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Intercorp Financial's Q4'17 profit slides 37.6% as other expenses rise

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Intercorp Financial's Q4'17 profit slides 37.6% as other expenses rise

Intercorp Financial Services Inc. saw a 37.6% year-over-year drop in its net income for the fourth quarter of 2017, due partly to losses at its insurance business and a rise in other expenses.

The company booked a quarterly profit of 241.2 million Peruvian soles, or 2.24 soles per share, down from 386.3 million soles, or 3.59 soles per share, in the year-ago period.

Net interest and similar income grew 5.0% annually to 709.4 million soles from 675.7 million soles, driven by higher interest on investments available for sale at banking unit Banco Internacional del Perú SAA, or Interbank, as well as an increase in interest and similar income attributable to the acquisition of Seguros Sura SA in late 2017.

Net fee income from financial services ticked 4.5% higher to 231.4 million soles, while other income jumped 67.1% to 171.1 million soles.

Intercorp Financial booked 188.8 million soles in provisions for loan losses, net of recoveries, in the fourth quarter, down 2.7% from 194.0 million soles a year earlier. This decline was mainly due to lower provision requirements in commercial loans and mortgages at Interbank, as well as a higher provision recovery at the subsidiary.

Other expenses shot up to 499.0 million soles, rising 20.6% from 413.8 million soles in the fourth quarter of 2016. This was primarily due to an increase in impairment loss on available-for-sale investments at two subsidiaries, in addition to the write-off of intangible assets at Seguros Sura.

Intercorp Financial recorded a negative impact on total premiums earned, less claims and benefits, due to a 132.3 million soles increase in adjustment of technical reserves and a 58.7 million soles increase in net claims and benefits incurred.

Banking unit Interbank's fourth-quarter profit improved 22.2% year over year to reach 273.4 million soles, but Intercorp's insurance business posted a net loss of 29.6 million soles, compared to a profit of 130.2 million soles a year earlier.

Intercorp Financial's full-year 2017 profit reached 837.8 million soles, rising slightly from 833.7 million soles in 2016.

The company's return on average equity tumbled to 17.2% in the fourth quarter of 2017 from 30.9% a year ago, while return on average assets fell to 1.7% from 3.0%.

As of Feb. 14, US$1 was equivalent to 3.26 Peruvian soles.