Intercorp Financial Services Inc. saw a 16.1% year-over-year decline in its second-quarter net income, which the company said was mainly due to a 144.8 million Peruvian soles one-time adjustment in technical reserves at its insurance business.
The company posted a second-quarter profit of 204.9 million soles, or 1.83 soles per share, down from the 244.1 million soles, or 2.29 soles per share, earned in the year-ago period.
In addition to the technical reserves adjustment in the insurance business, which was due to the adoption of new mortality tables, Intercorp said its decline in profitability was also the result of a decrease in other income and an increase in other expenses, as well as a higher effective tax rate.
Net interest and similar income grew 22.1% to 784.2 million soles from 642.1 million soles a year ago, while net fee income from financial services ticked 9.7% higher to 224.8 million soles. Other income, however, fell 44.0% annually to 73.1 million soles from 130.5 million soles.
At the same time, other expenses reached 453.8 million soles, rising 6.0% from 428.3 million soles a year earlier. Intercorp attributed the rise to increases in depreciation and amortization, salaries and employee benefits, and administrative expenses at the Interbank and Interseguro subsidiaries.
Provision for loan losses, net of recoveries, declined sharply, falling 34.9% to 112.6 million soles from 214.3 million soles in the second quarter of 2017. This was mainly due to lower provision requirements in credit cards and mortgages, as well as certain provision releases in corporate loans at the Interbank banking unit, the company said.
Second-quarter profit for the Interbank unit increased 38.3% year over year to 289.2 million soles, while the Interseguro insurance unit booked a net loss of 113.7 million soles, compared to a profit of 15.3 million soles a year earlier.
Intercorp Financial, which is a unit of Intercorp Perú Ltd., said its return on average equity declined to 12.7% in the second quarter from 18.6% a year ago, while return on average assets fell to 1.4% from 2.0%.
As of Aug. 8, US$1 was equivalent to 3.27 Peruvian soles.