial investments		24,899.4			25,561.1			25,484.2			-0.3	%		2.3	%
Loans, net of unearned interest		47,128.8			48,399.9			49,379.8			2.0	%		4.8	%
Impairment allowance for loans		(2,034.7	)		(2,173.8	)		(2,301.9	)		5.9	%		13.1	%
Property, furniture and equipment, net		787.6			782.0			797.3			2.0	%		1.2	%
Other assets		4,982.9			4,609.3			4,893.3			6.2	%		-1.8	%
Total assets		88,705.6			88,337.6			89,359.0			1.2	%		0.7	%
Liabilities and equity
Deposits and obligations		49,279.7			48,734.6			49,074.9			0.7	%		-0.4	%
Due to banks and correspondents and inter-bank funds		8,510.7			9,484.8			9,972.2			5.1	%		17.2	%
Bonds, notes and other obligations		8,192.9			5,620.8			5,845.9			4.0	%		-28.6	%
Insurance contract liabilities		10,535.0			11,935.2			11,564.2			-3.1	%		9.8	%
Other liabilities		3,162.7			3,171.0			3,268.5			3.1	%		3.3	%
Total liabilities		79,681.0			78,946.4			79,725.7			1.0	%		0.1	%
Equity, net
Equity attributable to IFS' shareholders		8,974.2			9,336.8			9,577.5			2.6	%		6.7	%
Non-controlling interest		50.5			54.4			55.9			2.7	%		10.7	%
Total equity, net		9,024.6			9,391.1			9,633.3			2.6	%		6.7	%
Total liabilities and equity net		88,705.6			88,337.6			89,359.0			1.2	%		0.7	%

(1)

Figures as of 09.30.22 have been re-expressed for comparison purposes due to IFRS17 adoption.

Intercorp Financial Services’ net profit was S/ 195.2 million in 3Q23, representing a decrease of S/ 135.8 million QoQ, or 41.0%, and S/ 371.6 million YoY, or 65.6%.

It is worth mentioning that IFS’ results in 3Q22 were supported by extraordinary income of S/ 222.5 million from revaluation of Izipay’s assets at IFS. Excluding such impact, profits would have resulted in S/ 344.3 million in 3Q22, resulting in a decrease of S/ 149.1 million YoY, or 43.3%.

IFS’s annualized ROE was 8.2% in 3Q23, below the 14.3% registered in 2Q23 and the 25.9% reported in 3Q22. For a comparison basis, ROE would have resulted in 16.0% in 3Q22, when excluding the above-mentioned extraordinary income in such quarter.

Intercorp Financial Services’ P&L statement (1)


S/ million	3Q22			2Q23			3Q23			%chg QoQ			%chg YoY
Interest and similar income		1,547.1			1,808.3			1,849.0			2.2	%		19.5	%
Interest and similar expenses		(462.9	)		(645.1	)		(681.2	)		5.6	%		47.2	%
Net interest and similar income		1,084.3			1,163.3			1,167.8			0.4	%		7.7	%
Impairment loss on loans, net of recoveries		(209.6	)		(416.8	)		(581.2	)		39.4	%	n.m.
Recovery (loss) due to impairment of financial investments		(6.9	)		1.1			3.8		n.m.			n.m.
Net interest and similar income after impairment loss		867.7			747.6			590.4			-21.0	%		-32.0	%
Fee income from financial services, net		316.3			298.9			290.5			-2.8	%		-8.2	%
Other income		306.4			85.0			105.3			23.8	%		-65.6	%
Insurance results		(51.3	)		(34.2	)		(28.8	)		-16.0	%		-44.0	%
Other expenses		(673.5	)		(690.3	)		(688.5	)		-0.3	%		2.2	%
Income before translation result and income tax		765.6			406.9			268.8			-33.9	%		-64.9	%
Translation result		(58.9	)		27.1			(42.7	)	n.m.				-27.5	%
Income tax		(140.0	)		(103.0	)		(31.0	)		-70.0	%		-77.9	%
Profit for the period		566.8			331.0			195.2			-41.0	%		-65.6	%
Attributable to IFS' shareholders		564.1			329.0			193.8			-41.1	%		-65.7	%
EPS		4.89			2.85			1.69
ROE		25.9	%		14.3	%		8.2	%
ROA		2.6	%		1.5	%		0.9	%
Efficiency ratio		31.2	%		35.1	%		33.8	%

(1)

Figures for 3Q22 have been re-expressed for comparison purposes due to IFRS17 adoption.

Quarter-on-quarter performance

Profits decreased S/ 135.8 million QoQ, or 41.0%, mainly due to a S/ 164.4 million increase in impairment loss on loans, net of recoveries, together with an S/ 8.4 million decrease in net fee income from financial services, and a negative performance in translation result. These factors were partially offset by a S/ 20.3 million increase in other income, a S/ 5.4 million improvement in insurance results, a S/ 4.5 million increase in net interest and similar income, and a S/ 1.8 million decrease in other expenses.

Impairment loss on loans, net of recoveries, increased S/ 164.4 million QoQ, or 39.4%, explained by higher provision requirements in both retail and commercial loan portfolios of our Banking business.

Net fee income from financial services decreased S/ 8.4 million QoQ, or 2.8%, mainly attributed to lower commissions from banking services and collection services, as well as higher fees paid to foreign banks in our Banking business.

Other income increased S/ 20.3 million QoQ, or 23.8%, mainly explained by a base effect related to a negative performance at the holding company level in 2Q23, as well as positive developments in valuation gain from investment property, and in net gain on sale of financial investments in our Insurance business. This was partially compensated by a mark-to-market loss on proprietary portfolio investments in our Wealth Management business, in turn attributable to negative global market trends, in addition to lower net gain on foreign exchange transactions and on financial assets at fair value through profit or loss in our Banking business.

Insurance results improved S/ 5.4 million QoQ, as a result of higher insurance income from individual life, partially offset by higher insurance expenses in annuities.

Net interest and similar income slightly increased S/ 4.5 million QoQ, or 0.4%, mainly due to higher average yields on all components of interest-earning assets in our Banking business, partially offset by a reduction in interest income in our Wealth Management business, in turn explained by lower dividends received from proprietary portfolio investments and lower levels of excess liquidity during the quarter.

Other expenses slightly decreased QoQ, mainly as a result of tight management of expenses in our Banking business.

Year-on-year performance

Profits decreased S/ 371.6 million YoY, or 65.6%, mainly due to an increase of S/ 371.6 million in impairment loss on loans, net of recoveries, in addition to a S/ 201.1 million reduction in other income, a S/ 25.8 million decrease in net fee income from financial

services, and S/ 15.0 million higher other expenses. These factors were partially offset by an S/ 83.5 million increase in net interest and similar income, and a S/ 22.5 million improvement in insurance results.

Impairment loss on loans, net of recoveries increased S/ 371.6 million YoY, or more than two-fold, due to higher requirements in both retail and commercial loan portfolios of our Banking business.

Other income decreased S/ 201.1 million YoY, or 65.6%, explained by the base effect of extraordinary income for S/ 222.5 million registered in 3Q22, from revaluation of Izipay’s assets at IFS.

Net fee income from financial services declined S/ 25.8 million YoY, or 8.2%, mainly attributed to lower commissions from banking services, commissions from credit card services, and fees from collection services and indirect loans in our Banking business.

Other expenses grew S/ 15.0 million YoY, or 2.2%, mainly due to higher salaries and administrative expenses in our Insurance business, as well as increased administrative expenses associated with higher customer acquisition and higher depreciation charges as a result of growth in the operations in our Payments business.

Net interest and similar income increased S/ 83.5 million YoY, or 7.7%, mainly explained by higher interest income and yields across all components of interest-earning assets in our Banking business, partially offset by lower interest income in our Insurance business, in turn attributed to a decrease in inflation-linked returns, as well as in our Wealth Management business, related to higher interest expense on deposits, which was attributed to the increases in the reference interest rate of the FED.

Insurance results improved S/ 22.5 million YoY, as a result of higher insurance income which more than offset higher insurance expense.

CONTRIBUTION BY BUSINESS

The following table shows the contribution of Banking, Insurance, Wealth Management and Payments businesses to Intercorp Financial Services’ net profit. The performance of each of the four segments is discussed in detail in the following sections.

Intercorp Financial Services’ Profit by business (1)


S/ million	3Q22			2Q23			3Q23			%chg QoQ			%chg YoY
Banking		365.6			274.4			196.2			-28.5	%		-46.3	%
Insurance		53.8			87.9			35.5			-59.6	%		-34.1	%
Wealth Management		(41.0	)		21.5			(17.7	)	n.m.				-56.9	%
Payments		11.7			9.4			7.4			-21.2	%		-36.7	%
Corporate and eliminations		176.7			(62.1	)		(26.3	)		-57.7	%	n.m.
IFS profit for the period		566.8			331.0			195.2			-41.0	%		-65.6	%

(1)

Figures for 3Q22 have been re-expressed for comparison purposes due to IFRS17 adoption.

Interbank

SUMMARY

Interbank’s profits were S/ 196.2 million in 3Q23, a decrease of S/ 78.2 million QoQ, or 28.5%, and S/ 169.4 million YoY, or 46.3%. The quarterly performance was mainly attributed to an increase of S/ 164.3 million in impairment loss on loans, net of recoveries, as well as reductions of S/ 9.4 million in net fee income from financial services and S/ 5.8 million in other income. These factors were partially offset by an increase of S/ 11.0 million in net interest and similar income, as well as a reduction of S/ 7.0 million in other expenses, together with a positive development in translation result.

The annual performance in net profit was mainly explained by an increase of S/ 371.6 million in impairment loss on loans, net of recoveries, in addition to reductions of S/ 14.3 million in net fee income from financial services and S/ 5.5 million in translation result. These effects were partially compensated by an increase of S/ 121.5 million in net interest and similar income.

Interbank’s ROE was 10.2% in 3Q23, lower than the 14.8% reported in 2Q23 and the 21.4% registered in 3Q22.

Banking Segment’s P&L Statement


S/ million	3Q22			2Q23			3Q23			%chg QoQ			%chg YoY
Interest and similar income		1,260.6			1,544.5			1,590.9			3.0	%		26.2	%
Interest and similar expense		(418.6	)		(592.0	)		(627.3	)		6.0	%		49.9	%
Net interest and similar income		842.0			952.5			963.5			1.2	%		14.4	%
Impairment loss on loans, net of recoveries		(209.6	)		(416.9	)		(581.2	)		39.4	%	n.m.
Recovery (loss) due to impairment of financial investments		(0.3	)		0.1			(0.0	)	n.m.				-83.3	%
Net interest and similar income after impairment loss		632.1			535.8			382.3			-28.6	%		-39.5	%
Fee income from financial services, net		213.0			208.1			198.7			-4.5	%		-6.7	%
Other income		119.7			126.0			120.2			-4.6	%		0.4	%
Other expenses		(487.7	)		(497.5	)		(490.5	)		-1.4	%		0.6	%
Income before translation result and income tax		477.2			372.4			210.6			-43.5	%		-55.9	%
Translation result		12.3			(10.4	)		6.8		n.m.				-44.2	%
Income tax		(123.9	)		(87.6	)		(21.2	)		-75.9	%		-82.9	%
Profit for the period		365.6			274.4			196.2			-28.5	%		-46.3	%
ROE		21.4	%		14.8	%		10.2	%
Efficiency ratio		40.1	%		37.3	%		36.5	%
NIM		5.0	%		5.6	%		5.6	%
NIM on loans		7.8	%		8.6	%		8.5	%

INTEREST-EARNING ASSETS

Interbank’s interest-earning assets reached S/ 66,569.9 million as of September 30, 2023, an increase of 1.0% QoQ and 0.3% YoY.

The quarterly growth in interest-earning assets was explained by increases of 1.9% in loans and 0.9% in financial investments, partially offset by a 2.6% decrease in cash and due from banks and inter-bank funds.

The YoY increase in interest-earning assets was attributed to growth of 5.3% in loans, partially compensated by decreases of 14.0% in cash and due from banks and inter-bank funds, and 4.3% in financial investments.

Interest-earning assets


S/ million	09.30.22		06.30.23		09.30.23		%chg 09.30.23/ 06.30.23			%chg 09.30.23/ 09.30.22
Cash and due from banks and inter-bank funds		11,144.2		9,837.3		9,579.5		-2.6	%		-14.0	%
Financial investments		12,025.9		11,409.5		11,508.2		0.9	%		-4.3	%
Loans		43,176.0		44,648.2		45,482.2		1.9	%		5.3	%
Total interest-earning assets		66,346.1		65,894.9		66,569.9		1.0	%		0.3	%

Loan portfolio


S/ million	09.30.22			06.30.23			09.30.23			%chg 09.30.23/ 06.30.23			%chg 09.30.23/ 09.30.22
Performing loans
Retail		22,405.6			25,057.7			25,186.0			0.5	%		12.4	%
Commercial		20,640.4			19,538.2			20,028.9			2.5	%		-3.0	%
Total performing loans		43,046.0			44,595.9			45,214.9			1.4	%		5.0	%
Restructured and refinanced loans		288.1			345.3			403.8			16.9	%		40.2	%
Past due loans		1,425.2			1,363.7			1,571.4			15.2	%		10.3	%
Total gross loans		44,759.3			46,304.9			47,190.1			1.9	%		5.4	%
Add (less)
Accrued and deferred interest		451.1			516.9			593.9			14.9	%		31.7	%
Impairment allowance for loans		(2,034.3	)		(2,173.6	)		(2,301.7	)		5.9	%		13.1	%
Total direct loans, net		43,176.0			44,648.2			45,482.2			1.9	%		5.3	%

The evolution of performing loans continued to be affected by the disbursement and maturity or prepayment of commercial loans under the Reactiva Peru Program. As of September 30, 2023, these performing loans amounted S/ 773.2 million, compared to balances of S/ 1,031.2 million as of June 30, 2023 and S/ 2,657.3 million as of September 30, 2022.

Performing loans increased 1.4% QoQ, as commercial loans grew 2.5% while retail loans grew 0.5%. Moreover, excluding the effect of the Reactiva Peru Program in the comparing periods, total performing loans would have increased 2.0% and commercial loans would have grown 4.0%.

Commercial loans grew for the first quarter in a year, by 2.5% QoQ, as a result of higher working capital loans in the mid-sized segment, in addition to higher trade finance loans and leasing operations in the corporate segment. These factors were partially offset by lower working capital loans in the corporate segment and lower credit balances in the SME segment.

Retail loans grew 0.5% QoQ due to an increase of 1.6% in mortgages, partially offset by a decrease of 0.1% in consumer loans. Growth in mortgages resulted from higher dynamism in traditional and MiVivienda segments. The slight reduction in consumer loans was due to lower balances of personal loans and credit cards, partially compensated by higher balances of payroll deduction loans.

Performing loans grew 5.0% YoY explained by a 12.4% increase in retail loans, partially offset by a 3.0% reduction in commercial loans. Excluding the effect of the Reactiva Peru Program in the comparing periods, performing loans and commercial loans would have increased 10.0% and 7.1% YoY, respectively.

The YoY growth in retail loans was due to increases of 16.6% in consumer loans and 6.0% in mortgages. Growth in consumer loans resulted from higher balances of cash loans and vehicle loans, payroll deduction loans and credit cards.

The annual reduction in commercial loans was mainly explained by lower balances of Reactiva Peru loans, particularly lower working capital loans in the mid and small-sized segments, as well as lower trade finance loans in the corporate segment. These effects were partially compensated by higher balances of leasing operations and working capital loans in the corporate segment.

As of 3Q23, 2Q23 and 3Q22, Interbank’s rescheduled portfolio of Reactiva Peru loans amounted to S/ 896.0 million, S/ 1,075.0 million and S/ 1,707.3 million, respectively, representing 94.7% of total balances of Reactiva Peru loans in 3Q23, 87.3% in 2Q23 and 58.1% in 3Q22.

It is worth mentioning that these loans are guaranteed in large part by the Peruvian government. As of September 30, 2023, Interbank activated the guarantee coverage for an amount of S/ 774.7 million.

Breakdown of retail loans


S/ million	09.30.22		06.30.23		09.30.23		%chg 09.30.23/ 06.30.23			%chg 09.30.23/ 09.30.22
Consumer loans:
Credit cards & other loans		8,998.9		10,778.9		10,599.6		-1.7	%		17.8	%
Payroll deduction loans(1)		4,529.1		5,011.3		5,172.5		3.2	%		14.2	%
Total consumer loans		13,528.0		15,790.3		15,772.1		-0.1	%		16.6	%
Mortgages		8,877.6		9,267.4		9,413.9		1.6	%		6.0	%
Total retail loans		22,405.6		25,057.7		25,186.0		0.5	%		12.4	%

(1)

Payroll deduction loans to public sector employees.

FUNDING STRUCTURE

Funding structure


S/ million	09.30.22			06.30.23			09.30.23			%chg 09.30.23/ 06.30.23			%chg 09.30.23/ 09.30.22
Deposits and obligations		45,493.7			45,623.2			45,652.6			0.1	%		0.3	%
Due to banks and correspondents and inter-bank funds		7,925.8			9,100.5			9,522.5			4.6	%		20.1	%
Bonds, notes and other obligations		6,790.9			4,351.0			4,508.6			3.6	%		-33.6	%
Total		60,210.4			59,074.7			59,683.8			1.0	%		-0.9	%
% of funding
Deposits and obligations		75.6	%		77.2	%		76.4	%
Due to banks and correspondents and inter-bank funds		13.1	%		15.4	%		16.0	%
Bonds, notes and other obligations		11.3	%		7.4	%		7.6	%

Interbank's funding base was still influenced by the funds provided by the Central Bank, associated with the bank’s involvement in the Reactiva Peru Program. As of September 30, 2023, the balance of such special funding was S/ 690.2 million, compared to S/ 928.9 million as of June 30, 2023 and S/ 2,598.7 million as of September 30, 2022.

The bank’s total funding base increased 1.0% QoQ, equal to growth of interest-earning assets. This was explained by increases of 4.6% in due to banks and correspondents and inter-bank funds, 3.6% in bonds, notes and other obligations, and 0.1% in deposits and obligations. Excluding the effect of the Reactiva Peru Program’s funds, the bank’s total funding base would have increased 1.5% QoQ, while due to banks and correspondents and inter-bank funds would have grown 8.1%.

The quarterly increase in due to banks and correspondents and inter-bank funds was mainly the result of higher short-term funding provided by correspondent banks abroad, as well as short-term inter-bank operations. These factors were partially compensated by lower long-term funding provided by the Central Bank and COFIDE.

The QoQ increase in bonds, notes and other obligations was mainly attributable to a higher exchange rate over the balances of dollar-denominated bonds.

The slight quarterly growth in deposits and obligations was mainly due to an increase of 2.9% in retail deposits, partially offset by decreases of 7.2% in institutional deposits and 1.5% in commercial deposits.

The bank’s total funding base decreased 0.9% YoY, compared to the 0.3% increase of interest-earning assets. This was explained by a reduction of 33.6% in bonds, notes and other obligations, partially offset by increases of 20.1% in due to banks and correspondents and inter-bank funds, and 0.3% in deposits and obligations. Excluding the effect of the Reactiva Peru Program’s funds, the bank’s total funding base and due to banks and correspondents and inter-bank funds would have increased 2.4% and 65.8% YoY, respectively.

The yearly decrease in bonds, notes and other obligations was due to the maturity and cancellation of senior unsecured bonds in the international market for US$ 485.0 million, as well as subordinated bonds in the local market for S/ 150.0 million, both in January 2023.

The YoY growth in due to banks and correspondents and inter-bank funds was mainly the result of higher funding provided by correspondent banks, as well as inter-bank funds and funding from COFIDE. These effects were partially compensated by lower funding provided by the Central Bank.

The annual increase in deposits and obligations was mainly attributable to growth of 28.0% in institutional deposits and 1.5% in retail deposits, partially offset by a reduction of 11.4% in commercial deposits.

As of September 30, 2023, the proportion of deposits and obligations to total funding was 76.4%, higher than the 75.6% reported as of September 30, 2022. Likewise, the proportion of institutional deposits to total deposits grew from 11.3% as of September 30, 2022 to 14.4% as of September 30, 2023.

Breakdown of deposits


S/ million	09.30.22		06.30.23		09.30.23		%chg 09.30.23/ 06.30.23			%chg 09.30.23/ 09.30.22
By customer service:
Retail		23,726.1		23,406.1		24,079.9		2.9	%		1.5	%
Commercial		16,278.2		14,635.9		14,420.9		-1.5	%		-11.4	%
Institutional		5,119.7		7,065.2		6,553.5		-7.2	%		28.0	%
Other		369.6		515.9		598.3		16.0	%		61.9	%
Total		45,493.7		45,623.2		45,652.6		0.1	%		0.3	%
By type:
Demand		13,688.9		11,664.5		12,458.8		6.8	%		-9.0	%
Savings		21,331.5		18,201.1		16,854.2		-7.4	%		-21.0	%
Time		10,459.2		15,751.5		16,324.7		3.6	%		56.1	%
Other		14.1		6.2		14.9	n.m.				6.0	%
Total		45,493.7		45,623.2		45,652.6		0.1	%		0.3	%

NET INTEREST AND SIMILAR INCOME

Net interest and similar income


S/ million	3Q22			2Q23			3Q23			%chg QoQ			%chg YoY
Interest and similar income		1,260.6			1,544.5			1,590.9			3.0	%		26.2	%
Interest and similar expense		(418.6	)		(592.0	)		(627.3	)		6.0	%		49.9	%
Net interest and similar income		842.0			952.5			963.5			1.2	%		14.4	%
NIM		5.0	%		5.6	%		5.6	%		0 bps			60 bps

Interest and similar income


S/ million	3Q22			2Q23			3Q23			%chg QoQ			%chg YoY
Interest and similar income
Due from banks and inter-bank funds		41.3			82.4			80.1			(2.9	)%		93.8	%
Financial investments		122.1			124.0			136.4			10.0	%		11.7	%
Loans		1,097.2			1,338.1			1,374.4			2.7	%		25.3	%
Total Interest and similar income		1,260.6			1,544.5			1,590.9			3.0	%		26.2	%
Average interest-earning assets		66,922.4			67,860.5			68,470.1			0.9	%		2.3	%
Average yield on assets (annualized)		7.5	%		9.1	%		9.3	%		20 bps			180 bps

Interest and similar expense


S/ million	3Q22			2Q23			3Q23			%chg QoQ			%chg YoY
Interest and similar expense
Deposits and obligations		(269.8	)		(412.7	)		(435.9	)		5.6	%		61.6	%
Due to banks and correspondents and inter-bank funds		(57.6	)		(117.2	)		(129.0	)		10.1	%	n.m.
Bonds, notes and other obligations		(91.2	)		(62.1	)		(62.5	)		0.5	%		(31.5	)%
Total Interest and similar expense		(418.6	)		(592.0	)		(627.3	)		6.0	%		49.9	%
Average interest-bearing liabilities		58,946.8			58,823.3			59,379.2			0.9	%		0.7	%
Average cost of funding (annualized)		2.8	%		4.0	%		4.2	%		20 bps			140 bps

QoQ Performance

Net interest and similar income grew 1.2% QoQ due to a 3.0% increase in interest and similar income, partially compensated by 6.0% growth in interest and similar expense.

The higher interest and similar income was attributed to increases of 10.0% in interest on financial investments and 2.7% in interest on loans, partially offset by a 2.9% reduction in interest on due from banks and inter-bank funds.

Interest on financial investments grew S/ 12.4 million QoQ, or 10.0%, due to increases of 30 basis points in the average yield, from 4.5% in 2Q23 to 4.8% in 3Q23, and 3.5% in the average volume.

Interest on loans increased S/ 36.3 million QoQ, or 2.7%, as the result of 1.8% growth in the average loan portfolio, in addition to a 10 basis point increase in the average yield.

The higher average volume of loans was attributed to growth of 2.2% in retail loans and 1.1% in commercial loans. In the retail portfolio, average volumes increased 2.6% in consumer loans and 1.6% in mortgages. In the commercial portfolio, average volumes increased 9.7% in leasing operations and 1.4% in trade finance loans, partially compensated by a 1.4% decrease in working capital loans.

The higher average rate on loans, from 11.5% in 2Q23 to 11.6% in 3Q23, was the result of a 20 basis point increase in commercial loans, while the average yield in retail loans remained stable.

Contrary to the performance of interest on investments and loans, interest on due from banks and inter-bank funds declined S/ 2.3 million QoQ, or 2.9%, explained by a 6.0% reduction in the average volume, despite a 10 basis point increase in the nominal average rate, from 3.2% in 2Q23 to 3.3% in 3Q23.

The nominal average yield on interest-earning assets increased 20 basis points QoQ, from 9.1% in 2Q23 to 9.3% in 3Q23, in line with the higher returns on all components of interest-earning assets.

The higher interest and similar expense was due to increases of 10.1% in interest on due to banks and correspondents, 5.6% in interest on deposits and obligations, and 0.5% in interest on bonds, notes and other obligations.

Interest on due to banks and correspondents increased S/ 11.8 million QoQ, or 10.1%, explained by a 9.9% increase in the average volume, while the average cost remained stable at 5.5%. The higher average volume was explained by higher funds provided by correspondent banks abroad and COFIDE, partially compensated by lower funding from the Central Bank.

The quarterly growth in interest on deposits and obligations was due to a 20 basis point increase in the average cost, from 3.6% in 2Q23 to 3.8% in 3Q23, partially offset by a 0.6% decrease in the average volume. The increase in the average cost was due to higher rates paid to retail and commercial deposits, partially compensated by lower rates paid to institutional deposits. By currency, average balances of soles-denominated deposits grew 0.1%, while average dollar-denominated deposits decreased 2.1%.

The increase in interest on bonds, notes and other obligations was mostly attributed to a 0.4% higher average volume, associated with the performance of the foreign exchange rate, while the average cost remained stable at 5.6%.

The average cost of funding increased 20 basis points, from 4.0% in 2Q23 to 4.2% in 3Q23, as a consequence of the higher cost of deposits and obligations which represent the large majority of interest-bearing liabilities.

As a result of similar increases in the yield on financial assets and the cost of financial liabilities, net interest margin remained flat QoQ, at 5.6% in 3Q23.

YoY Performance

Net interest and similar income grew 14.4% YoY due to a 26.2% increase in interest and similar income, partially offset by growth of 49.9% in interest and similar expense.

The higher interest and similar income was due to increases of 93.8% in interest on due from banks and inter-bank funds, 25.3% in interest on loans and 11.7% in interest on financial investments.

Interest on due from banks and inter-bank funds grew S/ 38.8 million YoY, or 93.8%, explained by growth of 180 basis points in the average yield, from 1.5% in 3Q22 to 3.3% in 3Q23, despite an 11.0% reduction in the average volume, mostly due to lower deposits at the Central Bank.

Interest on loans increased S/ 277.2 million YoY, or 25.3%, explained by growth of 180 basis points in the average yield and 5.7% in the average volume.

The increase in the average rate on loans, from 9.8% in 3Q22 to 11.6% in 3Q23, was mainly due to higher yields on commercial, consumer and mortgage loans to a lesser extent.

The higher average volume of loans was attributed to growth of 14.0% in retail loans, partially offset by a 6.7% reduction in commercial loans. In the retail portfolio, average volumes grew due to increases of 18.8% in consumer loans and 6.4% in mortgages. In the commercial portfolio, the lower average volume was mainly attributed to decreasing volumes in trade finance and working capital loans, partially offset by higher leasing operations.

Interest on financial investments increased S/ 14.3 million YoY, or 11.7%, due to growth of 50 basis points in the average yield and 1.6% in the average volume. The increase in the nominal average rate, from 4.3% in 3Q22 to 4.8% in 3Q23, was the result of higher returns on CDBCR and corporate bonds. Growth in the average volume was the result of higher balances of sovereign bonds and CDBCR, partially compensated by lower average volumes of corporate bonds and global bonds.

The nominal average yield on interest-earning assets increased 180 basis points, from 7.5% in 3Q22 to 9.3% in 3Q23, in line with the higher returns on all components of interest-earning assets.

The higher interest and similar expense was due to increases of more than two-fold in interest on due to banks and correspondents, 61.6% in interest on deposits and obligations, while interest on bonds, notes and other obligations decreased 31.5%.

Interest on due to banks and correspondents grew S/ 71.4 million YoY, or more than two-fold, as the result of a 250 basis point increase in the average cost, from 3.0% in 3Q22 to 5.5% in 3Q23, in addition to 20.4% growth in the average volume. The increase in the average cost was due to higher rates paid to funds from correspondent banks abroad and the Central Bank. The higher average volume was explained by increased funding from correspondent banks abroad and COFIDE.

Interest on deposits and obligations increased S/ 166.1 million YoY, or 61.6%, explained by a 140 basis point growth in the average cost, from 2.4% in 3Q22 to 3.8% in 3Q23, in addition to a 2.5% increase in the average volume. By currency, average balances of soles-denominated deposits grew 4.4% while average dollar-denominated deposits decreased 1.0%.

The lower interest on bonds, notes and other obligations was mainly explained by a 33.7% decrease in the average volume, attributable to the maturity of S/ 137.9 million subordinated bonds in the local market in mid-2022, as well as US$ 485.0 million senior bonds in the international market and S/ 150.0 million subordinated bonds in the local market, both in early 2023.

The average cost of funding increased 140 basis points, from 2.8% in 3Q22 to 4.2% in 3Q23, as a consequence of the higher implicit cost of due to banks and correspondents, as well as deposits.

As a result of the above, net interest margin was 5.6% in 3Q23, 60 basis points higher than the 5.0% reported in 3Q22.

IMPAIRMENT LOSS ON LOANS, NET OF RECOVERIES

Impairment loss on loans, net of recoveries increased 39.4% QoQ and more than two-fold YoY.

The quarterly growth was explained by higher provision requirements in both retail and commercial loan portfolios. In the retail portfolio, increase in provisions was mainly driven by higher requirements in personal loans and credit cards. In the commercial portfolio, the increase was mainly due to higher provision requirements in the corporate segment.

The annual increase in provisions was explained by higher provision requirements in both retail and commercial loan portfolios. Higher requirements in the retail loan book were mostly related to personal loans and credit cards. The increase in the commercial portfolio was mainly driven by higher provision requirements in the mid-sized segment.

As a result of the above, the annualized ratio of impairment loss on loans to average loans was 5.0% in 3Q23, higher than the 3.6% and 1.9% reported in 2Q23 and 3Q22, respectively.

Impairment loss on loans, net of recoveries


S/ million	3Q22			2Q23			3Q23			%chg QoQ			%chg YoY
Impairment loss on loans, net of recoveries		(209.6	)		(416.9	)		(581.2	)		39.4	%	n.m.
Impairment loss on loans/average gross loans		1.9	%		3.6	%		5.0	%		140 bps			310 bps
S3 NPL ratio (at end of period)		2.5	%		2.7	%		3.1	%		40 bps			60 bps
S3 NPL coverage ratio (at end of period)		182.4	%		173.0	%		160.6	%		-1240 bps			-2180 bps
Impairment allowance for loans		2,034.3			2,173.6			2,301.7			5.9	%		13.1	%

The Stage 3 NPL ratio increased 40 basis points QoQ and 60 basis points YoY, to 3.1% in 3Q23. The quarterly deterioration was due to a 60 basis point increase in the retail NPL ratio, slightly offset by a 10 basis point reduction in the commercial NPL ratio. The higher Stage 3 NPL ratio YoY was explained by a 60 basis point increase in commercial loans’ NPL, as well as a 40 basis point increase in retail loans’ NPL.

Furthermore, the S3 NPL coverage ratio was 160.6% as of September 30, 2023, lower than the 173.0% registered as of June 30, 2023 and the 182.4% reported as of September 30, 2022. Still, it represented healthy coverage levels of impairment allowance for loans.

FEE INCOME FROM FINANCIAL SERVICES, NET

Net fee income from financial services decreased S/ 9.4 million QoQ, or 4.5%, mainly explained by lower commissions from banking services and collection services, as well as higher fees paid to foreign banks. These factors were partially offset by higher fees from maintenance and mailing of accounts, transfer fees and commissions on debit card services, commissions from credit card services, fees from indirect loans, and lower expenses related to insurance sales.

Net fee income from financial services decreased S/ 14.3 million YoY, or 6.7%, mainly due to lower commissions from banking services, commissions from credit card services, and fees from collection services and indirect loans. These effects were partially compensated by lower expenses related to insurance and higher fees from maintenance and mailing of accounts, transfer fees and commissions on debit card services.

Fee income from financial services, net


S/ million	3Q22			2Q23			3Q23			%chg QoQ			%chg YoY
Income
Commissions from credit card services		116.6			112.3			114.4			1.8	%		-1.9	%
Commissions from banking services		80.1			83.5			77.9			-6.7	%		-2.8	%
Maintenance and mailing of accounts, transfer fees and commissions on debit card services		72.5			73.8			76.1			3.0	%		4.8	%
Fees from indirect loans		17.9			15.9			17.3			8.7	%		-3.5	%
Collection services		15.7			15.9			14.2			-10.2	%		-9.5	%
Other		13.6			11.5			10.6			-7.9	%		-21.9	%
Total income		316.5			312.9			310.4			-0.8	%		-1.9	%
Expenses
Insurance		(25.0	)		(21.3	)		(17.2	)		-19.0	%		-31.0	%
Fees paid to foreign banks		(6.9	)		(6.5	)		(6.9	)		6.2	%		-0.4	%
Other		(71.6	)		(77.1	)		(87.7	)		13.7	%		22.4	%
Total expenses		(103.5	)		(104.8	)		(111.8	)		6.6	%		8.0	%
Fee income from financial services, net		213.0			208.1			198.7			-4.5	%		-6.7	%

OTHER INCOME

Other income decreased S/ 5.8 million QoQ, mostly due to lower net gain on foreign exchange transactions and on financial assets at fair value through profit or loss.

Other income increased S/ 0.5 million YoY, mainly explained by the contribution of extraordinary concepts, and higher net gain on sale of financial investments, which more than offset a lower net gain on foreign exchange transactions and on financial assets at fair value through profit or loss.

Other income


S/ million	3Q22			2Q23			3Q23			%chg QoQ			%chg YoY
Net gain on foreign exchange transactions and on financial assets at fair value through profit or loss		104.9			99.4			95.1	(1)		-4.3	%		-9.3	%
Net gain on sale of financial investments		(0.1	)		(0.0	)		1.0		n.m.			n.m.
Other		14.9			26.6			24.0			-9.6	%		61.4	%
Total other income		119.7			126.0			120.2			-4.6	%		0.4	%

(1)

(1) Includes S/ 82.1 million of net gain on foreign exchange transactions and S/ 13.0 million of net gain (loss) on financial assets at fair value though profit or loss (derivatives).

OTHER EXPENSES

Other expenses decreased S/ 7.0 million QoQ, or 1.4%, and increased S/ 2.8 million YoY, or 0.6%.

The quarterly reduction in other expenses was explained by lower salaries and employee benefits, partially offset by higher depreciation and amortization charges.

The annual increase was the result of higher administrative expenses, as well as depreciation and amortization charges, partially compensated by lower salaries and employee benefits.

The efficiency ratio was 36.5% in 3Q23, an improvement compared to the 37.3% reported in 2Q23 and the 40.1% registered in 3Q22.

Other expenses


S/ million	3Q22			2Q23			3Q23			%chg QoQ			%chg YoY
Salaries and employee benefits		(166.9	)		(163.5	)		(149.4	)		-8.6	%		-10.5	%
Administrative expenses		(239.9	)		(250.1	)		(250.1	)		0.0	%		4.3	%
Depreciation and amortization		(63.7	)		(66.8	)		(69.0	)		3.2	%		8.2	%
Other		(17.1	)		(17.1	)		(22.0	)		28.9	%		28.4	%
Total other expenses		(487.7	)		(497.5	)		(490.5	)		-1.4	%		0.6	%
Efficiency ratio		40.1	%		37.3	%		36.5	%		-80 bps			-360 bps

REGULATORY CAPITAL

The ratio of regulatory capital to risk-weighted assets (RWA) was 15.0% as of September 30, 2023, slightly below the 15.2% reported both as of June 30, 2023 and as of September 30, 2022.

In 3Q23, risk-weighted assets (APR) increased 3.1% QoQ due to higher capital requirements for credit risk, operational risk and market risk. The higher RWA for credit risk were attributed to higher RWA for loans, due to an increase in these, as well as higher RWA for other assets and financial investments.

Total regulatory capital increased 1.8% QoQ, mainly attributed to the increase in profits for the year, mitigated by a higher unrealized loss (UL) of available for sale investments, when compared with 2Q23.

The annual performance in the total capital ratio was due to a 2.7% increase in RWA, partially offset by 1.5% growth in regulatory capital. The increase in RWA was due to higher capital requirements for credit risk, operational risk and market risk in a lesser extent. The additional capital requirements for credit risk was due to higher RWA for loans, due to an increase in these, partially offset by lower RWA for other assets and financial investments.

The YoY performance in regulatory capital was mainly a result of the additional capitalization of 2022 results and profits for the period. These effects were partially offset by a higher UL when compared to 3Q22, as well as a lower capital treatment of local subordinated debt and the deduction of intangible assets, due to the implementation of the new SBS regulation on solvency.

Also, it is worth mentioning that, in December 2022, the SBS issued the Official Document No. 03952-2022, by which it established that, from March 1, 2023, the minimum regulatory capital ratio requirement would remain at 8.5% and would follow an adequation schedule until March 2024, date in which the minimum regulatory capital ratio requirement will reach 10.0%. However, in June 2023, the SBS issued a modification of the resolution published in December 2022, by which it modifies the adequation schedule until September 2024, new date in which the minimum regulatory capital ratio requirement will reach 10.0%.

As of September 30, 2023, Interbank’s total capital ratio of 15.0% was significantly higher than the global requirement plus buffers and capital assigned to cover additional risks, by disposition of the SBS. The minimum regulatory requirement was 9.0% as of September 30, 2023. Additionally, Core Equity Tier 1 (CET1) was 11.2% under the new methodology required by the SBS, compared to the 11.4% registered as of June 30, 2023 and the 11.6% reported as of September 30, 2022, the latter being calculated under the previous methodology. It is important to mention that, under the new SBS regulation, CET1 is the main component of the Tier I capital ratio.

Regulatory capital


S/ million	09.30.22			06.30.23			09.30.23			%chg 09.30.23/ 06.30.23			%chg 09.30.23/ 09.30.22
Tier I capital		6,639.5			7,112.5			7,195.9			1.2	%		8.4	%
Tier II capital		2,873.0			2,375.2			2,460.5			3.6	%		(14.4	)%
Total regulatory capital		9,512.4			9,487.6			9,656.4			1.8	%		1.5	%
Risk-weighted assets (RWA)		62,558.4			62,359.8			64,277.5			3.1	%		2.7	%
Total capital ratio		15.2	%		15.2	%		15.0	%		-20 bps			-20 bps
Tier I capital / RWA		10.6	%		11.4	%		11.2	%		-20 bps			60 bps
CET1(1)		11.6	%		11.4	%		11.2	%		-20 bps			-40 bps

(1)

Under the new SBS regulation on solvency, in effect from January 1st, 2023 onwards, CET1 is part of the Total capital ratio, in line with Basel III guidelines.

Interseguro

SUMMARY

Interseguro adopted IFRS17 requirements starting January 1st, 2023. As permitted by this regulation, for periods prior to 2023, we hereby present a reconstruction of results appropriate to the first adoption of IFRS17 for comparative purposes.

Interseguro’s profits reached S/ 35.5 million in 3Q23, which represented a decrease of S/ 52.4 million QoQ and S/ 18.3 million YoY.

The quarterly contraction was mainly due to a S/ 64.7 million negative reversion in translation result, partially offset by a S/ 5.5 million positive development in insurance results, as well as growth of S/ 3.7 million in other income and S/ 2.3 million in recovery due to impairment of financial investments.

The annual performance in net profit was mainly explained by decreases of S/ 28.3 million in net interest and similar income, and S/ 16.4 million in other income, in addition to S/ 18.3 million higher other expenses. However, these factors were partially offset by positive performances of S/ 22.6 million in insurance results and S/ 18.7 million in translation result, as well as a positive development of S/ 4.0 million in recovery due to impairment of financial investments.

As a result, Interseguro’s ROE was 52.4% in 3Q23, lower than the 143.2% reported in 2Q23 and the 64.7% registered in 3Q22.

Insurance Segment’s P&L Statement (1)


S/ million	3Q22			2Q23			3Q23			%chg QoQ			%chg YoY
Interest and similar income		243.2			214.1			212.5			-0.7	%		-12.6	%
Interest and similar expenses		(31.1	)		(30.3	)		(28.7	)		-5.2	%		-7.6	%
Net interest and similar income		212.1			183.7			183.8			0.0	%		-13.4	%
Recovery (loss) due to impairment of financial investments		(0.7	)		1.0			3.3		n.m.			n.m.
Net interest and similar income after impairment loss		211.4			184.8			187.1			1.2	%		-11.5	%
Fee income from financial services, net		(2.0	)		(2.3	)		(2.5	)		9.8	%		25.2	%
Insurance results		(51.3	)		(34.2	)		(28.7	)		-16.0	%		-44.0	%
Other income		26.8			6.7			10.4			55.6	%		-61.0	%
Other expenses		(75.1	)		(94.5	)		(93.4	)		-1.1	%		24.5	%
Income before translation result and income tax		109.8			60.5			72.8			20.4	%		-33.7	%
Translation result		(56.0	)		27.4			(37.3	)	n.m.				-33.4	%
Profit for the period		53.8			87.9			35.5			-59.6	%		-34.1	%
ROE		64.7	%		143.2	%		52.4	%
Efficiency ratio		6.9	%		9.7	%		9.2	%

(1)

Figures for 3Q22 have been re-expressed for comparison purposes due to IFRS17 adoption.

RESULTS FROM INVESTMENTS

Results from Investments (1)


S/ million	3Q22			2Q23			3Q23			%chg QoQ			%chg YoY
Interest and similar income		243.2			214.2			212.6			-0.7	%		-12.6	%
Interest and similar expenses		(18.7	)		(17.0	)		(24.9	)		46.5	%		33.2	%
Net interest and similar income		224.6			197.2			187.8			-4.8	%		-16.4	%
Recovery (loss) due to impairment of financial investments		(0.7	)		1.0			3.3		n.m.			n.m.
Net Interest and similar income after impairment loss		223.9			198.2			191.0			-3.6	%		-14.7	%
Net gain (loss) on sale of financial investments		(12.7	)		2.6			4.7			80.5	%	n.m.
Net gain (loss) on financial assets at fair value through profit or loss		7.6			15.1			(47.6	)	n.m.			n.m.
Rental income		15.1			17.1			16.5			-3.4	%		9.6	%
Valuation gain (loss) from investment property		(0.2	)		(30.5	)		34.9		n.m.			n.m.
Other(1)		5.1			(4.2	)		0.5		n.m.				-90.2	%
Other income		14.9			0.1			9.0		n.m.				-39.9	%
Results from investments		238.8			198.3			200.0			0.9	%		-16.3	%

(1)

Only includes transactions related to investments.

NET INTEREST AND SIMILAR INCOME

Net interest and similar income related to investments was S/ 187.8 million in 3Q23, a decrease of S/ 9.4 million QoQ, or 4.8%, and S/ 36.8 million YoY, or 16.4%.

The quarterly performance was mainly explained by an increase of S/ 7.9 million in interest and similar expenses, together with a reduction of S/ 1.6 million in interest and similar income, attributed to lower dividends registered in the last quarter.

The yearly decrease was mainly due to lower interest and similar income, caused by a downward trend in inflation rates.

RECOVERY (LOSS) DUE TO IMPAIRMENT OF FINANCIAL INVESTMENTS

Recovery due to impairment of financial investments was S/ 3.3 million in 3Q23, compared to S/ 1.0 million in 2Q23 and a loss of S/ -0.7 million in 3Q22.

OTHER INCOME

Other income related to investments was S/ 9.0 million in 3Q23, an increase of S/ 8.9 million QoQ, but a decrease of S/ 5.9 million YoY.

The quarterly increase was explained by positive performances in valuation gain from investment property, and in net gain on sale of financial investments, partially compensated by a negative development in net loss on financial assets at fair value.

The annual performance in other income was mainly due to a negative development in net loss on financial assets at fair value. This factor was partially offset by positive performances in valuation gain from investment property, and in net gain on sale of financial investments.

INSURANCE RESULTS

Insurance Results


S/ million	3Q22			2Q23			3Q23			%chg QoQ			%chg YoY
Insurance Income		288.3			277.1			330.2			19.2	%		14.5	%
Insurance Expenses		(339.6	)		(311.3	)		(358.9	)		15.3	%		5.7	%
Insurance Results		(51.3	)		(34.2	)		(28.7	)		-16.0	%		-44.0	%

INSURANCE INCOME

Insurance Income


S/ million	3Q22		2Q23		3Q23		%chg QoQ			%chg YoY
Annuities		193.7		185.2		189.5		2.3	%		(2.2	)%
Individual Life		20.1		20.6		68.2	n.m.			n.m.
Retail Insurance		74.5		71.2		72.5		1.8	%		(2.7	)%
Total Insurance Income		288.3		277.1		330.2		19.2	%		14.5	%

Insurance income was S/ 330.2 million in 3Q23, an increase of S/ 53.1 million QoQ, or 19.2%, and S/ 41.9 million YoY, or 14.5%.

The quarterly performance was mainly explained by growth of S/ 47.6 million in individual life and S/ 4.3 million in annuities.

The yearly increase was mainly explained by growth in individual life of S/ 48.1 million, partially offset by a S/ 4.2 million decrease in annuities.

INSURANCE EXPENSES

Insurance Expenses


S/ million	3Q22			2Q23			3Q23			%chg QoQ			%chg YoY
Annuities		(356.6	)		(299.2	)		(340.6	)		13.8	%		-4.5	%
Individual Life		33.3			5.7			(15.8	)	n.m.			n.m.
Retail Insurance		(16.4	)		(17.8	)		(2.5	)		-85.9	%		-84.7	%
Total Insurance Expenses		(339.6	)		(311.3	)		(358.9	)		15.3	%		5.7	%

Insurance expenses were S/ 358.9 million in 3Q23, an increase of S/ 47.6 million QoQ, or 15.3%, and S/ 19.3 million YoY, or 5.7%.

The quarterly performance was mainly explained by higher expenses of S/ 41.4 million in annuities and S/ 21.5 million in individual life, partially offset by lower expenses of S/ 15.3 million in retail insurance.

The yearly increase was explained by higher expenses of S/ 49.1 million in individual life, partially offset by lower expenses of S/ 16.0 million in annuities and S/ 13.9 million in retail insurance.

OTHER EXPENSES

Other Expenses


S/ million	3Q22			2Q23			3Q23			%chg QoQ			%chg YoY
Salaries and employee benefits		(16.2	)		(23.5	)		(26.0	)		10.4	%		60.6	%
Administrative expenses		(14.5	)		(16.3	)		(17.3	)		6.1	%		19.6	%
Depreciation and amortization		(5.7	)		(5.3	)		(4.8	)		-10.6	%		-15.9	%
Expenses related to rental income		(3.2	)		(1.8	)		(1.2	)		-33.5	%		-63.8	%
Other		(35.5	)		(47.5	)		(44.2	)		-7.0	%		24.5	%
Other expenses		(75.1	)		(94.5	)		(93.4	)		-1.1	%		24.5	%

Other expenses decreased by S/ 1.1 million QoQ, or 1.1%, and increased by S/ 18.3 million YoY, or 24.5%. Salaries and administrative expenses were the main contributors to the growth in expenses.

Inteligo

SUMMARY

Inteligo’s bottom-line result in 3Q23 was S/ -17.7 million, a negative development compared to earnings in the previous quarter, but still a lower negative result compared to the same quarter of the previous year.

The quarterly performance was mainly attributable to a mark-to-market loss on proprietary portfolio investments. Other effects that explained the quarterly performance were a decrease of 26.8% in net interest and similar income, and an increase of 1.6% in other expenses, partially compensated by 2.4% higher net fee income from financial services.

On an annual basis, mark-to-market losses on proprietary portfolio investments decreased considerably in 3Q23 compared to 3Q22. This effect was offset by decreases of 39.4% in net interest and similar income, and 12.1% in net fee income.

From a business development perspective, Inteligo’s prospection process continued to show positive results in terms of new account openings, assets under management growth in Private Wealth Management and Mutual funds. Consequently, Inteligo’s AUM increased 5.6% QoQ and 3.3% YoY as of September 30, 2023.

Inteligo’s ROE and efficiency ratio in 3Q23 were not meaningful due to the significant impact of the mark-to-market loss within other income.

Wealth Management Segment’s P&L Statement


S/ million	3Q22			2Q23			3Q23			%chg QoQ			%chg YoY
Interest and similar income		43.3			47.6			43.6			-8.4	%		0.6	%
Interest and similar expenses		(12.4	)		(21.9	)		(24.8	)		13.1	%	n.m.
Net interest and similar income		30.9			25.6			18.7			-26.8	%		-39.4	%
Impairment loss of loans, net of recoveries		(0.0	)		0.1			0.0			-48.2	%	n.m.
Recovery (loss) due to impairment of financial investments		(6.0	)		(0.0	)		0.6		n.m.			n.m.
Net interest and similar income after impairment loss		24.9			25.6			19.3			-24.6	%		-22.3	%
Fee income from financial services, net		40.3			34.6			35.4			2.4	%		-12.1	%
Other income		(68.1	)		(3.4	)		(35.7	)	n.m.				-47.5	%
Other expenses		(34.7	)		(34.6	)		(35.1	)		1.6	%		1.2	%
Income before translation result and income tax		(37.6	)		22.2			(16.1	)	n.m.				-57.2	%
Translation result		(1.8	)		(0.3	)		(0.6	)		87.5	%		-66.0	%
Income tax		(1.7	)		(0.4	)		(1.0	)	n.m.				-40.5	%
Profit for the period		(41.0	)		21.5			(17.7	)	n.m.				-56.9	%
ROE	n.m.				9.7	%	n.m.
Efficiency ratio	n.m.				60.5	%	n.m.

ASSETS UNDER MANAGEMENT & DEPOSITS

AUM reached S/ 22,720.6 million in 3Q23, a S/ 1,205.5 million or 5.6% increase QoQ, mostly explained by inflows in Mutual funds and a higher exchange rate. On an annual comparison, AuM increased S/ 728.4 million or 3.3% due to inflows in Private Wealth Management and Mutual funds.

Client deposits were S/ 3,634.0 million in 3Q23, a S/ 274.6 million or 8.2% increase QoQ, mostly explained by an increase in term deposits of clients to benefit from higher interest rates. On a yearly basis, client deposits decreased S/ 385.3 million or 9.6%. This was mainly due to the conversion of cash positions from clients to investments in securities during 2023.

NET INTEREST AND SIMILAR INCOME

Net interest and similar income


S/ million	3Q22			2Q23			3Q23			%chg QoQ			%chg YoY
Interest and similar income
Due from banks and inter-bank funds		4.2			9.0			7.3			-19.0	%		75.8	%
Financial Investments		17.8			15.4			12.5			-18.7	%		-30.0	%
Loans		21.3			23.2			23.8			2.5	%		11.6	%
Total interest and similar income		43.3			47.6			43.6			-8.4	%		0.6	%
Interest and similar expenses
Deposits and obligations		(10.3	)		(22.2	)		(23.1	)		3.9	%	n.m.
Due to banks and correspondents		(2.0	)		0.3			(1.7	)	n.m.				-14.0	%
Total interest and similar expenses		(12.4	)		(21.9	)		(24.8	)		13.1	%	n.m.
Net interest and similar income		30.9			25.6			18.7			-26.8	%		-39.4	%

Inteligo’s net interest and similar income was S/ 18.7 million in 3Q23, a S/ 6.9 million, or 26.8% decrease when compared with 2Q23, mainly explained by lower dividends received from proprietary portfolio investments and lower levels of excess liquidity during the quarter.

Net interest and similar income decreased S/ 12.2 million YoY, or 39.4%, as a result of a higher interest expense on deposits, which was attributed to the increases in the reference interest rate of the FED, partially offset by higher interest income on both loans and due from banks for the same reason.

FEE INCOME FROM FINANCIAL SERVICES

Fee income from financial services, net


S/ million	3Q22			2Q23			3Q23			%chg QoQ			%chg YoY
Income
Brokerage and custody services		2.4			2.2			2.8			24.1	%		15.4	%
Funds management		38.3			32.8			33.0			0.5	%		-13.8	%
Total income		40.7			35.1			35.8			2.0	%		-12.1	%
Expenses
Brokerage and custody services		(0.2	)		(0.2	)		(0.2	)		3.8	%		11.6	%
Others		(0.2	)		(0.3	)		(0.2	)		-44.0	%		-21.5	%
Total expenses		(0.4	)		(0.5	)		(0.3	)		-27.3	%		-7.9	%
Fee income from financial services, net		40.3			34.6			35.4			2.4	%		-12.1	%

Net fee income from financial services was S/ 35.4 million in 3Q23, an increase of S/ 0.8 million, or 2.4% when compared to the previous quarter, mainly explained by higher fees from the wealth management segment.

On a YoY basis, net fee income from financial services decreased S/ 4.9 million, or 12.1%, mainly due to lower fees from funds management. This was explained by a lower frequency of client transactions, in turn driven by the persistent volatility in the financial markets and the high interest rates in money market products.

OTHER INCOME

Other income


S/ million	3Q22			2Q23			3Q23			%chg QoQ			%chg YoY
Net gain on sale of financial investments		(0.0	)		0.2			0.2			-14.0	%	n.m.
Net trading gain (loss)		(67.4	)		(2.8	)		(34.4	)	n.m.				-48.9	%
Other		(0.7	)		(0.9	)		(1.5	)		73.2	%	n.m.
Total other income		(68.1	)		(3.4	)		(35.7	)	n.m.				-47.5	%

Inteligo’s other income (loss) reached S/ -35.7 million in 3Q23, compared to losses of S/ 3.4 million in 2Q23 and S/ 68.1 million in 3Q22. This result was mainly attributable to a mark-to-market loss, in turn attributable to negative global market trends.

OTHER EXPENSES

Other expenses


S/ million	3Q22			2Q23			3Q23			%chg QoQ			%chg YoY
Salaries and employee benefits		(20.6	)		(20.8	)		(20.7	)		-0.1	%		0.6	%
Administrative expenses		(10.1	)		(9.9	)		(10.0	)		1.1	%		-1.4	%
Depreciation and amortization		(3.7	)		(3.7	)		(3.7	)		1.0	%		0.3	%
Other		(0.2	)		(0.2	)		(0.7	)	n.m.			n.m.
Total other expenses		(34.7	)		(34.6	)		(35.1	)		1.6	%		1.2	%
Efficiency ratio	n.m.				60.5	%	n.m.

Other expenses reached S/ 35.1 million in 3Q23, relatively flat against the comparing periods.

Izipay

SUMMARY

Izipay’s profits were S/ 7.4 million in 3Q23, which represented a decrease of 21.2% QoQ and 36.7% YoY.

In 3Q23, despite growth in net interest and similar income and in net fee income from financial services, the quarterly performance was affected by higher administrative expenses related to additional customer acquisition.

The annual performance in net profit was mainly explained by an 8.9% increase in other expenses, mainly associated with higher customer acquisition and depreciation given the rise in business activity. This was partially offset by 2.0% growth in net fee income from financial services, in turn related to higher income from payments acquirer where the number of merchants and monetary transactions grew 38% and 8%, respectively.

Izipay’s ROE was 12.3% in 3Q23, lower than the 16.2% and 23.6% reported in 2Q23 and 3Q22, respectively.

Payments Segment’s P&L Statement


S/ million	3Q22			2Q23			3Q23			%chg QoQ			%chg YoY
Interest and similar income		0.5			2.1			2.5			21.2	%	n.m.
Interest and similar expenses		(0.4	)		(1.3	)		(1.3	)		-1.7	%	n.m.
Net interest and similar income		0.1			0.7			1.2			61.3	%	n.m.
Fee income from financial services, net		84.9			87.7			86.6			-1.2	%		2.0	%
Payments acquirer		167.6			173.6			180.7			4.1	%		7.8	%
Correspondent banking		12.1			9.3			9.1			-2.6	%		-25.1	%
Credit cards processor		7.5			7.7			7.5			-2.4	%		-0.2	%
Service Cost		(102.3	)		(102.9	)		(110.7	)		7.5	%		8.2	%
Other income		8.6			8.3			8.5			1.4	%		-1.9	%
Other expenses		(76.5	)		(79.0	)		(83.3	)		5.5	%		8.9	%
Income before translation result and income tax		17.1			17.8			13.0			-27.1	%		-24.2	%
Translation result		2.6			(1.3	)		1.2		n.m.				-54.5	%
Income tax		(8.0	)		(7.1	)		(6.7	)		-5.5	%		-15.6	%
Profit for the period		11.7			9.4			7.4			-21.2	%		-36.7	%
ROE		23.6	%		16.2	%		12.3	%
Efficiency ratio		69.7	%		76.9	%		81.3	%

FEE INCOME FROM FINANCIAL SERVICES, NET

Net fee income from financial services was S/ 86.6 million in 3Q23, a decrease of S/ 1.1 million or 1.2% QoQ, mainly driven by higher acquirer license fees within the service cost, as a result of higher transactional volumes, partially offset by higher income from payments acquirer.

On a YoY basis, net fee income from financial services grew S/ 1.7 million, or 2.0%, mainly explained by higher transactional volumes in the acquirer business, partially compensated by an increase in service cost, associated with a higher level of business activity.

Fee income from financial services, net


S/ million	3Q22			2Q23			3Q23			%chg QoQ			%chg YoY
Income
Payments acquirer		167.6			173.6			180.7			4.1	%		7.8	%
Correspondent banking		12.1			9.3			9.1			-2.6	%		-25.1	%
Credit cards processor		7.5			7.7			7.5			-2.4	%		-0.2	%
Total income		187.2			190.6			197.3			3.5	%		5.4	%
Expenses
Service Cost		(102.3	)		(102.9	)		(110.7	)		7.5	%		8.2	%
Total expenses		(102.3	)		(102.9	)		(110.7	)		7.5	%		8.2	%
Fee income from financial services, net		84.9			87.7			86.6			-1.2	%		2.0	%

OTHER EXPENSES

Other expenses reached S/ 83.3 million in 3Q23, an increase of S/ 4.3 million or 5.5% QoQ, mostly due to higher administrative expenses and depreciation and amortization charges.

On a yearly basis, other expenses grew S/ 6.8 million, or 8.9% YoY, mainly as a result of increased administrative expenses associated with higher customer acquisition, as well as higher depreciation charges as a result of growth in the operations.

Other expenses


S/ million	3Q22			2Q23			3Q23			%chg QoQ			%chg YoY
Salaries and employee benefits		(17.6	)		(18.9	)		(19.1	)		0.9	%		8.2	%
Administrative expenses		(38.6	)		(42.6	)		(44.8	)		5.1	%		16.0	%
Depreciation and amortization		(9.0	)		(13.0	)		(14.4	)		11.5	%		59.7	%
Other		(11.2	)		(4.5	)		(5.0	)		10.7	%		-55.4	%
Total other expenses		(76.5	)		(79.0	)		(83.3	)		5.5	%		8.9	%
Efficiency ratio		69.7	%		76.9	%		81.3	%

Intercorp Financial Services Inc. and Subsidiaries

Interim consolidated financial statements as of September 30, 2023, December 31, 2022, January 1, 2022 and for the nine-month periods ended September 30, 2023 and 2022

Content

Interim consolidated financial statements



Interim consolidated statement of financial position	3

Interim consolidated statement of income	4

Interim consolidated statement of other comprehensive income	5

Interim consolidated statement of changes in equity	6

Interim consolidated statement of cash flows	7

Notes to the interim consolidated financial statements	9

Interim consolidated statement of financial position

As of September 30, 2023, December 31, 2022 and January 1, 2022


					Restated (Note 3.3.3)			Restated (Note 3.3.3)
	Note	30.09.2023			31.12.2022			01.01.2022
		S/(000)			S/(000)			S/(000)
Assets
Cash and due from banks	4(a)
Non-interest bearing			3,073,741			4,012,293			3,931,419
Interest bearing			7,507,813			8,712,874			12,488,242
Restricted funds			398,983			468,244			684,804
			10,980,537			13,193,411			17,104,465
Inter-bank funds	4(e)		125,903			296,119			30,002
Financial investments	5		25,484,155			22,787,598			24,547,294
Loans, net:	6
Loans, net of unearned interest			49,379,758			47,530,853			45,070,500
Impairment allowance for loans			(2,301,886	)		(2,027,855	)		(2,064,917	)
			47,077,872			45,502,998			43,005,583
Investment property	7		1,280,154			1,287,717			1,224,454
Property, furniture and equipment, net			797,258			791,432			815,118
Due from customers on acceptances			57,701			45,809			152,423
Intangibles and goodwill, net			1,645,774			1,633,202			1,044,749
Other accounts receivable and other assets, net	8		1,747,040			1,743,963			1,834,483
Insurance and reinsurance contract assets	9		26,287			30,577			52,978
Deferred Income Tax asset, net			136,361			165,787			142,367
Total assets			89,359,042			87,478,613			89,953,916
Liabilities and equity
Deposits and obligations	10
Non-interest bearing			7,480,265			8,684,678			9,270,255
Interest bearing			41,594,619			39,846,030			39,627,689
			49,074,884			48,530,708			48,897,944
Inter-bank funds	4(e)		451,070			30,012			—
Due to banks and correspondents	11		9,521,148			7,100,646			8,522,849
Bonds, notes and other obligations	12		5,845,875			7,906,303			8,389,672
Due from customers on acceptances			57,701			45,809			152,423
Insurance contract liabilities	9		11,564,218			11,251,825			12,787,958
Other accounts payable, provisions and other liabilities	8		3,128,340			3,129,164			2,468,242
Deferred Income Tax liability, net			82,499			81,899			—
Total liabilities			79,725,735			78,076,366			81,219,088
Equity, net	13
Equity attributable to IFS’s shareholders:
Capital stock			1,038,017			1,038,017			1,038,017
Treasury stock			(84,309	)		(3,363	)		(3,363	)
Capital surplus			532,771			532,771			532,771
Reserves			6,000,000			6,000,000			5,200,000
Unrealized results, net			(547,959	)		(554,421	)		(302,477	)
Retained earnings			2,638,933			2,335,524			2,219,902
			9,577,453			9,348,528			8,684,850
Non-controlling interest			55,854			53,719			49,978
Total equity, net			9,633,307			9,402,247			8,734,828
Total liabilities and equity, net			89,359,042			87,478,613			89,953,916

The accompanying notes are an integral part of these consolidated financial statements.

Interim consolidated statement of income

For the nine-month periods ended September 30, 2023 and 2022


					Restated (Note 3.3.3)
	Note	30.09.2023			30.09.2022
		S/(000)			S/(000)
Interest and similar income	15		5,315,367			4,187,331
Interest and similar expenses	15		(1,910,829	)		(1,126,242	)
Net interest and similar income			3,404,538			3,061,089
Impairment loss on loans, net of recoveries	6(d.1) and (d.2)		(1,365,627	)		(552,507	)
Loss due to impairment of financial investments	5(c)		(8,281	)		(4,574	)
Net interest and similar income after impairment loss			2,030,630			2,504,008
Fee income from financial services, net	16		890,702			814,138
Net gain on foreign exchange transactions			217,590			266,816
Net gain (loss) on sale of financial investments			8,850			(8,283	)
Net loss on financial assets at fair value through profit or loss			(49,585	)		(291,790	)
Net gain on investment property	7(b)		42,573			78,903
Other income	17		113,958			359,863
			1,224,088			1,219,647
Result from insurance activities, before expenses	18		(154,259	)		(125,842	)
Other expenses
Salaries and employee benefits			(678,860	)		(661,813	)
Administrative expenses			(949,355	)		(848,292	)
Depreciation and amortization			(279,461	)		(243,790	)
Other expenses	17		(151,245	)		(142,894	)
			(2,058,921	)		(1,896,789	)
Income before translation result and Income Tax			1,041,538			1,701,024
Translation result			(9,931	)		(74,289	)
Income Tax	14(e)		(238,425	)		(356,758	)
Net profit for the period			793,182			1,269,977
Attributable to:
IFS’s shareholders			787,829			1,262,516
Non-controlling interest			5,353			7,461
			793,182			1,269,977
Earnings per share attributable to IFS’s shareholders, basic and diluted (stated in Soles)	19		6.836			10.939
Weighted average number of outstanding shares (in thousands)	19		115,248			115,418

The accompanying notes are an integral part of these consolidated financial statements.

Interim consolidated statement of other comprehensive income

For the nine-month periods ended September 30, 2023 and 2022


				Restated (Note 3.3.3)
	30.09.2023			30.09.2022
	S/(000)			S/(000)
Net profit for the period		793,182			1,269,977
Other comprehensive income that will not be reclassified to the consolidated statement of income in subsequent periods:
Gains (losses) on valuation of equity instruments at fair value through other comprehensive income		11,914			(41,231	)
Income Tax		149			203
Total unrealized gain (loss) that will not be reclassified to the consolidated statement of income in subsequent periods		12,063			(41,028	)
Other comprehensive income to be reclassified to the consolidated statement of income in subsequent periods:
Net movement of debt instruments at fair value through other comprehensive income		311,794			(2,639,286	)
Income Tax		3,286			11,324
		315,080			(2,627,962	)
Insurance reserves at fair value		(243,928	)		2,499,718
Net movement of cash flow hedges		(47,003	)		(46,676	)
Income Tax		8,022			5,816
		(38,981	)		(40,860	)
Translation of foreign operations		(4,207	)		(17,146	)
Total unrealized gain (loss) to be reclassified to the consolidated statement of income in subsequent periods		27,964			(186,250	)
Other comprehensive income for the period		40,027			(227,278	)
Total comprehensive income for the period, net of Income Tax		833,209			1,042,699
Attributable to:
IFS’s shareholders		826,767			1,037,733
Non-controlling interest		6,442			4,966
		833,209			1,042,699

The accompanying notes are an integral part of these consolidated financial statements.

Interim consolidated statement of changes in equity

For the nine-month periods ended September 30, 2023 and 2022


						Attributable to IFS’s shareholders
								Unrealized results, net
	Number of shares						Instruments that will not be reclassified to the consolidated statement of income	Instruments that will be reclassified to the consolidated statement of income
	Issued	In treasury	Capital stock	Treasury stock	Capital surplus	Reserves	Equity instruments at fair value	Debt instruments at fair value	Insurance reserve at fair value	Cash flow hedges reserve	Translation of foreign operations	Retained earnings	Total	Non-controlling interest	Total equity, net
	(in thousands)	(in thousands)	S/(000)	S/(000)	S/(000)	S/(000)	S/(000)	S/(000)	S/(000)	S/(000)	S/(000)	S/(000)	S/(000)	S/(000)	S/(000)
Balances as of January 1, 2022	115,447	(29)	1,038,017	(3,363)	532,771	5,200,000	(8,787)	(599,626)	134,150	44,878	261,085	2,904,912	9,504,037	51,325	9,555,362
Impact of first adoption of IFRS 17 "Insurance Contract", Note 3.3.3	—	—	—	—	—	—	—	—	(134,177)	—	—	(685,010)	(819,187)	(1,347)	(820,534)
Balances as of January 1, 2022 - Restated	115,447	(29)	1,038,017	(3,363)	532,771	5,200,000	(8,787)	(599,626)	(27)	44,878	261,085	2,219,902	8,684,850	49,978	8,734,828
Net profit for the period	—	—	—	—	—	—	—	—	—	—	—	1,262,516	1,262,516	7,461	1,269,977
Other comprehensive income	—	—	—	—	—	—	(40,954)	(2,621,535)	2,495,615	(40,763)	(17,146)	—	(224,783)	(2,495)	(227,278)
Total comprehensive income	—	—	—	—	—	—	(40,954)	(2,621,535)	2,495,615	(40,763)	(17,146)	1,262,516	1,037,733	4,966	1,042,699
Declared and paid dividends, Note 13(a)	—	—	—	—	—	—	—	—	—	—	—	(751,532)	(751,532)	—	(751,532)
Transfer of retained earnings to reserves, Note 13(e)	—	—	—	—	—	800,000	—	—	—	—	—	(800,000)	—	—	—
Dividends paid to non-controlling interest of Subsidiaries	—	—	—	—	—	—	—	—	—	—	—	—	—	(4,509)	(4,509)
Sale of equity instruments at fair value through other comprehensive income	—	—	—	—	—	—	(12,005)	—	—	—	—	12,005	—	—	—
Others	—	—	—	—	—	—	—	—	—	—	—	3,134	3,134	(7)	3,127
Balances as of September 30, 2022 - Restated	115,447	(29)	1,038,017	(3,363)	532,771	6,000,000	(61,746)	(3,221,161)	2,495,588	4,115	243,939	1,946,025	8,974,185	50,428	9,024,613

Balances as of January 1, 2023	115,447	(29)	1,038,017	(3,363)	532,771	6,000,000	(46,763)	(2,420,809)	1,652,634	(9,262)	210,920	3,037,030	9,991,175	54,776	10,045,951
Impact of first adoption of IFRS 17 "Insurance Contract", Note 3.3.3	—	—	—	—	—	—	—	—	58,859	—	—	(701,506)	(642,647)	(1,057)	(643,704)
Balances as of January 1, 2023 - Restated	115,447	(29)	1,038,017	(3,363)	532,771	6,000,000	(46,763)	(2,420,809)	1,711,493	(9,262)	210,920	2,335,524	9,348,528	53,719	9,402,247
Net profit for the period	—	—	—	—	—	—	—	—	—	—	—	787,829	787,829	5,353	793,182
Other comprehensive income	—	—	—	—	—	—	12,048	313,473	(243,528)	(38,848)	(4,207)	—	38,938	1,089	40,027
Total comprehensive income	—	—	—	—	—	—	12,048	313,473	(243,528)	(38,848)	(4,207)	787,829	826,767	6,442	833,209
Declared and paid dividends, Note 13(a)	—	—	—	—	—	—	—	—	—	—	—	(511,788)	(511,788)	—	(511,788)
Purchase of treasury stock, Note 13(b)	—	(938)	—	(80,946)	—	—	—	—	—	—	—	—	(80,946)	—	(80,946)
Dividends paid to non-controlling interest of Subsidiaries	—	—	—	—	—	—	—	—	—	—	—	—	—	(4,242)	(4,242)
Sale of equity instruments at fair value through other comprehensive income	—	—	—	—	—	—	(32,476)	—	—	—	—	32,476	—	—	—
Others	—	—	—	—	—	—	—	—	—	—	—	(5,108)	(5,108)	(65)	(5,173)
Balances as of September 30, 2023	115,447	(967)	1,038,017	(84,309)	532,771	6,000,000	(67,191)	(2,107,336)	1,467,965	(48,110)	206,713	2,638,933	9,577,453	55,854	9,633,307

The accompanying notes are an integral part of these consolidated financial statements.

Interim consolidated statement of cash flows

For the nine-month periods ended September 30, 2023 and 2022


				Restated (Note 3.3.3)
	30.09.2023			30.09.2022
	S/(000)			S/(000)
Cash flows from operating activities
Net profit for the period		793,182			1,269,977
Plus (minus) adjustments to net profit
Impairment loss on loans, net of recoveries		1,365,627			552,507
Loss due to impairment of financial investments		8,281			4,574
Depreciation and amortization		279,461			243,790
Provision for sundry risks		3,237			7,376
Deffered Income Tax		28,266			(47,980	)
Net (gain) loss on sale of financial investments		(8,850	)		8,283
Net loss of financial assets at fair value through profit or loss		49,585			291,790
Net loss (gain) for valuation of investment property		6,933			(28,750	)
Profit on sale of property, furniture and equipment		(15,300	)		—
Exchange difference		9,931			74,289
(Increase) decrease in accrued interest receivable		(6,690	)		10,742
Increase (decrease) in accrued interest payable		232,846			(2,589	)
Net changes in assets and liabilities
Net increase in loan portfolio		(2,813,736	)		(2,542,065	)
Net decrease (increase) in other accounts receivable and other assets		16,746			(386,018	)
Net decrease in restricted funds		70,252			347,791
Increase in deposits and obligations		313,316			382,134
Increase (decrease) in due to banks and correspondents		2,379,563			(314,532	)
Increase in other accounts payable, provisions and other liabilities		232,890			708,889
Decrease of investments at fair value through profit or loss		304,129			159,469
Net cash provided by operating activities		3,249,669			739,677

The accompanying notes are an integral part of these consolidated financial statements.

Interim consolidated statements of cash flows (continued)


				Restated (Note 3.3.3)
	30.09.2023			30.09.2022
	S/(000)			S/(000)
Cash flows from investing activities
Purchase of investments at fair value through other comprehensive income and at amortized cost		(2,975,291	)		(3,617,888	)
Purchase of property, furniture and equipment		(108,374	)		(90,551	)
Purchase of intangible assets		(176,746	)		(130,260	)
Purchase of investment property		(13,957	)		(21,044	)
Sale of property, furniture and equipment		32,667			—
Net cash used in investing activities		(3,241,701	)		(3,859,743	)
Cash flows from financing activities
Dividends paid		(511,788	)		(751,532	)
Payments of bonds, notes and other obligations		(1,999,131	)		(137,900	)
Net decrease in receivable inter-bank funds		170,216			30,002
Net increase in payable inter-bank funds		421,058			294,051
Purchase of treasury stock, net		(80,946	)		—
Dividend payments to non-controlling interest		(4,242	)		(4,509	)
Lease payments		(161,414	)		(116,388	)
Net cash used in financing activities		(2,166,247	)		(686,276	)
Net decrease in cash and cash equivalents		(2,158,279	)		(3,806,342	)
Translation gain (loss) on cash and cash equivalents		6,287			(18,392	)
Cash and cash equivalents at the beginning of the period		12,707,776			16,416,311
Cash and cash equivalents at the end of the period		10,555,784			12,591,577

The accompanying notes are an integral part of these consolidated financial statements.

Notes to the interim consolidated financial statements

As of September 30, 2023 and December 31, 2022

1. Business activity, current context and acquisition of Subsidiaries

(a) Business activity -

Intercorp Financial Services Inc. and Subsidiaries (henceforth "IFS", “the Company” or “the Group”), is a limited liability holding company incorporated in the Republic of Panama on September 19, 2006, and is a Subsidiary of Intercorp Peru Ltd. (henceforth “Intercorp Peru”), a holding Company incorporated in 1997 in the Commonwealth of the Bahamas. As of September 30, 2023, Intercorp Peru holds directly and indirectly 71.44 percent of the issued capital stock of IFS, equivalent to 71.20 percent of the outstanding capital stock of IFS (70.65 percent of the issued capital stock, equivalent to 70.64 percent of the outstanding capital stock as of December 31, 2022).

IFS’s legal domicile is located at Av. Carlos Villarán 140 Urb. Santa Catalina, La Victoria, Lima, Peru.

As of September 30, 2023 and December 31, 2022, IFS holds 99.30 percent of the capital stock of Banco Internacional del Peru S.A.A. – Interbank (henceforth “Interbank”), 99.84 percent of the capital stock of Interseguro Compañía de Seguros S.A. (henceforth “Interseguro”), 100 percent of the capital stock of Inteligo Group Corp. (henceforth “Inteligo”) and 100 percent of Procesos de Medios de Pago and its subsidiary Izipay S.A.C (henceforth "Izipay"), acquired in April 2022, see (d).

The operations of Interbank, Interseguro and Izipay are concentrated in Peru, while the operations of Inteligo and its Subsidiaries (Interfondos S.A. Sociedad Administradora de Fondos, Inteligo Sociedad Agente de Bolsa S.A. and Inteligo Bank Ltd.) are mainly concentrated in Peru and Panama.

The main activities of IFS’s Subsidiaries and their assets, liabilities, equity, operating income, net income, balances and other relevant information are presented in Note 2.

As explained in Note 3.3.3, the consolidated financial statements as of December 31, 2022, January 1, 2022 and for the nine-month periods ended September 30, 2022 have been restated as a result of IFRS 17 "Insurance Contract" first adoption and are part of the accompanying interim consolidated financial statements, which have been approved by the Audit Committee and Board Meeting in sessions held on November 06 and 08, 2023, respectively. On the other hand, the audited consolidated financial statements as of December 31, 2022 (henceforth, Annual Consolidated Financial Statements) were approved by the General Shareholders' Meeting held on March 31, 2023.

(b) Political context in Peru –

On December 7, 2022, Pedro Castillo, President of Peru, announced the dissolution of Peruvian Congress and the establishment of an emergency government which, as he assured, would rule through decree until a new Parliament with constitutive powers would write a new Constitution. Due to this announcement, the Congress debated and voted in favor of a presidential vacancy motion that ended up in his destitution. He was immediately succeeded by the vice-president, Dina Boluarte, who was designated President of the Republic of Peru.

(c.1) State of National and Sanitary Emergency

In March 2020, the World Health Organization declared “Covid-19” as a global pandemic, with a significant impact on the world economy. In Peru, the Government declared a State of National and Sanitary Emergency with a series of measures that affected both businesses and the population at large. The reopening of economic activities began since mid-2020, through the establishment of targeted measures by region and new rules of social coexistence.

During 2022, the Peruvian government derogated the National State of Emergency, while the National State of Health Emergency was derogated at the end of May 2023. It is worth mentioning that, since the first quarter of 2022, economic activities in the country are being carried out with normality and at levels before the pandemic.

(c.2) Economic measures adopted by the Peruvian Government

During 2021, the Peruvian government implemented extraordinary measures to secure the continuity of the economy’s payment chain. The main measures implemented in the financial system were related to facilities for loans rescheduling (payment deferrals), suspension of counting of past due days, partial or total withdrawal of deposits for severance indemnity (“CTS” by its Spanish acronym), Repo operations with the Banco Central de Reserva del Peru (“BCRP” by its Spanish acronym) and the launching of credit programs guaranteed by the Peruvian Government, such as “Reactiva Peru”.

Given the nature of the adopted measures, they had effects mainly on Interbank. During 2020, and in response to the Covid-19 crisis, Interbank offered its clients several payment rescheduling options. As of September 30, 2023 and December 31, 2022, the balance of rescheduled loans amounted to S/4,165,806,000 and S/5,048,978,000, respectively.

On the other hand, under the program “Reactiva Peru”, Interbank granted loans for S/6,617,142,000. As of September 30, 2023, the balance of loans granted under this program amounts to S/1,021,715,000, including accrued interest for S/46,453,000. As of this date, the amount covered by the guarantee of the Peruvian Government was S/835,699,000 (as of December 31, 2022, the balance was S/2,357,201,000, including accrued interest for S/57,254,000; while the amount covered by the guarantee of the Peruvian Government was S/2,040,379,000). It should be noted that during 2023 and 2022, Interbank made rescheduling for the “Reactiva Peru” program for an amount of approximately S/25,691,000 and S/133,046,000, respectively. As of September 30, 2023 and December 31, 2022, the balance of rescheduled loans under the “Reactiva Peru” program amounts to approximately S/917,028,000 and S/1,473,770,000, respectively.

Additionally, during 2022, the government authorized the one-off withdrawal of the entirety of the CTS, with the purpose of covering the workers’ economic needs caused by the Covid-19 pandemic. As part of this benefit, approximately 245,000 clients withdrew the approximate sum of S/589,238,000 during the year 2023 (261,000 clients withdrew the approximate sum of S/767,470,000 during the year 2022).

(d) Acquisition of Procesos de Medios de Pago S.A. and Subsidiary Izipay S.A.C. (“Izipay”)

Until March 2022, the Group (through its subsidiary Interbank) held 50 percent of Izipay. In April 2022, IFS acquired the remaining 50 percent of Izipay's capital stock, thus completing the 100 percent of its capital stock. The amount paid by IFS amounted to US$83,775,000 (equivalent to approximately S/312,647,000). The economic activity of the acquired companies is explained in greater detail in Note 2(g).

The acquisition made by IFS was recorded using the “Step acquisition” accounting method, pursuant to IFRS 3 “Business Combinations”. According to this method, the acquirer company must readjust to fair value the previously held equity interest in the acquiree entities. Additionally, assets and liabilities must be recorded at their fair values estimated at the acquisition date, including the identified intangible assets and the resulting goodwill that were not recorded in the statements of financial position of each acquired entity.

As a result of the acquisition and pursuant to the accounting regulation in force, the previous participation was adjusted to its fair value with an effect of S/222,513,000 and recorded in the Company results in September 2022 and which is presented in the item “Other income and (expenses)” of the interim consolidated statement of income, see Note 17.

2. Subsidiaries

IFS’s Subsidiaries are the following:

(a) Banco Internacional del Peru S.A.A. - Interbank and Subsidiaries -

Interbank is incorporated in Peru and is authorized by the Superintendence of Banking, Insurance and Private Pension Funds (henceforth “SBS”, by its Spanish acronym) to operate as a universal bank in accordance with Peruvian legislation. The Bank's operations are governed by the General Act of the Banking and Insurance System and Organic Act of the SBS – Act No. 26702 (henceforth “the Banking and Insurance Act”), that establishes the requirements, rights, obligations, restrictions and other operating conditions that financial and insurance entities must comply with in Peru.

As of September 30, 2023, Interbank had 153 offices (164 offices as of December 31, 2022). Additionally, it holds approximately 100 percent of the shares of the following Subsidiaries:


Entity	Activity


Internacional de Títulos Sociedad Titulizadora S.A. - Intertítulos S.T.	Manages securitization funds.
Compañía de Servicios Conexos Expressnet S.A.C.	Services related to credit card transactions or products related to the brand “American Express”.

(b) Interseguro Compañía de Seguros S.A. and Subsidiary -

Interseguro is incorporated in Peru and its operations are governed by the Banking and Insurance Act. It is authorized by the SBS to issue life and general risk insurance contracts.

Interseguro holds participations in Patrimonio Fideicometido D.S.093-2002-EF, Interproperties Peru (henceforth “Patrimonio Fideicometido – Interproperties Peru”), that is a structured entity, incorporated in April 2008, and in which several investors (related parties to the Group) contributed investment properties. Each investor or investors have ownership of and specific control over the contributed investment property. The fair values of the properties contributed by Interseguro that were included in this structured entity as of September 30, 2023 and December 31, 2022, amounted to S/86,993,000 and S/93,994,000, respectively; see Note 7. For accounting purposes and under IFRS 10 “Consolidated Financial Statements” the assets included in said structure are considered “silos”, because they are ring-fenced parts of the wider structured entity (the Patrimonio Fideicometido - Interproperties Peru). IFS has ownership and decision-making power over these properties and the Group has the exposure or rights to their returns; therefore, IFS consolidates the silos containing the investment properties that it controls.

Inteligo is an entity incorporated in the Republic of Panama. As of September 30, 2023 and December 31, 2022, it holds 100 percent of the shares of the following Subsidiaries:


Entity	Activity

Inteligo Bank Ltd.	It is incorporated in The Commonwealth of the Bahamas and has a branch established in the Republic of Panama that operates under an international license issued by the Superintendence of Banks of the Republic of Panama. Its main activity is to provide private and institutional banking services, mainly to Peruvian citizens.
Inteligo Sociedad Agente de Bolsa S.A.	Brokerage firm incorporated in Peru.
Inteligo Peru Holding S.A.C.	Financial holding company incorporated in Peru in December 2018. As of September 30, 2023 and December 31, 2022, it holds 99.99 percent interest in Interfondos S.A. Sociedad Administradora de Fondos, company that manages mutual funds and investment funds.
Inteligo USA, Inc.	Incorporated in the United States of America in January 2019, provides investment consultancy and related services.

(d) Negocios e Inmuebles S.A. and Holding Retail Peru S.A. -

These entities were acquired by IFS as part of the purchase of Seguros Sura and Hipotecaria Sura in year 2017. In April 2021, Negocios e Inmuebles S.A. (absorbing company) merged with Holding Retail Peru S.A. (absorbed

company), the latter being extinguished without liquidation. As of September 30, 2023 and December 31, 2022, Negocios e Inmuebles S.A., holds 8.50 percent of Interseguro’s capital stock.

(e) San Borja Global Opportunities S.A.C. -

Its corporate purpose is the marketing of products and services through Internet, telephony or related and it operates under the name of Shopstar (online marketplace) dedicated to the sale of products from different stores locally.

(f) IFS Digital S.A.C. -

Entity incorporated in August 2020, which its corporate purpose is to perform any type of investments and related services.

(g) Procesos de Medios de Pago and Izipay (Izipay) –

As indicated in Note 1(d), both companies were acquired in April 2022. Procesos de Medios de Pago is dedicated to the development, management and operation of the shared service of transaction processing of credit and debit cards, through the acquirer role for the brands MasterCard, Visa and other private brands; also, it renders the processing service, through the issuer role, to entities of the financial system. Izipay is dedicated to the facilitation of payments and services, offering its services of technological, operating and safety infrastructure through the affiliation of commercial stores, as well as installation and maintenance of infrastructure for transactions through the electronic commerce modality, interconnected with the networks of payment methods processors.

As explained in Note 1(d), in April 2022, IFS acquired control of Izipay, becoming it its Subsidiary. Since then Izipay consolidates its financial information together with IFS. The investment that Interbank held in Izipay until March 31, 2022, is presented as investments in associates in the accompanying interim consolidated financial statements.

3. Significant accounting policies and first adoption of International Financial Reporting Standard No. 17 "Insurance Contracts"

3.1 Basis of presentation and use of estimates –

The interim consolidated financial statements as of September 30, 2023 and December 31, 2022, have been prepared in accordance with IAS 34 “Interim Financial Reporting”.

The interim consolidated financial statements do not include all the information and disclosures required in the annual consolidated financial statements and should be read in conjunction with the IFS’s Audited Consolidated Financial Statements as of December 31, 2022 and 2021 (henceforth “Annual Consolidated Financial Statements”), given into account Note 3.3.3 below.

The accompanying interim consolidated financial statements have been prepared on the historical cost basis, except for investment property, derivative financial instruments, financial investments at fair value through profit or loss and through other comprehensive income, which have been measured at fair value. The interim consolidated financial statements are presented in Soles, which is the functional currency of the Group, and all values are rounded to the nearest thousand (S/(000)), except when otherwise indicated.

The preparation of the interim consolidated financial statements, in accordance with the International Financial Reporting Standards (henceforth “IFRS”) as issued by the International Accounting Standards Board (IASB), requires Management to make estimations and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of significant events in the notes to the interim consolidated financial statements.

In that sense, the estimates and criteria are continually assessed and are based on historical experience, as well as other factors, including expectations of future events that are believed to be reasonable under the current circumstances. Existing circumstances and assumptions about future developments, however, may change due to markets’ behavior or circumstances arising beyond the control of the Group. Such changes are reflected in the assumptions when they occur. Actual results could differ from those estimates. The most significant estimates comprised in the accompanying interim consolidated financial statements are related to the calculation of the impairment of the portfolio of loan and financial investments, the measurement of the fair value of the financial investments and investment property, the assessment of the impairment of goodwill, the liabilities for insurance contracts and measurement of the fair value of derivative financial instruments; also, there are other estimates such

as provisions for litigation, the estimated useful life of intangible assets and property, furniture and equipment, the estimation of deferred Income Tax and the determination of the terms and estimation of the interest rate of the lease contracts.

3.2 Basis of consolidation –

The interim consolidated financial statements of IFS comprise the financial statements of Intercorp Financial Services Inc. and Subsidiaries. The method adopted by IFS to consolidate financial information with its Subsidiaries is described in Note 3.3 to the Annual Consolidated Financial Statements and has not changed since then.

Some amounts of the interim consolidated statement of income as of September 30, 2022, have been reclassified in order to make them comparable with the presentation as of September 30, 2023. In Management’s opinion, the reclassifications made in the consolidated financial statements as of September 30, 2022, are not significant considering the interim consolidated financial statements as a whole.

3.3 First adoption of the International Financial Reporting Standard No. 17 "Insurance Contracts" (henceforth IFRS 17) –

Since January 1, 2023, Interseguro adopted IFRS 17, which replaces IFRS 4 "Insurance Contracts".

Following is the description of the main impacts from the adoption of IFRS 17:

Classification and measurement –

The adoption of IFRS 17 has not changed the classification of the Group’s insurance contracts. However, it establishes specific principles for the recognition and measurement of insurance contracts held by the Group.

The key principles of IFRS 17 consider that the Group:

- Identifies insurance contracts as those under which the entity accepts significant insurance risk from another party (the policyholder) by agreeing to compensate the policyholder if a specified uncertain future event (the insured event) adversely affects the policyholder.

- Recognizes and separates in insurance contracts investment components and goods or services components from insurance services and records them according to other standards.

- Divides insurance contracts into groups that it recognizes and measures:

- A risk-adjusted present value of the future cash flows (fulfillment cash flow, or “FCF”) that incorporates all available information about the fulfilment cash flows in a way that is consistent with observable market information.

Plus:

- An amount representing the unearned profit in the group of contracts (the contractual service margin, or “CSM”).

- Recognizes profit from a group of insurance contracts over each period the Group provides insurance contract services, as the Group is released from risk. If a group of contracts is expected to be onerous (i.e., loss-making) over the remaining coverage period, the Group recognizes the loss immediately.

Transition –

b.1) Transition methodology –

The Group decided to apply the transition methodology under Fair Value, which consists of obtaining the amount under which a liability portfolio could be transferred to a third party. This amount was compared with the balance of the estimate of technical provisions (Best Estimate Liability – “BEL”) and Risk Adjustment existing at the transition date, and the result was the CSM as of said date. Also, it was determined the future benefit provided by the insurance contracts (Contractual Service Margin – CSM), and will be decommitted to the statement of income to the extent that the Group renders its services to the insured. The CSM balance at the date of transition into IFRS 17 was applied retrospectively for the policies in force at said date.

(b.1.1) Calculation methodology

The calculation methodology that the Group has applied to determine the Fair Value amount of its portfolios in force as of the date of transition into IFRS 17 is the valuation technique of present value. In this sense, the following calculation components are taken into account:

• Estimation of the future cash flows for the asset or liability subject to valuation

• Expectations of possible variations in the amount and the cash flows calendar that represent the uncertainty inherent to cash flows.

• Time value of money, represented by the interest rate on risk-free monetary assets that present maturity dates or lives that coincide with the periods covered by the cash flows and do not involve neither uncertainty regarding the calendar nor risk of default for the holder (i.e., risk-free interest rate).

• Price to bear the uncertainty inherent to cash flows (i.e., a risk premium).

• Other factors that market participants may take into account considering the circumstances.

• For a liability, the risk of default related to said liability, including the credit risk of the entity (i.e., the debtor).

As a result of the first adoption of IFRS 17, the impact on the net equity of the Company as of January 1, 2022 (transition date), amounted to S/820,534,000, as shown below:


	IFRS 4			Reclassifications for first adoption of IFRS 17			Adjustments for first adoption of IFRS 17			IFRS 17
	Balance			Total			Total			Balance
	S/(000)			S/(000)			S/(000)			S/(000)
Assets
Cash and due from banks		17,104,465			—			—			17,104,465
Inter-bank funds		30,002			—			—			30,002
Financial investments		24,547,294			—			—			24,547,294
Loans, net of unearned interest		45,070,500			—			—			45,070,500
Impairment allowance for loans		(2,064,917	)		—			—			(2,064,917	)
Loans, net		43,005,583			—			—			43,005,583
Investment property		1,224,454			—			—			1,224,454
Property, furniture and equipment, net		815,118			—			—			815,118
Due from customers on acceptances		152,423			—			—			152,423
Intangibles and goodwill, net		1,044,749			—			—			1,044,749
Other accounts receivable and other assets, net		1,887,454			—			(52,971	)		1,834,483
Insurance and reinsurance contract assets		—			—			52,978			52,978
Deferred Income Tax asset, net		142,367			—			—			142,367
Total assets		89,953,909			—			7			89,953,916
Liabilities
Deposits and obligations		48,897,944			—			—			48,897,944
Due to banks and correspondents		8,522,849			—			—			8,522,849
Bonds, notes and other obligations		8,389,672			—			—			8,389,672
Due from customers on acceptances		152,423			—			—			152,423
Insurance contract liabilities		11,958,058			9,359			820,541			12,787,958
Other accounts payable, provisions and other liabilities		2,477,601			(9,359	)		—			2,468,242
Total liabilities		80,398,547			—			820,541			81,219,088
Equity, net
Equity attributable to IFS’s shareholders:
Capital stock		1,038,017			—			—			1,038,017
Treasury stock		(3,363	)		—			—			(3,363	)
Capital surplus		532,771			—			—			532,771
Reserves		5,200,000			—			—			5,200,000
Unrealized results, net		(168,300	)		—			(134,177	)		(302,477	)
Retained earnings		2,904,912			—			(685,010	)		2,219,902
		9,504,037			—			(819,187	)		8,684,850
Non-controlling interest		51,325			—			(1,347	)		49,978
Total equity, net		9,555,362			—			(820,534	)		8,734,828
Total liabilities and equity, net		89,953,909			—			7			89,953,916

As a result of the first adoption of IFRS 17, the impact on the net equity of the Company as of December 31, 2022, amounted to S/643,704,000, as is made up as follows:


	IFRS 4			Reclassifications for first adoption of IFRS 17			Adjustments for first adoption of IFRS 17			IFRS 17
	Balance			Total			Total			Balance
	S/(000)			S/(000)			S/(000)			S/(000)
Assets
Cash and due from banks		13,193,411			—			—			13,193,411
Inter-bank funds		296,119			—			—			296,119
Financial investments		22,787,598			—			—			22,787,598
Loans, net of unearned interest		47,530,853			—			—			47,530,853
Impairment allowance for loans		(2,027,855	)		—			—			(2,027,855	)
Loans, net		45,502,998			—			—			45,502,998
Investment property		1,287,717			—			—			1,287,717
Property, furniture and equipment, net		791,432			—			—			791,432
Due from customers on acceptances		45,809			—			—			45,809
Intangibles and goodwill, net		1,633,202			—			—			1,633,202
Other accounts receivable and other assets, net		1,778,559			—			(34,596	)		1,743,963
Insurance and reinsurance contract assets		—			—			30,577			30,577
Deferred Income Tax asset, net		165,787			—			—			165,787
Total assets		87,482,632			—			(4,019	)		87,478,613
Liabilities
Deposits and obligations		48,530,708			—			—			48,530,708
Inter-bank funds		30,012			—			—			30,012
Due to banks and correspondents		7,100,646			—			—			7,100,646
Bonds, notes and other obligations		7,906,303			—			—			7,906,303
Due from customers on acceptances		45,809			—			—			45,809
Insurance contract liabilities		10,602,372			9,768			639,685			11,251,825
Other accounts payable, provisions and other liabilities		3,138,932			(9,768	)		—			3,129,164
Deferred Income Tax liability, net		81,899			—			—			81,899
Total liabilities		77,436,681			—			639,685			78,076,366
Equity, net
Equity attributable to IFS’s shareholders:
Capital stock		1,038,017			—			—			1,038,017
Treasury stock		(3,363	)		—			—			(3,363	)
Capital surplus		532,771			—			—			532,771
Reserves		6,000,000			—			—			6,000,000
Unrealized results, net		(613,280	)		—			58,859			(554,421	)
Retained earnings		3,037,030			—			(701,506	)		2,335,524
		9,991,175			—			(642,647	)		9,348,528
Non-controlling interest		54,776			—			(1,057	)		53,719
Total equity, net		10,045,951			—			(643,704	)		9,402,247
Total liabilities and equity, net		87,482,632			—			(4,019	)		87,478,613

The reconciliation between the book values according to IFRS 4 and the balances reported according to IFRS 17 is presented below, for the nine-month periods ended September 30, 2022:


	IFRS 4			Adjustments for first adoption of IFRS 17			IFRS 17
	Balance			Total			Balance
	S/(000)			S/(000)			S/(000)
Interest and similar income		4,187,331			—			4,187,331
Interest and similar expenses		(1,126,675	)		433			(1,126,242	)
Net interest and similar income		3,060,656			433			3,061,089
Impairment loss on loans, net of recoveries		(552,507	)		—			(552,507	)
Recovery due to impairment of financial investments		(4,574	)		—			(4,574	)
Net interest and similar income after impairment loss		2,503,575			433			2,504,008
Fee income from financial services, net		814,138			—			814,138
Net gain on foreign exchange transactions		266,816			—			266,816
Net loss on sale of financial investments		(8,283	)		—			(8,283	)
Net loss on financial assets at fair value through profit or loss		(291,790	)		—			(291,790	)
Net gain on investment property		78,903			—			78,903
Other income		359,883			(20	)		359,863
		1,219,667			(20	)		1,219,647
Insurance premiums and claims
Net premiums earned		512,435			(512,435	)		—
Net claims and benefits incurred for life insurance contracts and others		(636,127	)		636,127			—
		(123,692	)		123,692			—

Result from insurance activities, before expenses		—			(125,842	)		(125,842	)

Other expenses
Salaries and employee benefits		(661,813	)		—			(661,813	)
Administrative expenses		(848,292	)		—			(848,292	)
Depreciation and amortization		(243,790	)		—			(243,790	)
Other expenses		(185,310	)		42,416			(142,894	)
		(1,939,205	)		42,416			(1,896,789	)
Income before translation result and Income Tax		1,660,345			40,679			1,701,024
Exchange difference		(35,575	)		(38,714	)		(74,289	)
Income Tax		(356,758	)		—			(356,758	)
Net profit for the period		1,268,012			1,965			1,269,977
Attributable to:
IFS’s shareholders		1,260,555			1,961			1,262,516
Non-controlling interest		7,457			4			7,461
		1,268,012			1,965			1,269,977
Earnings per share attributable to IFS’s shareholders, basic and diluted (stated in Soles)		10.922			—			10.939
Weighted average number of outstanding shares (in thousands)		115,418			—			115,418

4. Cash and due from banks and inter-bank funds

(a) The detail of cash and due from banks is as follows:


	30.09.2023		31.12.2022
	S/(000)		S/(000)
Cash and clearing (b)		2,201,007		2,865,251
Deposits in the BCRP (b)		6,232,209		6,918,526
Deposits in banks (c)		2,122,568		2,923,999
Accrued interest		25,770		17,391
		10,581,554		12,725,167
Restricted funds (d)		398,983		468,244
Total		10,980,537		13,193,411

Cash and cash equivalents presented in the consolidated statements of cash flows do not include the restricted funds and accrued interest.

(b) In accordance with rules in force, Interbank is required to maintain a legal reserve to honor its obligations with the public. This reserve is comprised of funds kept in Interbank and in the BCRP and is made up as follows:


	30.09.2023		31.12.2022
	S/(000)		S/(000)
Legal reserve (*)
Deposits in the BCRP		4,035,169		6,055,726
Cash in vaults		2,200,948		2,719,277
Subtotal legal reserve		6,236,117		8,775,003
Non-mandatory reserve
Term deposits in BCRP (**)		1,514,300		100,000
Overnight deposit in BCRP (***)		682,740		762,800
Cash and clearing		—		145,903
Subtotal non-mandatory reserve		2,197,040		1,008,703
Cash balances not subject to legal reserve		59		71
Total		8,433,216		9,783,777

(*) The legal reserve funds maintained in the BCRP are non-interest bearing, except for the part that exceeds the minimum reserve required that accrued interest at a nominal annual rate. According to the information note “Interest rate of the reserve funds in the Central Reserve Bank of Peru”, starting in February 2022, the rate used for the calculation of interest was the Secured Overnight Financing Rate (“SOFR”). As of September 30, 2023 and December 31, 2022, the excess in foreign currency accrued interest at an annual average rate of 4.82 and 3.79 percent, respectively. During 2023 and 2022, Interbank did not maintain excess reserves in national currency.

In Group Management’s opinion, Interbank has complied with the requirements established by the rules in force related to the computation of the legal reserve.

(**) As of September 30, 2023, corresponds to three term deposits in local currency held by Interbank maintained in the BCRP, matured in October 2023, and accrued interest at an annual interest rate of 7.47 percent (one term deposit in local currency that Interbank maintained in the BCRP, matured in January 2023, and accrued interest at an annual interest rate of 7.50 percent, as of December 31, 2022).

(***) As of September 30, 2023, corresponds to an overnight deposit in foreign currency for US$180,000,000 (approximately equivalent to S/682,740,000) in the BCRP, with maturity in the first days of October 2023 and accrued interest at an annual interest rate of 5.34 percent (one overnight deposit in foreign currency for US$200,000,000, approximately equivalent to S/762,800,000, in the BCRP, with maturity in the first days of January 2023 and accrued interest at an annual interest rate of 4.39 percent, as of December 31, 2022).

(c) Deposits in domestic banks and abroad are mainly in Soles and US Dollars, they are freely available and accrue interest at market rates.

(d) The Group maintains restricted funds related to:


	30.09.2023		31.12.2022
	S/(000)		S/(000)
Inter-bank transfers (*)		352,673		431,052
Derivative financial instruments, Note 8(b)		43,958		34,784
Others		2,352		2,408
Total		398,983		468,244

(*) Funds held at BCRP to guarantee transfers made through the Electronic Clearing House ("CCE", by its Spanish acronym).

(e) Inter-bank funds -

These are loans made between financial institutions with maturity, in general, minor than 30 days and do not have specific guarantees. As of September 30, 2023, Inter-bank funds assets and liabilities accrue interest at an annual rate of 7.50 percent in local currency and 5.50 percent in foreign currency (annual rate of 7.50 percent in local currency for Inter-bank funds assets and liabilities, as of December 31, 2022).

5. Financial investments

(a) This caption is made up as follows, as of September 30, 2023 and December 31, 2022:


	30.09.2023		31.12.2022
	S/(000)		S/(000)
Financial investments
Debt instruments measured at fair value through other comprehensive income (b) and (c)		19,982,550		16,716,517
Investments at amortized cost (d)		3,279,129		3,231,139
Investments at fair value through profit or loss (e)		1,524,891		1,932,993
Equity instruments measured at fair value through other comprehensive income (f)		453,227		512,884
Total		25,239,797		22,393,533
Accrued income
Debt instruments measured at fair value through other comprehensive income (b)		207,915		322,425
Investments at amortized cost (d)		36,443		71,640
Total		25,484,155		22,787,598

(b) Following is the detail of debt instruments measured at fair value through other comprehensive income:


			Unrealized gross amount								Annual effective interest rates
	Amortized							Estimated			S/				US$
	cost		Gains		Losses (c)			fair value		Maturity	Min		Max		Min		Max
	S/(000)		S/(000)		S/(000)			S/(000)			%		%		%		%
As of September 30, 2023
Corporate, leasing and subordinated bonds (*)		9,443,948		10,274		(1,228,213	)		8,226,009	Oct-23 / Feb-97		2.72		14.52		6.35		17.00
Sovereign Bonds of the Republic of Peru		8,279,725		348		(898,433	)		7,381,640	Aug-24 / Feb-55		1.91		7.50		—		—
Negotiable Certificates of Deposit issued by the Central Reserve Bank of Peru		3,255,652		125		(255	)		3,255,522	Oct-23 / Sep-24		6.57		7.20		—		—
Bonds guaranteed by the Peruvian Government		491,973		2,253		(15,063	)		479,163	Oct-24 / Oct-33		3.54		5.21		7.82		8.38
Global Bonds of the Republic of Peru		511,609		—		(48,178	)		463,431	Jul-25 / Dec-32		—		—		5.55		5.97
Treasury Bonds of the United States of America		93,173		—		(5,135	)		88,038	Nov-31 / Aug-33		—		—		4.56		4.58
Sovereign Bonds of the United States of America		45,916		—		(145	)		45,771	Oct-23 / Feb-32		—		—		5.38		5.47
Other		46,740		—		(3,764	)		42,976	Feb-24 / Feb-34		—		—		5.12		6.54
Total		22,168,736		13,000		(2,199,186	)		19,982,550
Accrued interest									207,915
Total									20,190,465

			Unrealized gross amount								Annual effective interest rates
	Amortized							Estimated			S/				US$
	cost		Gains		Losses (c)			fair value		Maturity	Min		Max		Min		Max
	S/(000)		S/(000)		S/(000)			S/(000)			%		%		%		%
As of December 31, 2022
Corporate, leasing and subordinated bonds (*)		8,707,969		9,477		(1,143,244	)		7,574,202	Jan-23 / Feb-97		1.60		13.26		5.10		13.14
Sovereign Bonds of the Republic of Peru		7,878,445		590		(1,270,254	)		6,608,781	Sep-23 / Feb-55		1.89		8.14		—		—
Variable interest Certificates of Deposit issued by the Central Reserve Bank of Peru		1,434,752		89		(5	)		1,434,836	Jan-23 / Mar-23		7.29		7.46		—		—
Bonds guaranteed by the Peruvian Government		512,316		1,698		(26,286	)		487,728	Oct-24 / Oct-33		3.48		6.01		6.86		8.25
Global Bonds of the Republic of Peru		508,813		—		(55,527	)		453,286	Jul-25 / Dec-32		—		—		5.18		5.60
Global Bonds of the Republic of Colombia		82,836		—		(2,026	)		80,810	Mar-23 / Feb-24		—		—		6.07		6.23
Negotiable Certificates of Deposit issued by the Central Reserve Bank of Peru		44,234		—		(366	)		43,868	Mar-23		2.28		2.28		—		—
Other		39,627		—		(6,621	)		33,006	Nov-31 / Feb-34		—		—		3.85		6.06
Total		19,208,992		11,854		(2,504,329	)		16,716,517
Accrued interest									322,425
Total									17,038,942

(*) As of September 30, 2023 and December 31, 2022, Inteligo holds corporate bonds from several entities for approximately S/111,865,000 and S/116,603,000, respectively, which guarantee loans with Bank J. Safra Sarasin, see Note 11(a).

(c) The Group, according to the business model applied to these debt instruments, has the capacity to hold these investments for a sufficient period that allows the early recovery of the fair value, up to the maximum period for the early recovery or the due date.

Following is the movement of the provision for expected credit loss for these debt instruments, measured at fair value through other comprehensive income:


	30.09.2023			31.12.2022			30.09.2022
	S/(000)			S/(000)			S/(000)
Expected credit loss at the beginning of the period		53,974			41,108			41,108
New assets originated or purchased		1,292			3,132			2,929
Assets derecognized or matured		(922	)		(462	)		(181	)
Effect on the expected credit loss due to the change of the stage during the year		324			15,548			6,820
Loss (reversal) for impairment		9,903			(3,651	)		(3,688	)
Others		(2,316	)		(1,817	)		(1,306	)
Period movement		8,281			12,750			4,574
Effect of foreign exchange variation		(187	)		116			417
Expected credit loss at the end of the period		62,068			53,974			46,099

(d) As of September 30, 2023, investments at amortized cost corresponds to Sovereign Bonds of the Republic of Peru issued in Soles, for an amount of S/3,236,616,000 and term deposits issued mainly in Soles, for an amount of S/78,956,000, including accrued interest (as of December 31, 2022 corresponds to sovereign bonds of the Republic of Peru issued in Soles, for an amount of S/3,302,779,000).

As of September 30, 2023, the sovereign bonds of the Republic of Peru and time deposits have maturity dates that range from August 2024 to August 2037, have accrued interest at effective annual rates ranging from 3.10 percent and 8.80 percent, and estimated fair value amounting to approximately S/3,094,572,000 (as of December 31, 2022, their maturity dates ranged from September 2023 to August 2037, accrued interest at effective annual rates between 4.29 percent and 6.64 percent, and its estimated fair value amounted to approximately S/2,949,507,000).

As of September 30, 2023 and December 31, 2022, Interbank keeps loans with the BCRP and with foreign banks that are guaranteed with these sovereign bonds, classified as restricted, for approximately S/2,518,335,000 and S/2,310,536,000, respectively; see Note 11(a).

(e) The composition of financial instruments at fair value through profit or loss is as follows:


	30.09.2023		31.12.2022
	S/(000)		S/(000)
Equity instruments
Local and foreign mutual funds and investment funds participations		1,154,047		1,517,075
Listed shares		255,028		315,820
Non-listed shares		79,846		74,430
Debt instruments
Corporate, leasing and subordinated bonds		32,008		25,668
Indexed Certificates of Deposit		3,962		—
Total		1,524,891		1,932,993

As of September 30, 2023 and December 31, 2022, investments at fair value through profit or loss include investments held for trading for approximately S/195,935,000 and S/209,549,000, respectively; and those assets that are necessarily measured at fair value through profit or loss for approximately S/1,328,956,000 and S/1,723,444,000, respectively.

(f) As of September 30, 2023 and December 31, 2022, the composition of equity instruments measured at fair value through other comprehensive income is as follow:


	30.09.2023		31.12.2022
	S/(000)		S/(000)
Listed shares (g)		413,419		474,588
Non-listed shares		39,808		38,296
Total		453,227		512,884

As of September 30, 2023 and December 31, 2022, it corresponds mainly to investments in shares in the biological sciences, distribution of machinery, energy, telecommunications, financial and massive consumption sectors that are listed on the domestic and foreign markets.

(g) Below are the debt instruments measured at fair value through other comprehensive income and at amortized cost according to the stages indicated by IFRS 9 as of September 30, 2023 and December 31, 2022:


	30.09.2023
Debt instruments measured at fair value through other comprehensive income and at amortized cost	Stage 1		Stage 2		Stage 3		Total
	S/(000)		S/(000)		S/(000)		S/(000)
Sovereign Bonds of the Republic of Peru		10,584,949		—		—		10,584,949
Corporate, leasing and subordinated bonds		7,405,495		818,855		1,659		8,226,009
Negotiable Certificates of Deposit issued by the BCRP		3,255,522		—		—		3,255,522
Bonds guaranteed by the Peruvian government		479,163		—		—		479,163
Global Bonds of the Republic of Peru		463,431		—		—		463,431
Treasury Bonds of the United States of America		88,038		—		—		88,038
Sovereign Bonds of the United States of America		45,771		—		—		45,771
Others		90,616		28,180		—		118,796
Total		22,412,985		847,035		1,659		23,261,679

	31.12.2022
Debt instruments measured at fair value through other comprehensive income and at amortized cost	Stage 1		Stage 2		Stage 3		Total
	S/(000)		S/(000)		S/(000)		S/(000)
Sovereign Bonds of the Republic of Peru		9,839,920		—		—		9,839,920
Corporate, leasing and subordinated bonds		6,709,273		864,511		418		7,574,202
Variable interest Certificates of Deposit issued by the BCRP		1,434,836		—		—		1,434,836
Bonds guaranteed by the Peruvian government		487,728		—		—		487,728
Global Bonds of the Republic of Peru		453,286		—		—		453,286
Global Bonds of the Republic of Colombia		—		80,810		—		80,810
Negotiable Certificates of Deposit issued by the BCRP		43,868		—		—		43,868
Others		33,006		—		—		33,006
Total		19,001,917		945,321		418		19,947,656

6. Loans, net

(a) This caption is made up as follows:


	30.09.2023			31.12.2022
	S/(000)			S/(000)
Direct loans
Loans (*)		36,624,818			35,977,734
Credit cards and other loans (**)		6,553,817			6,239,314
Leasing		1,457,730			1,174,542
Factoring		1,088,430			1,011,496
Discounted notes		1,013,551			894,588
Advances and overdrafts		35,639			38,763
Refinanced loans		403,760			322,941
Past due and under legal collection loans		1,571,411			1,365,972
		48,749,156			47,025,350
Plus (minus)
Accrued interest from performing loans		675,633			527,615
Unearned interest and interest collected in advance		(45,031	)		(22,112	)
Impairment allowance for loans (d)		(2,301,886	)		(2,027,855	)
Total direct loans, net		47,077,872			45,502,998
Indirect loans		4,481,948			4,487,347

(*) As of September 30, 2023 and December 31, 2022, Interbank maintains repo operations of loans represented in securities according to the BCRP’s definition. In consequence, loans provided as guarantee amount to S/690,246,000 and S/1,909,375,000, respectively, and are presented in the caption “Loan, net”, and the related liability is presented in the caption “Due to banks and correspondents” of the interim consolidated statement of financial position; see Note 11(b).

(**) As of September 30, 2023 and December 31, 2022, it includes non-revolving consumer loans related to credit card lines for approximately S/3,459,624,000 and S/3,225,874,000, respectively.

(b) The classification of the direct loan portfolio is as follows:


	30.09.2023		31.12.2022
	S/(000)		S/(000)
Commercial loans (c.1)		21,308,006		21,412,126
Consumer loans (c.1)		16,685,006		14,967,799
Mortgage loans (c.1)		9,708,174		9,286,944
Small and micro-business loans (c.1)		1,047,970		1,358,481
Total		48,749,156		47,025,350

Following is the balance of loans under the “Reactiva Peru” program as of September 30, 2023 and December 31, 2022:


	30.09.2023		31.12.2022
	S/(000)		S/(000)
Commercial loans		677,787		1,704,203
Small and micro-business loans		297,475		595,744
Total		975,262		2,299,947

For purposes of estimating the impairment loss in accordance with IFRS 9, the Group's loans are segmented into homogeneous groups that share similar risk characteristics; the Group determined these 3 types of portfolios: Retail Banking (consumer and mortgage loans), Commercial Banking (commercial loans) and Small Business Banking (loans to small and micro-business).

(c) The following table shows the credit quality and maximum exposure to credit risk based on the Group's internal credit rating as of September 30, 2023 and December 31, 2022. The amounts presented do not consider impairment.


	30.09.2023								31.12.2022
Direct loans, (c.1)	Stage 1		Stage 2		Stage 3		Total		Stage 1		Stage 2		Stage 3		Total
	S/(000)		S/(000)		S/(000)		S/(000)		S/(000)		S/(000)		S/(000)		S/(000)
Not impaired
High grade		36,288,432		1,677,500		—		37,965,932		35,613,991		1,111,421		—		36,725,412
Standard grade		3,406,063		915,951		—		4,322,014		4,282,904		835,217		—		5,118,121
Sub-standard grade		878,249		1,274,997		—		2,153,246		776,603		940,391		—		1,716,994
Past due but not impaired		1,371,106		1,493,671		—		2,864,777		1,124,557		1,150,139		—		2,274,696
Impaired
Individually		—		—		36,211		36,211		—		—		45,907		45,907
Collectively		—		—		1,406,976		1,406,976		—		—		1,144,220		1,144,220
Total direct loans		41,943,850		5,362,119		1,443,187		48,749,156		41,798,055		4,037,168		1,190,127		47,025,350


	30.09.2023								31.12.2022
Contingent Credits: Guarantees and stand by letters, import and export letters of credit (substantially, all indirect loans correspond to commercial loans)	Stage 1 S/(000)		Stage 2 S/(000)		Stage 3 S/(000)		Total S/(000)		Stage 1 S/(000)		Stage 2 S/(000)		Stage 3 S/(000)		Total S/(000)
Not impaired
High grade		3,939,675		419,382		—		4,359,057		3,945,307		402,336		—		4,347,643
Standard grade		28,334		35,733		—		64,067		12,083		39,541		—		51,624
Sub-standard grade		3,348		39,124		—		42,472		2,051		59,953		—		62,004
Past due but not impaired		—		—		—		—		—		—		—		—
Impaired		—		—		—
Individually		—		—		6,227		6,227		—		—		9,330		9,330
Collectively		—		—		10,125		10,125		—		—		16,746		16,746
Total indirect loans		3,971,357		494,239		16,352		4,481,948		3,959,441		501,830		26,076		4,487,347

(c.1) The following tables show the credit quality and maximum exposure to credit risk for each classification of the direct loans:


	30.09.2023								31.12.2022
	Stage 1		Stage 2		Stage 3		Total		Stage 1		Stage 2		Stage 3		Total
Commercial loans	S/(000)		S/(000)		S/(000)		S/(000)		S/(000)		S/(000)		S/(000)		S/(000)
Not impaired
High grade		15,858,824		1,475,373		—		17,334,197		16,213,146		914,480		—		17,127,626
Standard grade		1,372,367		320,333		—		1,692,700		1,991,637		230,180		—		2,221,817
Sub-standard grade		413,925		240,475		—		654,400		380,679		171,648		—		552,327
Past due but not impaired		812,401		356,725		—		1,169,126		704,067		398,185		—		1,102,252
Impaired
Individually		—		—		36,211		36,211		—		—		45,907		45,907
Collectively		—		—		421,372		421,372		—		—		362,197		362,197
Total direct loans		18,457,517		2,392,906		457,583		21,308,006		19,289,529		1,714,493		408,104		21,412,126


	30.09.2023								31.12.2022
	Stage 1		Stage 2		Stage 3		Total		Stage 1		Stage 2		Stage 3		Total
Consumer loans	S/(000)		S/(000)		S/(000)		S/(000)		S/(000)		S/(000)		S/(000)		S/(000)
Not impaired
High grade		12,200,455		183,949		—		12,384,404		11,331,807		181,066		—		11,512,873
Standard grade		1,232,488		586,716		—		1,819,204		1,139,837		579,625		—		1,719,462
Sub-standard grade		91,446		719,520		—		810,966		60,415		542,841		—		603,256
Past due but not impaired		222,516		845,077		—		1,067,593		153,865		526,042		—		679,907
Impaired
Individually		—		—		—		—		—		—		—		—
Collectively		—		—		602,839		602,839		—		—		452,301		452,301
Total direct loans		13,746,905		2,335,262		602,839		16,685,006		12,685,924		1,829,574		452,301		14,967,799


	30.09.2023								31.12.2022
	Stage 1		Stage 2		Stage 3		Total		Stage 1		Stage 2		Stage 3		Total
Mortgage loans	S/(000)		S/(000)		S/(000)		S/(000)		S/(000)		S/(000)		S/(000)		S/(000)
Not impaired
High grade		7,685,444		12,834		—		7,698,278		7,490,495		1,033		—		7,491,528
Standard grade		590,030		563		—		590,593		667,599		15,411		—		683,010
Sub-standard grade		372,551		271,626		—		644,177		334,967		200,226		—		535,193
Past due but not impaired		294,426		213,003		—		507,429		205,728		132,958		—		338,686
Impaired
Individually		—		—		—		—		—		—		—		—
Collectively		—		—		267,697		267,697		—		—		238,527		238,527
Total direct loans		8,942,451		498,026		267,697		9,708,174		8,698,789		349,628		238,527		9,286,944


	30.09.2023								31.12.2022
	Stage 1		Stage 2		Stage 3		Total		Stage 1		Stage 2			Stage 3		Total
Small and micro-business loans	S/(000)		S/(000)		S/(000)		S/(000)		S/(000)		S/(000)			S/(000)		S/(000)
Not impaired
High grade		543,709		5,344		—		549,053		578,543		14,842			—		593,385
Standard grade		211,178		8,339		—		219,517		483,831		10,001			—		493,832
Sub-standard grade		327		43,376		—		43,703		542		25,676			—		26,218
Past due but not impaired		41,763		78,866		—		120,629		60,897		92,954			—		153,851
Impaired
Individually		—		—		—		—		—		—	��		—		—
Collectively		—		—		115,068		115,068		—		—			91,195		91,195
Total direct loans		796,977		135,925		115,068		1,047,970		1,123,813		143,473			91,195		1,358,481

(d) The balances of the direct and indirect loan portfolio and the movement of the respective allowance for expected credit loss, calculated according to IFRS 9, is as follows:

(d.1) Direct loans


	30.09.2023				30.09.2022				31.12.2022
Changes in the allowance for expected credit losses for direct loans, see (d.1.1)	Stage 1	Stage 2	Stage 3	Total	Stage 1	Stage 2	Stage 3	Total	Total
	S/(000)	S/(000)	S/(000)	S/(000)	S/(000)	S/(000)	S/(000)	S/(000)	S/(000)
Expected credit loss at beginning of year balances	608,558	737,286	682,011	2,027,855	956,456	404,881	703,580	2,064,917	2,064,917
Impact of the expected credit loss in the consolidated statement of income -
New originated or purchased assets	458,367	—	—	458,367	427,641	—	—	427,641	503,454
Assets matured or derecognized (excluding write-offs)	(116,438)	(47,522)	(21,016)	(184,976)	(80,194)	(40,384)	(27,361)	(147,939)	(713,843)
Transfers to Stage 1	92,956	(90,510)	(2,446)	—	131,173	(128,787)	(2,386)	—	—
Transfers to Stage 2	(244,136)	252,515	(8,379)	—	(245,524)	256,359	(10,835)	—	—
Transfers to Stage 3	(87,868)	(240,445)	328,313	—	(72,667)	(209,469)	282,136	—	—
Impact on the expected credit loss for credits that change stage in the period (*)	(77,167)	307,187	894,895	1,124,915	(106,426)	231,696	271,195	396,465	387,272
Others (**)	(71,866)	(127,806)	187,201	(12,471)	(364,087)	95,918	145,370	(122,799)	659,674
Total	(46,152)	53,419	1,378,568	1,385,835	(310,084)	205,333	658,119	553,368	836,557
Write-offs	—	—	(1,217,964)	(1,217,964)	—	—	(699,194)	(699,194)	(1,021,539)
Recovery of written–off loans	—	—	105,115	105,115	—	—	117,123	117,123	155,070
Foreign exchange effect	91	53	901	1,045	(216)	(355)	(898)	(1,469)	(7,150)
Expected credit loss at the end of period	562,497	790,758	948,631	2,301,886	646,156	609,859	778,730	2,034,745	2,027,855

(*) During 2023 and 2022, the Group applied its expert judgement with the purpose of reflecting the effects of the political and economic uncertainty that were not considered in the forward-looking model, therefore a higher expected loss was recorded.

(**) Corresponds mainly to: (i) the variation between the amortized cost of the loan at the beginning and the end of the period (variation in the provision recorded for partial amortizations that did not represent a reduction or derecognized of the loan), (ii) variations in credit risk that did not generate transfers to other stages; and (iii) the execution of contingent loans (conversion of indirect debt into direct debt).

(d.1.1) The following tables show the movement of the allowance for expected credit losses for each classification of the direct loan portfolio:


	30.09.2023				30.09.2022				31.12.2022
Commercial loans	Stage 1	Stage 2	Stage 3	Total	Stage 1	Stage 2	Stage 3	Total	Total
	S/(000)	S/(000)	S/(000)	S/(000)	S/(000)	S/(000)	S/(000)	S/(000)	S/(000)
Expected credit loss at beginning of year	45,474	47,311	154,299	247,084	100,874	60,100	182,467	343,441	343,441
Impact of the expected credit loss in the consolidated statement of income -
New originated or purchased assets	31,384	—	—	31,384	31,242	—	—	31,242	33,506
Assets derecognized or matured (excluding write-offs)	(24,264)	(6,151)	(2,186)	(32,601)	(10,053)	(7,259)	(9,137)	(26,449)	(149,378)
Transfers to Stage 1	3,102	(2,811)	(291)	—	31,051	(30,398)	(653)	—	—
Transfers to Stage 2	(18,110)	19,021	(911)	—	(19,273)	20,155	(882)	—	—
Transfers to Stage 3	(7,472)	(18,393)	25,865	—	(2,827)	(49,780)	52,607	—	—
Impact on the expected credit loss for credits that change stage in the period (*)	(2,126)	7,399	33,544	38,817	(26,476)	14,466	(5,006)	(17,016)	(9,787)
Others (**)	12,843	6,358	2,019	21,220	(18,025)	60,503	(25,912)	16,566	97,276
Total	(4,643)	5,423	58,040	58,820	(14,361)	7,687	11,017	4,343	(28,383)
Write-offs	—	—	(49,269)	(49,269)	—	—	(57,319)	(57,319)	(68,362)
Recovery of written–off loans	—	—	4,248	4,248	—	—	1,076	1,076	5,942
Foreign exchange effect	85	64	701	850	(361)	(409)	(664)	(1,434)	(5,554)
Expected credit loss at the end of period	40,916	52,798	168,019	261,733	86,152	67,378	136,577	290,107	247,084


	30.09.2023				30.09.2022				31.12.2022
Consumer loans	Stage 1	Stage 2	Stage 3	Total	Stage 1	Stage 2	Stage 3	Total	Total
	S/(000)	S/(000)	S/(000)	S/(000)	S/(000)	S/(000)	S/(000)	S/(000)	S/(000)
Expected credit loss at beginning of year	534,005	657,474	430,902	1,622,381	802,421	263,219	336,041	1,401,681	1,401,681
Impact of the expected credit loss in the consolidated statement of income -
New originated or purchased assets	408,602	—	—	408,602	357,570	—	—	357,570	438,109
Assets derecognized or matured (excluding write-offs)	(74,463)	(40,219)	(9,536)	(124,218)	(66,676)	(29,009)	(7,976)	(103,661)	(386,494)
Transfers to Stage 1	82,643	(81,363)	(1,280)	—	50,251	(49,205)	(1,046)	—	—
Transfers to Stage 2	(213,289)	218,134	(4,845)	—	(203,559)	207,111	(3,552)	—	—
Transfers to Stage 3	(68,671)	(201,203)	269,874	—	(63,677)	(108,165)	171,842	—	—
Impact on the expected credit loss for credits that change stage in the period (*)	(69,005)	279,380	784,771	995,146	(39,514)	197,581	355,869	513,936	422,247
Others (**)	(101,933)	(139,721)	194,957	(46,697)	(334,337)	(1,825)	93,664	(242,498)	493,030
Total	(36,116)	35,008	1,233,941	1,232,833	(299,942)	216,488	608,801	525,347	966,892
Write-offs	—	—	(1,101,742)	(1,101,742)	—	—	(590,302)	(590,302)	(886,200)
Recovery of written–off loans	—	—	93,415	93,415	—	—	109,176	109,176	140,438
Foreign exchange effect	—	(19)	(59)	(78)	1	33	4	38	(430)
Expected credit loss at the end of period	497,889	692,463	656,457	1,846,809	502,480	479,740	463,720	1,445,940	1,622,381


	30.09.2023												30.09.2022												31.12.2022
Mortgage loans	Stage 1			Stage 2			Stage 3			Total			Stage 1			Stage 2			Stage 3			Total			Total
	S/(000)			S/(000)			S/(000)			S/(000)			S/(000)			S/(000)			S/(000)			S/(000)			S/(000)
Expected credit loss at beginning of year		4,236			12,285			45,101			61,622			12,669			42,681			99,850			155,200			155,200
Impact of the expected credit loss in the consolidated statement of income -
New originated or purchased assets		1,286			—			—			1,286			1,750			—			—			1,750			1,473
Assets derecognized or matured (excluding write-offs)		(108	)		(522	)		(8,413	)		(9,043	)		(359	)		(510	)		(8,764	)		(9,633	)		(12,155	)
Transfers to Stage 1		4,556			(4,556	)		—			—			5,080			(5,080	)		—			—			—
Transfers to Stage 2		(549	)		2,905			(2,356	)		—			(563	)		4,487			(3,924	)		—			—
Transfers to Stage 3		(843	)		(2,077	)		2,920			—			(185	)		(1,110	)		1,295			—			—
Impact on the expected credit loss for credits that change stage in the period (*)		(4,381	)		11,128			17,889			24,636			(4,637	)		3,889			7,476			6,728			9,989
Others (**)		374			701			819			1,894			12,930			(14,786	)		(6,758	)		(8,614	)		(89,448	)
Total		335			7,579			10,859			18,773			14,016			(13,110	)		(10,675	)		(9,769	)		(90,141	)
Write-offs		—			—			(3,475	)		(3,475	)		—			—			(2,161	)		(2,161	)		(2,267	)
Recovery of written–off loans		—			—			—			—			—			—			—			—			—
Foreign exchange effect		6			7			252			265			150			26			(257	)		(81	)		(1,170	)
Expected credit loss at the end of period		4,577			19,871			52,737			77,185			26,835			29,597			86,757			143,189			61,622


	30.09.2023				30.09.2022				31.12.2022
Small and micro-business loans	Stage 1	Stage 2	Stage 3	Total	Stage 1	Stage 2	Stage 3	Total	Total
	S/(000)	S/(000)	S/(000)	S/(000)	S/(000)	S/(000)	S/(000)	S/(000)	S/(000)
Expected credit loss at beginning of year	24,843	20,216	51,709	96,768	40,492	38,881	85,222	164,595	164,595
Impact of the expected credit loss in the consolidated statement of income -
New originated or purchased assets	17,095	—	—	17,095	37,079	—	—	37,079	30,366
Assets derecognized or matured (excluding write-offs)	(17,603)	(630)	(881)	(19,114)	(3,106)	(3,606)	(1,484)	(8,196)	(165,816)
Transfers to Stage 1	2,655	(1,780)	(875)	—	44,791	(44,104)	(687)	—	—
Transfers to Stage 2	(12,188)	12,455	(267)	—	(22,129)	24,606	(2,477)	—	—
Transfers to Stage 3	(10,882)	(18,772)	29,654	—	(5,978)	(50,414)	56,392	—	—
Impact on the expected credit loss for credits that change stage in the period (*)	(1,655)	9,280	58,691	66,316	(35,799)	15,760	(87,144)	(107,183)	(35,177)
Others (**)	16,850	4,856	(10,594)	11,112	(24,655)	52,026	84,376	111,747	158,816
Total	(5,728)	5,409	75,728	75,409	(9,797)	(5,732)	48,976	33,447	(11,811)
Write-offs	—	—	(63,478)	(63,478)	—	—	(49,412)	(49,412)	(64,710)
Recovery of written–off loans	—	—	7,452	7,452	—	—	6,871	6,871	8,690
Foreign exchange effect	—	1	7	8	(6)	(5)	19	8	4
Expected credit loss at the end of period	19,115	25,626	71,418	116,159	30,689	33,144	91,676	155,509	96,768

(d.2) Indirect loans (substantially, all indirect loans correspond to commercial loans)


	30.09.2023												30.09.2022												31.12.2022
Changes in the allowance for expected credit losses for indirect loans	Stage 1			Stage 2			Stage 3			Total			Stage 1			Stage 2			Stage 3			Total			Total
	S/(000)			S/(000)			S/(000)			S/(000)			S/(000)			S/(000)			S/(000)			S/(000)			S/(000)
Expected credit loss at beginning of year balances		8,354			18,205			8,936			35,495			8,594			18,492			13,243			40,329			40,329
Impact of the expected credit loss in the consolidated statement of income -
New originated or purchased assets		2,884			—			—			2,884			5,802			—			—			5,802			5,615
Assets derecognized or matured		(1,656	)		(4,070	)		(323	)		(6,049	)		(4,540	)		(1,692	)		(924	)		(7,156	)		(13,095	)
Transfers to Stage 1		283			(283	)		—			—			105			(105	)		—			—			—
Transfers to Stage 2		(1,078	)		2,718			(1,640	)		—			(793	)		793			—			—			—
Transfers to Stage 3		(16	)		(59	)		75			—			—			(41	)		41			—			—
Impact on the expected credit loss for credits that change stage in the period (*)		(198	)		(1,196	)		726			(668	)		(81	)		687			(101	)		505			1,161
Others (**)		(3,487	)		(12,596	)		(292	)		(16,375	)		691			(165	)		(538	)		(12	)		313
Total		(3,268	)		(15,486	)		(1,454	)		(20,208	)		1,184			(523	)		(1,522	)		(861	)		(6,006	)
Foreign exchange effect		(26	)		(8	)		—			(34	)		194			1,061			(8	)		1,247			1,172
Expected credit loss at the end of period, Note 8(a)		5,060			2,711			7,482			15,253			9,972			19,030			11,713			40,715			35,495

7. Investment property

(a) This caption is made up as follows:


	30.09.2023		31.12.2022		Acquisition or construction year	Valuation methodology as of September 30, 2023 and December 31, 2022
	S/(000)		S/(000)
Land
San Isidro – Lima		265,547		264,868	2009	Appraisal
San Martín de Porres – Lima		79,504		88,182	2015	Appraisal
Nuevo Chimbote		33,561		33,747	2021	Appraisal
Santa Clara – Lima		26,862		26,352	2017	Appraisal
Sullana		22,628		22,689	2012	Appraisal
Others		8,903		8,716	-	Appraisal/Cost
		437,005		444,554
Completed investment property - “Real Plaza” shopping malls
Talara		34,579		43,728	2015	DCF
		34,579		43,728
Buildings
Ate Vitarte – Lima		154,101		149,720	2006	DCF/Appraisal
Orquídeas - San Isidro – Lima		132,981		138,643	2017	DCF
Piura		124,898		123,508	2008/2020	DCF/Appraisal
Paseo del Bosque		94,191		96,194	2021	DCF
Chorrillos – Lima		86,839		81,516	2017	DCF
Chimbote		43,136		45,069	2015	DCF
Maestro-Huancayo		32,301		32,342	2017	DCF
Cusco		27,030		27,513	2017	DCF
Panorama – Lima		20,476		20,669	2016	DCF
Cercado de Lima – Lima		15,879		14,543	2017	DCF
Pardo y Aliaga – Lima		15,656		16,755	2008	DCF
Trujillo		15,301		15,815	2016	DCF
Others		45,781		37,148	-	DCF
		808,570		799,435

Total		1,280,154		1,287,717

DCF: Discounted cash flow

(i) As of September 30, 2023 and December 31, 2022, there are no liens on investment property.

(b) Below is the composition of the net result on investment properties as of September 30, 2023 and 2022:


	30.09.2023			30.09.2022
	S/(000)			S/(000)
Income from rental of investment property		49,506			50,153
(Loss) gain on valuation of investment property		(6,933	)		28,750
Net result		42,573			78,903


	30.09.2023			30.09.2022
	S/(000)			S/(000)
Beginning of period balances		1,287,717			1,224,454
Additions		13,957			21,044
(Loss) gain on valuation		(6,933	)		28,750
Transfers and others		(14,587	)		10,885
Balances as of September 30		1,280,154			1,285,133
Balances as of December 31, 2022					1,287,717

8. Other accounts receivable and other assets, net, and other accounts payable, provisions and other liabilities

(a) These captions are comprised of the following:


			Restated
	30.09.2023		31.12.2022
	S/(000)		S/(000)
Other accounts receivable and other assets
Financial instruments
Other accounts receivable, net		764,002		633,926
Accounts receivable related to derivative financial instruments (b)		214,126		515,800
POS Commission accounts receivable		120,589		110,906
Operations in process (d)		96,241		112,195
Accounts receivable from sale of investments (c)		41,939		37,987
Others		17,356		24,753
		1,254,253		1,435,567
Non-financial instruments
Payments in advance of Income Tax		194,133		26,759
Deffered cost of POS affiliation and registration		101,656		95,265
Deferred charges		99,616		92,865
Realizable assets, received as payment and seized through legal actions		29,583		27,266
Tax credit for General Sales Tax - IGV		29,028		17,623
Investments in associates		17,447		22,728
POS equipment supplies (*)		13,719		18,698
Others		7,605		7,192
		492,787		308,396
Total		1,747,040		1,743,963

(*) Corresponds to the Points of Sale (“POS”) required for the rendering of the service. Their supplies are recorded at cost.


			Restated
	30.09.2023		31.12.2022
	S/(000)		S/(000)
Other accounts payable, provisions and other liabilities
Financial instruments
Contract liability with investment component		970,670		873,500
Other accounts payable		896,148		726,983
Third party compensation (**)		362,344		386,136
Operations in process		242,072		184,584
Accounts payable related to derivative financial instruments (b)		178,279		297,038
Workers’ profit sharing and salaries payable		131,660		154,460
Lease liabilities		94,874		112,581
Accounts payable for acquisitions of investments		43,317		53,905
Allowance for indirect loan losses, Note 6(d.2)		15,253		35,495
Accounts payable to reinsurers and coinsurers		6,642		5,648
		2,941,259		2,830,330
Non-financial instruments
Taxes payable		70,777		138,819
Provision for other contingencies		69,631		79,304
Registration for use of POS		23,619		17,029
Deferred income (***)		17,656		57,001
Others		5,398		6,681
		187,081		298,834
Total		3,128,340		3,129,164

(**) Corresponds mainly to outstanding balances payable to affiliated businesses, for the consumptions made by the cards users, net of the respective fee charged by Izipay, which are mainly settled the day after the transaction.

(***) Corresponds mainly to deferred fees for indirect loans (mainly guarantee letters) and transactions recorded by Izipay, related to accrual of installments with affiliated businesses.

(b) Below is the fair value of derivative financial instruments, recorded as assets or liabilities, including their notional amounts as of September 30, 2023 and December 31, 2022:


	Assets	Liabilities	Notional amount	Effective part recognized in other comprehensive income during the period	Maturity	Hedged instruments	Caption of the consolidated statement of financial position where the hedged item has been recognized
As of September 30, 2023	S/(000)	S/(000)	S/(000)	S/(000)
Derivatives held for trading (*) -
Forward exchange contracts	41,069	65,289	7,101,815	—	Between October 2023 and September 2024	-	-
Interest rate swaps	64,141	44,975	1,448,199	—	Between October 2023 and June 2036	-	-
Currency swaps	31,562	37,785	1,017,040	—	Between October 2023 and April 2028	-	-
Options	3,145	3,170	310,211	—	Between October 2023 and September 2024	-	-
	139,917	151,219	9,877,265	—
Derivatives held as hedges - Cash flow hedges:
Cross currency swaps (CCS)	55,952	—	569,550	(13,248)	October 2027	Senior bond	Bonds, notes and obligations outstanding
Cross currency swaps (CCS)	—	3,405	113,790	(330)	August 2024	Due to banks	Due to banks and correspondents
Cross currency swaps (CCS)	—	5,919	113,790	69	October 2024	Due to banks	Due to banks and correspondents
Cross currency swaps (CCS)	—	5,221	75,940	(3,533)	October 2027	Senior bond	Bonds, notes and obligations outstanding
Cross currency swaps (CCS)	—	4,956	75,940	(3,028)	October 2027	Senior bond	Bonds, notes and obligations outstanding
Cross currency swaps (CCS)	45	—	75,860	(253)	February 2025	Due to banks	Due to banks and correspondents
Cross currency swaps (CCS)	5,207	1,357	246,545	(44)	January 2025 and June 2025	Due to banks	Due to banks and correspondents
Cross currency swaps (CCS)	—	2,329	37,930	33	November 2024	Due to banks	Due to banks and correspondents
Cross currency swaps (CCS)	11,630	3,872	1,137,900	(17,691)	October 2026	Corporate bonds	Bonds, notes and obligations outstanding
Cross currency swaps (CCS)	1,375	1	189,650	(154)	May 2025	Due to banks	Due to banks and correspondents
Cross currency swaps (CCS)	—	—	—	(669)	-	Corporate bonds	Bonds, notes and obligations outstanding
	74,209	27,060	2,636,895	(38,848)
	214,126	178,279	12,514,160	(38,848)


	Assets	Liabilities	Notional amount	Effective part recognized in other comprehensive income during the year	Maturity	Hedged instruments	Caption of the consolidated statement of financial position where the hedged item has been recognized
As of December 31, 2022	S/(000)	S/(000)	S/(000)	S/(000)
Derivatives held for trading -
Forward exchange contracts	58,201	27,556	6,328,060	—	Between January 2023 and December 2023	-	-
Currency swaps	77,045	141,823	2,672,533	—	Between January 2023 and March 2029	-	-
Interest rate swaps	67,737	38,551	2,424,566	—	Between January 2023 and June 2036	-	-
Cross currency swaps	—	75,489	224,485	—	January 2023	-	-
Options	99	463	80,151	—	Between January 2023 and December 2023	-	-
	203,082	283,882	11,729,795	—
Derivatives held as hedges - Cash flow hedges:
Cross currency swaps (CCS)	237,438	—	1,681,974	(20,199)	January 2023	Corporate bonds	Bonds, notes and obligations outstanding
Cross currency swaps (CCS)	75,280	—	573,000	(33,565)	October 2027	Senior bond	Bonds, notes and obligations outstanding
Cross currency swaps (CCS)	—	3,916	114,420	360	August 2024	Due to banks	Due to banks and correspondents
Cross currency swaps (CCS)	—	6,295	114,420	(355)	October 2024	Due to banks	Due to banks and correspondents
Cross currency swaps (CCS)	—	931	57,210	(225)	January 2025	Due to banks	Due to banks and correspondents
Cross currency swaps (CCS)	—	2,014	38,140	(156)	November 2024	Due to banks	Due to banks and correspondents
	312,718	13,156	2,579,164	(54,140)
	515,800	297,038	14,308,959	(54,140)

(i) As of September 30, 2023 and December 31, 2022, certain derivative financial instruments hold some collateral deposits; see Note 4(d).

(ii) For the designated hedging derivatives mentioned in the table above, changes in fair values of hedging instruments completely offset the changes in fair values of hedged items; therefore, there has been no hedge ineffectiveness as of September 30, 2023 and December 31, 2022. During 2023 and 2022, there were no discontinued hedges accounting.

(iii) Derivatives held for trading are traded mainly to satisfy clients’ needs. The Group may also take positions with the expectation of profiting from favorable movements in prices or rates. Also, this caption includes any derivatives which do not comply with IFRS 9 hedging accounting requirements.

9. Assets and Liabilities for insurance and reinsurance contracts

(a)

The composition of these items is presented below:


	30.09.2023						31.12.2022
	Assets		Liabilities		Asset, net		Assets		Liabilities		Asset, net
	S/(000)		S/(000)		S/(000)		S/(000)		S/(000)		S/(000)
Reinsurance contracts held
Life insurance contracts
Claims		22,036		446		21,590		27,283		3,476		23,807
New policies		4,697		—		4,697		6,770		—		6,770
Total reinsurance contracts held		26,733		446		26,287		34,053		3,476		30,577

	30.09.2023						31.12.2022
	Assets		Liabilities		Liability, net		Assets		Liabilities		Liability, net
	S/(000)		S/(000)		S/(000)		S/(000)		S/(000)		S/(000)
Insurance contracts issued
Life insurance contracts
Claims		—		11,312,092		11,312,092		—		10,703,473		10,703,473
New policies		16,143		268,269		252,126		—		548,352		548,352
Total insurance contracts issued		16,143		11,580,361		11,564,218		—		11,251,825		11,251,825

(b)

The movement of reinsurance contract assets is presented below:


	Liabilities for remaining coverage			Liabilities Claims incurred contracts not measured by Premium Allocation Approach			Liabilities Claims incurred contracts measured by Premium Allocation Approach						Total
							Fulfilment Cash Flows			Risk Adjustment
	S/(000)			S/(000)			S/(000)			S/(000)			S/(000)
Balance at 01.01.2022		(867	)		48,513			5,175			157			52,978
Movement of Insurance Service liabilities		(8,067	)		(16,098	)		769			(51	)		(23,447	)
Net cash flow and other changes		4,163			(2,813	)		(145	)		91			1,296
Exchange difference		(250	)		—			—			—			(250	)
Balance at 31.12.2022		(5,021	)		29,602			5,799			197			30,577
Movement of Insurance Service liabilities		(9,496	)		5,792			(172	)		(74	)		(3,950	)
Net cash flow and other changes		8,359			(8,536	)		(158	)		—			(335	)
Exchange difference		5			5			(13	)		(2	)		(5	)
Balance at 30.09.2023		(6,153	)		26,863			5,456			121			26,287

(c)

Below is the movement of insurance contract liabilities:


	Remaining coverage liabilities						Liabilities Claims incurred contracts not measured by Premium Allocation Approach			Liabilities Claims incurred contracts measured by Premium Allocation Approach						Total
	Excluding loss component			Loss component						Fulfilment Cash Flows			Risk Adjustment
	S/(000)						S/(000)			S/(000)			S/(000)			S/(000)
Balance at 01.01.2022		12,063,440			509,792			169,976			43,508			1,242			12,787,958
Movement of Insurance Service liabilities		(2,239,923	)		121,050			935,946			76,732			1,551			(1,104,644	)
Net cash flow and other changes		837,038			(5,143	)		(946,828	)		(75,804	)		(120	)		(190,857	)
Exchange difference		(228,563	)		(10,309	)		(1,273	)		(388	)		(99	)		(240,632	)
Balance at 31.12.2022		10,431,992			615,390			157,821			44,048			2,574			11,251,825
Movement of Insurance Service liabilities		181,719			46,409			326,109			79,704			(1,599	)		632,342
Net cash flow and other changes		560,341			(33,886	)		(738,746	)		(78,438	)		—			(290,729	)
Exchange difference		(29,491	)		404			(55	)		(24	)		(54	)		(29,220	)
Balance at 30.09.2023		11,144,561			628,317			(254,871	)		45,290			921			11,564,218

10. Deposits and obligations

(a) This caption is made up as follows:


	30.09.2023		31.12.2022
	S/(000)		S/(000)
Saving deposits		16,854,032		20,911,746
Demand deposits		13,403,903		13,824,824
Time deposits		18,036,349		12,866,602
Compensation for service time (c)		765,400		921,288
Other obligations		15,200		6,248
Total		49,074,884		48,530,708

(b) Interest rates applied to deposits and obligations are determined based on the market interest rates.

(c) In May 2022, through Act No. 31480 “Act Authorizing the Withdrawal of Severance Indemnities to Cover Economic Needs Caused by the Covid-19 Pandemic”, the Peruvian government authorized clients, until December 31, 2023, to withdraw the 100 percent of these deposits. As part of this benefit, approximately 245,000 clients withdrew approximately S/589,238,000 during the year 2023 (261,000 clients withdrew approximately S/767,470,000, during the year 2022).

(d) As of September 30, 2023 and December 31, 2022, approximately S/18,150,448,000 and S/18,368,816,000, respectively, are covered by the Deposit Insurance Fund.

11. Due to banks and correspondents

(a) This caption is comprised of the following:


	30.09.2023		31.12.2022
	S/(000)		S/(000)
By type -
Central Reserve Bank of Peru (b)		5,300,439		4,481,138
Promotional credit lines		1,988,565		1,863,482
Loans received from foreign entities		1,733,401		339,446
Loans received from Peruvian entities		402,650		357,770
		9,425,055		7,041,836
Interest and commissions payable		96,093		58,810
		9,521,148		7,100,646
By term -
Short term		4,653,134		2,433,459
Long term		4,868,014		4,667,187
Total		9,521,148		7,100,646

(b) As part of the exceptional measures implemented to mitigate the financial and economic impact generated by the Covid-19 pandemic, see Note 1(c.2), the BCRP issued a series of regulations related to the loans repurchase agreements. In this sense, as of December 31, 2022, Interbank took in repurchase agreements of loan portfolio for an amount of S/42,461,000, which was aimed to the “Reactiva Peru” program. As of September 30, 2023 and December 31, 2022, Interbank maintains this type of reporting operations guaranteed by a loan portfolio for approximately S/690,246,000 and S/1,909,375,000, respectively. See Note 6(a).

12. Bonds, notes and other obligations

(a) This caption is comprised of the following:


Issuance	Issuer	Annual interest rate	Interest payment	Maturity	Amount issued	30.09.2023	31.12.2022
					(000)	S/(000)	S/(000)
Local issuances
Subordinated bonds – second program
Third (A series)	Interbank	7.50%	Semi-annually	2023	US$50,000	189,632	190,616
Second (A series)	Interbank	5.81%	Semi-annually	2023	S/150,000	—	149,998
						189,632	340,614
Subordinated bonds – third program
Third - single series	Interseguro	4.84%	Semi-annually	2030	US$25,000	94,825	95,350
First - single series	Interseguro	6.00%	Semi-annually	2029	US$20,000	75,794	76,213
Second - single series	Interseguro	4.34%	Semi-annually	2029	US$20,000	75,860	76,280
						246,479	247,843
Corporate bonds – second program
Fifth (A series)	Interbank	3.41% + VAC (*)	Semi-annually	2029	S/150,000	150,000	150,000
Total local issuances						586,111	738,457
International issuances
Subordinated bonds	Interbank	4.000%	Semi-annually	2030	US$300,000	1,132,089	1,137,691
Corporate bonds	Interbank	5.000%	Semi-annually	2026	S/312,000	311,635	311,522
Corporate bonds	Interbank	3.250%	Semi-annually	2026	US$400,000	1,510,878	1,517,661
Subordinated bonds	Interbank	6.625%	Semi-annually	2029	US$300,000	1,137,323	1,142,764
Senior bonds	IFS	4.125%	Semi-annually	2027	US$300,000	1,068,869	1,074,396
Corporate bonds	Interbank	3.375%	Semi-annually	2023	US$484,895	—	1,849,133
Total international issuances						5,160,794	7,033,167
Total local and international issuances						5,746,905	7,771,624
Interest payable						98,970	134,679
Total						5,845,875	7,906,303

(*) The Spanish term “Valor de actualización constante” is referred to amounts in Soles indexed by inflation.

(b) The international issuances are listed at the Luxembourg Stock Exchange. On the other hand, the local and international issuances include standard clauses of compliance with financial ratios, the use of funds and other administrative matters, which have been met in the opinion of the Group's Management and its legal advisors.

13. Equity

(a) Capital stock and distribution of dividends -

IFS’s shares are listed on the Lima Stock Exchange and, since July 2019, they are listed also on the New York Stock Exchange. IFS’s shares have no nominal value and their issuance value was US$9.72 per share.

As of September 30, 2023 and December 31, 2022, IFS’s capital stock is represented by 115,447,705 subscribed and paid-in common shares.

The General Shareholders’ Meeting of IFS held on March 31, 2023, agreed to distribute dividends charged to profits for the year 2022 for approximately US$136,222,000 (equivalent to approximately S/511,788,000); equivalent to US$1.18 per share, to be paid on May 8, 2023.

The General Shareholders’ Meeting of IFS held on March 31, 2022, agreed to distribute dividends charged to profits for the year 2021 for approximately US$202,025,000 (equivalent to approximately S/751,532,000); equivalent to US$1.75 per share, which were paid on May 6, 2022.

(b) Treasury stock and Share Repurchase Program -

As of December 31, 2022, the Company and Subsidiaries held 30,074 shares issued by IFS, with an acquisition cost equivalent to S/3,363,000.

On March 31, 2023, the shareholders of IFS approved the Share Repurchase Program for an amount of up to US$100 million, which will remain in effect until the Board of Directors decides otherwise. Said program, may be carried out simultaneously in two markets (Lima Stock Exchange and New York Stock Exchange - NYSE) in one or more opportunities and at market value. Within the framework of this Program, as of September 30, 2023, Interbank has purchased 938,371 shares for approximately S/81,021,000.

Corresponds to the difference between the nominal value of the shares issued and their public offerings price, which were performed in 2007 and 2019. Capital surplus is presented net of the expenses incurred and related to the issuance of such shares.

(d) Shareholders’ equity for legal purposes (regulatory capital) -

IFS is not required to establish a regulatory capital for statutory purposes. As of September 30, 2023 and December 31, 2022, the regulatory capital required for Interbank, Interseguro and Inteligo Bank (a Subsidiary of Inteligo Group Corp.), is calculated based on the separate financial statement of each Subsidiary and prepared following the accounting principles and practices of their respective regulators (the SBS or the Central Bank of the Bahamas, in the case of Inteligo Bank).

(e) Reserves -

The General Shareholders’ Meeting of IFS held on March 31, 2022, agreed to constitute reserves for S/800,000,000 charged to retained earnings.

14. Tax situation

(a) IFS and its Subsidiaries are incorporated and domiciled in the Republic of Panama and the Commonwealth of the Bahamas (see Note 2), and are not subject to any Income Tax, or any other taxes on capital gains, equity or property. The Subsidiaries incorporated and domiciled in Peru (see Note 2) are subject to the Peruvian Tax legislation; see paragraph (c).

Peruvian life insurance companies are exempt from Income Tax regarding the income derived from assets linked to technical reserves for pension insurance and annuities from the Private Pension Fund Administration System; as well as income generated through assets related to life insurance contracts with savings component.

In Peru, all income from Peruvian sources obtained from the direct or indirect sale of shares of stock capital representing participation of legal persons domiciled in the country are subject to income tax. For that purpose, an indirect sale shall be considered to have occurred when shares of stock or ownership interests of a legal entity are sold and this legal entity is not domiciled in the country and, in turn, is the holder — whether directly or through other legal entity or entities — of shares of stock or ownership interests of one or more legal entities domiciled in the country, provided that certain conditions established by law occur.

In this sense, the Act states that an assumption of indirect transfer of shares arises when in any of the 12 months prior to disposal, the market value of shares or participations of the legal person domiciled is equivalent to 50 percent or more of the market value of shares or participations of the legal person non-domiciled. Additionally, as a concurrent condition, it is established that in any period of 12 months shares or participations representing 10 percent or more of the capital of legal persons non-domiciled be disposal.

(b) Legal entities or individuals not domiciled in Peru are subject to an additional tax (equivalent to 5 percent) on dividends received from entities domiciled in Peru. The corresponding tax is withheld by the entity that distributes the dividends. In this regard, since IFS controls the entities that distribute the dividends, it records the amount of the Income Tax on dividends as expense of the financial year of the dividends received. In this sense, as of September 30, 2023 and 2022, IFS has recorded an expense for S/26,758,000 and S/ 23,348 000, respectively, in the caption “Income Tax” of the interim consolidated statement of income.

(c) IFS’s Subsidiaries incorporated in Peru are subject to the payment of Peruvian taxes; hence, they must calculate their tax expenses on the basis of their separate financial statements. The Income Tax rate as of September 30, 2023 and December 31, 2022, was 29.5 percent, over the taxable income.

(d) The Tax Authority (henceforth “SUNAT”, by its Spanish acronym) is legally entitled to perform tax audit procedures for up to four years subsequent to the date at which the tax return regarding a taxable period must be filed.

Below are the taxable periods subject to inspection by the Tax Authority as of September 30, 2023:

- Interbank: Income Tax returns for the years 2019 to 2022, and Value-Added-Tax returns for the years 2018 to 2022.

- Interseguro: Income Tax returns for the years 2018, 2019, 2021 and 2022, and Value-Added-Tax returns for the years 2018 to 2022.

- Seguros Sura: Income Tax returns and Value-Added-Tax returns for the year 2018.

- Procesos de Medios de Pago: Income Tax returns and Value-Added-Tax returns for the years 2018 to 2022.

- Izipay: Income Tax returns and Value-Added-Tax returns for the years 2018 to 2022.

Given the possible interpretations that SUNAT may give to the legislation in effect, up to date it is not possible to determine whether or not any review to be conducted would result in liabilities for the Subsidiaries; any increased

tax or surcharge that could arise from possible tax audits would be applied to the results of the period in which such tax increase or surcharge may be determined.

Following is the description of the main ongoing tax procedures and processes for the main Subsidiaries:

Interbank:

Tax periods from 2000 to 2006:

Between 2004 and 2010, Interbank received several Tax Determination and Tax Penalty notices corresponding mainly to the Income Tax determination for the fiscal years 2000 to 2006. As a result, claims and appeals were filed and subsequent contentious administrative proceedings were started.

Regarding the tax litigations followed by Interbank related to the annual Income Tax returns for the years 2000 to 2006, the most relevant matter subject to discrepancy with SUNAT corresponds to whether the “interest in suspense” are subject to Income Tax or not. In this sense, Interbank considers that the interest in suspense does not constitute accrued income, in accordance with the SBS’s regulations and International Financial Reporting Standards, which is also supported by a ruling by the Permanent Constitutional and Social Law Chamber of the Supreme Court issued in August 2009 and a pronouncement in June 2019.

In June and September 2022, the Permanent Constitutional and Social Law Chamber of the Supreme Court declared unfounded the cassation appeals by SUNAT and the Ministry of Economy and Finance, thus reaffirming the position of Interbank in the sense that interest in suspense does not constitute taxable income, both in the 2001 Income Tax and in the 2004 Income Tax.

On August 29, 2023, the government’s official bulletin published the Cassation Ruling No. 1035-2022 LIMA, which resolves the claim filed by SUNAT regarding the Income Tax for the period 2004, with judgment favorable for the Bank.

As of September 30, 2023 the tax liability requested for this concept and other minor contingencies, amounts to approximately S/155,000,000 which includes the tax, fines and interest arrears, out of which S/91,000,000 corresponded to interest in suspense and S/64,000,000 corresponded to other minor repairs. As of December 31, 2022, the tax liability amounted to S/290,000,000 and includes taxes, fines, and interest arrears.

In May 2020, Interbank was notified with the Resolution of Compliance related to the Income Tax and advance payments of the Income Tax for the year 2005 (linked to the interest in suspense). Through said notification, SUNAT increased the requested tax debt from S/1,000,000 to S/35,000,000 because as a result of the Resolution of Compliance, certain previously accepted deductions by SUNAT. In June 2020, Interbank filed an Appeal against the Resolution of Compliance, which is pending of pronouncement by the Tax Court.

In December 2022, the Tax Court notified of Resolution No. 09431-9-2022, through which it revoked interest in suspense, financial pro-rata, advance payments and fines. Interbank is awaiting the Resolution of Compliance.

In February 2021, Interbank was notified with the Resolution of Compliance related to the Income Tax and prepaid income tax of the year 2006 (related to litigations about interest in suspense). Through said notification, SUNAT rejected an excess payment of S/3,500,000 and determined a tax debt of S/23,000,000.

In December 2022, the Tax Court notified of Resolution No. 09451-1-2022, through which it revoked interest in suspense, advance payments coefficient and fines. Interbank is awaiting the Resolution of Compliance.

In January 2023, Interbank was notified with Resolution of Compliance No. 4070150000145, that rectified and resettled the debt contained in Resolutions of Determination No. 0120030012106 and No. 0120030012107 related to advance payments of the Income Tax for the period 2003, without any amount to pay.

In February 2023, Interbank was notified with the Tax Court Resolution No. 00227-2-2023, that declared null the Resolution of Intendence No. 0150150002380, dated May 15, 2020, in relation to the payments of the Income Tax for the period 2004 in the part referred to interest in suspense and related penalties.

In March 2023, Interbank was notified with Resolution of Compliance No. 4070150000186, that rectified the tax debt contained in the Resolution of Penalty No. 012-002-0011622, thus reducing said penalty from S/68,998,000 to

S/ 25,290,000. Likewise, Interbank filed the respective Appeal Recourse against Resolution of Compliance No. 4070150000186, described in the previous paragraph, which is pending resolution by the Tax Court.

Tax period 2010:

In 2017, SUNAT closed the audit procedure corresponding to the Income Tax for the year 2010. Interbank paid the debt under protest and filed a claim procedure. Currently, the procedure has been appealed and it is pending resolution by the Tax Administration.

Tax period 2012:

In July 2020, Interbank was notified of the Determination and Penalty Resolutions corresponding to the audit of the Income Tax for the fiscal year 2012. As of September 30, 2023 and December 31, 2022, the tax debt claimed by the Tax Authority amounted to S/14,400,000 and S/14,000,000, respectively. As of the date of this report, the process is on appeal, pending resolution.

Tax period 2013:

In 2019, Interbank was notified of the Determination and Penalty Resolutions corresponding to the audit of the Income Tax for the fiscal year 2013. The main concept observed corresponded to the deduction of loan write-offs without proof by the SBS.

During 2021, Interbank filed a claim against the Resolution of the Tax Court, this authority confirmed, revoked and ordered to resettle the aforementioned concepts. At the end of 2022, the Tax Court reconfirmed its ruling in the aforementioned Resolution.

In December 2022, the Tax Authority through Resolution of Coactive Collection No. 0110060065138, notified the payment of the third-category Income Tax debt corresponding to the period 2013, for approximately S/62,000,000, which was paid by Interbank; however, the process continues in the Judiciary.

Tax periods 2014 and 2015:

In September and December, 2019, SUNAT notified Interbank about the beginning of the definitive audit procedure on Income Tax corresponding to the year 2014 and 2015, respectively, which are in the appeal stage.

As of September 30, 2023 and December 31, 2022, the tax debt requested by the Tax Authority in relation to the Income Tax advance payments for the period 2015 and to the application of the additional Income Tax rate of 4.1 percent, amounted to S/14,300,000 and S/14,000,000, respectively.

Tax period 2017:

In December 2021, by letter No. 210011740110-01-SUNAT, SUNAT notified Interbank about the beginning of the definitive audit procedure on Income Tax corresponding to the year 2017. In October 2022, SUNAT notified of Resolutions of Determination No. 0120030127896 and No. 0120030127908, issued regarding the third-category Income Tax corresponding to the period 2017 and Income Tax advance payments from January to December 2017, without additional amounts to pay related to the third-category Income Tax; however, in November 2022, Interbank filed an appeal recourse on other minor concepts, observed by the Tax Authority.

In June 2023, Interbank was notified with the Resolution No. 4070140000600 declaring the claim unfounded. Within the law term, Interbank will be presenting the respective appeal. In July 2023, Interbank filed the respective Appeal against said Resolution, which is pending of pronouncement by the Tax Court.

Tax period 2018:

In April 2019, SUNAT notified about the commencement of the definitive audit procedure on Income Tax withholdings of non-domiciled entities corresponding to the year 2018. To date, said audit is under process.

Interseguro:

In December 2022, SUNAT notified Interseguro the beginning of the fiscalization procedure regarding the Income Tax corresponding to the year 2020. As of the date of this report, said inspection is in process.

Izipay:

As of September 30, 2023 and December 31, 2022, Izipay maintains carryforward tax losses amounting to S/80,079,727 and S/82,931,174, respectively. In application of current tax regulations, Izipay opted for system “B”

to offset its tax losses. Under this system, the tax loss may be offset against the net income obtained in the following years, up to 50 percent of said income until they are extinguished; therefore, they do not have an expiration date.

In the opinion of the Company’s Management and its legal advisers, any eventual additional tax would not be significant for the financial statements as of September 30, 2023 and December 31, 2022.

(e) IFS’s Subsidiaries recognize the period’s Income Tax expense using the best estimate of the tax rate. The table below presents the amounts reported in the interim consolidated statements of income:


	For the nine-month periods ended September 30,

	2023		2022
	S/(000)		S/(000)
Current – Expense		210,159		404,738
Deferred – Expense (income)		28,266		(47,980	)
		238,425		356,758

15. Interest income and expenses, and similar accounts

(a)

This caption is comprised of the following:


				Restated
	30.09.2023			30.09.2022
	S/(000)			S/(000)
Interest and similar income
Interest on loan portfolio		4,000,702			3,007,351
Impact from the modification of contractual cash flows due to the loan rescheduling schemes		(38,237	)		19,398
Interest on investments at fair value through other comprehensive income		912,731			878,399
Interest on due from banks and inter-bank funds		279,283			100,726
Interest on investments at amortized cost		126,312			121,136
Dividends on financial instruments		31,067			57,835
Others		3,509			2,486
Total		5,315,367			4,187,331
Interest and similar expenses
Interest and fees on deposits and obligations		(1,226,392	)		(554,946	)
Interest and fees on obligations with financial institutions		(341,980	)		(151,225	)
Interest on bonds, notes and other obligations		(235,317	)		(315,516	)
Deposit insurance fund fees		(60,480	)		(57,592	)
Others		(46,660	)		(46,963	)
Total		(1,910,829	)		(1,126,242	)

16. Fee income from financial services, net

(a)

This caption is comprised of the following for the nine-month periods ended September 30, 2023 and 2022:


	30.09.2023	30.09.2022
	S/(000)	S/(000)
Income
Performance obligations at a point in time:
Accounts maintenance, carriage, transfers, and debit and credit card fees	556,111	512,851
Income from services (acquirer and issuer role) (b)	547,259	314,987
Banking services fees	158,976	179,052
Brokerage and custody services	4,344	4,337
Others	28,427	22,869

Performance obligations over time:
Funds management	102,798	119,136
Contingent loans fees	50,537	52,310
Collection services	46,833	44,865
Commission for loans rescheduling “Reactiva Peru” program	8,908	15,200
Others	16,253	18,066
Total	1,520,446	1,283,673
Expenses
Expenses for services (acquirer and issuer role) (b)	(251,257)	(150,386)
Credit cards	(146,989)	(114,217)
Commissions Mastercard - Visa	(61,254)	(37,521)
Credit life insurance premiums	(55,043)	(75,559)
Local banks fees	(43,880)	(35,505)
Foreign banks fees	(19,505)	(18,993)
Commission for loans rescheduling “Reactiva Peru” program	(12,211)	(20,951)
Registry expenses	(1,185)	(1,569)
Brokerage and custody services	(511)	(795)
Others	(37,909)	(14,039)
Total	(629,744)	(469,535)
Net	890,702	814,138

(b)

Corresponds to the management and operation of the shared service of transaction processing of credit and debit cards, for clients of Izipay since April 2022, month in which Izipay became a Subsidiary of IFS.

17. Other income and (expenses)

(a)

This caption is comprised of the following:


				Restated
	30.09.2023			30.09.2022
	S/(000)			S/(000)
Other income
Fair value adjustment of the participation held by Interbank in Izipay, note 1(d)		—			222,513
Maintenance, installation and sale of POS equipment		19,740			15,790
Profit from sale of property, furniture and equipment (b)		15,300			10,248
Gain from sale of written-off-loans		12,587			4,622
Other technical income from insurance operations		7,982			5,288
Services rendered to third parties		5,361			4,740
Income from ATM rentals		4,098			4,934
Others		48,890			91,728
Total other income		113,958			359,863
Other expenses
Commissions from insurance activities		(46,258	)		(39,277	)
Administrative and tax penalties		(15,655	)		(4,935	)
Cost of sale of POS equipment		(11,590	)		(9,545	)
Sundry technical insurance expenses		(8,008	)		(9,582	)
Provision for accounts receivable		(5,718	)		(2,360	)
Expenses related to rental income		(4,073	)		(7,422	)
Donations		(3,601	)		(3,431	)
Provision for sundry risk		(3,237	)		(7,376	)
Others		(53,105	)		(58,966	)
Total other expenses		(151,245	)		(142,894	)

(b)

Corresponds to the sale of a property made by Interbank to third parties for US$8,552,000 (approximately equivalent to S/32,667,000), with a net disposal cost of S/17,367,000.

18. Result from insurance activities, before expenses

(a) The composition of the category is presented below:


	30.09.2023			30.09.2022
	S/(000)			S/(000)
Insurance Income
Annuities		563,079			563,353
Retail Insurance		208,786			259,508
Individual life		110,940			55,217
Total		882,805			878,078
Insurance Expenses
Annuities		(997,511	)		(1,047,234	)
Retail Insurance		(35,288	)		(46,602	)
Individual life		(4,265	)		89,916
Total		(1,037,064	)		(1,003,920	)
Results of insurance activities (*)		(154,259	)		(125,842	)

(*) Before expenses attributed to the insurance activity that are presented in the caption “Other expenses” in the interim consolidated statement of income, and that correspond to salaries and employee benefits, administrative expenses, depreciation and amortization, and other expenses. See also financial information for segments in Note 21.

19. Earnings per share

The following table presents the calculation of the weighted average number of shares and the basic and diluted earnings per share, determined and calculated based on the earnings attributable to the Group:


	Outstanding shares			Shares considered in computation			Effective days in the year		Weighted average number of shares
	(in thousands)			(in thousands)					(in thousands)
Period 2022
Balance as of January 1, 2022		115,418			115,418			270		115,418
Balance as of September 30, 2022		115,418			115,418					115,418
Net earnings attributable to IFS’s shareholders - restated S/(000)										1,262,516
Basic and diluted earnings per share attributable to IFS’s shareholders (Soles)										10.939
Period 2023
Balance as of January 1, 2023		115,418			115,418			270		115,418
Sale of treasury stock		1			1			103		0
Purchase of treasury stock		(939	)		(939	)		49		(170	)
Balance as of September 30, 2023		114,480			114,480					115,248
Net earnings attributable to IFS’s shareholders S/(000)										787,829
Basic and diluted earnings per share attributable to IFS’s shareholders (Soles)										6.836

20. Transactions with related parties and affiliated entities

(a) The table below presents the main transactions with related parties and affiliated companies as of September 30, 2023 and December 31, 2022 and for the nine-month periods ended September 30, 2023 and 2022:


	30.09.2023			31.12.2022
	S/(000)			S/(000)
Assets
Instruments at fair value through profit or loss		1,145			99
Investments at fair value through other comprehensive income		60,366			58,378
Loans, net (b)		1,665,707			1,317,453
Accounts receivable		87,546			117,273
Other assets		18,552			32,043
Liabilities
Deposits and obligations		1,003,474			1,040,975
Other liabilities		9,113			3,215
Off-balance sheet accounts
Indirect loans (b)		70,292			89,707

	30.09.2023			30.09.2022
	S/(000)			S/(000)
Income (expenses)
Interest and similar income		64,325			51,742
Rental income		19,519			23,659
Valuation of financial derivative instruments		106			137
Administrative expenses		(26,017	)		(21,476	)
Interest and similar expenses		(28,712	)		(9,884	)
Others, net		36,200			33,558

(b) As of September 30, 2023 and December 31, 2022, the detail of loans is the following:


	30.09.2023						31.12.2022
	Direct Loans		Indirect Loans		Total		Direct Loans		Indirect Loans		Total
	S/(000)		S/(000)		S/(000)		S/(000)		S/(000)		S/(000)
Affiliated		1,354,015		15,634		1,369,649		1,108,276		18,832		1,127,108
Associates		311,692		54,658		366,350		209,177		70,875		280,052
		1,665,707		70,292		1,735,999		1,317,453		89,707		1,407,160

(c) As of September 30, 2023 and December 31, 2022, the directors, executives and employees of the Group have been involved in credit transactions with certain subsidiaries of the Group, as permitted by Peruvian law, which regulates and limits on certain transactions with employees, directors and executives of financial entities. As of September 30, 2023 and December 31, 2022, direct loans to employees, directors and executives amounted to S/211,295,000 and S/211,715,000, respectively; said loans are repaid monthly and bear interest at market rates.

There are no loans to the Group’s directors and key personnel guaranteed with shares of any Subsidiary.

(d) The Group’s key personnel basic remuneration for the nine-month periods ended September 30, 2023 and 2022, is presented below:


	30.09.2023		30.09.2022
	S/(000)		S/(000)
Salaries		22,508		21,039
Board of Directors’ compensations		2,771		2,516
Total		25,279		23,555

(e) In Management’s opinion, transactions with related companies have been performed under market conditions and within the limits permitted by the SBS.

21. Business segments

The Chief Operating Decision Maker (“CODM”) of IFS is the Chief Executive Officer (“CEO”). The Group presents four operating segments based on products and services, as follows:

Banking -

Mainly loans, credit facilities, deposits and current accounts.

Insurance -

It provides life annuity products with single-premium payment and conventional life insurance products, as well as other retail insurance products.

Wealth management -

It provides brokerage and investment management services. Inteligo serves mainly Peruvian citizens.

Payments -

It provides mainly administration services, operation and processing of credit and debit cards. Given into account that Izipay became a subsidiary of IFS since April 2022, the results shown for this segment are considered thereafter.

The operating segments monitor the operating results of their business units separately for the purpose of making decisions on the distribution of resources and performance assessment. Segment performance is evaluated based on operating profit or loss and it is measured consistently with operating profit or loss in the consolidated financial statements.

Transfer prices between operating segments are on an arm’s length basis in a manner similar to transactions with third parties.

The following table presents the Group’s financial information by business segments for the nine-month periods ended September 30, 2023 and 2022:


	30.09.2023
	Banking			Insurance			Wealth management			Payments			Holding and consolidation adjustments			Total consolidated
	S/(000)			S/(000)			S/(000)			S/(000)			S/(000)			S/(000)
Consolidated statement of income data
Interest and similar income		4,519,975			654,718			134,951			6,248			(525	)		5,315,367
Interest and similar expenses		(1,744,779	)		(94,128	)		(69,349	)		(3,662	)		1,089			(1,910,829	)
Net interest and similar income		2,775,196			560,590			65,602			2,586			564			3,404,538
(Loss) reversal on loans, net of recoveries		(1,365,782	)		—			155			—			—			(1,365,627	)
(Loss) reversal due to impairment of financial investments		255			(8,783	)		251			—			(4	)		(8,281	)
Net interest and similar income after impairment loss on loans		1,409,669			551,807			66,008			2,586			560			2,030,630
Fee income from financial services, net		613,711			(9,906	)		109,622			260,684			(83,409	)		890,702
Net gain on foreign exchange transactions		217,590			—			—			—			—			217,590
Net gain on sale of financial investments		1,094			7,127			629			—			—			8,850
Net gain (loss) on financial assets at fair value through profit or loss		67,025			(19,679	)		(52,149	)		—			(44,782	)		(49,585	)
Net gain on investment property		—			42,573			—			—			—			42,573
Other income		87,738			17,148			(1,869	)		24,150			(13,209	)		113,958
		987,158			37,263			56,233			284,834			(141,400	)		1,224,088
Result from insurance activities, before expenses		—			(154,249	)		—			—			(10	)		(154,259	)
Salaries and employee benefits		(483,172	)		(72,801	)		(62,047	)		(56,248	)		(4,592	)		(678,860	)
Administrative expenses		(730,574	)		(50,669	)		(33,153	)		(125,111	)		(9,848	)		(949,355	)
Depreciation and amortization		(201,987	)		(14,742	)		(11,216	)		(39,795	)		(11,721	)		(279,461	)
Other expenses		(58,923	)		(142,521	)		(1,324	)		(14,979	)		66,502			(151,245	)
		(1,474,656	)		(280,733	)		(107,740	)		(236,133	)		40,341			(2,058,921	)
Income (loss) before translation result and Income Tax		922,171			154,088			14,501			51,287			(100,509	)		1,041,538
Exchange difference		(10,098	)		556			(511	)		(805	)		927			(9,931	)
Income Tax		(191,256	)		—			(2,347	)		(21,519	)		(23,303	)		(238,425	)
Net profit (loss) for the period		720,817			154,644			11,643			28,963			(122,885	)		793,182
Attributable to:
IFS’s shareholders		720,817			154,644			11,643			28,963			(128,238	)		787,829
Non-controlling interest		—			—			—			—			5,353			5,353
		720,817			154,644			11,643			28,963			(122,885	)		793,182


	30.09.2022 (restated)
	Banking (*)			Insurance			Wealth management			Payments (**)			Holding and consolidation adjustments			Total consolidated
	S/(000)			S/(000)			S/(000)			S/(000)			S/(000)			S/(000)
Consolidated statement of income data
Interest and similar income		3,377,986			695,763			113,216			681			(315	)		4,187,331
Interest and similar expenses		(997,471	)		(93,045	)		(32,264	)		(859	)		(2,603	)		(1,126,242	)
Net interest and similar income		2,380,515			602,718			80,952			(178	)		(2,918	)		3,061,089
(Loss) reversal due to impairment loss on loans, net of recoveries		(554,724	)		—			2,217			—			—			(552,507	)
(Loss) reversal due to impairment of financial investments		(314	)		4,279			(8,528	)		—			(11	)		(4,574	)
Net interest and similar income after impairment loss on loans		1,825,477			606,997			74,641			(178	)		(2,929	)		2,504,008
Fee income from financial services, net		586,277			(5,539	)		125,949			165,900			(58,449	)		814,138
Net gain on foreign exchange transactions		266,816			—			—			—			—			266,816
Net loss on sale of financial investments		(2,590	)		(1,613	)		(4,080	)		—			—			(8,283	)
Net gain (loss) on financial assets at fair value through profit or loss		(1,275	)		(95,753	)		(234,721	)		—			39,959			(291,790	)
Net gain (loss) on investment property		—			78,935			—			—			(32	)		78,903
Other income		81,800			49,178			(561	)		22,149			207,297			359,863
		931,028			25,208			(113,413	)		188,049			188,775			1,219,647
Result from insurance activities, before expenses		—			(125,842	)		—			—			—			(125,842	)
Salaries and employee benefits		(501,006	)		(59,494	)		(62,539	)		(34,753	)		(4,021	)		(661,813	)
Administrative expenses		(677,049	)		(49,861	)		(32,540	)		(71,828	)		(17,014	)		(848,292	)
Depreciation and amortization		(189,613	)		(18,213	)		(11,067	)		(18,629	)		(6,268	)		(243,790	)
Other expenses		(55,366	)		(116,044	)		(843	)		(21,731	)		51,090			(142,894	)
		(1,423,034	)		(243,612	)		(106,989	)		(146,941	)		23,787			(1,896,789	)
Income (loss) before translation result and Income Tax		1,333,471			262,751			(145,761	)		40,930			209,633			1,701,024
Exchange difference		(7,291	)		(44,720	)		(10,151	)		4,316			(16,443	)		(74,289	)
Income Tax		(317,000	)		—			(2,406	)		(15,911	)		(21,441	)		(356,758	)
Net profit (loss) for the period		1,009,180			218,031			(158,318	)		29,335			171,749			1,269,977
Attributable to:
IFS’s shareholders		1,009,180			218,031			(158,318	)		29,335			164,288			1,262,516
Non-controlling interest		—			—			—			—			7,461			7,461
		1,009,180			218,031			(158,318	)		29,335			171,749			1,269,977

(*) As of September 30, 2022, the banking segment includes 50 percent of Interbank’s participation in Izipay, recorded in the caption “Other income”. The portion corresponding to the second and third quarter has been eliminated from the consolidation process.

(**) As of September 30, 2022, the payments segment corresponds to income generated by Izipay in the six-month period ended September 30, 2022 plus the participation recorded by Interbank over Izipay’s income generated in the first quarter.


	30.09.2023
	Banking		Insurance		Wealth management		Payments		Holding and consolidation adjustments			Total consolidated
	S/(000)		S/(000)		S/(000)		S/(000)		S/(000)			S/(000)
Capital investments (*)		210,406		15,912		4,064		68,433		262			299,077
Total assets		68,822,094		14,568,871		4,653,841		914,497		399,739			89,359,042
Total liabilities		61,038,668		14,239,334		3,767,415		669,216		11,102			79,725,735

	31.12.2022 (Restated)
	Banking		Insurance		Wealth management		Payments		Holding and consolidation adjustments			Total consolidated
	S/(000)		S/(000)		S/(000)		S/(000)		S/(000)			S/(000)
Capital investments (*)		258,887		41,599		3,443		92,133		1,004			397,066
Total assets		66,977,277		14,130,205		5,102,598		902,610		365,923			87,478,613
Total liabilities		59,498,433		13,789,726		4,208,369		686,292		(106,454	)		78,076,366

(*) It includes the purchase of property, furniture and equipment, intangible assets and investment properties.

The distribution of the Group’s total income based on the location of the customer and its assets for the nine-month periods ended September 30, 2023, is S/7,894,225,000 in Peru and S/157,777,000 in Panama (for the nine-month periods ended September 30, 2022, was S/6,809,426,000 in Peru and S/34,314,000 in Panama). The distribution of the Group’s total assets based on the location of the customer and its assets as of September 30, 2023 is S/84,839,430,000 in Peru and S/4,519,612,000 in Panama (as of December 31, 2022, was S/82,503,996,000 in Peru and S/4,974,617,000 in Panama).

22. Financial instruments classification

The financial assets and liabilities of the consolidated statement of financial position as of September 30, 2023 and December 31, 2022, are presented below:


	As of September 30, 2023
	At fair value through profit or loss		Debt instruments measured at fair value through other comprehensive income		Equity instruments measured at fair value through other comprehensive income		Amortized cost		Total
	S/(000)		S/(000)		S/(000)		S/(000)		S/(000)
Financial assets
Cash and due from banks		—		—		—		10,980,537		10,980,537
Inter-bank funds		—		—		—		125,903		125,903
Financial investments		1,524,891		20,190,465		453,227		3,315,572		25,484,155
Loans, net		—		—		—		47,077,872		47,077,872
Due from customers on acceptances		—		—		—		57,701		57,701
Other accounts receivable and other assets, net		214,126		—		—		1,040,127		1,254,253
Insurance and reinsurance contract assets		—		—		—		26,287		26,287
		1,739,017		20,190,465		453,227		62,623,999		85,006,708
Financial liabilities
Deposits and obligations		—		—		—		49,074,884		49,074,884
Inter-bank funds		—		—		—		451,070		451,070
Due to banks and correspondents		—		—		—		9,521,148		9,521,148
Bonds, notes and other obligations		—		—		—		5,845,875		5,845,875
Due from customers on acceptances		—		—		—		57,701		57,701
Insurance contract liabilities		—		—		—		11,564,218		11,564,218
Other accounts payable, provisions and other liabilities		178,279		—		—		2,762,980		2,941,259
		178,279		—		—		79,277,876		79,456,155


	As of December 31, 2022 (restated)
	At fair value through profit or loss		Debt instruments measured at fair value through other comprehensive income		Equity instruments measured at fair value through other comprehensive income		Amortized cost		Total
	S/(000)		S/(000)		S/(000)		S/(000)		S/(000)
Financial assets
Cash and due from banks		—		—		—		13,193,411		13,193,411
Inter-bank funds		—		—		—		296,119		296,119
Financial investments		1,932,993		17,038,942		512,884		3,302,779		22,787,598
Loans, net		—		—		—		45,502,998		45,502,998
Due from customers on acceptances		—		—		—		45,809		45,809
Other accounts receivable and other assets, net		515,800		—		—		919,767		1,435,567
Insurance and reinsurance contract assets		—		—		—		30,577		30,577
		2,448,793		17,038,942		512,884		63,291,460		83,292,079
Financial liabilities
Deposits and obligations		—		—		—		48,530,708		48,530,708
Inter-bank funds		—		—		—		30,012		30,012
Due to banks and correspondents		—		—		—		7,100,646		7,100,646
Bonds, notes and other obligations		—		—		—		7,906,303		7,906,303
Due from customers on acceptances		—		—		—		45,809		45,809
Insurance contract liabilities		—		—		—		11,251,825		11,251,825
Other accounts payable, provisions and other liabilities		297,038		—		—		2,533,292		2,830,330
		297,038		—		—		77,398,595		77,695,633

23. Financial risk management

It comprises the management of the main risks, that due to the nature of their operations, IFS and its Subsidiaries are exposed to; and correspond to: credit risk, market risk, liquidity risk, insurance risk and real estate risk.

To manage the risks detailed above, every Subsidiary of the Group has a specialized structure and organization in their management, measurement systems, as well as mitigation and coverage processes, according to specific regulatory needs and requirements for the development of its business. The Group and its Subsidiaries, mainly Interbank, Interseguro, Inteligo Bank and Izipay, operate independently but in coordination with the general provisions issued by the Board of Directors and Management of IFS. The Board of Directors and Management of IFS are ultimately responsible for identifying and controlling risks. The Company has an Audit Committee comprised of three independent directors, pursuant to Rule 10A-3 of the Securities Exchange Act of the United States; and one of them is a financial expert according to the regulations of the New York Stock Exchange. The Audit Committee is appointed by the Board of Directors and its main purpose is to monitor and supervise the preparation processes of financial and accounting information, as well as the audits over the financial statements of IFS and its Subsidiaries. Also, the Company has an Internal Audit Division which is responsible for monitoring the key processes and controls to ensure an adequate low risk control according to the standards defined in the Sarbanes Oxley Act.

A full description of the Group’s financial risk management is presented in Note 30 “Financial risk management” of the audited Annual Consolidated Financial Statements; following is presented the financial information related to credit risk management for the loan portfolio, offsetting of financial assets and liabilities, and foreign exchange risk.

(a) Credit risk management for loans -

Interbank’s loan portfolio is segmented into homogeneous groups that shared similar credit risk characteristics. These groups are: (i) Retail Banking (credit card, mortgage, payroll loan, consumer loan and vehicular loan), (ii) Small Business Banking (segments S1, S2 and S3), and (iii) Commercial Banking (corporate, institutional, companies and real estate). In addition, at Inteligo Bank, the internal model developed (scorecard) assigns 5 levels of credit risk classified as follows: low risk, medium low risk, medium risk, medium high risk, and high risk. These categories are described in Note 30.1(d) of the audited Annual Consolidated Financial Statements.

Additionally, as consequence of the Covid-19 pandemic, the behavior and performance of the expected credit losses of the retail and commercial clients has been affected, thus requiring a greater monitoring of results, which has also implied

to perform certain subsequent adjustments to the expected loss model to be able to capture the effects of the current situation, which has generated a high level of uncertainty in the estimation of the loans expected loss.

In compliance with the policy of monitoring the Group’s credit risk, during 2022 Interbank performed the recalibration process of its risk parameters for the calculation of the expected credit losses.

The Group structures the levels of credit risk it undertakes by placing limits on the amount of risk accepted in relation to one borrower or groups of borrowers, geographical and industry segments. Said risks are monitored on a revolving basis and subject to continuous review.

(b) Offsetting of financial assets and liabilities -

The information contained in the tables below includes financial assets and liabilities that:

- Are offset in the statement of financial position of the Group; or

- Are subject to an enforceable master netting arrangement or similar agreement that covers similar financial instruments, regardless of whether they are offset in the consolidated statement of financial position or not.

Similar arrangements of the Group include derivatives clearing agreements. Financial instruments such as loans and deposits are not disclosed in the following tables since they are not offset in the consolidated statement of financial position.

The offsetting framework agreement issued by the International Swaps and Derivatives Association Inc. (“ISDA”) and similar master netting arrangements do not meet the criteria for offsetting in the statement of financial position, because of such agreements were created in order for both parties to have an enforceable offsetting right in cases of default, insolvency or bankruptcy of the Group or the counterparties or following other predetermined events. In addition, the Group and its counterparties do not intend to settle such instruments on a net basis or to realize the assets and settle the liabilities simultaneously.

The Group receives and delivers guarantees in the form of cash with respect to transactions with derivatives; see Note 4.

(b.1) Financial assets subject to offsetting, enforceable master netting arrangements and similar agreements as of September 30, 2023 and December 31, 2022, are presented below:


							Related amounts not offset in the consolidated statement of financial position
	Gross amounts of recognized financial assets		Gross amounts of recognized financial liabilities and offset in the consolidated statement of financial position		Net amounts of financial assets presented in the consolidated statement of financial position		Financial instruments (including non-cash guarantees)			Cash guarantees received			Net amount
	S/(000)		S/(000)		S/(000)		S/(000)			S/(000)			S/(000)
As of September 30, 2023
Derivatives, Note 8(b)		214,126		—		214,126		(63,682	)		(49,537	)		100,907
Total		214,126		—		214,126		(63,682	)		(49,537	)		100,907
As of December 31, 2022
Derivatives, Note 8(b)		515,800		—		515,800		(169,050	)		(235,133	)		111,617
Total		515,800		—		515,800		(169,050	)		(235,133	)		111,617

(b.2) Financial liabilities subject to offsetting, enforceable master netting arrangements and similar agreements as of September 30, 2023 and December 31, 2022, are presented below:


							Related amounts not offset in the consolidated statement of financial position
	Gross amounts of recognized financial liabilities		Gross amounts of recognized financial assets and offset in the consolidated statement of financial position		Net amounts of financial liabilities presented in the consolidated statement of financial position		Financial instruments (including non-cash guarantees)			Cash guarantees pledged, Note 4(d)			Net amount
	S/(000)		S/(000)		S/(000)		S/(000)			S/(000)			S/(000)
As of September 30, 2023
Derivatives, Note 8(b)		178,279		—		178,279		(63,682	)		(43,958	)		70,639
Total		178,279		—		178,279		(63,682	)		(43,958	)		70,639
As of December 31, 2022
Derivatives, Note 8(b)		297,038		—		297,038		(169,050	)		(34,784	)		93,204
Total		297,038		—		297,038		(169,050	)		(34,784	)		93,204

The Group is exposed to fluctuations in the exchange rates of the foreign currency prevailing in its financial position and cash flows. Management sets limits on the levels of exposure by currency and total daily and overnight positions, which are monitored daily. Most of the assets and liabilities in foreign currency are stated in US Dollars. Transactions in foreign currency are made at the exchange rates of free market.

As of September 30, 2023, the weighted average exchange rate of free market published by the SBS for transactions in US Dollars was S/3.790 per US$1 bid and S/3.797 per US$1 ask (S/3.808 and S/3.820 as of December 31, 2022, respectively). As of September 30, 2023, the exchange rate for the accounting of asset and liability accounts in foreign currency set by the SBS was S/3.793 per US$1 (S/3.814 as of December 31, 2022).

The table below presents the detail of the Group’s position:


	As of September 30, 2023				As of December 31, 2022 (restated)
	US Dollars	Soles	Other currencies	Total	US Dollars	Soles	Other currencies	Total
	S/(000)	S/(000)	S/(000)	S/(000)	S/(000)	S/(000)	S/(000)	S/(000)
Assets
Cash and due from banks	6,999,192	3,566,754	414,591	10,980,537	10,205,093	2,404,942	583,376	13,193,411
Inter-bank funds	75,883	50,020	—	125,903	—	296,119	—	296,119
Financial investments	6,885,552	18,556,793	41,810	25,484,155	6,860,558	15,884,533	42,507	22,787,598
Loans, net	14,500,673	32,577,199	—	47,077,872	13,507,125	31,995,873	—	45,502,998
Due from customers on acceptances	57,701	—	—	57,701	45,809	—	—	45,809
Insurance and reinsurance contract assets	518	25,769	—	26,287	1,032	29,545	—	30,577
Other accounts receivable and other assets, net	275,934	978,226	93	1,254,253	303,720	1,131,459	388	1,435,567
	28,795,453	55,754,761	456,494	85,006,708	30,923,337	51,742,471	626,271	83,292,079
Liabilities
Deposits and obligations	18,897,772	29,702,449	474,663	49,074,884	19,187,300	28,843,457	499,951	48,530,708
Inter-bank funds	56,912	394,158	—	451,070	—	30,012	—	30,012
Due to banks and correspondents	2,184,070	7,337,078	—	9,521,148	645,706	6,454,940	—	7,100,646
Bonds, notes and other obligations	5,348,810	497,065	—	5,845,875	7,257,098	649,205	—	7,906,303
Due from customers on acceptances	57,701	—	—	57,701	45,809	—	—	45,809
Insurance contract liabilities	3,913,056	7,651,162	—	11,564,218	4,202,094	7,049,731	—	11,251,825
Other accounts payable, provisions and other liabilities	1,313,476	1,627,735	48	2,941,259	1,229,952	1,599,519	859	2,830,330
	31,771,797	47,209,647	474,711	79,456,155	32,567,959	44,626,864	500,810	77,695,633
Forwards position, net	(686,720)	418,277	268,443	—	(1,993,217)	2,074,784	(81,567)	—
Currency swaps position, net	726,870	(726,870)	—	—	1,384,495	(1,384,495)	—	—
Cross currency swaps position, net	2,295,525	(2,295,525)	—	—	2,354,679	(2,354,679)	—	—
Options position, net	400	(400)	—	—	(172)	172	—	—
Monetary position, net	(640,269)	5,940,596	250,226	5,550,553	101,164	5,451,388	43,894	5,596,446

As of September 30, 2023, the Group granted indirect loans (contingent operations) in foreign currency for approximately US$697,734,000, equivalent to S/2,646,505,000 (US$614,405,000, equivalent to S/2,343,341,000 as of December 31, 2022).

24. Fair value

(a) Financial instruments measured at their fair value and fair value hierarchy -

The following table presents an analysis of the financial instruments that are measured at their fair value, including the level of hierarchy of fair value. The amounts are based on the balances presented in the consolidated statement of financial position:


	As of September 30, 2023				As of December 31, 2022
	Level 1	Level 2	Level 3	Total	Level 1	Level 2	Level 3	Total
Financial assets	S/(000)	S/(000)	S/(000)	S/(000)	S/(000)	S/(000)	S/(000)	S/(000)
Financial investments
At fair value through profit or loss (*)	309,284	318,690	896,917	1,524,891	428,739	564,559	939,695	1,932,993
Debt instruments measured at fair value through other comprehensive income	11,874,160	8,108,390	—	19,982,550	9,946,427	6,770,090	—	16,716,517
Equity instruments measured at fair value through other comprehensive income	404,842	10,455	37,930	453,227	464,556	10,188	38,140	512,884
Derivatives receivable	—	214,126	—	214,126	—	515,800	—	515,800
	12,588,286	8,651,661	934,847	22,174,794	10,839,722	7,860,637	977,835	19,678,194
Accrued interest				207,915				322,425
Total financial assets				22,382,709				20,000,619
Financial liabilities
Derivatives payable	—	178,279	—	178,279	—	297,038	—	297,038

(*) As of September 30, 2023 and December 31, 2022, correspond mainly to participations in mutual funds and investment funds.

Financial assets included in Level 1 are those measured on the basis of information that is available on the market, to the extent that their quoted prices reflect an active and liquid market and that are available in some centralized trading mechanism, trading agent, price supplier or regulatory entity.

Financial instruments included in Level 2 are valued based on the market prices of other instruments with similar characteristics or with financial valuation models based on information of variables observable in the market (interest rate curves, price vectors, etc.).

Financial assets included in Level 3 are valued by using assumptions and data that do not correspond to prices of operations traded on the market. The valuation requires Management to make certain assumptions about the model variables and data, including the forecast of cash flow, discount rate, credit risk and volatility.

During the year 2023 and 2022, there were no transfers of financial instruments to or from level 3 to level 1 or level 2.

The table below includes a reconciliation of fair value measurement of financial instruments classified by the Group within Level 3 of the valuation hierarchy:


	30.09.2023			31.12.2022
	S/(000)			S/(000)
Initial balance as of January 1		977,835			1,133,763
Purchases		72,294			180,344
Sales		(30,564	)		(280,297	)
Loss recognized on the consolidated statement of income		(84,718	)		(55,975	)
Ending balance		934,847			977,835

(b) Financial instruments not measured at their fair value -

The table below presents the disclosure of the comparison between the carrying amounts and fair values of the Group’s financial instruments that are not measured at their fair value, presented by level of fair value hierarchy:


	As of September 30, 2023					As of December 31, 2022 (restated)
	Level 1	Level 2	Level 3	Fair value	Book value	Level 1	Level 2	Level 3	Fair value	Book value
	S/(000)	S/(000)	S/(000)	S/(000)	S/(000)	S/(000)	S/(000)	S/(000)	S/(000)	S/(000)
Assets
Cash and due from banks	—	10,980,537	—	10,980,537	10,980,537	—	13,193,411	—	13,193,411	13,193,411
Inter-bank funds	—	125,903	—	125,903	125,903	—	296,119	—	296,119	296,119
Investments at amortized cost	3,015,615	78,957	—	3,094,572	3,315,572	2,949,507	—	—	2,949,507	3,302,779
Loans, net	—	45,107,965	—	45,107,965	47,077,872	—	42,932,260	—	42,932,260	45,502,998
Due from customers on acceptances	—	57,701	—	57,701	57,701	—	45,809	—	45,809	45,809
Insurance and reinsurance contract assets	—	26,287	—	26,287	26,287	—	30,577	—	30,577	30,577
Other accounts receivable and other assets, net	—	1,040,127	—	1,040,127	1,040,127	—	919,767	—	919,767	919,767
Total	3,015,615	57,417,477	—	60,433,092	62,623,999	2,949,507	57,417,943	—	60,367,450	63,291,460
Liabilities
Deposits and obligations	—	49,008,141	—	49,008,141	49,074,884	—	48,464,095	—	48,464,095	48,530,708
Inter-bank funds	—	451,070	—	451,070	451,070	—	30,012	—	30,012	30,012
Due to banks and correspondents	—	9,508,157	—	9,508,157	9,521,148	—	6,859,664	—	6,859,664	7,100,646
Bonds, notes and other obligations	4,582,592	827,739	—	5,410,331	5,845,875	6,447,282	990,545	—	7,437,827	7,906,303
Due from customers on acceptances	—	57,701	—	57,701	57,701	—	45,809	—	45,809	45,809
Insurance contract liabilities	—	11,564,218	—	11,564,218	11,564,218	—	11,251,825	—	11,251,825	11,251,825
Other accounts payable and other liabilities	—	2,762,980	—	2,762,980	2,762,980	—	2,533,292	—	2,533,292	2,533,292
Total	4,582,592	74,180,006	—	78,762,598	79,277,876	6,447,282	70,175,242	—	76,622,524	77,398,595

The methodologies and assumptions used to determine fair values depend on the terms and risk characteristics of each financial instrument and they include the following:

(i) Long-term fixed-rate and variable-rate loans are assessed by the Group based on parameters such as interest rates, specific country risk factors, individual creditworthiness of the customer and the risk characteristics of the financed project. Based on this evaluation, allowances are taken into account for the estimated losses of these loans. As of September 30, 2023 and December 31, 2022, the book value of loans, net of allowances, was not significantly different from the calculated fair values.

(ii) Instruments whose fair value approximates their book value: For financial assets and financial liabilities that are liquid or have short-term maturity (less than 3 months) it is assumed that the carrying amounts approximate to their fair values. This assumption is also applied to demand deposits, savings accounts without a specific maturity and variable-rate financial instruments.

(iii) Fixed-rate financial instruments: The fair value of fixed-rate financial assets and financial liabilities at amortized cost is determined by comparing market interest rates when they were first recognized with current market rates related to similar financial instruments for their remaining term to maturity. The fair value of fixed interest rate deposits is based on discounted cash flows using market interest rates for financial instruments with similar credit risk and maturity. For quoted debt issued, the fair value is determined based on quoted market prices. When quotations are not available, a discounted cash flow model is used based on the yield curve of the appropriate interest rate for the remaining term to maturity.

25. Fiduciary activities and management of funds

The Group provides custody, trustee, investment management and advisory services to third parties; therefore, the Group makes purchase and sale decisions in relation to a wide range of financial instruments. Assets that are held as trust are not included in the consolidated financial statements.

As of September 30, 2023 and December 31, 2022, the value of the managed off-balance sheet financial assets is as follows:


	30.09.2023		31.12.2022
	S/(000)		S/(000)
Investment funds		17,699,156		16,821,566
Mutual funds		5,021,413		4,495,832
Total		22,720,569		21,317,398

Intercorp Financial Services (IFS) 6-KThird Quarter 2023 Earnings