Banks
Banco Internacional del Peru S.A.A. - Interbank
Update
Universal Commercial Banks
Peru
Ratings
Foreign Currency
Long-Term Issuer Default Rating | BBB |
Short-Term Issuer Default Rating | F3 |
Local Currency |
Long-Term Issuer Default Rating | BBB |
Short-Term Issuer Default Rating | F3 |
Key Rating Drivers
Negative Rating Outlook: Banco Internacional del Peru S.A.A. - Interbank's (Interbank) Issuer Default Ratings (IDRs) and senior debt ratings are driven by its 'bbb' Viability Rating (VR), which is in line with the implied VR. The Negative Rating Outlook on the Long-Term IDRs is aligned with the Negative Rating Outlook on Peru's sovereign rating. The VR and Long-Term IDRs are sensitive to a material deterioration in the local operating environment (OE) or a negative sovereign rating action. OE pressures include a slow recovery of GDP due to the challenging investment and business environment.
Strong Franchise in Retail Lending: Interbank is Peru's fourth largest universal commercial bank, with a market share by loans and deposits of 13.3% and 13.8%, respectively, as of 2Q23. It has a strategic focus on retail banking in Peru, as reflected in its 22.7% and 19.4% market shares in consumer loans and retail deposits, respectively, at 2Q23, comparable with the largest Peruvian bank's market shares in these products.
Stable Asset Quality: As of 2Q23, the 90 days nonperforming loans (NPL) ratio remained stable at
2.6% (YE22: 2.6%) and similar to pre-pandemic levels despite the important expansion of the retail segment and the seasoning of Reactiva Peru program loans. Loan loss allowance coverage of impaired loans of 192.2% at 2Q23 (YE22: 191.7%) is adequate and similar to pre-pandemic levels. Fitch Ratings believes asset quality could deteriorate slightly in 2023, due to unseasoned retail loan growth and weaker borrower repayment capacity due to high interest rates and high inflation.
Sound Probability: The operating profit-to-risk-weighted assets (RWA) ratio increased slightly to 2.4% at 2Q23, from 2.3% at YE22, reflecting a higher net interest margin (NIM) and controlled credit and noninterest expenses. Higher interest rates coupled with a change in the portfolio mix, with a higher proportion of the retail segment and a lower proportion of the commercial portfolio, supported the NIM. Fitch expects profitability to remain sound at around 2%, supported by a strong NIM and good efficiency.
Adequate Capitalization: Interbank's Fitch Core Capital (FCC) declined to 10.4% at 2Q23, versus 10.7% at 2Q22, reflecting higher RWA due to the bank's increased exposure in retail loans and the seasoning of Reactiva Peru loans. Fitch expects Interbank's capitalization to remain commensurate with current ratings, sustained by moderate expected growth and sound earnings generation.
Stable Funding and Liquidity: The loan-to-deposits ratio remained stable at 108.2% as of 2Q23, similar to 109.6% at YE22. Deposit growth was 3.4% as of June 2023, reflecting tighter monetary policy, and covered more than two thirds of funding needs (75.9% at 2Q23). Fitch expects liquidity pressures to remain within rating expectations, partly reflecting stable monetary policy signals as of mid-2023.
Rating Sensitivities
Factors that could, individually or collectively, lead to negative rating action/downgrade
IDRs and VR
- The IDRs are sensitive to a negative rating action on the sovereign or any deterioration of Fitch's OE score assessment.
-
Interbank's VR could be downgraded if asset quality deterioration causes a sustained Firmado Digitalmentedecline inpor:the bank's operating profit-to-RWA ratio to less than 2.0% and loss absorption
GLORIA CECILIA RAMIREZ RIESCO Fecha: 25/08/2023 11:49:17 a.m.
Viability Rating | bbb |
Government Support Rating | bbb- |
Sovereign Risk
Long-Term Foreign Currency | |
Issuer Default Rating | BBB |
Long-Term Local Currency | |
Issuer Default Rating | BBB |
Country Ceiling | BBB+ |
Rating Outlooks
Long-Term Foreign Currency | |
Issuer Default Rating | Negative |
Long-Term Local Currency | |
Issuer Default Rating | Negative |
Sovereign Long-Term Foreign | |
Currency Issuer Default Rating | Negative |
Sovereign Long-Term Local | |
Currency Issuer Default Rating | Negative |
Applicable Criteria
Bank Rating Criteria (September 2022)
Related Research
Latin American Banks 2023 Outlook (December 2022)
Financial Data
Banco Internacional del Peru S.A.A. - Interbank
(PEN Mil.) | June 30, 2023 | Dec. 31, 2022 |
Total Assets | 18,662.6 | 17,444.4 |
(USD Mil.) | ||
Total Assets | 67,633.4 | 66,445.7 |
Total Equity | 7,279.2 | 7,079.8 |
PEN - Peruvian sol. USD - U.S. dollars. Source: Fitch Ratings, Fitch Solutions, Interbank
Analysts
Ricardo Aguilar
+52 81 4161 7086 ricardo.aguilar@fitchratings.com
Larisa Arteaga
+57 601 241 3270 larisa.arteaga@fitchratings.com
Update │ August 25, 2023 | fitchratings.com | 1 |
Banks
Universal Commercial Banks
Peru
capacity, either in the form of an FCC or common equity Tier 1 (CET1) ratio below 10% or a relevant decline in reserve coverage for more than four consecutive quarters.
Factors that could, individually or collectively, lead to positive rating action/upgrade
IDRs and VR
- Interbank's IDRs currently have a Negative Rating Outlook in line with the sovereign, which makes an upgrade highly unlikely over the rating horizon as the bank's IDRs are constrained by the sovereign ratings.
- Over the medium term, Interbank's ratings could be upgraded by the confluence of improvement in theOE and thebank's financial profiles in thecontext ofa sovereign upgrade.
Other Debt and Issuer Ratings
Rating Type | Rating | Rating Outlook |
Subordinated: Long-Term | BB+ | - |
Source: Fitch Ratings | ||
Subordinated Debt
Interbank's subordinated bonds are considered "plain vanilla," as they do not have coupon deferral features. The subordinated debt is two notches below the VR of 'bbb', reflecting baseline notching for loss severity. There is no notching due to incremental nonperformance risk.
- The subordinated debt ratings would be downgraded if Interbank's VR is downgraded.
- Subordinated debt ratings would be upgraded if Interbank's VR is upgraded.
Banco Internacional del Peru S.A.A. - Interbank | ||
Update │ August 25, 2023 | fitchratings.com | 2 |
Banks
Universal Commercial Banks
Peru
Ratings Navigator
Banco Internacional del Peru S.A.A. - Interbank ESG Relevance:
Banks
Ratings Navigator
Operating Environment | Financial Profile | ||||||||||||||
Business Profile | Risk Profile | Asset Quality | Earnings & Profitability | Capitalisation & Leverage | Funding & Liquidity | Implied Viability Rating | Viability Rating | Government Support | Issuer Default Rating | ||||||
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aaa | aaa | aaa | aaa | AAA | |||||||||||
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bbb | bbb | bbb | bbb bbb | bbb | BBBBBB Neg | ||||||||||
bbb- | bbb- | bbb- | bbb- bbb- | BBB- | |||||||||||
bb+ | bb+ | bb+ | bb+ | BB+ | |||||||||||
bb | bb | bb | bb | BB | |||||||||||
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b | b | b | b | B | |||||||||||
b- | b- | b- | b- | B- | |||||||||||
ccc+ | ccc+ | ccc+ | ccc+ | CCC+ | |||||||||||
ccc | ccc | ccc | ccc | CCC | |||||||||||
ccc- | ccc- | ccc- | ccc- | CCC- | |||||||||||
cc | cc | cc | cc | CC | |||||||||||
c | c | c | c | C | |||||||||||
f | f | f | ns | D or RD |
The Key Rating Driver (KRD) weightings used to determine the implied VR are shown as percentages at the top. In cases where the implied VR is adjusted upward or downward to arrive at the VR, the KRD associated with the adjustment reason is highlighted in red. The shaded areas indicate the benchmark-implied scores for each KRD.
VR - Adjustments to Key Rating Drivers
The OE score has been assigned above the implied score due to the following adjustment reasons: Sovereign Rating (positive) and Macroeconomic Stability (positive).
The Capitalization and Leverage score has been assigned above the implied score due to the following adjustment reason: Reserve Coverage and Asset Valuation (positive).
Banco Internacional del Peru S.A.A. - Interbank | ||
Update │ August 25, 2023 | fitchratings.com | 3 |
Banks
Universal Commercial Banks
Peru
Summary Financials and Key Ratios
2023a | 2022 | 2021 | 2020 | ||
USD Mil. | PEN Mil. | PEN Mil. | PEN Mil. | PEN Mil. | |
(Years Ended as of Dec. 31) | Interim | Interim | Audited | Audited | Audited |
Summary Income Statement | |||||
Net Interest and Dividend Income | 503 | 1,821.1 | 3,280.5 | 2,699.8 | 2,881.2 |
Net Fees and Commissions | 76 | 276.3 | 651.2 | 555.0 | 502.5 |
Other Operating Income | 72 | 259.3 | 412.2 | 511.4 | 407.5 |
Total Operating Income | 650 | 2,356.7 | 4,343.9 | 3,766.2 | 3,791.2 |
Operating Costs | 261 | 945.5 | 1,862.4 | 1,696.3 | 1,491.4 |
Pre-Impairment Operating Profit | 389 | 1,411.2 | 2,481.5 | 2,069.9 | 2,299.8 |
Loan and Other Impairment Charges | 189 | 686.0 | 1,002.6 | 450.2 | 2,003.0 |
Operating Profit | 200 | 725.2 | 1,478.9 | 1,619.7 | 296.8 |
Other Non-Operating Items (Net) | 11 | 39.4 | 11.7 | -35.2 | -0.5 |
Tax | 52 | 188.7 | 318.9 | 384.0 | 31.4 |
Net Income | 159 | 575.9 | 1,171.7 | 1,200.5 | 264.9 |
Other Comprehensive Income | 58 | 209.3 | -294.5 | -581.1 | 191.8 |
Fitch Comprehensive Income | 217 | 785.2 | 877.2 | 619.4 | 456.7 |
Summary Balance Sheet | |||||
Assets | |||||
Gross Loans | 12,894 | 46,726.6 | 45,629.3 | 43,315.9 | 41,859.8 |
- of which Impaired | 331 | 1,200.9 | 1,172.7 | 1,299.5 | 1,343.5 |
Loan Loss Allowances | 637 | 2,307.5 | 2,247.8 | 2,067.0 | 2,856.5 |
Net Loans | 12,257 | 44,419.1 | 43,381.5 | 41,248.9 | 39,003.3 |
Interbank | 134 | 484.5 | 1,075.7 | 919.9 | 845.5 |
Derivatives | 59 | 212.7 | 476.5 | 783.6 | 435.2 |
Other Securities and Earning Assets | 3,188 | 11,551.9 | 9,721.9 | 10,586.5 | 9,582.5 |
Total Earning Assets | 15,637 | 56,668.2 | 54,655.6 | 53,538.9 | 49,866.5 |
Cash and Due from Banks | 2,554 | 9,257.2 | 10,229.6 | 12,952.7 | 16,257.8 |
Other Assets | 471 | 1,708.0 | 1,560.5 | 1,620.4 | 1,699.8 |
Total Assets | 18,663 | 67,633.4 | 66,445.7 | 68,112.0 | 67,824.1 |
Liabilities | |||||
Customer Deposits | 11,878 | 43,047.3 | 41,638.6 | 42,873.1 | 43,290.6 |
Interbank and Other Short-Term Funding | 2,874 | 10,416.7 | 9,416.0 | 10,085.2 | 9,227.7 |
Other Long-Term Funding | 1,552 | 5,625.0 | 6,904.6 | 7,086.5 | 7,873.4 |
Trading Liabilities and Derivatives | 64 | 233.4 | 297.0 | 413.1 | 0.0 |
Total Funding and Derivatives | 16,369 | 59,322.4 | 58,256.2 | 60,457.9 | 60,391.7 |
Other Liabilities | 285 | 1,031.8 | 1,109.7 | 851.3 | 1,249.0 |
Total Equity | 2,009 | 7,279.2 | 7,079.8 | 6,802.8 | 6,183.4 |
Total Liabilities and Equity | 18,663 | 67,633.4 | 66,445.7 | 68,112.0 | 67,824.1 |
Exchange Rate | - | USD1 = PEN3.6240 | USD1 = PEN3.8090 | USD1 = PEN3.9849 | USD1 = PEN3.6200 |
aFirst six months of 2023 only (1H23), ended June 30. PEN - Peruvian sol. USD - U.S. dollars. Source: Fitch Ratings, Fitch Solutions, Interbank
Banco Internacional del Peru S.A.A. - Interbank | ||
Update │ August 25, 2023 | fitchratings.com | 4 |
Banks
Universal Commercial Banks
Peru
Summary Financials and Key Ratios
(Years Ended as of Dec. 31) | 2023a | 2022 | 2021 | 2020 |
Ratios (Annualized as Appropriate) | ||||
Profitability | ||||
Operating Profit/Risk-Weighted Assets | 2.4 | 2.3 | 2.8 | 0.6 |
Net Interest Income/Average Earning Assets | 6.6 | 6.0 | 5.2 | 6.2 |
Noninterest Expense/Gross Revenue | 40.4 | 43.4 | 45.5 | 39.5 |
Net Income/Average Equity | 16.4 | 17.6 | 19.1 | 4.4 |
Asset Quality | ||||
Impaired Loans Ratio | 2.6 | 2.6 | 3.0 | 3.2 |
Growth in Gross Loans | 2.4 | 5.3 | 3.5 | 15.0 |
Loan Loss Allowances/Impaired Loans | 192.2 | 191.7 | 159.1 | 212.6 |
Loan Impairment Charges/Average Gross Loans | 3.0 | 2.3 | 1.0 | 5.1 |
Capitalization | ||||
Common Equity Tier 1 Ratio | N.A. | 10.8 | 12.5 | 11.5 |
Fitch Core Capital Ratio | 10.4 | 11.0 | 11.9 | 12.0 |
Tangible Common Equity/Tangible Assets | 9.7 | 10.0 | 9.4 | 8.5 |
Net Impaired Loans/Fitch Core Capital | -17.1 | -16.4 | -12.1 | -26.4 |
Funding and Liquidity | ||||
Gross Loans/Customer Deposits | 108.6 | 109.6 | 101.0 | 96.7 |
Customer Deposits/Total Non-Equity Funding | 72.9 | 71.8 | 71.4 | 71.7 |
aFirst six months of 2023 only (1H23), ended June 30. N.A. - Not applicable Source: Fitch Ratings, Fitch Solutions, Interbank
Banco Internacional del Peru S.A.A. - Interbank | ||
Update │ August 25, 2023 | fitchratings.com | 5 |
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INTERBANK - Banco Internacional del Perú SAA published this content on 25 August 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 25 August 2023 17:29:06 UTC.