Intercorp Financial Services Inc

NYSE:IFS

Earnings Call Transcript 2018-Q3

[Operator]

Good morning, and welcome to the Intercorp Financial Services Third Quarter 2018 Conference Call. [Operator Instructions]

It is now my pleasure to turn the call over to Rafael Borja of i-advize Corporate Communications. Sir, please begin.

[Rafael Borja]

Thank you, and good morning, everyone. On today's call, Intercorp Financial Services will discuss its third quarter 2018 earnings.

We are very pleased to have with us Mrs. Michela Casassa, Chief Financial Officer of Intercorp Financial Services; Mr. Gonzalo Basadre, Chief Executive Officer of Interseguro and Deputy CEO of IFS; and Mr. Bruno Ferreccio, Deputy CEO of Inteligo Group.

They will be discussing the results that were distributed on Tuesday, November 6. There is also a presentation to accompany these results. If you didn't receive a copy of the presentation or the earnings, it is now available on the company's website, ifs.com.pe to download a copy.

Otherwise, for any reason, if you need any assistance today, please call i-advize in New York at [phone].

I would like to remind you that today's call is for investors and analysts only. Therefore, questions from the media will not be taken at this time.

It is now my pleasure to turn the call over to Mr. Gonzalo Basadre, Chief Executive Officer of Interseguro and Deputy CEO of IFS, for his presentation. Mr. Basadre, please go ahead.

[Gonzalo José Brazzini, executive]

Good morning, and welcome to Intercorp Financial Services Third Quarter Earnings Call. First, let me start on the macro and political fronts.

In recent weeks, positive and negative announcements in both areas have struck headlines. On the positive side, market consensus remains optimistic on how the economy's going to perform towards the end of the year. Despite GDP growth has happened in recent months, the revenue outlook for the fishing and mining sectors in the fourth quarter of the year, together with improvement in terms of trade, households, income and employment, has led GDP growth expectations to stand around 3.8 for 2018.

2019 should grow at a similar rate, mainly due to higher levels of private spending, as mining investments are expected to increase due to execution of projects such as Quellaveco Mina Justa, which were announced this year, and Pampa de Pongo Corani which should start their construction phase in 2019.

Although downside risk to the country's GDP growth remains on the table, such as faster than expected increase in U.S. rates, lower copper price and a more aggressive trade war between the U.S. and China, Peru's macro fundamentals are solid. Our low debt and inflation levels as well as our entire international reserves positions us in stronger standpoint than our regional peers to take such risk.

On the negative side, the political turmoil remains as a source of uncertainty in the country. On one hand, a former Supreme Court judge who was reportedly negotiating sentences and under-the-table deals flew (sic) [fled] the country in spite he was barred from doing so.

Although he has been already captured, his extradition to Peru is still uncertain. On the other hand, more recent leader of Peru's political opposition party was arrested and put under pretrial detention for 36 months, accused of money laundering in the presidential campaign in 2011.

These issues, together with the tense relations between the President and the Congress has diminished business confidence in recent months.

Despite the turbulence, the financial system continued to recover, although at a lower pace than previous quarters. During the third quarter 2018, the banking system profits increased 5.8% year-over-year, while loans grew 9.5%, driven by a 10.4% growth in retail loans and a 9% increase in commercial loans, according to the SBS. Other consumer loans and mortgages grew the most in retail banking. On the commercial banking, corporate loans performed better year-over-year.

As we will discuss later, on Interbank clearly outpaces system's growth, especially in corporate loans and credit cards.

Finally, a few words on the third quarter 2018 results. IFS numbers was solid. Interbank continued to increase its market share in the loans, with healthy asset quality indicators and strong profitability.

Interseguro group posted its earnings in a year-over-year comparison and resumed growth in annuity. Inteligo continued to grow in net assets under management and strong gains on its proprietary portfolio. We are confident that our business model and the opportunity the Peruvian market offers will allow us to keep showing strong results in the coming quarters.

Now let me pass it on to Michela for a detailed review of our results.

[Michela Ramat, executive]

Good morning, everybody. Let me start with the presentation on Page #2. Third quarter results have seen a 20% year-on-year growth in IFS recurring earnings and 3.5% quarterly were normalized by the impact of the new mortality tables at Interseguro in the second quarter and excluding the release of provisions at Interbank.

19% ROA (sic) [ ROAE ] with strong results at all operating companies. At Interbank, strong quarter with market share gain in all loan products and in retail deposits.

Earnings reached PEN 248 million, growing 3.8% on a quarterly basis and 8.6% on a yearly basis and for the recurring basis and cost of risk further decreased to 2.2% in the quarter.

Our strong focus on digital transformation continues to show results, with growing figures in all of our main digital indicators. At Interseguro, gross premiums plus collections continued growing 5.2% in the quarter and 46.8% year-on-year, with market share in annuity at 32.5%.

Earnings grew 3 points year-on-year, and decreased 36% on a quarterly normalized basis, mainly due to an increasing technical reserve caused by an 18% quarterly increase in the sale of annuities and higher inflation that impacted inflation objective portion of the annuity obligation.

ROE (sic) [ROAE] in the quarter was impacted by lower earnings and higher equity, due to unrealized gains from the fixed income and equity portfolios accounted in the quarter. At Inteligo, assets under management grew 5.3% in the quarter and 9.2% year-on-year. Solid quarter with earnings growing 22% on a quarterly basis and 31% year-on-year, with ROE (sic) [ROAE] reaching 33%.

Now let's have a look at IFS key performance indicators on Page #4.

At IFS, net profit was PEN 316 million in the third quarter. Annualized ROE (sic) [ROAE] reached 18.7% in the quarter. The efficiency ratio increased 60 basis points on a quarterly basis but decreased from 36.4% to 35% year-on-year. NIM at Interbank decreased 10 basis points in the quarter, as risk-adjusted NIM continued to improve and additional 10 basis points in this quarter up to 4.2%.

Total capital ratio for Interbank stands at 16.2% with core equity Tier 1 ratio reaching 10.6% as of September 2018.

At Interseguro, gross premiums plus collections increased 5.2% on a quarterly basis, thanks to our recovery of the market and an increase in market share. The return on investment was 6.1% up 70 basis points in the quarter.

Strong recovery of growth in asset under management plus deposits at Inteligo to 4.9% during this quarter.

Fee income at Inteligo decreased year-on-year due to the recognition of an extraordinary fee during the second quarter, which in addition to slightly lower fees from financial advisories at Interbank led to 6.9% reduction in fee income at IFS levels.

On Page #5, relevant net income for dividend generation in the second quarter increased 10% year-on-year or PEN 21 million for Interbank, increased threefold year-on-year or PEN 44 million for Interseguro and increased 31% year-on-year or PEN 13 million for Inteligo.

As of September, accumulated relevant net income for dividend generation at IFS level reached PEN 1,218,000,000, a significant increase of 41% or PEN 360 million when compared to the previous year.

Please turn to the following pages for a brief overview of the quarterly net earnings of IFS for each segment.

On Page #7, Interbank's third quarter net profit reached PEN 248 million, a 14% decrease on a quarterly basis, 3.8% growth when excluding the reversion of provisions and dividend income from the second quarter and grew 8.6% on a yearly basis, mainly thanks [ to ] top line growth coupled with an improvement in cost of risk. Third quarter ROE (sic) [ROAE] was 19.5%. Net interest income grew 8.6% on a yearly basis, with risk-adjusted NIM improving further 10 basis points in the quarter up to 4.2%.

When excluding the construction company's impact, thanks to a 5.7% quarterly decrease in loan provision expenses, which improved cost of risk 20 basis points in the quarter and 80 basis points year-on-year, down to 2.2%.

On Page #8, we are showing the further evolution of our digital transformation. As explained during the last call, the first phase of our digital transformation was focused on building capabilities that would allow clients to perform their day-to-day transactions digitally and afterwards to be able to acquire services digitally.

Now we're entering the second phase, in which we are increasing our efforts for educating clients to foster usage of our existing functional capabilities and also to provide solution services online, while completing the full set of digital capabilities.

Digital customers, who include clients that interact with the banks through our digital platforms, has reached 49% as of September from 37% in September last year and 45% in June this year, representing roughly a 42% increase year-on-year in number of digital customers.

The percentage of transactions performed off branches have continued to increase, reaching 95% as of September from 90% as of September last year.

The percentage and functionality that are available on our digital channels, which include transactions, sales of new products and self-service features, has continued to increase, reaching 95% this year from 91% a year earlier.

Digital sales and self-service interactions have increased their penetration to 22% in September this year from 11% in September last year. We are now able to digitally open new accounts also for businesses, sell credit cards and loans through credit cards, increase credit card lines, among other products.

On page #9, at Interbank, we have been able to increase our market share in total loans by 10 basis points on a quarterly basis and by 50 basis points on a yearly basis, reaching 11.9%.

Performing loan growth reached 3.6% on a quarterly basis, as a result of an increase of 3.6% in retail loans and 3.7% in commercial loans. Credit card growth reached 4.3% in the quarter, reaching 21.2% on a yearly basis.

Performing loans further accelerated growth on a yearly basis to 15.3%, due to a total increase of 16% in retail loans year-on-year and 14.5% in commercial loans. We're looking at a yearly growth, retail loans grew mainly due to increases of 21% in credit card, 14.6% in mortgages and 13.3% in other consumer loans.

On Page 10. Retail deposits increased 3.5% during this quarter, reaching a growth of 12.6% on a yearly basis, allowing us to gain 10 basis points market share in the quarter. Average cost of funds remained stable year-on-year but increased 20 basis points in the quarter.

On Page 11, and switching to asset quality. We have seen asset quality continue to improve in this quarter, with cost of risk decreasing 20 basis points on a quarterly basis and 80 basis points on a yearly basis down to 2.2%. The improvement in cost of risk is mainly coming this quarter from commercial banking, which have reduced our decreasing cost of risk of 70 basis points on a quarterly basis.

On the other hand, cost of risk for credit card has continued to improve down to 8.4%, thanks to an improvement in the risk profile of the client portfolio, to a better behavior of clients, to all the different actions we have been undertaking in order to improve underwriting and collections processes and to the recovery in volumes.

NPL ratio under IFRS criteria has improved 30 basis points in the quarter, down to 2.8%, with NPL coverage ratio increasing to 136%.

On Page #12. When looking at SBS figures comparable to the system, Interbank's past-due loan ratio improved 10 basis points in the quarter down to 2.6%, and still below the system average of 3.1%. Coverage ratio in the accounting standard remains strong at 180%.

When looking at the PDL breakdown. We can see within retail that consumer and credit PDL ratio has remained flat at 2.1% in the quarter, and is below the system average of 2.4%. There has been a certain improvement in credit card PDL ratio of 20 basis points down to 4.2%.

Mortgages PDL ratio has also improved 20 basis points in the quarter down to 3.7%. The trend in cost of risk in local GAAP is very similar to what we previously discussed under IFRS. Our cost of risk in local GAAP of 2.3% in this quarter remains above the system average of 1.9%, mainly due to the portfolio mix with a higher incidence of retail and credit cards when compared to the system and to the other credit cards. Normalizing the effect of our portfolio mix, our ratio would be 1.8%, below the system average of 1.9%.

On Page 14. As of the third quarter, Interbank's capital ratio of 16.2%, 450 basis points above its risk-adjusted minimum requirement, established at 11.7% and above the system average of 15%. Core equity Tier 1 ratio has continued to improve during the quarter 30 basis points this time, reaching 10.6%.

Please turn to the following pages to discuss Interseguro's results.

On Page 16, gross premiums and collections in the third quarter increased 5.2% and 46% on a yearly basis. Annuities for this showed a strong increases in this quarter, 18.3% as a result of higher market share, which reached 32.5% in the third quarter compared to 7.6% in the second quarter and 26% in the third quarter of the previous year.

This is in the context of a more dynamic market. Retail insurance remained stable on a quarterly basis and individual life, together with disability and survivorship, shows strong yearly increases mainly due to the incorporation of Seguros Sura.

On Page 17. Total premium earned, less claims and benefits, resulted in minus PEN 74.7 million in the quarter, mainly explained by a PEN 41 million higher recurring adjustment of technical reserves in the quarter, partly offset by an increase of 8.3% on a quarterly basis and 35.9% increase on a yearly basis in net premiums.

The quarterly increase in the recurring adjustment of technical reserves was mainly the result of the strong increase in the sale of annuities of 18% on a quarterly basis and higher inflation that impacted the extension adjusted portion of the annuity obligation, which represents roughly 25% of the portfolio.

In Page 18, Interseguro's investment portfolio reached PEN 11.3 billion, which represents an increase of 2.8% in the quarter and 88% on a yearly basis. The quarterly growth is explained by results of unrealized gains from fixed income portfolio and gains from valuation on the investment properties. The year-on-year growth is mainly explained by the merger with Seguros Sura investment portfolio.

Results from investment in the third quarter were PEN 170.9 million, which represented a 6.1% return on Interseguro's investment portfolio above the 5.4% reported in the second quarter.

Starting on Page #20, we will have a look at Inteligo's results.

Inteligo's net profit in the third quarter was PEN 55.7 million, a PEN 10 million or 22% increase on a quarterly basis and a PEN 13 million or 30.8% increase on a yearly basis. These results were attributed to a better performance of Inteligo's proprietary portfolio.

Net fee income from financial services was PEN 27 million in the quarter, a PEN 5.5 million decrease on a quarterly basis, which is explained by the recognition of the extraordinary fees during the second quarter. When compared with the third quarter of the previous year, net fee income from financial services decreased PEN 1.2 million, explained by lower fees associated with fund management.

Inteligo's other income reached PEN 23 million in the quarter, an increase of PEN 19.4 million and PEN 8.2 million when looking at the yearly figure, which corresponds to a better capital market performance but triggers an appreciation of securities of Inteligo's profit portfolio during the third quarter.

Inteligo's other expenses have been relatively stable in the comparable periods. They reached PEN 20.8 million in the third quarter, an increase of PEN 1.8 million on a quarterly basis and a decrease of PEN 3.4 million on a yearly basis, due to the recognition of an impairment loss on available for sale investments in the third quarter of the previous year.

On Page 21, and looking at Inteligo's key indicators, assets under management, plus deposits, reached PEN 15.3 billion in the third quarter, up PEN 700 million or 5% growth on a quarterly basis. This result was mostly attributed to the opening of accounts due to our strength of investment strategy. As a consequence, the increase in asset under management, Inteligo expect an incremental growth of brokerage and customer services fees in the quarters to come.

Inteligo's loan portfolio reached PEN 1.3 billion in the third quarter, an increase of PEN 35 million or 2.8% on a quarterly basis, but a decrease of 19% on a yearly basis. Revenues generated by Inteligo was PEN 76 million, an increase of 17% on a quarterly basis and 16% on a yearly basis.

The quarter and yearly growth was mostly explained by the appreciation of Inteligo's proprietary portfolio reflected in other income. Inteligo's fee income divided by asset under management was relatively stable at 0.8%.

As a consequence of these results, Inteligo's net profit in the third quarter reached PEN 55.7 million, a 22% increase on a quarterly basis, which led to an improvement of Inteligo's ROE to 33% compared to the 26.5% reported in the second quarter.

Now we welcome any questions you may have.

[Operator]

[Operator Instructions] And we will start with Andres Soto with Santander.

[Andres Soto, analyst]

I have a question related to the insurance business. This quarter, we saw a significant decline in profitability, which as Michela explained was related to both lower net income, higher equity. And although the earnings performance is partially explained by the positive results of the annuities business, I understand there is also an effect from rates at the balance sheet level and inflation at the P&L level. Could you please provide a little bit more detail on those effects? And give us an idea of what to expect over the next few quarters regarding Interseguro's profitability?

[Michela Ramat, executive]

Let me first start with the explanation of what have impacted the portfolio this quarter. As you may recall, we have eliminated the volatility coming from the changes in the interest rate, okay, on technical reserves. But there is still a portion of the portfolio, which is adjusted with inflation, roughly speaking represents 25% of the portfolio, which has a similar effect of what we had in the past with interest rates. So basically, what happens is that we've had higher inflation this quarter, roughly speaking, it has been like 3x the inflation of the second quarter. And this have led the technical reserve on that portion of the portfolio to be higher in the quarter. Of course, the offsetting impact of this negative impact in the P&L goes to equity as it happened in the past with the interest rate, okay? So basically, we still have this volatility coming from the inflation-adjusted portion of the portfolio in the next quarter, but we think that we've always had it. In this particular quarter, it has been a little bit higher than what we have seen in the past. I'm not sure if this answers what you were hoping and I'm not sure whether it...

[Gonzalo José Brazzini, executive]

I would like to add -- I am Gonzalo. I would like to add that going forward, we will expect much less volatility than we have before. Just because of the reason Michela said that we've changed the methodology for calculating reserves.

[Andres Soto, analyst]

Perfect. And do you have any idea what would be the so-called recurrent profitability if we exclude these effects, this 8% that you reported will be 15%, 16%?

[Michela Ramat, executive]

I mean what we expect, as we mentioned during the last quarter, that it will be a double-digit profitability. Maybe there will be a little bit of slight variation, in onetime double digits, but always pointing out to something that is close to the 15% that we saw in the previous quarter.

[Operator]

We will take our next question from Thiago Batista with Itaú BBA.

[Thiago Bovolenta Batista, analyst]

Can you mention how much loan portfolio can extend next year? I believe retail and credit card business probably will lead this expansion. And if you think it's true, is it possible to believe in a positive margin strength in next year?

[Michela Ramat, executive]

Thiago, thank you for your question. Talking about loan growth -- actually, the loan growth that we have experienced this year, I mean, surprised that's possible. Now we were expecting a lower growth of the portfolio when we gave the guidance at the beginning of the year. But we have had to appraise it, and the gross positively has been the retail growth that we have been experienced, which actually comes hand in hand with the fact that we have been gaining market share in the different products. When talking about commercial banking, we have also been gaining a little bit of market share there, especially in the mid-corporate segment. And this is actually driving us to continue to similar growth that will be similar to what we have registered this year, also for next year. Of course, there will be some market expectations that need to be there. So as -- that the economy continues with a positive outlook for the next year. But what we are foreseeing is something that -- I mean can be slightly lower than what we have seen this year but still double-digit growth. In terms of margin, this year, we have seen an improvement in the risk-adjusted NIM of our portfolio. This is coming hand-in-hand with one with, and in fact, coming from the portfolio mix. So basically, the product that has been growing faster are the high-yield products and 2, an improvement in cost of risk. What we are expecting for next year is something -- I mean, fairly simple, so maybe liens would be stable and risk-adjusted liens stable, with the possibility of an upside. That's what we're foreseeing.

[Operator]

And we will take our next question from Alonso Aramburú with BTG.

[Alonso Aramburú, analyst]

I wanted to ask Michela about fee income, which was relatively weak this quarter. How shall we think about growth in this category? And going back to your answer on margins, what we're seeing is your loan yields have been declining for a couple of quarters. And it seems to me that this quarter, part of NIM improvement was because of the change in mix on the asset side, right? Your cash declines, your loans gain share, but it seems to me that's going to happen going forward. So how do you gain more margin in the future? Is it just because of mix on the loan side? What's the explanation there?

[Michela Ramat, executive]

Alonso, in terms of fees, this quarter have been a different mix of effects. Now when you look at the numbers at IFS level, one of the things that is impacting these declining fees in Inteligo, as we have explained, due to higher fees in the second quarter. But also at the bank level, an increase have been like a little bit lower compared to the second quarter. This recently is the result of a number of effects that are impacting fee income, some of them related to the fact that with more and more transactions in client migrating to the digital channel, more and more clients are going to the channels that cost less, so basically they are charged less fees, okay? This is a portion of the explanation. But I think that it's helping [ things ] that you don't see reflected in the fee income basis, and you see it in the other operating income line is that we have been strongly increasing the billing in credit cards. So basically what happens there is that you have more merchant fees, but you also have more fees that you have to return to the merchants. And there is another line that adds up to this formula, which is accounted in other income, which is what we get then from the merchants have been the shareholders of those companies. So basically, that portion will have increased. You don't see it in the income so it's not enough the negative effect of this strong growth that we are experiencing in the business of credit cards. I'm not sure whether I make myself clear in that part.

[Alonso Aramburú, analyst]

Just to clarify, you're saying that the other income line should see growth that used to be in the fee income line?

[Michela Ramat, executive]

There is a portion of an increase in one related to the overall business of the billing and credit cards that goes to other income that a little bit the reduction in fee. But what we are expecting for the fourth quarter going forward is to have a recovery of this fee income, especially at the bank level. In terms of margin, I mean, this year, when you look at the margins in the loan portfolio, okay, we have explained in the past.

[Audio Gap]

but also to get stronger focus of the credit card business in the lower risk segments of the portfolio, okay. We have seen a decline there, but that is more than compensated when you look at the risk-adjusted yield. Going forward, what we are expecting to see is that we should start to go a little bit faster also in the lower segments of the portfolio, and also a little bit faster in banking the bank. So that should help a little bit the yield in the credit card business, coupled with the fact that we're strongly pushing the consumer portion of the credit card portfolio, which is the one with the higher yield. This, together with the fact that we will continue to grow credit cards and grow the products which are higher yield, and we've seen the commercial banking growing the higher yield in that segment, which are need in small coverage should help yields to stay stable for the coming year.

[Alonso Aramburú, analyst]

Sorry, just a follow-up. So on the funding side, when your rates are low enough in the U.S. and you had a little bit of a higher funding costs. And rates may go up improving next year on the funding side, should we expect also a little bit of a higher funding costs?

[Michela Ramat, executive]

Yes. I expect it to be a little bit higher. What we are doing here is strongly growing retail deposits. So basically what you have seen in the past months, we've been gaining market share there. This is our -- starting to try to contain, if you want, the increase cost of funds because, of course, the short-term version, not the one related to treasury or traditional deposits, with increasing rates in dollar and in sols, and we are foreseeing for next year should increase for sure.

[Operator]

[Operator Instructions] We will take our next question from Sebastían Gallego with CrediCorp.

[Sebastian Gallego, analyst]

I have two follow-up questions. The first one, I was particularly curious about the answer you gave on the digital channels and the effect on fees. Can you provide more color on that? And how do you think about it for the upcoming years, given the transformation in digital channels, because we're seeing fees dropping at Interbank, but also administrative expenses at the Interbank level also climbing above 15%? Can you provide more color on that front? And the second question also a follow-up from initial questions on the insurance business. I know you mentioned the effect on the adjustment of technical reserves, but we're still seeing massive growth on net claims. We're seeing quarter-on-quarter drop on net interest and similar income. When can we expect the insurance business to see recurring ROE towards the double-digit figure that you have mentioned?

[Michela Ramat, executive]

First on digital channels. I think this is like the third year now that we have been strongly investing in the digital transformation, especially talking about the banks. This digital transformation actually have investments that go directly to the client, so you see some things that we are doing that are new, that increase functionalities, that increase also the level of service that we're able to give to the client. But this goes also hand-in-hand with the investments that you had to do on your operation platform in order to support the higher volume and transactions that you see, now with the digital channel going forward. So basically, we've been investing in a number of things that goes from improving the functionalities for the clients in the web, in the app, providing new functionalities, so the ability for the clients to be able not only to transact online, but also to acquire new products online, but also, again, to improve the operational efficiency of the bank. So this has led to an increase in the cost of operating the bank. So basically, the investment that we have been doing then gets reflected in higher depreciation and some higher OpEx coming from those investments. These investments, though, have replaced some costs related, for example, from the closing of branches that we have been doing over the past years. Now if you take a look at the peak of the number of branches that we have, I don't know, 1 or a couple of years ago, we have decreased the number of branches of Interbank, I mean, roughly speaking, 10%. And this is coming from the fact that more and more transactions have migrated to the digital channels, and less of those low valued transactions are being done in branches. In the same way, we have started to invest in some robots, which are optimizing some of the -- I mean basic processes that we have in the banks. And that has also -- we'll start to show more results in terms of improving costs. But I think that we have seen, and we believe we will continue to see in the future, is that this investment has to come also not only with cost efficiency, but also increased commercial productivity. So basically, as more and more clients continue to migrate transactions to the digital channels and start to migrate more aggressively to buying and consuming financial firms online, we should start to see an improve of productivity, okay, that will show higher growth in revenues than what you are seeing in costs. But again, there is kind of a lag in the timing. So basically, we are -- we have been doing already investments, but clients are just starting to use especially the portion of acquiring new products online. In the digital indicator that I showed you when doing the presentation, you can see that clients have more quickly migrate to the digital channel, when we are talking about the day-to-day transactions. So we have already like 50% of Interbank's clients are already doing their day-to-day transactions online. But when you look at the digital sales and self-service indicator, that has just reached 22% coming from 11% last year. So there is still a way to go in the selling of new products online. So I guess another point that I should mention is that this migration of transactions to the digital channels have also allowed us to strongly grow in the number of clients and in the modules, without opening new branches. So if you look at Interbank, I don't know 3 years ago, if you look at Interbank today, now the growth that we have seen in the number of transactions and the number of clients is double-digit every year. And we have been able to cope with that growth actually, and reducing the number of branches. So I think that is a portion of the value of the digital transformation that you don't see directly into the numbers that would have been an increase of cost that you -- that we are not reflecting in the papers. And if that's okay, I will move then to the insurance question. Let me go back one second to Slide #17 of the presentation. In that slide, we are showing in the bottom left-hand side part of the slide, net cash and benefits incurred. What you see there and when you see the year-on-year comparison, actually the increase from 94 to 188 is just the reflection of the portfolio of Sura. So basically, this net claims and benefits are mainly related, and you see the blue portion of it to annuity business. So it's not that we are seeing an increase in claims. What we are seeing is that when we incorporated the portfolio of Sura, which was the same size of Interseguro, now we have more benefits related to annuities that has to be reimbursed to clients. So that is like, if you want, the highest portion. But it's not that we are seeing a deterioration of claims at the insurance business.

[Gonzalo José Brazzini, executive]

I just want to clarify that in the annuities business, claims means payments. The pension payments we do with the annuities business is accounted for as claims. So once we bought Sura's portfolio, we actually doubled the amount of money that we paid every month as a pension payment. And that's the way that is recorded. That's compensated by our increase in the investment income. So net it has a positive impact.

[Operator]

And this does conclude today's Q&A session. I'd like to turn the program back over to Mr. Casassa for closing remarks.

[Michela Ramat, executive]

Thank you, everybody, for joining our third quarter results call. We will be discussing our results again for the fourth quarter in the coming months. Thank you, everybody.

[Operator]

Thank you for your participation. This does conclude today's program. You may disconnect at any time.