Banco Internacional del Perú A Interbank : Informes De Clasificación De Riesgo.

RATING ACTION COMMENTARY

Fitch Af�rms Banco Internacional del Peru S.A.A. at 'BBB'; Outlook Stable

Thu 07 Apr, 2022 - 5:25 PM ET

Fitch Ratings - New York - 07 Apr 2022: Fitch Ratings has af�rmed Banco Internacional del Peru S.A.A.'s (Interbank) Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) at 'BBB'/Stable Outlook, and its Viability Rating (VR) at 'bbb'. In addition, Fitch has af�rmed the IDRs of Interbank's holding company, Intercorp Financial Services, Inc. (IFS) at 'BBB-'/Stable.

Fitch has withdrawn Interbank's Support Rating and Support Rating Floor as they are no longer relevant to the agency's coverage following the publication of its updated Bank Rating Criteria on Nov. 12, 2021. In line with the updated criteria, Fitch has assigned Interbank a Government Support Rating (GSR) of 'bbb-'.

KEY RATING DRIVERS

Stable Outlook: Interbank's IDRs and senior debt ratings are driven by its 'bbb' VR, which is in line with the implied VR. The Stable Outlook on the Long-Term IDRs re�ects Fitch's view that Interbank's core �nancial metrics have suf�cient headroom to maintain its current ratings, even if economic conditions are moderately weaker than Fitch's base case because of external shocks or ongoing political and policy uncertainty.

Operating Environment In�uence: Fitch believes Interbank's IDRs are sensitive to a material deterioration in the local operating environment (OE) or a negative sovereign rating action. Pressure in the OE includes a slow recovery of the GDP due to political uncertainty and the challenging investment and business environment.

Strong Franchise in Retail Lending: Interbank is the fourth largest universal commercial bank in Peru, with a market share by assets, loans, and deposits of 10.3%, 12.3% and 13.4% at YE 2021, respectively. It has a strategic focus on retail banking in Peru, with outsized strength in retail products comparable with the largest Peruvian bank's market share in these products.

Stable Asset Quality: At YE 2021, the 90 days NPL ratio modestly improved to 3.0% (YE 2020: 3.2%), mainly due to signi�cant charge-offs and a sharp reduction of credit reliefs (11.3% at YE 2021 from 17.0% at YE 2020). Reprogramed loans also declined to 14.5% of total loans at YE 2021 (YE 2020: 25.1%). The loan loss allowances coverageof impaired loans declined to 159.1% at YE 2021 (YE 2020: 212.6%), but is still adequate.

Excluding loans under the government guarantee relief program, which have low provisioning requirements, the reserves coverage is up to 187.5%, similar to pre-pandemic levels. Fitch believes that asset quality will remain stable in 2022 due to the gradual lifting of relief programs and lower unemployment compared with pre-pandemic levels, which should mitigate uncertainty from political volatility.

Improved Pro�tability: The operating pro�t to RWA ratio improved to 2.8% at YE 2021 from 0.6% at YE 2020, given the lower risk of credit related to the adjustments of expected loss estimations due to macroeconomic environment stabilization compared to the initial stages of the pandemic. Fitch expects pro�tability to decline in 2022 compared to 2021, when there was a signi�cant reversion of provisions and non-recurrent income from trading, both outliers.

Adequate Capitalization: Interbank's FCC remained stable at 11.9% at YE 2021 compared to 12.0% at YE 2020. This ratio compares mildly better than pre-pandemic levels (YE 2019: 11.6%) and additionally, loan loss allowances for impaired loans are sound, which further supports the bank's loss absorption capacity. Fitch expects the FCC ratio to be sustained above 11.0%, driven by the moderate expected growth and sound earnings generation.

Sound Liquidity: The bank's liquidity position is sound; however, it declined, re�ecting tighter liquidity in the banking system. The loan-to-deposit ratio deteriorated to 101.0% at YE 2021 from 96.7% at YE 2020, as total deposits contracted by 1%. Historically, customer deposits have covered more than two-thirds of funding needs (71.4% at YE 2021). Interbank has made signi�cant gains in attracting a stable retail deposit base, ranking third in retail deposits with a market share of 15.0% at YE 2021. Fitch expects liquidity to remain commensurate with the bank's current rating levels and does not expect pressures in this regard.

Holding Company: IFS's ratings re�ect the business and �nancial pro�les of its main operating subsidiary, Interbank. IDRs are one notch below those of Interbank, re�ecting IFS's separate jurisdiction (Panama), the lack of regulatory focus on IFS on a consolidated basis, and the potential for regulatory restriction of liquidity upstreaming to IFS in the event of solvency pressures at Interbank. The rating also considers IFS's low double leverage at 105.6%.

Government Support Rating: The 'bbb-'GSR re�ects high probability of support is forthcoming. The Peruvian government has a high propensity to provide support to Interbank given its moderate systemic importance. The sovereign's ability to provide support is re�ected in its 'BBB'/Stable IDR, which is underpinned by its sound �nancial position, ample international reserves and low debt levels.

RATING SENSITIVITIES

Factors that could, individually or collectively, lead to negative rating action/downgrade:

INTERBANK

IDRs, VR, AND SENIOR DEBT

--Interbank's VR could be downgraded if the bank's asset quality deteriorates signi�cantly causing a sustained decline of the bank's operating performance to less than 2.0% of RWA, and if Interbank's loss absorption capacity is further pressured, either in the form of an FCC ratio below 10% or a relevant decline in reserve coverage for more than four consecutive quarters;

--The IDRs are sensitive to a negative rating action on the sovereign or any deterioration of Fitch's assessment on the operating environment score.

GSR

--Interbank's GSR would be affected if Fitch negatively changes its assessment of the government's ability and/or willingness to support the bank.

IFS

IDRs and SENIOR DEBT

--IFS's ratings are sensitive to a change in Interbank's ratings;

--A reduction on the importance of Interbank's role in the group or increase the complexity of the group's structure;

--A material and consistent increase in IFS's common equity double leverage above 120% or deterioration in its standalone liquidity pro�le.

Factors that could, individually or collectively, lead to positive rating action/upgrade:

INTERBANK

IDRs, VR, AND SENIOR DEBT

--There is limited upside potential for Interbank's ratings given the sovereign's current rating and Outlook and under the light of the increasingly challenging operating environment;

--Over the medium term, ratings can be upgraded by the con�uence of an improvement of the operating environment and the �nancial pro�le of the bank.

GSR

--Interbank's SR and SRF would be affected if Fitch positively changes its assessment of the government's ability and/or willingness to support the bank.

IFS

IDRs and SENIOR DEBT

--IFS's ratings are sensitive to a positive change in Interbank's ratings.

OTHER DEBT AND ISSUER RATINGS: KEY RATING DRIVERS

Interbank's subordinated bonds are plain vanilla as they don't have coupon deferral features. Subordinated debt is two notches below the VR, re�ecting the baseline notching for loss severity.

OTHER DEBT AND ISSUER RATINGS: RATING SENSITIVITIES

Factors that could, individually or collectively, lead to negative rating action/downgrade:

-- The subordinated debt ratings would be downgraded if Interbank's VR is downgraded.

Factors that could, individually or collectively, lead to positive rating action/upgrade:

--Subordinated debt ratings would be upgraded if Interbank's VR are upgraded.

VR ADJUSTMENTS

The Operating Environment score has been assigned above the implied score due to the following adjustment reason: Sovereign Rating (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).

BEST/WORST CASE RATING SCENARIO

International scale credit ratings of Financial Institutions and Covered Bond issuers have a best-case rating upgrade scenario (de�ned as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (de�ned as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. For more information about the methodology used to determine sector-speci�c best- and worst-case scenario credit ratings, visithttps://www.�tchratings.com/site/re/10111579

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING

The principal sources of information used in the analysis are described in the Applicable Criteria.

PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS

Intercorp Financial Services' ratings are driven by Interbank's ratings.

ESG CONSIDERATIONS

Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. For more information on Fitch's ESG Relevance Scores, visitwww.�tchratings.com/esg.

RATING ACTIONS

ENTITY / DEBT 	RATING 	PRIOR 
Intercorp Financial Services Inc	BBB- Rating Outlook Stable
LT IDR

BBB- Rating Outlook Stable Af�rmed

F3

ST IDRF3

Af�rmed

BBB- Rating Outlook StableLC LT IDRBBB- Rating Outlook StableAf�rmed

F3

LC ST IDRF3

Af�rmedsenior unsecured

BBB-LTBBB-Af�rmedBanco Internacional del Peru S.A.A. - Interbank

BBB Rating Outlook StableLT IDRBBB Rating Outlook StableAf�rmed

F3

ST IDRF3

Af�rmed

BBB Rating Outlook StableLC LT IDRBBB Rating Outlook StableAf�rmed

F3

LC ST IDRF3

Af�rmed

bbbViabilitybbbAf�rmed

VIEW ADDITIONAL RATING DETAILS

FITCH RATINGS ANALYSTS

Robert Stoll

Director

Primary Rating Analyst [phone] robert.stoll@�tchratings.com Fitch Ratings, Inc.

Hearst Tower 300 W. 57th Street New York, NY 10019

Larisa Arteaga

Director