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Investing.com -- Fitch Ratings has affirmed Banco Internacional del Peru’s (Interbank) Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) at ’BBB’ and upgraded Intercorp Financial Services, Inc. (NYSE:IFS), Interbank’s holding company, to ’BBB’ from ’BBB-’.
The rating agency maintained a Stable outlook for both entities’ Long-Term IDRs while affirming their Short-Term Local and Foreign Currency IDRs at ’F3’.
IFS’ upgrade reflects its consistently low double leverage (below 120%) and prudent liquidity management throughout the economic cycle.
Interbank’s Viability Rating (VR), which drives its Long-Term IDR, remains at ’bbb’. This rating acknowledges the bank’s position as Peru’s fourth-largest universal commercial bank with a significant retail banking presence. The bank holds 21.0% market share in total consumer loans and 14.6% in retail deposits as of year-end 2024.
Fitch assesses Interbank’s business profile at ’bbb’, considering its four-year average total operating income of $1.2 billion and its diversified business model focused on lower-risk markets and segments.
Asset quality has improved, with the 90-day nonperforming loans ratio decreasing to 2.4% in the first quarter of 2025, down from the 2.8% average between 2021 and 2024. Loan loss allowance coverage of impaired loans stood at 165.6% as of the first quarter.
The bank’s profitability is recovering, with operating profit-to-risk-weighted assets ratio reaching 2.7% in the first quarter of 2025, up from the 2.2% average during 2021-2024. This improvement stems primarily from a significant decrease in cost of risk during the second half of 2024.
Interbank’s capitalization remains adequate with a common equity Tier 1 (CET1) ratio of 11.6% in the first quarter of 2025, though this is below local peers. Fitch expects capitalization to remain in the 11.0%-11.5% range through 2025.
Liquidity improved in 2024 with 14% year-over-year growth in customer deposits, bringing the loans-to-customer deposits ratio to 99.6% at year-end 2024, down from 109% at year-end 2023. Deposits now cover more than 80% of funding sources.
The ratings could face downward pressure if Peru’s sovereign rating is downgraded or if there is deterioration in the operating environment. A sustained decline in operating profit to risk-weighted assets ratio below 2%, or a CET1 ratio below 10%, could also trigger a downgrade.
Potential upgrades are constrained by the sovereign’s ratings and would require improvements in both the operating environment and the bank’s financial profiles.
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