intercorp perú ltd. and subsidiaries interim condensed ......translation of consolidated financial...
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Translation of consolidated financial statements originally issued in Spanish – Note 29
Intercorp Perú Ltd. and Subsidiaries
Interim condensed consolidated financial statements as of September 30,
2019, December 31, 2018 and for the nine-month periods ended September
30, 2019 and 2018
Translation of consolidated financial statements originally issued in Spanish – Note 29
Intercorp Perú Ltd. and Subsidiaries
Interim condensed consolidated financial statements as of September 30, 2019,
December 31, 2018 and for the nine-month periods ended September 30, 2019 and
2018
Content
Interim condensed consolidated financial statements
Interim condensed consolidated statements of financial position
Interim condensed consolidated statements of income
Interim condensed consolidated statements of other comprehensive income
Interim condensed consolidated statements of changes in equity
Interim condensed consolidated statements of cash flows
Notes to the interim condensed consolidated financial statements
Translation of consolidated financial statements originally issued in Spanish – Note 29
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
Intercorp Perú Ltd. and Subsidiaries
Interim condensed consolidated statements of financial position As of September 30, 2019 (unaudited) and December 31, 2018 (audited)
Note As of September
31, 2019
As of December
31, 2018
S/(000) S/(000)
Assets
Cash and due from banks 5
Cash and clearing 1,647,142 1,890,173
Deposits in the Central Reserve Bank of Peru 6,023,439 3,689,662
Deposits in local and foreign banks 3,081,436 2,017,228
Restricted funds 1,589,716 1,318,911
12,341,733 8,915,974
Inter-bank funds - 495,037
Financial investments 6 18,488,868 17,663,095
Loans, net 7 36,206,964 33,424,704
Investment property 8 4,325,124 4,072,977
Inventories, net 9 2,432,339 2,310,254
Property, furniture and equipment, net 4.2.2(a) 9,891,179 7,415,320
Due from customers on acceptances 124,691 132,437
Accounts receivable and other assets, net 10 4,221,969 2,817,093
Goodwill, trademark and other intangible assets, net 4,530,173 4,567,162
Deferred Income Tax asset, net 289,233 310,789
80,510,540 73,208,868
Total assets 92,852,273 82,124,842
Note As of September
31, 2019
As of December
31, 2018
S/(000) S/(000)
Liabilities
Deposits and obligations 11 35,765,012 33,262,266
Inter-bank funds 15,001 -
Due to banks and correspondents 12 7,352,704 7,226,209
Bonds, notes and other obligations 13 14,751,547 11,929,628
Due from customers on acceptances 124,691 132,437
Insurance contract liabilities 14 11,453,272 10,300,468
Accounts payable, provisions and other liabilities 10 8,266,648 6,162,926
Deferred Income Tax liability, net 688,456 710,324
Total liabilities 78,417,331 69,724,258
Equity, net 15
Equity attributable to Intercorp Perú Ltd.‘s shareholders:
Capital stock 4,502,155 4,010,690
Reserves 3,798,659 3,740,123
Unrealized results 72,963 (102,476)
Retained earnings 1,533,318 1,063,864
9,907,095 8,712,201
Non-controlling interest 4,527,847 3,688,383
Total equity, net 14,434,942 12,400,584
Total liabilities and equity net 92,852,273 82,124,842
Translation of consolidated financial statements originally issued in Spanish – Note 29
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
Intercorp Perú Ltd. and Subsidiaries
Interim condensed consolidated statements of income F or the nine-month periods ended September 30, 2019 and 2018
Note 2019 2018
S/(000) S/(000)
Interest and similar income 17 4,036,769 3,558,644
Interest and similar expenses 17 (1,617,119) (1,397,600)
Net interest and similar income 2,419,650 2,161,044
Impairment loss on loans, net of recoveries 7(c) (763,977) (562,608)
Impairment recovery on financial investments 6(c) 1,529 2,326
Net interest and similar income after impairment loss 1,657,202 1,600,762
Net sales from retail business 21 10,864,764 10,056,305
Cost of sales from retail business 21 (7,885,377) (7,378,267)
Fee income from financial services, net 18 706,621 667,409
Net gain on foreign exchange transactions 191,542 163,018
Net gain on sale of financial investments 105,295 25,861
Net gain on financial assets at fair value through profit or loss 3,836 47,097
Income from educational services 682,212 568,442
Net gain on investment property 8(b) 312,407 276,175
Other income 19 77,268 84,495
5,058,568 4,510,535
Insurance premiums and claims
Net premiums earned 20 318,723 206,698
Net claims and benefits incurred for life insurance contracts and others (535,145) (546,557) (216,422) (339,859)
Other expenses
Salaries and employee benefits (2,007,496) (1,866,959)
Selling and administrative expenses (1,801,888) (1,947,057)
Depreciation and amortization (773,238) (400,692)
Other expenses 19 (140,685) (154,040) (4,723,307) (4,368,748)
Income before translation result and Income Tax 1,776,041 1,402,690
Translation result (883) (70,232)
Income tax 16(j) (579,444) (496,170)
Net profit for the period 1,195,714 836,288
Attributable to:
Intercorp Perú‘s shareholders 755,610 542,479
Non-controlling interest 440,104 293,809
1,195,714 836,288
Earnings per share attributable to Intercorp Perú’s shareholders (A and B classes) basic and
diluted (stated in Soles) 22 5.07 3.64
Weighted average number of outstanding shares (A and B classes) (in thousands) 22 149,019 149,019
Translation of consolidated financial statements originally issued in Spanish – Note 29
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
Intercorp Perú Ltd. and Subsidiaries
Interim condensed consolidated statements of other comprehensive income For the nine-month periods ended September 30, 2019 and 2018
2019 2018
S/(000) S/(000)
Net profit for the period 1,195,714 836,288
Other comprehensive income that will not be reclassified to the consolidated income
statements in subsequent periods:
Net movement of equity instruments at fair value through other comprehensive income 73,252 39,328
Income Tax (32,195) (36,142)
Total unrealized gain (loss) that will not be reclassified to the consolidated income
statements
41,057 3,186
Other comprehensive income to be reclassified to the consolidated income statements
in subsequent periods:
Net movement of debt instruments at fair value through other comprehensive income 1,276,816 (368,149)
Income Tax (2,088) (321)
1,274,728 (368,470)
Net movement of insurance premiums reserve (1,066,585) 901,069
Net movement of cash flow hedges (7,200) (6,980)
Income Tax 1,836 (9,224)
(5,364) (16,204)
Translation of foreign operations 852 8,179
Others 177 -
Total unrealized gains to be reclassified to the consolidated income statements in
subsequent periods
203,808 524,574
Total other comprehensive income for the period, net of Income Tax 1,440,579 1,364,048
Attributable to:
Intercorp Peru’s shareholders 931,049 952,672
Non-controlling interest 509,530 411,376
1,440,579 1,364,048
Translation of consolidated financial statements originally issued in Spanish – Note 29
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
Intercorp Perú Ltd. and Subsidiaries
Interim condensed consolidated statements of changes in equity For the nine-month periods ended September 30, 2019 and 2018
Attributable to Intercorp Perú’s shareholders
Unrealized results, net
Number of
shares
Instruments that
will not be
reclassified to
the consolidated
income
statements Instruments that will be reclassified to the consolidated income statements
Issued
Capital
stock Reserves
Equity
instruments at
fair value
Debt
instruments at
fair value
Insurance
premiums
reserves
Cash flow
hedges
reserve
Translation of
foreign
operations Others
Retained
earnings Total
Non-
controlling
interest
Total equity,
net (in thousands) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000)
Balances as of January 1, 2018 (Restated, Note 4.2.1) 149,019 3,524,799 2,626,014 56,942 148,012 (527,021) (641) 2,580 - 1,572,803 7,403,488 2,991,825 10,395,313
Net profit for the period - - - - - - - - - 542,479 542,479 293,809 836,288
Other comprehensive income - - - 646 (280,090) 697,511 (13,110) 5,236 - - 410,193 117,567 527,760
Total other comprehensive income - - - 646 (280,090) 697,511 (13,110) 5,236 - 542,479 952,672 411,376 1,364,048
Earnings capitalization, Note 15(a) - 485,891 - - - - - - - (485,891) - - -
Transfer of retained earnings to reserves - - 1,114,109 - - - - - - (1,114,109) - - -
Declared dividends, Note 15(a) - - - - - - - - - (97,818) (97,818) (125,677) (223,495)
Net variation of treasury stock held by Subsidiaries, net of
dividends received - - - - - - - - - 230,328 230,328 66,941 297,269
Effect of change in Subsidiaries’ shareholding - - - - - - - - - (83,394) (83,394) 83,394 -
Merge of subsidiaries, Note 2.2 - - - - - - - - - 293,368 293,368 186,367 479,735
Others - - - - - - - - - (71,218) (71,218) 4,105 (67,113)
Balance as of September 30, 2018 149,019 4,010,690 3,740,123 57,588 (132,078) 170,490 (13,751) 7,816 - 786,548 8,627,426 3,618,331 12,245,757
Balances as of January 1, 2019 149,019 4,010,690 3,740,123 42,969 (217,527) 57,395 (7,216) 21,903 - 1,063,864 8,712,201 3,688,383 12,400,584
Net profit for the period - - - - - - - - - 755,610 755,610 440,104 1,195,714
Other comprehensive income - - - 32,251 898,481 (751,986) 1,964 (5,383) 112 - 175,439 69,426 244,865
Total other comprehensive income - - - 32,251 898,481 (751,986) 1,964 (5,383) 112 755,610 931,049 509,530 1,440,579
Earnings capitalization, Note 15(a) - 491,465 - - - - - - - (491,465) - - -
Transfer of retained earnings to reserves - - 58,536 - - - - - - (58,536) - - -
Declared dividends, Note 15(a) - - - - - - - - - (98,940) (98,940) - (98,940)
Dividends declared to non-controlling interest of Subsidiaries - - - - - - - - - - - (194,289) (194,289)
Capital contribution from non-controlling interest in Subsidiaries - - - - - - - - - - - 31,681 31,681
Acquisition of non-controlling interest, Note 3.2(i) - - - - - - - - - (131,819) (131,819) 64,094 (67,725)
Initial Public Offering of Subsidiary, Note 1.2 - - - - - - - - - 495,449 495,449 410,152 905,601
Others - - - - - - - - - (845) (845) (15,775) (16,620)
Balance as of September 30, 2019 149,019 4,502,155 3,798,659 75,220 680,954 (694,591) (5,252) 16,520 112 1,533,318 9,907,095 4,527,847 14,434,942
Translation of consolidated financial statements originally issued in Spanish – Note 29
Intercorp Perú Ltd. and Subsidiaries
Interim condensed consolidated statements of cash flows For the nine-month periods ended September 30, 2019 and 2018
2019 2018
S/(000) S/(000)
Cash flows from operating activities Net profit for the period 1,195,714 836,288
Plus (minus) Impairment loss on loans, net of recoveries 763,977 562,608
Depreciation and amortization 773,238 400,692
Deferred Income Tax (14,940) 66,673
Net gain on sale of financial investments (105,295) (25,861)
Impairment recovery on financial investments (1,529) (2,329)
Net gain of financial assets at fair value through profit or loss (3,836) (47,097)
Gain for valuation of investment property (47,232) (16,188)
Translation result 883 70,232
Provision for impairment of inventories, net of recoveries 17,598 28,827
Net increase in accrued interest payable 9,426 62,481
Net increase in accrued interest receivable (29,842) (20,827)
Net changes in assets and liabilities Net increase in loans (3,516,395) (3,734,514)
Net increase of financial investments through profit or loss (19,058) (63,899)
Net increase in inventories (139,683) (3,526)
Net (increase) decrease in restricted funds (270,805) 344,185
Net increase (decrease) in deposits and obligations 2,494,245 (1,774,843)
Net decrease (increase) in other assets (1,134,688) (521,755)
Net increase in other liabilities 728,452 325,215
Net cash provided by (used in) operating activities 700,230 (3,513,638)
Cash flows from investing activities
Purchase of investments at fair value through other comprehensive income and at amortized
cost (452,042) (241,201)
Purchase of investment property (211,470) (162,704)
Purchase of property, furniture and equipment (749,540) (685,012)
Purchase of intangible assets (113,941) (121,306)
Acquisition of Subsidiaries (4,867) (1,871,430)
Sale of subsidiary shares, net of commisions paid 368,256 -
Net cash used in investing activities (1,163,604) (3,081,653)
Translation of consolidated financial statements originally issued in Spanish – Note 29
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
Interim condensed consolidated statements of cash flows (continued)
2019 2018
S/(000) S/(000)
Cash flows from financing activities Net increase in due to banks and correspondents 126,495 186,735
Net increase in bonds, notes and other obligations 2,821,919 2,160,474
Net decrease in inter-bank funds assets 495,037 373,519
Net increase in inter-bank funds liabilities 15,001 203,545
Payment of dividends to shareholders (74,691) (72,626)
Payment of dividends to non-controlling interest (194,289) (125,677)
Net income for purchase of treasury stock of Subsidiaries - 297,269
Capital contribution from non-controlling interest 31,681 -
Initial Public Offering of subsidiary, net of related expenses, Note 1.2 397,175 -
Net cash provided by financing activities 3,618,328 3,023,239
Net increase (decrease) in cash and cash equivalents 3,154,954 (3,572,052)
Cash and cash equivalents at the beginning of the period 7,597,063 9,527,746 Cash and cash equivalents at the end of the period 10,752,017 5,955,694
Translation of consolidated financial statements originally issued in Spanish – Note 29
Intercorp Perú Ltd. and Subsidiaries
Notes to the interim condensed consolidated financial statements As of September 30, 2019 and December 31, 2018
1. Business activity and Initial public offering of Subsidiary shares -
1.1 Business activity
Intercorp Perú Ltd. (henceforth “Intercorp Perú” or “the Company”) is a limited liability holding company incorporated in
November 1997 in The Commonwealth of The Bahamas. Intercorp Perú is the holding company of the group of Subsidiaries
of the denominated “Intercorp Group” (or “the Group”), thus coordinating their policies and management. Intercorp Perú as
a holding company also maintains certain investments in all types of securities.
The Company’s legal address is Sassoon House Shirley Street & Victoria Avenue, Nassau, The Bahamas. Management and
its administrative offices are located at Av. Carlos Villarán 140, Urb. Santa Catalina, La Victoria, Lima, Peru.
The operations of Intercorp Perú and its Subsidiaries are concentrated mainly in Peru, but it also maintains operations in
The Bahamas, Panama, Ecuador, Colombia and Bolivia, see Note 2.1; with activities in the financial, insurance, retail,
pharma, real estate and educational businesses. The relevant activities and data of the Subsidiaries as of September 30,
2019, and December 31, 2018, are disclosed in Note 3.
The consolidated financial statements as of September 30, 2019, have been approved by the Management on November
15, 2019. The audited consolidated financial statements of Intercorp and Subsidiaries as of December 31, 2018,
December 31, 2017, and January 1, 2017, were approved by the General Shareholders’ Meeting on April 1, 2019.
1.2 Initial Public Offering of Intercorp Financial Services Inc.
On July 3, 2019, following the approval by the Board, Intercorp Financial Services, Subsidiary of Intercorp, filed with the
Securities and Exchange Commission of the United States of America (“SEC”), a Registration Statement under Form F-1 of
the Securities Exchange Act of 1933 of the United States of America, in relation with a proposal of an Initial Public Offering
of IFS’ (The Offering).
On July 18, 2019, IFS announced the Initial Public Offering of approximately 9,000,000 common shares at a price of
US$46.00 per share with sellers being: (i) IFS, (ii) Interbank, (iii) Intercorp Perú Ltd., and (iv) a non-related shareholder.
Also, IFS granted the underwriters an option for a period of 30 days to purchase up to an aggregate of 1,350,000 additional
new common shares.
As part of the Offering, IFS sold 2,418,754 common shares held as treasury stock (including shares sold by Interbank), and
1,150,000 new common shares to be issued. Intercorp Perú sold 2,531,246 shares, and the non-related shareholder sold
3,000,000 shares. Also, the underwriters exercised the purchase option over 1,186,841 new common shares.
In this sense, Intercorp Perú and Subsidiaries jointly sold 7,286,841 shares at US$46.00 per share. The sale value
amounted to approximately US$335,195,000 (before issuance expenses).
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
2
The total impact of the Offering over Intercorp Perú’s consolidated net equity, after discounting the issuance expenses,
amounted to S/495,449,000, which is mainly explained by:
(i) Issuance of 2,336,841 shares and sale of shares held as treasury stock by IFS (2,418,754 shares) with a total impact
of S/287,995,000 recorded as retained earnings.
(ii) Sale of shares held by Intercorp Perú (2,531,246 shares), which generated gains, net of cost (S/160,802,000)
amounting to S/207,454,000 which is presented in the caption “Retained Earnings” according to accounting
standards, for consolidated financial statements.
2. Business combinations-
2.1 Corporación Educativa Hispanoamericana, S.C. -
In June 2019, Intercorp’s Subsidiaries Transformando la Educación de México, S.A de C.V. and Servicios Administrativos
Transformando la Educación de México, S.C., acquired 100 percent of the shareholding of Corporación Educativa
Hispanoamericana, S.C., a Mexican entity that operates the private educational institution “Comunidad Educativa
Hispanoamericana”.
The value of this operation amounted to approximately S/6,156,000, equivalent to $35,800,000 (Mexican Pesos), out of
which 80 percent, approximately, has been paid. The balance will be paid in the following three years.
As of the date of acquisition, the highest value paid for this acquisition amounts to approximately S/5,678,000, equivalent
to $33,000,000 (Mexican Pesos).
2.2 Quicorp S.A. and Subsidiaries –
In January 2018, InRetail Pharma S.A. (formerly Eckerd Perú S.A.) and NG Infra II S.A.C. (a non-related entity) constituted IR
Pharma S.A.C. (formerly Chakana Salud S.A.C.), through cash contributions that resulted in a shareholding of 73.21
percent and 26.79 percent, respectively. The purpose of constituting IR Pharma S.A.C. was to acquire, through it, 100
percent of Quicorp and its Subsidiaries. The acquired conglomerate (henceforth and collectively, “Quicorp Group”) was
comprised of the following companies: Química Suiza Comercial S.A.C., Química Suiza S.A.C., Cifarma S.A.C., Mifarma
S.A.C., Empresa Comercializadora Mifarma S.A. (Bolivia), Botica Torres de Limatambo S.A.C., BTL Amazonía S.A.C.,
Vanttive S.A.C., Farmacias Peruanas S.A.C., Droguería La Victoria S.A.C., Vanttive Cía. Ltda. (Ecuador), Quifatex S.A.
(Ecuador), Quimiza Ltda. (Bolivia), Quideca S.A. (Colombia), Albis S.A.C., Jorsa de la Selva S.A.C. and Superfarma
Mayorista S.A.C. These entities operate in manufacturing, distribution and retail segments within the pharmaceutical sector
in Peru, Ecuador, Bolivia and Colombia.
The acquisition of Quicorp Group closed in January 2018, for approximately US$592,000,000, was financed by a loan
granted to InRetail Pharma S.A. by Citibank N.A. and J.P. Morgan Chase Bank N.A.; which was paid in full in June 2018,
principally with proceeds from issuances of “Senior Unsecured Notes” by InRetail Pharma S.A.
In April 2018, InRetail Pharma S.A. absorbed IR Pharma S.A.C., which was dissolved without liquidation, thereby reducing
the participation percentage of its main shareholder (InRetail Perú Corp.) to 87.02 percent (before said merger, InRetail
Perú Corp. held 100 percent of the capital stock of InRetail Pharma S.A.) and adding NG Infra II S.A.C. with 12.98 percent
as a shareholder. It is worth mentioning that the contribution made by NG Infra II S.A.C. for the acquisition of Quicorp Group
amounted to S/481,500,000. As a result, as of December 31, 2018, InRetail Pharma S.A. is the sole owner of Quicorp
Group.
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
3
Furthermore, between March and July 2018, various merging processes between the acquired entities were performed,
through which Mifarma S.A.C. absorbed Farmacias Peruanas S.A.C., Droguería La Victoria S.A.C. and Boticas Torres de
Limatambo S.A.C., while Quicorp S.A.C. absorbed Química Suiza Comercial S.A.C.
The acquisition of Quicorp Group was recorded in accordance with IFRS 3 "Business Combinations", applying the purchase
accounting method. Under this method, assets and liabilities were recorded at their estimated fair values at the date of
purchase, including identified intangible assets not recorded in the financial statements position of each entity acquired.
The cost related to the acquisition, amounting to S/16,340,000, was recorded as an expense and is presented in the
caption “Selling and administrative expenses” of the consolidated income statements for the period 2018.
Following are the fair values of the identifiable assets and liabilities of Quicorp Group at the date of acquisition:
Fair value of the
acquired entities
S/(000)
Assets
Cash and short-term deposits (cash and due from banks) 33,911
Trade accounts receivable 488,215
Other accounts receivable 160,762
Inventories 677,880
Property, furniture and equipment 429,289
Intangibles 721,526
Deferred Income Tax assets, net 64,562
Other assets 45,995
Liabilities
Trade accounts payable (935,264)
Other accounts payable (255,504)
Other payables – contingencies (35,556)
Financial obligations (500,687)
Deferred Income Tax liabilities (269,508) __________
Total net assets identified at fair value 625,621
Goodwill generated in the acquisition 1,272,634 __________
Consideration transferred 1,898,255 ___________
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
4
The net cash flow used in the acquisition is presented below:
S/(000)
Consideration transferred 1,897,347
Price adjustment 908
Cash and due from Banks of the acquired companies (33,911) __________
1,864,344 __________
Goodwill amounting to S/1,272,634,000, represents the future synergies that are expected to arise from the
combination of operations, distribution channels, workforce and other efficiencies not included in the intangible assets of
the present value of the acquired in-force business.
2.3 Acquisition of Seguros Sura and Hipotecaria Sura
In May 2017, IFS entered into an agreement with Sura Asset Management S.A. (Colombia), Sura Asset Management Perú
S.A. (Peru) and Grupo Wiese (Peru) for the purchase of shares, which resulted in the direct and indirect acquisition of up
to 100 percent of Seguros Sura S.A. (henceforth “Seguros Sura”) and up to 100 percent of Hipotecaria Sura. The
acquisition was approved by Peru’s Superintendence of Banking, Insurance and Private Pension Funds Administrators
(henceforth “SBS”, by its Spanish acronym) on September 28, 2017.
As a consequence, in November 2017, IFS acquired directly and indirectly 99.39 percent of Seguros Sura’s capital stock
and 99.40 percent of Hipotecaria Sura’s capital stock.
The acquisition was recorded in accordance with the “Acquisition method” established by IFRS 3 "Business
Combinations". The costs related to the acquisition, amounting to S/7,863,000, were recorded as expenses at the
acquisition date.
The following are the fair values of the entities acquired:
Fair value
S/(000)
Seguros Sura S.A.
Assets 5,543,147
Liabilities (5,287,650)
Hipotecaria Sura S.A.
Assets 12,560
Liabilities (2,452) _________
Total net assets identified 265,605
Non-controlling interest (1,912)
Goodwill 628,218 _________
Consideration transferred 891,911 _________
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
5
The net cash flow used in the acquisition is presented below:
S/(000)
Consideration transferred 891,911
Cash and due from banks of the acquired entities (239,247)
Acquisition costs 7,863 _________
Net cash flow 660,527 _________
The net assets recognized in the consolidated financial statements of Intercorp at the acquisition date were based on a
preliminary fair value assessment. During 2018, Management completed the review of the fair value estimation of
insurance contracts liabilities as of the acquisition date and, as consequence, the net identifiable assets were modified.
Amendments were therefore made to the net identifiable assets, as detailed below:
Preliminary
balance Amendment Amended balance S/(000) S/(000) S/(000)
Insurance contracts liabilities (5,210,487) 195,339 (5,015,148)
Goodwill 628,218 (195,339) 432,879
3. Organization of Intercorp Group
Below is the information about the entities that are part of Intercorp Group:
3.1 Financial and insurance entities
Intercorp Financial Services Inc. - (henceforth “IFS”)
It is a limited liability holding, incorporated in September 2006 in the Republic of Panama, in order to group the
companies of Intercorp Group engaged in financial and insurance businesses.
As of September 30, 2019, after the Initial Public Offering of IFS (see Note 1.2), the Company holds directly and indirectly
70.62 percent of the issued capital stock and the outstanding capital stock of IFS (76.46 percent of the issued capital
stock of IFS and 75.94 percent of the outstanding capital stock of IFS as of December 31, 2018). The percentage of
indirect ownership over IFS’ issued capital stock is held by Intercorp Perú through its Subsidiaries IFH Capital Corp. and
Intercorp Capital Investments Inc., in which Intercorp Perú holds 100 percent of their capital stock and, at the same time,
each of these Subsidiaries hold 8.62 percent of IFS’ capital stock as of September 30, 2019 and December 31, 2018.
As of September 30, 2019, and December 31, 2018, IFS holds 99.30 percent of the outstanding capital stock of Banco
Internacional del Perú S.A.A. – Interbank (henceforth “Interbank”), 99.84 percent of the outstanding capital stock of
Interseguro Compañía de Seguros S.A. (henceforth “Interseguro”) and 100 percent of Inteligo Group Corp. (henceforth
“Inteligo”) and San Borja Global Opportunities S.A.C. In addition, as of December 31, 2018, it holds 99.42 percent of the
capital stock of Hipotecaria Sura Empresa Administradora Hipotecaria S.A. (henceforth “Hipotecaria Sura”), which was
liquidated in February 2019. The operations of Interbank, Interseguro and Hipotecaria Sura are concentrated in Peru,
while the operations of Inteligo and its Subsidiaries (Inteligo Sociedad Agente de Bolsa S.A., Inteligo Bank Ltd,
Interfondos S.A. Sociedad Administradora de Fondos – Interfondos S.A.F. and Inteligo USA.), are concentrated in Peru
and Panama.
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
6
The Subsidiaries of IFS and their economic activities are presented below:
(a) Banco Internacional del Perú S.A.A. – Interbank and Subsidiaries
Interbank is incorporated in Peru and is authorized to operate as a universal bank by the SBS, in accordance with
Peruvian legislation. Interbank's operations are governed by the General Act of the Financial and Insurance
System and Organic Act of the SBS – Act No. 26702 (henceforth “Banking and Insurance Act”), which
establishes the requirements, rights, obligations, restrictions and other operating conditions that Peruvian
financial and insurance entities must comply with in Peru.
As of September 30, 2019, and December 31, 2018, Interbank operates 264 and 269 offices, respectively, and
a branch established in the Republic of Panama. Additionally, it holds 100 percent of the shares of the following
Subsidiaries:
Entity Activity
Internacional de Títulos Sociedad Titulizadora S.A. -
Intertítulos S.T. Management of securitization funds.
Inversiones Huancavelica S.A. Real estate activities. In September 2019, the company
was absorbed by Interbank.
Contacto Servicios Integrales de Créditos y Cobranzas S.A. Collection services. In September 2019 the company
was absorbed by Interbank. At the time of the merger,
the absorbed assets amounted to approximately
S/305,000.
Compañía de Servicios Conexos Expressnet S.A.C. Services related to credit card transactions or products
related to the brand “American Express”.
In January 2019, Interbank entered into a sales agreement over its entire participation in Interfondos S.A.,
Sociedad Administradora de Fondos (henceforth “Interfondos”) with Inteligo Perú Holdings S.A.C., a related
entity, Subsidiary of Inteligo Group. This operation did not have any effect on the accompanying consolidated
financial statements.
(b) Interseguro Compañía de Seguros S.A.
Interseguro is incorporated in Peru and its operations are governed by the Banking and Insurance Act. It is
authorized by the SBS to issue life and general risk insurance contracts.
Likewise, Interseguro holds contributions in Patrimonio Fideicometido D.S.093-2002-EF, Interproperties Perú
(henceforth “Patrimonio Fideicometido – Interproperties Perú”), a structured entity incorporated in April 2008,
and in which several investors (related parties to the Intercorp Group) contributed investment property; each
investor has ownership of and specific control over the contributed investment property. For accounting purposes
and under IFRS 10 “Consolidated Financial Statements”, the assets included in said structure are considered
“silos”, because they are ring-fenced parts of the wider structured entity (the Patrimonio Fideicometido -
Interproperties Perú). Intercorp Group has ownership of and decision-making power over these properties, and
the Group has the exposure or rights to their returns; therefore, the Group has consolidated the silos containing
the investment property that it controls.
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
7
(c) Inteligo Group Corp. and Subsidiaries
Inteligo Group Corp. is an entity incorporated in the Republic of Panama. As of September 30, 2019, and
December 31, 2018, it holds 100 percent of the shares of the following Subsidiaries:
Entity Activity
Inteligo Bank Ltd. It was incorporated in the Commonwealth of The Bahamas and has a
branch established in the Republic of Panama that operates under
an international license issued by the Superintendence of Banks of
the Republic of Panama. Its main activity is to provide private and
institutional banking services mainly to Peruvian citizens.
Inteligo Sociedad Agente de Bolsa S.A. Brokerage firm incorporated in Peru.
Inteligo Perú Holding S.A.C Holding company incorporated in Peru. As of September 30, 2019, it
holds 100 percent of the shares in:
Interfondos S.A. Sociedad Administradora de Fondos:
management of mutual funds and investment funds.
Inteligo USA It was incorporated in the United States of America that has as its
main objective to provide investment advisory services to fund
managers.
(d) Hipotecaria Sura Empresa Administradora Hipotecaria S.A. – In liquidation
As of September 30, 2019, the company has been liquidated, by virtue of the agreement adopted in the
Universal Shareholders' Meeting held on February 20, 2019. This company was incorporated in Peru, was
regulated by the SBS and its main activity was to grant mortgage loans. Since 2015, it had not granted mortgage
loans.
(e) San Borja Global Opportunities S.A.C.
Its corporate purpose is the marketing of products and services through Internet, telephony or related mediums.
As of September 30, 2019, and December 31, 2018, it maintains paid-in capital of S/1,461,000.
3.2 Retail and real estate businesses
(i) Intercorp Retail Inc.
It is a limited liability holding company incorporated in the Republic of Panama in December 2010, in order to
group the entities of Intercorp Group engaged in the retail business in Peru.
In June 2019, Intercorp Retail Inc. (a 100-percent Subsidiary of Intercorp Perú) acquired 9.98 percent of the
shareholding of NG HPSA Corp., a minority shareholder of HPSA Corp., for approximately US$24.0 million.
Additionally, at the same date, Intercorp Retail Inc. acquired from NG Retail Credit Corp., a minority shareholder
of IFH Retail Corp., 9.99 percent of the latter’s class A shares for approximately US$34.0 million. Subsequently
to these acquisitions, Intercorp Retail Inc. increased its participation in said companies from 65.01 percent to
74.99 percent (in HPSA Corp.) and from 78.35 percent to 84.28 percent (in IFH Retail Corp.). It is worth
mentioning that Intercorp Retail Inc. increased its participation in class A shares of IFH Retail Corp. from 63.54
percent to 73.53 percent.
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
8
As of September 30, 2019 and December 31,2018, the Company holds 100 percent of its capital stock and
owns the following Subsidiaries:
Entity Activity
InRetail Perú Corp
(As of September 30, 2019, and December 31,
2018, Intercorp Retail Inc. holds 59.04 percent
of its outstanding capital stock. Also, Intercorp
Perú, through its Subsidiaries, holds 70.80 and
70.98 percent, respectively (directly and
indirectly) of InRetail Perú Corp.'s outstanding
capital stock).
Holding incorporated in the Republic of Panama in January 2011, which
holds 100 percent of the capital stock of the following Subsidiaries, which
operate several businesses:
(a) Shopping malls: Developed by InRetail Real Estate Corp., owner of
Patrimonio en Fideicomiso InRetail Shopping Malls, which in turn
is owner of (i) Real Plaza S.R.L. and (ii) Patrimonio en Fideicomiso
- D.S. No. 093-2002-EF-Interproperties Holding and Patrimonio
en Fideicomiso -D.S. No. 093-2002-EF Interproperties Holding II,
equity trusts which are special-purpose entities; see description in
paragraph 3.2(v);
(b) Patrimonio en Fideicomiso Inretail Consumer: Incorporated in August
2014, which develops the following retail businesses:
(i) Supermarkets: Developed by Supermercados Peruanos
S.A. and Subsidiaries, a company that, as of September
30, 2019 and December 31, 2018, operates stores
under the trademarks “Plaza Vea”, “Plaza Vea Súper”,
“Vivanda”, “Mass” and “Economax”.
(ii) Drugstores: Developed by InRetail Pharma S.A. (formerly
Eckerd Perú) and Subsidiaries, a company that, as of
September 30, 2019, and December 31, 2018,
operates under the trademark “Inkafarma”.
In January 2018, InRetail Pharma S.A. through its
Subsidiary IR Pharma S.A.C., acquired 100 percent of
Quicorp S.A. and Subsidiaries, which operate under the
trademarks “Mifarma” and “BTL”; see Note 2.2.
(c) InRetail Management S.R.L., company dedicated to the
administration of personnel and operations of the aforementioned
Patrimonios en Fideicomiso.
IFH Retail Corp.
(As of September 30, 2019, and December 31,
2018, Intercorp Retail Inc. holds 84.28 percent
and 78.35 percent, respectively, of its capital
stock).
Holding incorporated in the Republic of Panama in September 2006. As of
September 30, 2019, and December 31, 2018, holds 22.63 percent, of
Tiendas Peruanas S.A. and Subsidiaries; see Note 3.2(ii), a company
engaged in the retail business through department stores under the
trademark “Oechsle”; and of 96 percent of Financiera OH! S.A., as of
September 30, 2019 and December 31, 2018, which provides financial
support to the companies of Intercorp Group dedicated to the retail
business.
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
9
Entity Activity
HPSA Corp.
(As of September 30, 2019, and December 31,
2018, Intercorp Retail Inc. holds 74.99 percent
and 65.00 percent, respectively, of its capital
stock).
Holding incorporated in the Republic of Panama, owner of Homecenters
Peruanos S.A. and Subsidiary, a company engaged in the operation of the
business of home improvement stores under the trademark “Promart”.
Lince Global Opportunities Corp.
(As of September 30, 2019, and December 31,
2018, Intercorp Retail Inc. holds 100 percent of
its capital stock).
Holding incorporated in the Republic of Panama in December 2010, which
holds 98.79 percent of the capital stock of Inmobiliaria Milenia S.A., which
is engaged in the real estate business.
(ii) Callao Global Opportunities
Subsidiary of Intercorp Perú, incorporated in 2011 as a limited liability holding company in the Republic of Panama. As of
September 30, 2019, and December 31, 2018, it holds 76.18 percent of the capital stock of Tiendas Peruanas S.A.
As of September 30, 2019 and December 31, 2018, holds 22.63 percent of Tiendas Peruanas S.A., therefore the
ownership of Intercorp Perú in Tiendas Peruanas, through IFH Retail corp. and Callao Global Opportunities, is equivalent
to 98.81 percent of its capital stock.
(iii) Intercorp Investments Perú Inc.
It is a limited liability holding company incorporated in September 2006 in the Republic of Panama. As of September 30,
2019, and December 31, 2018, the Company holds 100 percent of its capital stock. Intercorp Investments Perú Inc. is
the sole shareholder of Horizonte Global Opportunities Corp., a holding company incorporated in the Republic of
Panama, owner of Horizonte Global Opportunities Perú S.A.C., whose sole asset is a land lot located in the district of
Independencia in Lima.
(iv) Urbi Propiedades S.A.
As of September 30, 2019, and December 31, 2018, the Company holds 100 percent of the capital stock of this entity,
incorporated in Peru in 1998, engaged in real estate management and in the provision of structuring and real estate
project management. In addition, and through its Subsidiaries, develops several real estate projects.
As of September 30, 2019, and December 31, 2018, Urbi holds 100 percent of the following Subsidiaries:
Entity Activity
Alameda Colonial S.A. Incorporated in Lima in May 2006, to build apartments under the Government’s
program “Mi Vivienda”.
Domus Hogares del Norte S.A. Incorporated in Lima in June 2009, to develop a real estate project called “Domus
Hogares del Norte”.
Urbi Solutions S.A.C. Incorporated in Lima in June 2014 to engage in the construction of real estate
projects.
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
10
In April 2018, Intercorp Peru and Urbi Propiedades sold their ownership in Club de Socios S.A. to third parties, not related
to the Group.
(v) Patrimonio en Fideicomiso – D.S. N°093-2002 EF, Interproperties Holding and Interproperties Holding II -
In September 2011 and May 2012, Patrimonio en Fideicomiso – D.S. No. 093-2002-EF, Interproperties Holding and
Patrimonio en Fideicomiso – D.S. No. 093-2002-EF, Interproperties Holding II (henceforth and collectively
“Interproperties Holding”) were incorporated with the purpose of creating autonomous equity trusts, independent from
each investor constituted as originator.
Through these equity trusts, investments in real estate projects are made, and their yields support (i) the certificates of
participation issued, and (ii) the compliance with other obligations assumed directly or through third parties in order to
obtain the resources that are necessary to make said investments. As of September 30, 2019, and December 31, 2018,
the company that consolidates financial information with Intercorp Perú and that holds 100 percent of the participations
in Interproperties Holding is InRetail Perú Corp.
Through these equity trusts, Intercorp Group holds the ownership of the property where the shopping malls called “Real
Plaza” operate. As of September 30, 2019, and December 31, 2018, the main shopping malls are located in different
cities of Peru.
(vi) Intercorp Re Inc.
It is a limited liability holding incorporated in August 2015 in the Republic of Panama. As of September 30, 2019, and
December 31, 2018, the Company holds 100 percent of its capital stock and, in turn, Intercorp Re Inc. is the sole
shareholder of Inteligo Real Estate Corp., a holding company incorporated in the Republic of Panama, owner of Inteligo
Real Estate Perú S.A.C.
3.3 Educational business
(i) NG Education Holdings Corp.
It is a limited liability holding company incorporated in January 2011 in the Republic of Panama, whose purpose
is to group the Subsidiaries of Intercorp Group engaged in the educational business in Peru.
As of September 30, 2019, and December 31, 2018, Intercorp Perú holds 100 percent of Class A shares and
51.47 percent of Class B shares of NG Education Holdings Corp.’s capital stock that holds the following
Subsidiaries (main):
Entity Activity
Colegios Peruanos S.A.
(As of September 30, 2019, and December 31,
2018, NG Education Holdings Corp. holds 33.99
percent of its capital stock).
As of September 30, 2019, it operates 54 schools under the
trademark “Innova Schools” (49 schools as of December 31, 2018).
NG Education S.A.C.
( As of September 30, 2019, and December 31,
2018, NG Education Holdings Corp. holds 48.67
percent of its capital stock).
Holding incorporated in Peru in November 2011. As of September 30,
2019, and December 31, 2018, NG Education S.A.C. holds 100
percent of the following Subsidiaries:
a) Universidad Tecnológica del Perú S.A.C.: Incorporated in Lima in
February 1998. It has the following 3 business units: UTP
University, IDAT Institute and Post-Graduate School. As of
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
11
September 30, 2019, and December 31, 2018, UTP holds 100
percent of shareholding in the following Subsidiaries:
(i) Corriente Alterna S.A.C.: School of artistic education that
offers the career of Visual Arts and has 1 premise in Lima.
(ii) Instituto Superior Tecnológico Corriente Alterna S.A.C.: As
of date of this report, it is not operating.
b) Promotora de la Universidad Tecnológica de Chiclayo S.A.C.: An
entity with operations in Peru which as of September 30, 2019,
and December 31, 2018, has 1 premise.
(ii) NG Education Holdings II Corp.
It is a limited liability holding company incorporated in October 2013 in the Republic of Panama. As of
September 30, 2019, and December 31, 2018, Intercorp Perú holds 50 percent of the capital stock of NG
Education Holdings II Corp., which in turn owns the following Subsidiary:
Entity Activity
Servicios Educativos Perú S.A.C.
(As of September 30, 2019, and December
31, 2018, NG Education Holdings II Corp.
holds 100 percent of its capital stock).
Company incorporated in Peru in October 2013. As of September 30, 2019,
and December 31, 2018, it holds 100 percent of the capital stock of
Servicios Educativos Empresariales S.A.C., incorporated in Lima in February
2012. As of September 30, 2019, operates 8 premises under the
trademark “Zegel-IPAE” and 2 premises under construction located in
Arequipa and Lima. ( As of December 31, 2018, operates 5 premises and 2
premises under construction located in Arequipa and Ica)
(iii) NG Education Holdings III Corp.
It is a limited liability holding company incorporated in July 2013 in the Republic of Panama. As of September
30, 2019, and December 31, 2018, Intercorp Perú holds 85.31 percent of its capital stock and, in turn, at the
same dates, it holds 16.52 percent of the capital stock of Colegios Peruanos S.A.
(iv) Intercorp Education Services, S.L.
It is a limited liability holding company incorporated in November 2017 in Spain. As of September 30, 2019,
and December 31, 2018, Intercorp Perú holds 100 percent of its capital stock. This subsidiary has 55 percent of
the capital stock of Transformando la Educación en México S.L. de C.V., which, at the same time, holds 99.99
percent (99.85 percent as of December 31, 2018) of the capital stock of Servicios Administrativos
Transformando la Educación en Mexico S.C. The latter operates under the brand “Innova Schools” and is
headquartered in Mexico.
In June 2019, Transformando la Educación en México, S.L. de C.V. and Servicios Administrativos Transformando
la Educación en México, S.C. entered into an accord to acquire Corporación Educativa Hispanoamericana, S.C.,
a company incorporated in Mexico and operating in the educational sector. See Note 2.1.
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
12
3.4 Other entities
As of September 30, 2019 and December 31, 2018, the Company holds 100 percent of the capital stock of the following
Subsidiaries:
Company Activity Country of incorporation
Inversiones Río Nuevo S.A.C. Real estate business Peru
San Miguel Global Opportunities S.A.C. Real estate business Peru
Intercorp Management S.A.C. Administrative services Peru
Puente de San Miguel Arcángel S.A. Holding Republic of Panama
Centro Cívico S.A. Real estate business Peru
Ronepeto S.A. Real estate business Peru
La Punta Global Opportunities Corp. Specialized investments Republic of Panama
Urbi Proyectos S.A. Real estate projects Peru
Beacon Healthcare S.A.C. Holding Peru
Centros de Salud Peruanos S.A.C. Health sector Peru
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
13
The following table presents the financial information of the main Subsidiaries, before eliminations and adjustments for consolidation purposes with Intercorp Perú, as of September 30, 2019, and December 31, 2018; and for the nine-month periods ended September 30, 2019 and
2018:
Net profit (loss)
Total assets Total liabilities Net equity As of September 30,
Entity
As of September
30, 2019
As of December
31, 2018
As of September
30, 2019
As of December
31, 2018
As of September
30, 2019
As of December
31, 2018
2019 2018
S/(000) S/(000)
S/(000) S/(000)
S/(000) S/(000)
S/(000) S/(000)
Intercorp Financial Services Inc. and Subsidiaries 71,404,880 63,744,409 62,924,248 56,655,933 8,480,632 7,088,476 1,037,342 811,054
Intercorp Retail Inc. and Subsidiaries 18,963,177 16,787,509 13,625,274 11,666,986 5,337,903 5,120,523 340,922 (10,242)
NG Education Holdings Corp. and Subsidiaries 2,664,850 2,087,676 1,819,666 1,277,490 845,184 810,186 55,679 25,647
Urbi Propiedades S.A. and Subsidiaries 526,853 458,851 118,451 234,128 408,402 224,723 (13,373) (123)
La Punta Global Opportunities Corp. 322,810 291,477 - - 322,810 291,477 31,332 19,491
NG Education Holdings II Corp. and Subsidiaries 207,452 95,990 87,353 21,050 120,099 74,940 (8,622) (1,805)
Intercorp Investments Perú Inc. and Subsidiaries 134,804 133,602 32,007 33,072 102,797 100,530 (8,828) (3,908)
Callao Global Opportunities Corp. 111,862 134,705 - - 111,862 134,705 (21,582) (14,117)
Beacon Healthcare S.A.C. and Subsidiary 122,746 64,388 63,796 22,870 58,950 41,518 (6,131) (1,904)
Intercorp Education Services S.L. 78,638 51,370 11,278 2,654 67,360 48,716 (6,830) -
San Miguel Global Opportunities S.A.C. 59,105 47,268 10,594 7,654 48,511 39,614 8,607 (130)
NG Education Holdings III Corp. 56,847 58,553 2 3 56,845 58,550 (1,703) (503)
Others 16,699 20,066 6,557 3,739 10,142 16,327 (29,700) (14,168)
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
14
4. Significant accounting principles and practices
4.1 Basis of presentation
The interim condensed consolidated financial statements as of September 30, 2019, and for the nine-month periods
ended September 30, 2019 and 2018 have been prepared in accordance with IAS 34 “Interim Financial Reporting”.
The interim condensed consolidated financial statements do not include all the information and disclosures required in
the annual consolidated financial statements and should be read in conjunction with the Group’s consolidated audited
financial statements as of December 31, 2018 and 2017, and as of January 1, 2017 (henceforth “2018 Annual
Consolidated Financial Statements”).
The interim condensed consolidated financial statements have been prepared on a historical cost basis, except for
investment property, derivative financial instruments, financial investments at fair value through profit or loss and through
other comprehensive income, which have been measured at fair value. The interim condensed consolidated financial
statements are presented in Soles, which is the functional currency of the Group, and all values are rounded to the
nearest thousand (S/ (000)), except when otherwise indicated.
The preparation of the interim condensed consolidated financial statements, in conformity with the International
Financial Reporting Standards (henceforth “IFRS”) as issued by the International Accounting Standards Board (IASB),
requires Management to make estimations and assumptions that affect the reported amounts of assets, liabilities,
revenues and expenses and the disclosure of significant events in the notes to the interim condensed consolidated
financial statements.
4.2 Changes in accounting policies, adoption of new IFRS and disclosures -
4.2.1 Change in accounting policy
As of December 31, 2017, the Subsidiary Interseguro recognized in its income statements the effect of the
change in the value of liabilities coming from retirement, disability and survival pensions, caused by the
variations in the market interest rates used to discount these liabilities. In the first quarter of 2018, Management
decided to modify its accounting policy in order to show the effect of the change in market interest rates on the
interim condensed consolidated statements of other comprehensive income. This change was made to reduce
volatility in the profits or losses associated with the effect of changes in market interest rates, as the financial
assets supporting such insurance liabilities are measured at fair value through other comprehensive income.
According to IAS 8, as the aforementioned change constitutes a voluntary change in the accounting policy of the
Company and, in compliance with said the standard, was applied retrospectively; see Note 4.2.1 of the 2018
Annual Consolidated Financial Statements.
4.2.2 New accounting standards, adopted by the group
The accounting policies adopted in the preparation of the interim condensed consolidated financial statements
are consistent with those followed in the preparation of the Group’s annual consolidated financial statements for
the year ended December 31, 2018, except for the adoption of new standards effective as of January 1, 2019.
The Group has adopted, for the first time, IFRS 16 “Leases” and, as required by IAS 34, the nature and effect of
these changes are disclosed below. Several other amendments and interpretations have been adopted for the
first time in 2019, but do not have an impact on the interim condensed consolidated financial statements of the
Group.
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
15
(a) First adoption of IFRS 16 “Leases”
IFRS 16 supersedes IAS 17 “Leases”, IFRIC 4 “Determining whether an Arrangement Contains a Lease”,
SIC 15 “Operating Leases-Incentives” and SIC 27 “Evaluating the Substance of Transactions Involving
the Legal Form of a Lease”. The standard sets out the principles for the recognition, measurement,
presentation and disclosure of leases and requires lessees to account for all leases under a single on-
balance sheet model. Lessor accounting under IFRS 16 is substantially unchanged from the one under
IAS 17. Lessors will continue to classify leases as either operating or finance leases using similar
principles as in IAS 17. Therefore, IFRS 16 did not have an impact for leases where the Group is the
lessor.
As permitted by the transitional provisions of IFRS 16, the Group elected to apply the modified
retrospective approach and has not restated comparative figures. Under this method, the Group
recognizes lease liabilities for an amount equivalent to the current values of future payments agreed as
of January 1, 2019. The Group also chose to use the recognition exemptions for lease contracts that, at
the commencement date, the underlying asset is of low value (‘low-value assets’).
The effect of first adoption of IFRS 16, as of January 1, 2019, was as follows:
S/(000)
Assets
Property, furniture and equipment (Right-of-use assets) 2,183,555
Liabilities
Accounts payable, provisions and other liabilities (Lease liabilities) 2,183,555
The first adoption of IFRS 16 did not have impact neither on the interim condensed consolidated
statements of income nor on the interim condensed consolidated statements of changes in equity, as of
January 1, 2019.
(a.1) Nature of the effect of adoption of IFRS 16
Before the adoption of IFRS 16, the Group classified each of its leases (as lessee) at the
inception date as either a finance lease or an operating lease. A lease was classified as a
finance lease if it transferred substantially all of the risks and rewards incidental to ownership
of the leased asset to the Group; otherwise it was classified as an operating lease. Finance
leases were capitalized at the commencement of the lease at the fair value of the inception
date of the leased property or, if lower, at the present value of the minimum lease payments.
Lease payments were apportioned between interest (recognized as finance costs) and
reduction of the lease liability. In an operating lease, the leased property was not capitalized
and the lease payments were recognized as rent expense in the consolidated income
statements on a straight-line basis over the lease term. Any prepaid rent and accrued rent were
recognized under the captions “Prepaid rights” and “Other accounts payable”, respectively.
Upon adoption of IFRS 16, the Group applied a single recognition and measurement approach
for all leases, except for leases of low-value assets. The standard provides specific transition
requirements and practical expedients, which have been applied by the Group.
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
16
- Leases previously classified as finance leases
The Group did not change the initial carrying amounts of recognized assets and
liabilities at the date of initial adoption for leases previously classified as finance
leases (i.e., the right-of-use assets and lease liabilities equal the lease assets and
liabilities recognized under IAS 17). The requirements of IFRS 16 were applied to these
leases from January 1, 2019.
- Leases previously classified as operating leases
The Group recognized right-of-use assets and lease liabilities for leases previously
classified as operating leases, except for leases of low-value assets. The right-of-use
assets for most leases were recognized based on the amount equal to the lease
liabilities, adjusted for any related prepaid and accrued lease payments previously
recognized. Lease liabilities were recognized based on the present value of the
remaining lease payments, discounted by using the incremental borrowing rate at the
date of initial application.
The leases liabilities as of January 1, 2019, can be reconciled to the operating lease
commitments as of December 31, 2018, as follows:
S/(000)
Operating lease commitments as of December 31, 2018 3,168,950
Weighted average incremental borrowing rate as of January 1, 2019 6.50%
Discounted operating lease commitments as of January 1, 2019 2,183,779
Minus:
Commitments relating to leases of low-value assets (224) __________
Lease liabilities as of January 1, 2019 2,183,555 __________
(a.2) Summary of new accounting policies
Set out below are the new accounting policies of the Group upon adoption of IFRS 16, which
have been applied from the date of initial application:
- Right-of-use assets
The Group recognizes right-of-use assets at the commencement date of the lease (i.e.,
the date the underlying asset is available for use). Right-of-use assets are measured at
cost, minus any accumulated depreciation and impairment losses, and adjusted for
any remeasurement of lease liabilities. The cost of right-of-use assets includes the
amount of lease liabilities recognized, initial direct costs incurred, and lease payments
made at or before the commencement date less any lease incentives received. Unless
the Group is reasonably certain to obtain ownership of the leased asset at the end of
the lease term, the recognized right-of-use assets are depreciated on a straight-line
basis over the shorter of its estimated useful life and the lease term. Right-of-use
assets are subject to impairment.
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
17
- Lease liabilities
At the commencement date of the lease, the Group recognizes lease liabilities
measured at the present value of lease payments to be made over the lease term. The
lease payments include fixed payments (including in- substance fixed payments) less
any lease incentives receivable, variable lease payments that depend on an index or a
rate, and amounts expected to be paid under residual value guarantees. The lease
payments also include the exercise price of a purchase option reasonably certain to be
exercised by the Group and payments of penalties for terminating a lease, if the lease
term reflects the Group exercising the option to terminate it. The variable lease
payments that do not depend on an index or a rate are recognized as expense in the
period in which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Group uses the incremental
borrowing rate at the lease commencement date if the interest rate implicit in the
lease is not readily determinable. After the commencement date, the amount of lease
liabilities is increased to reflect the accretion of interest and reduced for the lease
payments made. In addition, the carrying amount of lease liabilities is remeasured if
there is a modification, a change in the lease term, a change in the in-substance fixed
lease payments or a change in the assessment to purchase the underlying asset.
- Low-value assets
The Group applies the lease of low-value assets recognition exemption to leases of
small items of office furniture. Lease payments and leases of low-value assets are
recognized as expense on a straight-line basis over the lease term.
- Significant judgement in determining the lease term of contracts with renewal options
The Group determines the lease term as the non-cancellable term of the lease,
together with any periods covered by an option to extend the lease if it is reasonably
certain to be exercised, or any periods covered by an option to terminate the lease, if it
is reasonably certain not to be exercised.
The Group has the option, under some of its leases, to lease the assets for additional
terms. The Group applies judgement in evaluating whether it is reasonably certain to
exercise the option to renew the lease. That is, it considers all relevant factors that
create an economic incentive for it to exercise the renewal the lease. After the
commencement date, the Group reassesses the lease term if there is a significant
event or change in circumstances that is within its control and affects its ability to
exercise (or not to exercise) the option to renew the lease (e.g., a change in business
strategy).
The Group includes the renewal period as part of the lease term for leases, if it is
appropriate, based on the paragraphs described above.
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
18
(a.3) Amounts recognized in the interim condensed statements of financial position and interim condensed consolidated statements of income as of September 30, 2019, as an effect of adoption of IFRS 16:
Right-of-use-assets
Land
Buildings and
facilities
Furniture and
equipment Vehicles Total Lease liabilities
S/(000) S/(000) S/(000) S/(000) S/(000)
S/(000)
As of January 1, 2019 292,542 1,885,377 4,406 1,230 2,183,555
2,183,555
Additions 37,054 194,525 6,258 737 238,574
236,094
Disposals and/or sales (21,201) (44,702) (359) - (66,262)
(65,951)
Depreciation expense (15,770) (281,874) (2,217) (205) (300,066)
-
Interest expense - - - - -
113,731
Translation (95) 20 (4) 5 (74)
2,245
Payments - - - - -
(363,599)
As of September 30, 2019 292,530 1,753,346 8,084 1,767 2,055,727
2,106,075
(b) Interpretation of IFRIC 23 “Uncertainty over Income Tax Treatments”
The Interpretation addresses the accounting for income taxes when tax treatments involve uncertainty that affects the application of IAS 12 “Income Taxes”. The interpretation does not apply
to taxes or levies outside the scope of IAS 12, nor does it specifically include requirements relating to interest and penalties associated with uncertain tax treatments.
The Interpretation specifically addresses the following:
- Whether an entity considers uncertain tax treatments separately.
- The assumptions an entity makes about the examination of tax treatments by taxation authorities.
- How an entity determines taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates.
- How an entity considers changes in facts and circumstances.
An entity has to determine whether to consider each uncertain tax treatment separately or together with one or more other uncertain tax treatments. The approach that better predicts the
resolution of the uncertainty should be followed.
Although Intercorp and its Subsidiaries domiciled in the Republic of Panama and The Bahamas are not subject to any income tax or capital gains tax, the Group applied the interpretation
from the entry into force; however, as a result of the evaluation made, Management concluded that this interpretation has not affected the interim condensed consolidated financial
statements.
(c) Amendments to IFRS 9 “Financial Instruments”: Prepayment features with negative compensation Under IFRS 9
A debt instrument can be measured at amortized cost or at fair value through other comprehensive income, provided that the contractual cash flows are ‘solely payments of principal and interest on the principal amount outstanding’ (the SPPI criterion) and the instrument is held within
the appropriate business model for that classification. The amendments to IFRS 9 clarify that a financial asset passes the SPPI criterion regardless of the event or circumstance that causes the early termination of the contract and irrespective of which party pays or receives reasonable
compensation for the early termination of the contract. These amendments had no significant impact on the interim condensed consolidated financial statements of the Group.
(d) Amendments to IAS 19 “Employee Benefits”
Plan amendment, curtailment or settlement the amendments to IAS 19 address the accounting when a plan amendment, curtailment or settlement occurs during a reporting period. The amendments specify that when a plan amendment, curtailment or settlement occurs during the
annual reporting period, an entity is required to determine the cost of current services for the remainder of the period after the plan amendment, curtailment or settlement the benefits.
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
19
The amendments had no impact on the interim condensed consolidated financial statements of the
Group as it does not maintain defined benefit plans.
(e) Amendments to IAS 28 “Investments in Associates and Joint Ventures”: Long- term interests in
associates and joint ventures.
The amendments clarify that an entity applies IFRS 9 to long-term interests in an associate or joint
venture to which the equity method is not applied but that, in substance, form part of the net investment
in the associate or joint venture (long-term interests). This clarification is relevant because it implies that
the expected credit loss model in IFRS 9 applies to such long-term interests.
The amendments also clarified that, when applying IFRS 9, an entity does not have into account
neither any loss of the associated or joint venture, nor any impairment loss of the net investment,
which is recognized as adjustments to net investment in associated o joint venture that arise from IAS
28 “Investments in Associates and Joint Ventures”.
In Management’s opinion, these amendments had no impact on the interim condensed consolidated
financial statements as the Group does not have long-term interests in associates and joint ventures.
(f) IFRS improvements (2015 – 2017 cycle)
- IFRS 3 “Business Combinations”, the amendments clarify that, when an entity obtains control
of a business that is a joint operation, it applies the requirements for a business combination
achieved in stages, including remeasuring previously held interests in the assets and liabilities
of the joint operation at fair value. In doing so, the acquirer remeasures its entire previously
held interest in the joint operation.
An entity applies those amendments to business combinations for which the acquisition date is
on or after the beginning of the first annual reporting period beginning on or after January 1,
2019, with early adoption permitted.
In Management’s opinion, these amendments had no impact on the interim condensed
consolidated financial statements of the Group.
- IFRS 11 “Joint Arrangements”, a party that participates in, but does not have joint control of, a
joint operation might obtain joint control of the joint operation in which the activity of the joint
operation constitutes a business as defined by IFRS 3. The amendments clarify that the
previously held interests in that joint operation are not remeasured.
An entity applies those amendments to transactions in which it obtains joint control on or after
the beginning of the first annual reporting period beginning on or after January 1, 2019, with
early adoption permitted.
In Management’s opinion, these amendments had no impact on the interim condensed
consolidated financial statements of the Group as there is no transaction where joint control is
obtained.
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
20
- IAS 12 “Income Taxes”, the amendments clarify that the income tax consequences of dividends
are linked more directly to past transactions or events that generated distributable profits than
to distributions to owners. Therefore, an entity recognizes the income tax consequences of
dividends in profit or loss, other comprehensive income or equity according to where the entity
originally recognized those past transactions or events.
An entity applies those amendments for annual reporting periods beginning on or after January
1, 2019, with early adoption permitted. When an entity first adopts those amendments, it
applies them to the income tax consequences of dividends recognized on or after the beginning
of the earliest comparative period.
Although Intercorp and its Subsidiaries domiciled in the Republic of Panama and The Bahamas
are not subject to any income tax or capital gains tax – see Note 16(a), natural persons not
domiciled in Peru are subject to an additional tax on dividends received from entities domiciled
in Peru. In this regard, since the Company controls the Subsidiaries that distribute the
dividends, it recognizes the amount of the Income Tax as an expense of the year to which these
dividends correspond. Since the Group´s current practice is in line with these amendments,
they had no impact on the interim condensed consolidated financial statements of the Group.
- IAS 23 “Borrowing Costs”, the amendments clarify that an entity treats as part of general
borrowings any borrowing originally made to develop a qualifying asset when substantially all of
the activities necessary to prepare that asset for its intended use or sale are complete.
An entity applies those amendments to borrowing costs incurred on or after the beginning of
the annual reporting period in which the entity first adopts those amendments. An entity
applies those amendments for annual reporting periods beginning on or after January 1, 2019,
with early adoption permitted.
In Management’s opinion, these modifications had no impact on the Group's interim
condensed consolidated financial statements because they do not develop qualified assets or
obtain financing for these purposes.
4.3 Significant accounting judgments, estimates and assumptions –
The preparation of the consolidated financial statements of the Group requires Management to make judgments,
estimates and assumptions that affect the reported amount of income, expenses, assets and liabilities, and the
accompanying disclosures, as well as the disclosure of contingent liabilities. In the process of applying the Group's
accounting policies, Management has used judgments and assumptions about the future and other key sources to make
its estimates at the reporting date, which have a significant risk that may cause a material adjustment to the value in
books of assets and liabilities within the next financial year. The estimates and existing assumptions may change due to
circumstances beyond the control of the Group and are reflected in assumptions if they occur. The items with the most
impact recognized in the consolidated financial statements with judgements and/or considerable estimates are the
following: the calculation of the impairment of the portfolio of loans and financial investments, the measurement
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
21
of the fair value of the financial investments and investment properties, the provision for inventory losses, the assessment
of the impairment of the goodwill, the liabilities for insurance contracts and the measurement of the fair value of
derivative financial instruments; also, there are other estimates such as the estimated useful life of intangible assets,
property, furniture and equipment, and the estimation of deferred Income Tax assets and liabilities.
During 2018, the Group made the following changes in the accounting estimate related to the determination of insurance
contracts liabilities, as detailed below:
4.3.1 Adoption of new mortality tables (SPP 2017)
Through SBS Resolution No.886-2018 dated March 7, 2018, the SBS published the new Peruvian mortality and
morbidity tables “SPP-S-2017” and “SPP-I-2017” (for men and women) to be used in mathematical reserve
calculations of pensions from the Private Pension System (“SPP”, by its Spanish acronym) and the
Complementary Insurance of Hazardous Work. These tables gather updated information from Peru’s SPP and
show the recent changes in life expectancy. The population used for the analysis and study were those affiliated
to the SPP. From June 1, 2018, the Group decided to use these new tables for its pension reserve calculation.
4.3.2 Changes in the assumptions used in calculating interest rates to discount pension reserves
Until May 31, 2018, in order to discount claim reserves, Interseguro used the average market rate of its financial
assets portfolio for the matching currency pension flows and a reinvestment rate of 3 percent for non-matching
currency pension flows. From the second quarter 2018, Interseguro modified the estimation of these
assumptions, using the risk-free rate due to the currency of Peruvian government’s sovereign yield curves plus an
illiquidity premium as a portion of the corporate bonds spread to loss given default or the cost of credit rating
downgrade. These corporate bonds spread is calculated based on the performance of the asset portfolio
designated by Interseguro to cover its pension obligations.
In accordance with IAS 8, “Accounting Policies, Changes in Accounting Estimates and Errors” as the changes above result
from new information or events and are not error corrections nor related to previous periods, they are considered changes
in accounting estimations and the effects were recognized prospectively and included in the interim condensed
consolidated income statements for:
(i) The period in which a change occurs, if it affects only such period; or
(ii) The period in which a change occurs and future periods, if it affects all of them.
As a consequence, Management considers that the changes in the mortality and morbidity tables and in the method for
determining the discount interest rate reflect a better accounting estimation of insurance contracts liabilities; see Note
4.6 (a) and (b) of the 2018 Annual Consolidated Financial Statements. Since these changes in accounting estimates
were recorded during the second quarter of 2018, the interim condensed consolidated financial statements as of
September 30, 2018, did not contain such modifications.
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
22
4.4 Basis of consolidation
There were no changes in the composition of the Group in the period. The interim condensed consolidated financial
statements of the Group comprise the condensed financial statements of Intercorp Perú Ltd. and Subsidiaries. The
method adopted by the Group to consolidate its Subsidiaries is described in Note 4.3 of the 2018 Annual Consolidated
Financial Statements.
5. Cash and due from banks
(a) The detail of cash and due from banks is as follows:
As of September
30, 2019
As of December
31, 2018
S/(000) S/(000)
Cash and clearing 1,647,142 1,890,173
Deposits in the Central Reserve Bank of Peru – BCRP 6,016,933 3,682,844
Deposits in banks 3,081,436 2,017,228
Accrued interest 6,506 6,818
10,752,017 7,597,063
Restricted funds (b) 1,589,716 1,318,911
Total 12,341,733 8,915,974
Cash and cash equivalents presented in the interim condensed consolidated statements of cash flows exclude the
restricted funds and accrued interest related to the computation of the legal reserve.
(b) The Group maintains restricted funds related to:
As of September
30, 2019 As of December
31, 2018
S/(000)
S/(000)
Repurchase agreements with BCRP (*) 1,430,213 1,189,454
Derivative financial instruments, Note 10(b) 78,306 92,456
Others 81,197 37,001
Total 1,589,716 1,318,911
(*) As of September 30, 2019, correspond to deposits maintained in the BCRP which guarantee repurchase
agreements amounting to S/1,400,200,000 including interest (guaranteed repurchase agreements amounting
to S/1,154,500,000 including interest as of December 31, 2018), see Note 12(a).
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
23
6. Financial investments
(a) As of September 30, 2019, and December 31, 2018, this caption is made up as follows:
As of September
30, 2019 As of December
31, 2018
S/(000)
S/(000)
Debt instruments at fair value through other comprehensive income (b) 13,537,584 13,013,959
Investments at fair value through profit or loss (d) 1,990,447 1,967,553
Investments at amortized cost (e) 2,115,773 1,843,944
Equity instruments at fair value through other comprehensive income (f) 684,428 617,289
Total financial investments 18,328,232 17,442,745
Accrued income -
Debt instruments at fair value through other comprehensive income (b) 145,615 180,227
Investments at amortized cost (e) 15,021 40,123
Total 18,488,868 17,663,095
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
24
(b) Following is the detail of debt instruments measured at fair value through other comprehensive income:
Unrealized gross amount Annual effective interest rates
Amortized
Estimated
S/ US$
cost Gains Losses (c) fair value Maturity Min Max Min Max
As of September 30, 2019 S/(000) S/(000) S/(000) S/(000) % % % %
Corporate, leasing and subordinated bonds (*) 7,413,487 625,644 (12,288) 8,026,843 Oct-19 / Jan-114 1.42 9.33 2.43 10.73
Peruvian Sovereign Bonds 3,021,118 354,426 (320) 3,375,224 Sep-23 / Feb-55 1.55 8.19 - -
Negotiable Certificates of Deposit issued by BCRP 1,200,532 1,954 (9) 1,202,477 Oct-19 / Aug-20 2.26 2.32 - -
Bonds guaranteed by the Peruvian Government 707,227 41,092 (370) 747,949 Oct-24 / Jul -34 4.10 6.01 4.23 6.60
United States of America Treasury Bonds 67,654 6 - 67,660 Oct-19 - - 1.63 1.63
Global Bonds of the Republic of Colombia 116,787 644 - 117,431 Jul-21 / Mar-23 - - 2.41 2.53
Total 12,526,805 1,023,766 (12,987) 13,537,584
Accrued interest 145,615
Total 13,683,199
Unrealized gross amount Annual effective interest rates
Amortized Estimated
S/ US$
cost Gains Losses (c) fair value Maturity Min Max Min Max
As of December 31, 2018 S/(000) S/(000) S/(000) S/(000) % % % %
Corporate, leasing and subordinated bonds (*) 7,559,293 77,778 (285,494) 7,351,577 Jan-19 / Ene-114 2.01 9.58 2.80 8.90
Peruvian Sovereign Bonds 2,702,571 46,714 (65,955) 2,683,330 Aug-20 / Feb-55 2.37 8.19 - -
Negotiable Certificates of Deposit issued by BCRP (**) 1,381,011 179 (711) 1,380,479 Jan-19 / Apr-20 2.73 3.05 - -
Bonds guaranteed by the Peruvian Government 804,309 5,166 (14,477) 794,998 May-24 / Jul-34 4.10 6.01 4.97 8.81
Global Bonds of the Republic of Peru 332,311 1,439 (14,692) 319,058 Jul-25 / Feb-55 6.39 7.40 3.66 3.71
Global Bonds of the Republic of Colombia 271,482 - (4,046) 267,436 Mar-19 / Sep-37 - - 2.29 7.48
Global Bonds of the United Mexican States 105,749 - (7,133) 98,616 Oct-23 / Sep-34 - - 4.16 6.28
United States of America Treasury Bonds 83,888 - (1,039) 82,849 Dec-20 / Oct-23 - - 2.47 2.53
Global Bonds of the Republic of Chile 36,983 - (1,367) 35,616 Feb-28 - - 3.74 3.74
Total 13,277,597 131,276 (394,914) 13,013,959
Accrued interest 180,227
Total 13,194,186
(*) As of September 30, 2019 and December 31, 2018, Inteligo holds corporate bonds from different entities for approximately S/456,734,000 and S/411,047,000, respectively, which guarantee loans with Credit Suisse First Boston and J. Safra Sarasin; see Note 12(a).
(**) As of December 31, 2018, Interbank holds certificates of deposit issued by the BCRP for approximately S/256,777,000 respectively which guarantee loans with said entity for approximately S/247,456,000; see Note 12(a).
(c) The Group has determined that the unrealized losses on debt instruments as of September 30, 2019, and December 31, 2018, not related to credit risk, are of temporary nature.
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
25
The Group, according to the business model applied to these debt instruments, has the capacity to maintain these investments for a sufficient period that allows the early recovery of the fair value, up to the maximum period for the early recovery or the due date.
As of September 30, 2019, and December 31, 2018, the detail of the unrealized losses of the debt instruments classified as at fair value through other comprehensive income is as follows:
As of September 30, 2019
As of December 31, 2018
Issuer
Amortized
cost
Unrealized gross
gain
Unrealized gross
loss
Amortized
cost
Unrealized gross
gain
Unrealized gross
loss
Maturity as of
September 30,
2019
Risk rating as of
30.09.19 and
31.12.18
S/(000) S/(000) S/(000)
S/(000) S/(000) S/(000) (***)
BBVA Banco Continental 287,933 14,139 (3,954) 199,326 2,039 (4,737) 2020-2033 AA+ (*)
Banco de Crédito del Perú S.A. 120,075 167 (1,013) 222,072 - (14,536) 2019-2023 AA+ (**)
Southern Perú Copper Corporation S.A.A. 62,576 2,366 (657) 220,634 - (7,653) 2028-2035 BBB+ (*)
Taboada Finance Ltda 91,656 2,343 (370) 93,010 612 (4,694) 2029-2033 BBB+ (*)
Peruvian Sovereign Bonds 3,021,118 354,426 (320) 2,702,571 46,714 (65,955) 2023-2055 A- (*)
Enel Distribución Perú S.A.A. (before Edelnor S.A.A.) 85,660 7,964 (111) 85,665 426 (5,864) 2025-2038 AAA (**)
Corporación Financiera de Desarrollo S.A. 240,969 31,259 - 386,240 - (19,238) 2025-2046 AA (**)
H2Olmos S.A. 228,763 9,428 - 230,838 - (4,793) 2025-2032 AA (**)
Fermaca Enterprises S.R.L. 223,401 1,657 - 229,906 - (11,778) 2038 BBB (*)
Fideicomiso de Bienes Raíces Uno 183,973 11,018 - 183,572 - (23,301) 2044 BBB (*)
Mexichem S.A. 178,832 8,542 - 178,387 - (18,048) 2042-2044 BBB- (*)
Línea Amarilla S.A.C. 174,345 13,748 - 173,130 1,042 (4,998) 2037 AA (**)
Fideicomiso PA Pacifico 165,451 980 - 166,049 - (12,280) 2035 BBB- (*)
Celulosa Arauco y Constitución S.A. 164,138 15,383 - 163,796 - (12,295) 2047 BBB- (*)
Lima Metro Line 2 Finance Limited 149,534 6,638 - 149,512 - (7,935) 2034 BBB (*)
Global Bonds of the Republic of Colombia 116,787 644 - 271,482 - (4,046) 2021-2023 BBB (*)
Red de Energía del Perú 101,997 6,395 - 109,665 - (4,111) 2026-2031 AAA (**)
Falabella Perú S.A.A. 101,255 6,793 - 101,341 - (6,474) 2028-2035 AA+ (**)
Celeo Redes Operación CL 94,190 10,042 - 94,252 - (6,014) 2047 BBB (*)
Cencosud S.A. 79,479 1,218 - 191,388 - (20,819) 2045 BBB- (*)
Electricity de France S.A. 72,901 5,679 - 72,431 - (8,673) 2114 A- (*)
México Generadora de Energía 70,479 3,176 - 72,009 - (5,324) 2032 BBB (*)
Goldman Sachs 64,182 10,355 - 63,129 - (6,572) 2030-2042 BBB+ (*)
Global Bonds of the Republic of Peru - - - 332,311 1,439 (14,692) - BBB+ (*)
Global Bonds of the United Mexican States - - - 105,749 - (7,133) - BBB+ (*)
Mexico City Airport Trust S.A. - - - 94,948 - (11,129) - BBB (*)
Instruments with individual losses lower than S/4 million 315,402 6,370 (6,562) 3,985,325 7,797 (81,822) - -
Total 6,395,096 530,728 (12,987)
10,878,738 60,069 (394,914)
(*) Instrument rated abroad.
(**) Instrument rated in Peru.
(***) Corresponds to the instrument’s rating with the largest unrealized loss.
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
26
The movement of the allowance for expected credit losses for debt instruments measured at fair value through other
comprehensive income is presented below:
As of
September
30, 2019
As of
December 31,
2018
As of
September
30, 2018
S/(000) S/(000) S/(000)
Expected credit loss under IFRS 9 at the beginning of the period 28,050 40,840 40,840
New assets originated or purchased 1,379 1,215 764
Assets derecognized or matured (excluding write-offs) (1,146) (13,463) (2,238)
Effect on the expected credit loss different to changes of the Stage during the
period (*) (1,762) (829) (852)
Foreign exchange effect - 287 202
Expected credit loss under IFRS 9 at the end of the period 26,521
28,050
38,716
(*) Corresponds mainly to the variation in the inputs used for calculating the expected credit losses.
As a result of the assessment of the impairment of its debt instruments at fair value through other comprehensive income,
the Group recorded a recovery of the impairment of S/1,529,000 and S/2,326,000 for the nine-month periods ended
September 30, 2019 and 2018, respectively; which were presented in the caption “Impairment recovery on financial
investments” in the annual consolidated statements of income.
(d) The composition of financial instruments at fair value through profit or loss is as follows:
As of September
30, 2019
As of December
31, 2018
S/(000) S/(000)
Equity instruments
Local and foreign mutual funds and investment funds participations 1,443,272 1,566,934
BioPharma Credit PLC 134,152 144,157
Royalty Pharma, Note 23(a) 105,706 78,808
LendUp 81,696 23,720
ViaSat Inc. 28,029 21,705
Ishare Core MSCI Word UCIT 21,506 18,195
Others 105,894 66,982
Debt instruments
Corporate, leasing and subordinated bonds 70,192 21,611
Peruvian Sovereign Bonds - 21,927
United States of America Treasury Bonds - 3,514
Total 1,990,447 1,967,553
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
27
(e) As of September 30, 2019, and December 31, 2018, the investments at amortized costs are comprised of Peruvian
Sovereign Bonds for an amount of S/2,130,794,000 and S/1,884,067,000, respectively, including accrued interest.
These investments present a low credit risk and the expected credit loss is insignificant.
As of September 30, 2019, the estimated fair value of these investments amounts to approximately S/2,244,611,000
(S/1,856,325,000, as of December 31, 2018).
As of September 30, 2019, and December 31, 2018, Interbank holds loans with the BCRP for approximately
S/959,031,000 and S/671,963,000, respectively – see Note 12(a), that are guaranteed through the Peruvian Sovereign
Bonds; which are classified as restricted for approximately S/1,042,220,000 and S/738,635,000, respectively.
(f) As of September 30, 2019, and December 31, 2018, the composition of equity instruments measured at fair value
through other comprehensive income is as follows:
As of September
30, 2019
As of December
31, 2018
S/(000) S/(000)
BioPharma Credit PLC 275,333 261,484
Ishares diverse countries (ETF) 104,134 130,155
Ferreycorp S.A.A. 76,574 78,528
Engie- Energía Perú S.A. 79,928 51,384
Luz del Sur S.A.A. 78,587 23,727
Others below S/ 26 million 69,872 72,011
Total 684,428 617,289
(g) As described in detail in Note 34.1 of the Annual Consolidated Financial Statements, the Group rates its financial assets
into Stage 1, Stage 2 and Stage 3, as described below:
- Stage 1: When the financial assets are first recognized, the Group recognizes an allowance based on 12 months ECLs.
Stage 1 also includes financial assets whose credit risk has improved, and the loan has been reclassified from Stage 2.
- Stage 2: When a financial asset has shown a significant increase in credit risk since origination, the Group records an
allowance for the lifetime ECLs. Stage 2 also includes financial assets whose credit risk has improved and the financial
asset has been reclassified from Stage 3.
- Stage 3: Financial assets considered credit -impaired. The Group records an allowance for the lifetime financial asset.
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
28
Below are the debt instruments measured at fair value through other comprehensive income and at amortized cost according to the stages indicated by IFRS 9 as of September 30, 2019 and December 31, 2018:
As of September 30, 2019
Debt instruments measured at fair value throgh other comprehensive
income and at amortized cost Stage 1 Stage 2 Stage 3 Total
S/(000) S/(000) S/(000) S/(000)
Corporate, leasing and subordinated bonds 7,617,978 408,865 - 8,026,843
Peruvian Sovereign Bonds 5,490,997 - - 5,490,997
Negotiable Certificates of Deposit issued by BCRP 1,202,477 - - 1,202,477
Bonds guaranteed by the Peruvian Government 747,949 - - 747,949
Global Bonds of the Republic of Colombia 117,431 - - 117,431
United States of America Treasury Bonds 67,660 - - 67,660
Total 15,244,492 408,865 - 15,653,357
As of December 31, 2018
Debt instruments measured at fair value throgh other comprehensive
income and at amortized cost Stage 1 Stage 2 Stage 3 Total
S/(000) S/(000) S/(000) S/(000)
Corporate, leasing and subordinated bonds
7,038,332 313,245 - 7,351,577
Peruvian Sovereign Bonds
4,527,274 - - 4,527,274
Negotiable Certificates of Deposit issued by BCRP
1,380,479 - - 1,380,479
Bonds guaranteed by the Peruvian Government
794,998 - - 794,998
Global Bonds of the Republic of Peru
319,058 - - 319,058
Global Bonds of the Republic of Colombia
267,436 - - 267,436
Global Bonds of the United Mexican States
98,616 - - 98,616
United States of America Treasury Bonds
82,849 - - 82,849
Global Bonds of the Republic of Chile
35,616 - - 35,616
Total 14,544,658 313,245 - 14,857,903
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
29
7. Loans, net
(a) This caption is made up as follows:
As of September 30,
2019
As of December 31,
2018
S/(000) S/(000)
Direct loans
Loans 27,353,067 25,508,140
Credit cards 6,527,881 5,653,124
Leasing 1,346,867 1,461,286
Discounted notes 582,718 492,202
Factoring 300,086 283,885
Advances and overdrafts 62,720 50,219
Refinanced loans 243,497 227,882
Past due and under legal collection loans 1,059,229 926,216
37,476,065 34,602,954
Plus (minus)
Accrued interest from performing loans 389,581 359,739
Unearned interest and interest collected in advance (42,621) (47,737)
Impairment allowance for loans (c) (1,616,061) (1,490,252)
Total direct loans, net 36,206,964 33,424,704
Indirect loans 3,960,043 4,024,244
(b) The classification of the direct loan portfolio is as follows:
As of September 30,
2019
As of December 31,
2018
S/(000)
S/(000)
Commercial loans 15,783,192 15,248,545
Consumer loans 13,932,088 12,220,305
Mortgage loans 7,011,465 6,407,479
Small and micro-business loans 749,320 726,625
Total 37,476,065 34,602,954
For purposes of estimating the impairment loss in accordance with IFRS 9, the Group's loan portfolio is segmented by
homogeneous groups that share similar risk characteristics; the Group determined these 3 types of portfolios: Retail
Banking (groups consumer and mortgage loans), Commercial Banking (groups commercial loans) and Small Business
Banking (groups loans to small and micro-business).
Translation of consolidated financial statements originally issued in Spanish – Note 29
Notes to the interim condensed consolidated financial statements (continued)
30
(c) The movement of the allowance for expected credit loss, calculated according to IFRS 9, is as follows:
(c.1) Total direct loans
As of September 30, 2019 As of September 30, 2018
As of December 31,
2018
Changes in the allowance for expected credit losses for direct loans Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total Total
S/(000) S/(000) S/(000) S/(000)
S/(000) S/(000) S/(000) S/(000)
S/(000)
Expected credit loss under IFRS 9 at the beginning of period balances 444,159 492,778 553,315 1,490,252
369,104 501,758 475,255 1,346,117
1,346,117
Impact of the expected credit loss in the consolidated income statements
New assets originated or purchased 600,007 - - 600,007
474,550 - - 474,550
706,282
Assets derecognized or paid (224,320) (82,982) (33,519) (340,821)
(183,448) (80,439) (29,851) (293,738)
(385,594)
Transfers to Stage 1 118,162 (116,396) (1,766) -
93,437 (92,571) (866) -
-
Transfers to Stage 2 (143,959) 160,030 (16,071) -
(148,737) 165,016 (16,279) -
-
Transfers to Stage 3 (175,128) (134,016) 309,144 -
(115,240) (145,750) 260,990 -
-
Impact on the expected credit loss for credits that change stage in the period (101,346) 143,177 468,158 509,989
(82,931) 150,534 350,047 417,650
586,327
Others (*) 44,703 (28,211) (1,870) 14,622
13,391 (15,613) 27,828 25,606
(14,370)
118,119 (58,398) 724,076 783,797
51,022 (18,823) 591,869 624,068
892,645
Write offs (**) - - (786,466) (786,466)
- - (710,728) (710,728)
(935,584)
Recovery of written–off loans - - 128,032 128,032
- - 133,328 133,328
176,320
Foreign exchange effect (***) 61 139 246 446
377 1,631 3,232 5,240
10,754
Expected credit loss under IFRS 9 at the end of period balances 562,339 434,519 619,203 1,616,061
420,503 484,566 492,956 1,398,025
1,490,252
(c.1.1) The following tables present the changes in the allowance for expected credit losses for direct loans for each classification of the direct loan portfolio:
Changes in the allowance for expected credit losses for direct loans – Commercial loans As of September 30, 2019
As of September 30, 2018
As of December 31,
2018
Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total Total S/(000) S/(000) S/(000) S/(000)
S/(000) S/(000) S/(000) S/(000)
S/(000)
Expected credit loss under IFRS 9 at the beginning of period balances 68,705 27,397 98,111 194,213
48,699 28,437 75,335 152,471
152,471
Impact of the expected credit loss in the consolidated income statements
New assets originated or purchased 51,240 - - 51,240
56,676 - - 56,676
72,297
Assets derecognized or paid (27,270) (7,851) (2,310) (37,431)
(26,390) (10,025) (6,724) (43,139)
(50,354)
Transfers to Stage 1 7,623 (7,623) - -
7,221 (7,221) - -
-
Transfers to Stage 2 (12,062) 13,233 (1,171) -
(16,277) 17,665 (1,388) -
-
Transfers to Stage 3 (5,924) (3,441) 9,365 -
(2,947) (3,034) 5,981 -
-
Impact on the expected credit loss for credits that change stage in the period (5,466) 3,445 20,976 18,955 (4,645) 7,338 29,789 32,482 40,119
Others (*) (2,953) (1,038) 2,701 (1,290)
(330) (2,059) 12,187 9,798
10,835
5,188 (3,275) 29,561 31,474
13,308 2,664 39,845 55,817
72,897
Write offs (**) - - (14,892) (14,892)
- - (31,250) (31,250)
(34,355)
Recovery of written–off loans - - 794 794
- - 963 963
1,163
Foreign exchange effect (***) 72 22 78 172
296 194 548 1,038
2,037
Expected credit loss under IFRS 9 at the end of period balances 73,965 24,144 113,652 211,761
62,303 31,295 85,441 179,039
194,213
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
31
Changes in the allowance for expected credit losses for direct loans – Consumer loans
As of September 30, 2019 As of September 30, 2018
As of December 31,
2018
Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total Total
S/(000) S/(000) S/(000) S/(000)
S/(000) S/(000) S/(000) S/(000)
S/(000)
Expected credit loss under IFRS 9 at the beginning of period balances 353,262 428,341 330,483 1,112,086
302,724 432,279 297,263 1,032,266
1,032,266
Impact of the expected credit loss in the consolidated income statements
New assets originated or purchased 533,550 - - 533,550
402,896 - - 402,896
616,062
Assets derecognized or paid (192,557) (72,878) (18,669) (284,104)
(153,081) (66,822) (14,622) (234,525)
(315,610)
Transfers to Stage 1 102,473 (100,707) (1,766) -
77,222 (76,356) (866) -
-
Transfers to Stage 2 (126,458) 131,289 (4,831) -
(127,017) 131,877 (4,860) -
-
Transfers to Stage 3 (166,941) (120,847) 287,788 -
(110,959) (132,248) 243,207 -
-
Impact on the expected credit loss for credits that change stage in the period (88,535) 131,534 395,860 438,859 (70,303) 137,444 279,652 346,793 483,030
Others (*) 51,445 (26,937) (3,620) 20,888
15,961 (11,109) 9,202 14,054
(25,882)
112,977 (58,546) 654,762 709,193
34,719 (17,214) 511,713 529,218
757,600
Write offs (**) - - (732,451) (732,451)
- - (649,034) (649,034)
(855,457)
Recovery of written–off loans - - 123,080 123,080
- - 128,936 128,936
170,783
Foreign exchange effect (***) 8 119 214 341
49 1,339 1,981 3,369
6,894
Expected credit loss under IFRS 9 at the end of period balances 466,247 369,914 376,088 1,212,249
337,492 416,404 290,859 1,044,755
1,112,086
Changes in the allowance for expected credit losses for direct loans – Mortgage loans
As of September 30, 2019
As of September 30, 2018
As of December 31,
2018
Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total Total
S/(000) S/(000) S/(000) S/(000)
S/(000) S/(000) S/(000) S/(000)
S/(000)
Expected credit loss under IFRS 9 at the beginning of period balances 8,428 20,142 86,040 114,610
8,368 24,742 71,977 105,087
105,087
Impact of the expected credit loss in the consolidated income statements
New assets originated or purchased 1,621 - - 1,621
1,700 - - 1,700
2,035
Assets derecognized or paid (639) (793) (9,914) (11,346)
(1,092) (1,388) (6,869) (9,349)
(11,857)
Transfers to Stage 1 6,287 (6,287) - -
6,793 (6,793) - -
-
Transfers to Stage 2 (1,052) 11,068 (10,016) -
(912) 10,943 (10,031) -
-
Transfers to Stage 3 (229) (3,073) 3,302 -
(180) (3,720) 3,900 -
-
Impact on the expected credit loss for credits that change stage in the period (5,753) 1,684 24,979 20,910 (6,207) (1,188) 18,233 10,838 23,422
Others (*) 541 (622) (2,733) (2,814)
62 (2,876) 1,448 (1,366)
(3,032)
776 1,977 5,618 8,371
164 (5,022) 6,681 1,823
10,568
Write offs (**) - - (1,386) (1,386)
- - (1,079) (1,079)
(2,689)
Foreign exchange effect (***) 2 6 50 58
23 88 632 743
1,644
Expected credit loss under IFRS 9 at the end of period balances 9,206 22,125 90,322 121,653
8,555 19,808 78,211 106,574
114,610
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
32
Changes in the allowance for expected credit losses for direct loans – Small and micro-business loans
As of September 30, 2019
As of September 30, 2018
As of December 31,
2018
Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total Total
S/(000) S/(000) S/(000) S/(000)
S/(000) S/(000) S/(000) S/(000)
S/(000)
Expected credit loss under IFRS 9 at the beginning of period balances 13,764 16,898 38,681 69,343
9,313 16,300 30,680 56,293
56,293
Impact of the expected credit loss in the consolidated income statements
New assets originated or purchased 13,596 - - 13,596
13,278 - - 13,278
15,888
Assets derecognized or paid (3,854) (1,460) (2,626) (7,940)
(2,885) (2,204) (1,636) (6,725)
(7,773)
Transfers to Stage 1 1,779 (1,779) - -
2,201 (2,201) - -
-
Transfers to Stage 2 (4,387) 4,440 (53) -
(4,531) 4,531 - -
-
Transfers to Stage 3 (2,034) (6,655) 8,689 -
(1,154) (6,748) 7,902 -
-
Impact on the expected credit loss for credits that change stage in the period (1,592) 6,514 26,343 31,265 (1,776) 6,940 22,373 27,537 39,756
Others (*) (4,330) 386 1,782 (2,162)
(2,302) 431 4,991 3,120
3,709
(822) 1,446 34,135 34,759
2,831 749 33,630 37,210
51,580
Write offs (**) - - (37,737) (37,737)
- - (29,365) (29,365)
(43,083)
Recovery of written–off loans - - 4,158 4,158
- - 3,429 3,429
4,374
Foreign exchange effect (***) (21) (8) (96) (125)
9 10 71 90
179
Expected credit loss under IFRS 9 at the end of period balances 12,921 18,336 39,141 70,398
12,153 17,059 38,445 67,657
69,343
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
33
(c.2) Indirect loans (substantially, all indirect loans correspond to commercial loans)
As of September 30, 2019
As of September 30, 2018
As of December 31,
2018
Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total Total
S(000) S(000) S(000) S(000)
S(000) S(000) S(000) S(000)
S(000)
Expected credit loss under IFRS 9 at the beginning of period balances 19,829 19,753 22,469 62,051 46,890 77,299 14,989 139,178 139,178
Impact of the expected credit loss in the consolidated income statements-
New assets originated or purchased 6,396 - - 6,396
13,186 - - 13,186
12,138
Assets derecognized or paid (9,329) (5,809) (3,302) (18,440)
(6,729) (26,933) (10,136) (43,798)
(53,790)
Transfers to Stage 1 9,180 (9,180) - -
9,746 (9,746) - -
-
Transfers to Stage 2 (1,928) 1,928 - -
(1,588) 3,300 (1,712) -
-
Transfers to Stage 3 (183) (9) 192 -
(12) (5) 17 -
-
Impact on the expected credit loss for credits that change stage in the period (3,450) (1,225) 390 (4,285)
(3,628) 4,050 120 542
(3,009)
Others (*) (639) (1,803) (1,049) (3,491)
(14,420) (17,059) 89 (31,390)
(34,490) 47 (16,098) (3,769) (19,820) (3,445) (46,393) (11,622) (61,460)
(79,151)
Write offs (**) - - - -
- - (24) (24)
(70)
Foreign exchange effect and others 28 41 2 71
451 442 42 935
2,094
Expected credit loss under IFRS 9 at the end of period balances 19,904 3,696 18,702 42,302 43,896 31,348 3,385 78,629
62,051
(*) Corresponds mainly to: (i) the variation between the amortized cost of the loan at the beginning of period and its amortized cost at the end of period (variation in the provision recorded for partial amortizations that did not represent a reduction or cancellation of the loan), (ii) variations in credit
risk that did not generate transfers to other stages; and (iii) the execution of contingent loans (conversion of indirect debt into direct debt).
(**) The Group writes off financial assets that are still subject to collection activities. In this regard, the Group seeks to recover the amounts legally owed in full, but have been written off because there is no reasonable expectation of recovery.
(***) Corresponds mainly to the effect of the exchange rate and the variation of the value of money over time.
(d) In Management’s opinion, the impairment allowance for loans recorded as of September 30, 2019 and December 31, 2018 has been established in accordance with IFRS 9 and is sufficient to cover incurred losses on the loan portfolio.
Translation of consolidated financial statements originally issued in Spanish – Note 29
Notes to the interim condensed consolidated financial statements (continued)
34
8. Investment property
(a) This caption is made up as follows:
As of September
30, 2019
As of December
31, 2018
Acquisition or
construction year
Hierarchy
level (i) Valuation methodology
S/(000) S/(000) As of September 30, 2019 / As of
December 31, 2018
Land -
Miraflores - Lima 481,567 477,307 2010 Level 3 Appraisal
San Martín de Porres - Lima 270,775 263,974 2015 Level 3 Appraisal
San Isidro - Lima 253,554 249,377 2009 Level 3 Appraisal
Piura 51,446 50,708 2008 Level 3 Appraisal
Lurín - Lima 52,146 47,562 2012 Level 3 Appraisal
Ate Vitarte - Lima 39,168 45,522 2008 Level 3 Appraisal
Chacarilla - Lima 36,352 36,221 2014 Level 3 Appraisal
Centro Urbano Nuevo Chimbote 23,099 32,563 2010 Level 3 Appraisal
Others, below S/ 30 million 125,664 121,790 Level 3 Appraisal
1,333,771 1,325,024
Built investment property -
“Real Plaza” Shopping Malls
Puruchuco - Lima 461,062 324,780 2008 Level 3 DCF / Appraisal
Primavera - Lima 171,603 165,929 2009 Level 3 DCF
Chiclayo 161,913 165,212 2005 Level 3 DCF
Centro Comercial San Isidro - Lima 159,550 162,526 2010 Level 3 DCF
Trujillo 143,790 145,701 2007 Level 3 DCF
Piura 115,307 131,984 2010 Level 3 DCF
Pucallpa 85,428 84,143 2014 Level 3 DCF
Cajamarca 70,701 69,950 2013 Level 3 DCF
Pro - Lima 52,261 51,696 2008 Level 3 DCF
Chorrillos - Lima 48,773 48,260 2011 Level 3 DCF
Santa Clara - Lima 33,879 33,095 2009 Level 3 DCF
Ilo 37,534 - 2019 Level 3 DCF
Others, below S/ 30 million 77,108 69,015 Level 3 DCF
1,618,909 1,452,291
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
35
As of September
30, 2019
As of December
31, 2018
Acquisition or
construction year
Hierarchy
level (i)
Valuation methodology As of
September 30, 2019 / As of
December 31, 2018
S/(000) S/(000)
Built on leased land -
Salaverry - Lima 330,178 325,745 2014 Level 3 DCF
Cuzco 147,309 127,615 2013 Level 3 DCF
Centro Cívico - Lima 122,274 112,450 2007 - 2014 Level 3 DCF
Huancayo 100,262 99,199 2008 Level 3 DCF
Villa Maria del Triunfo - La Curva - Lima 55,946 55,105 2013 - 2016 Level 3 DCF
Juliaca 54,839 54,437 2010 Level 3 DCF
Huánuco 54,584 53,562 2012 Level 3 DCF
Arequipa 44,887 45,072 2010 Level 3 DCF
Villa El Salvador - La Plazita - Lima 30,051 28,906 2017 Level 3 DCF
Moquegua 20,298 19,952 2015 Level 3 DCF
960,628 922,043
Buildings -
Orquídeas -San Isidro- Lima 161,005 144,645 2017 Level 3 DCF
Ate Vitarte - Lima 78,655 67,894 2006 Level 3 DCF
Chorrillos - Lima 67,961 51,552 2017 Level 3 DCF
Huancayo 32,715 32,901 2017 Level 3 DCF
Others, below S/ 30 million 71,480 76,627 Level 3 DCF/Cost
411,816 373,619
Total 4,325,124 4,072,977
DCF: Discounted cash flow.
(i) There were no transfers between levels of hierarchy.
(ii) As of September 30, 2019 and December 31, 2018, there are no liens on any investment property.
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
36
(b) The net gain on investment property for the nine-month periods ended September 30, 2019 and 2018, consists of the
following:
2019 2018 S/(000) S/(000)
Income from rental of investment property 264,413 259,580
Gain on valuation of investment property 47,232 16,188
Gain on sale of investment property 762 407
Total 312,407 276,175
(c) The movement of investment property is as follows:
As of September 30,
2019 As of September 30,
2018
S/(000) S/(000)
Beginning of period balances 4,072,977 3,740,321
Additions (d) 236,095 169,341
Sales (24,625) (6,637)
Additions due to acquisition of Quicorp, Note 2.2 - 10,131
Gain on valuation, net 47,232 16,188
Net transfers (e) (6,555) (25,151)
Ending balances 4,325,124 3,904,193
Balance as of December 31, 2018 4,072,977
(d) During 2019, main additions correspond to buildings in the shopping malls (mainly “Puruchuco”, “Chiclayo” and
“Trujillo”).
During 2018, main additions correspond to buildings in the shopping malls (mainly “Puruchuco”) and to the outlays
related to the construction of the “Orquídeas” buildings (San Isidro – Lima).
(e) During 2019 and 2018, transfers were made between real estate investments and fixed assets mainly by properties in
Pucallpa, Talara, Trujillo, Puruchuco and Cusco, which are used by Subsidiaries of the Group for their own operations.
(f) Fair value measurement – Investment property - Valuation techniques
The valuation techniques to estimate the fair value and the main assumptions used are described in Note 8 “Investment
property” of the 2018 Annual Consolidated Financial Statements.
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
37
The main assumptions used in the valuation and estimation of the market value of investment properties
US$ / Percentage
As of September
30, 2019
As of December 31,
2018
Average ERV US$73.3 US$59.1
Long-term inflation 2.6 2.6
Long-term occupancy rate 88.0 / 99.0 90.9 / 98.9
Average growth rate of rental income 2.5 / 3.0 2.5 / 2.75
Average NOI margin 65.0 / 92.7 50.7 / 95.3
Discount rate 9.0 9.0
9. Inventories, net
(a) This caption is made up as follows:
As of September 30,
2019 As of December 31,
2018
S/(000) S/(000)
Inventories from retail activities, net (b) 2,411,541 2,288,168
Inventories from real estate activities, net 20,798 22,086
Total 2,432,339 2,310,254
(b) The table below presents the balance of inventories from retail activities:
As of September 30,
2019 As of December 31,
2018
S/(000) S/(000)
Inventories 2,265,737 2,169,794
Finished goods 122 689
Raw material 13,984 13,044
In-transit inventories 152,704 115,169
Miscellaneous supplies 5,738 5,836 2,438,285 2,304,532
Minus:
Allowance for obsolescence of inventories (b.1) (26,744) (16,364)
2,411,541 2,288,168
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
38
(b.1) The movement of the allowance for impairment of inventories by retail activities is as follows:
As of September 30,
2019 As of September 30,
2018
S/(000) S/(000)
Beginning of period balances 16,364 13,949
Provision for the period 17,598 28,827
Recoveries (2,937) (2,718)
Write-offs (4,281) (14,801)
Additions due to acquisition of Quicorp, Note 2.2 - 24,684
Translation - 80
End of period balances 26,744 50,021
Balance as of December 31, 2018
16,364
The allowance for impairment of inventories is determined based on rotation levels, discounts for clearance sales and other
characteristics based on periodical assessments performed by Management. In Management’s opinion, the balance of this
provision covers adequately the risk of impairment of inventories as of September 30, 2019 and 2018.
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
39
10. Accounts receivable and other assets, net; accounts payable, provisions and other liabilities
(a) These captions are comprised of the following:
As of September 30,
2019 As of December 31,
2018 S/(000) S/(000)
Accounts receivable and other assets
Financial instruments
Trade accounts receivable, net 608,917 692,692
Accounts receivable from the sale of investments 183,537 367,902
Other accounts receivable 578,919 535,270
Rights related to Interbank Corporate Bonds 2026, Note 13 (c) 1,665,200 -
Accounts receivable related to derivative financial instruments (b) 434,665 349,718
Assets for technical reserves for claims and premiums by reinsurers 87,762 147,891
Operations in process 60,410 55,024
Accounts receivable from reinsurers and coinsurers 31,615 39,875
Accounts receivable from insurance operations, net 9,682 42,795
Credit cards commissions receivable 13,748 13,366
Total 3,674,455 2,244,533
Non-financial instruments
Deferred charges 212,851 183,602
Recoverable taxes 171,430 160,171
Investments in associates 71,390 67,621
Value-Added Tax credit – VAT 61,034 72,770
Prepaid rentals 15,305 16,953
Public works tax deduction 7,556 22,608
Others 7,948 48,835
547,514 572,560
Total 4,221,969 2,817,093
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
40
As of September 30,
2019
As of December 31,
2018
S/(000) S/(000)
Accounts payable, provisions and other liabilities
Financial instruments
Trade accounts payable 3,453,085 3,497,540
Liability for leases, Note 4.2.2(a) 2,106,075 -
Liability for contract with investment component 438,474 298,382
Accounts payable for acquisitions of investments 319,100 250,433
Other accounts payable 444,365 718,672
Workers’ profit sharing and salaries payable 411,450 349,291
Accounts payable related to derivative financial instruments (b) 261,028 154,116
Operations in process 158,356 122,723
Allowance for indirect loan losses, Note 7(c.2) 42,302 62,051
Accounts payable to reinsurers and coinsurers 19,390 62,879
7,653,625 5,516,087
Non-financial instruments
Taxes payable 424,588 440,664
Deferred income 112,601 128,318
Provision for other contingencies 64,072 56,329
Others 11,762 21,528
613,023 646,839
Total 8,266,648 6,162,926
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
41
(b) The following table presents, as of September 30, 2019, and December 31, 2018, the fair value of derivative financial instruments recorded as assets or liabilities, including their notional amounts.
As of September 30, 2019 Assets Liabilities Notional amount
Effective part recognized in other
comprehensive income during
the nine-month period ended
September 30, 2019 Maturity Hedged instruments
Caption of the consolidated statements
of financial position where the hedged
item has been recognized S/(000) S/(000) S/(000) S/(000)
Derivatives held for trading -
Forward exchange contracts 34,197 41,798 8,652,218 - Between October 2019 and January 2021 - -
Interest rate swaps 104,702 115,674 4,152,089 - Between November 2020 and December 2029 - -
Foreign currency options 33,993 39,223 1,579,371 - Between October 2019 and September 2026 - -
Cross currency swaps - 58,852 199,116 - January 2023 - -
Options 297 699 136,891 - Between October 2019 and September 2020 - -
173,189 256,246 14,719,685 - Derivatives held as hedges -
Cash flow hedges:
Call Spreads (*) 79,904 - 1,354,000 (675) May 2023 Senior note not guaranteed Bonds, notes and other obligations
Call Spreads (*) 85,613 - 1,184,750 6,931 April 2028 Senior note not guaranteed Bonds, notes and other obligations
Cross currency swaps (CCS) 73,359 - 1,491,903 (8,424) January 2023 Senior bonds Bonds, notes and other obligations
Cross currency swaps (CCS) 22,268 - 507,450 (1,851) October 2027 Senior bonds Bonds, notes and other obligations
Cross currency swaps (CCS) 332 - 67,660 302 October 2020 Senior bonds Bonds, notes and other obligations
Interest rate swaps (IRS) - 1,335 84,575 (484) December 2020 Due to banks Due to banks and correspondents
Interest rate swaps (IRS) - 1,330 84,575 (486) December 2020 Due to banks Due to banks and correspondents
Interest rate swaps (IRS) - 2,117 135,320 (612) November 2020 Due to banks Due to banks and correspondents
261,476 4,782 4,910,233 (5,299)
434,665 261,028 19,629,918 (5,299)
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
42
As December 31, 2018 Assets Liabilities Notional amount
Effective part recognized in
other comprehensive income
during the year Maturity Hedged instruments
Caption of the consolidated statements of
financial position where the hedged item
has been recognized
S/(000) S/(000) S/(000) S/(000)
Derivatives held for trading -
Forward exchange contracts 20,400 21,529 5,194,105 - Between January 2019 and February 2020 - -
Interest rate swaps 19,249 19,854 2,018,220 -
Between November 2020 and December 2029 - -
Currency swaps 48,452 48,915 909,114 - Between January 2019 and January 2025 - -
Cross currency swaps - 59,683 198,527 - January 2023 - -
Options 628 1,956 234,780 - Between January 2019 and June 2020 - -
88,729 151,937 8,554,746 -
Derivatives held as hedges -
Cash flow hedges:
Call Spreads (*) 86,694 - 1,351,600 (12,356) May 2023 Senior note not guaranteed Bonds, notes and other obligations
Call Spreads (*) 77,257 - 1,182,650 (29,276) April 2028 Senior note not guaranteed Bonds, notes and other obligations
Cross currency swaps (CCS) 74,144 - 1,349,200 25,775 January 2023 Senior bonds Bonds, notes and other obligations
Cross currency swaps (CCS) 22,675 - 505,950 3,420 October 2027 Senior bonds Bonds, notes and other obligations
Interest rate swaps (IRS) - 1,002 134,920 (684) November 2020 Due to banks Due to banks and correspondents
Interest rate swaps (IRS) - 588 84,325 (393) December 2020 Due to banks Due to banks and correspondents
Interest rate swaps (IRS) - 589 84,325 (394) December 2020 Due to banks Due to banks and correspondents
Cross currency swaps (CCS) 219 - 67,460 2,562 October 2020 Senior bonds Bonds, notes and other obligations
260,989 2,179 4,760,430 (11,346)
349,718 154,116 13,315,176 (11,346)
(*) The call spread contracts were settled during 2018 with JP Morgan Chase & Co. and Citibank N.A. for a total reference value of US$350,000,000 and US$400,000,000, respectively; and were agreed in order to reduce the exchange rate risk exposure caused by the part of foreign currency debt issued by
InRetail Shopping Malls and InRetail Pharma S.A., in April and May 2018. In addition, the purchase price paid for such derivative financial instruments (premium) was financed in installments, generating a liability, whose total balance as of September 30, 2019, and December 31, 2018, amounts
approximately to S/121,750,000 and S/133,099,000; respectively, see Note 12(a).
(i) As of September 30,2019, and December 31, 2018 there are certain derivative financial instruments which according to the contracts signed have required the constitution of guarantee deposits; see Note 5.
(ii) For the designated hedging derivatives mentioned in the chart above, changes in fair values of hedging instruments completely offset the changes in fair values of hedged items; therefore, there has been no hedge ineffectiveness during the nine-month period ended September 30, 2019 and during the
fiscal year 2018.
(iii) Derivatives held for trading are traded mainly to satisfy clients’ needs. The Group may also take positions with the expectation of profiting from favorable movements in prices or rates. Also, this caption includes any derivatives which do not comply with IFRS 9 hedge accounting requirements.
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
43
11. Deposits and obligations
(a) This caption is made up as follows:
As of September 30,
2019 As of December 31,
2018
S/(000) S/(000)
Time deposits 11,257,429 11,035,800
Demand deposits 10,905,081 9,692,363
Saving deposits 11,708,263 10,727,772
Compensation for service time 1,880,779 1,801,372
Other obligations 13,460 4,959
Total 35,765,012 33,262,266
(b) Interest rates applied to deposits and obligations are determined based on the market interest rates.
(c) As of September 30, 2019, and December 31, 2018, out of total deposits and obligations, approximately
S/10,318,100,000 and S/9,734,215,000, respectively, are covered by the Peruvian Deposit Insurance Fund.
12. Due to banks and correspondents
(a) This caption is comprised of the following:
As of September
30, 2019 As of December
31, 2018
S/(000) S/(000)
By type
Loans received from Peruvian entities 2,571,929 2,123,186
BCRP, Notes 5(b), 6(b) (**) and 6(e) 2,359,231 2,073,919
Promotional credit lines 1,408,006 1,454,603
Loans received from foreign entities, (b) and Note 6(b)(*) 760,890 1,088,373
Loans received from third parties 66,887 293,214
Loans for purchase of derivative financial instruments, Note 10(b)(*) 125,259 133,099 7,292,202 7,166,394
Interest and commissions payable 60,502 59,815
7,352,704 7,226,209
By term
Short term 4,383,736 3,862,214
Long term 2,968,968 3,363,995
Total 7,352,704 7,226,209
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
44
(b) As of September 30, 2019 and December 31, 2018, some of the Group loan agreements include standard clauses
regarding the compliance of financial ratios, assets disposals and intercompany transactions under certain conditions,
the use of funds and other management issues, such as:
(i) Submit audited financial statements on an annual basis and unaudited financial statements on a quarterly
basis (both in Spanish and English).
(ii) Maintain a determined global capital ratio.
(iii) Maintain a determined coverage margin of non-performing loan portfolio.
(iv) Maintain a determined past due loans rate.
In the opinion of Management, the Group complies with these covenants as of September 30, 2019 and December 31,
2018.
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
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13. Bonds, notes and other obligations
(a) This caption is comprised of the following:
Issuance Issuer Annual interest rate
Interest
payment Maturity Amount issued
As of September
30, 2019
As of December
31, 2018
S/(000) S/(000) S/(000)
Local issuances
Subordinated bonds – first program Second (B series) Interbank 9.50% Semi-annually 2023 US$30,000 - 94,086
Third (A series) Interbank 3.5% + VAC (*) Semi-annually 2023 S/110,000 91,000 70,000
Fifth (A series) Interbank 8.50% Semi-annually Jul 2019 S/3,300 - 3,300
Sixth (A series) Interbank 8.16% Semi-annually Jul 2019 US$15,110 - 50,966
Eighth (A series) Interbank 6.91% Semi-annually 2022 S/137,900 137,105 137,130
Second, first tranch (* *) Interseguro 6.97% Semi-annually 2024 US$35,000 - 118,055
Second, second tranch Interseguro 6.00% Semi-annually 2024 US$15,000 50,745 50,594
278,850 524,131
Subordinated bonds – second program Second (A series) Interbank 5.81% Semi-annually 2023 S/150,000 149,814 149,776
Third (A series) Interbank 7.50% Semi-annually 2023 US$50,000 168,855 168,312
318,669 318,088
Subordinated bonds – third program
First issue - Interseguro Interseguro 9.50% Semi-annually 2029 US$20,000 67,660 -
67,660 -
Corporate bonds – first program First (A series) Financiera OH! 7.69% Quarterly 2021 S/120,000 119,745 119,626
First (B series) Financiera OH! 6.97% Quarterly 2021 S/99,419 99,209 99,129
Second (A series) Financiera OH! 6.28% Quarterly 2021 S/100,000 99,750 99,670
Second (B series) Financiera OH! 5.84% Quarterly 2022 S/60,000 59,813 59,765
Third (A series) Financiera OH! 6.41% Quarterly 2023 S/95,885 95,554 -
474,071 378,190
Corporate bonds – second program Fifth (A series) Interbank 3.41% + VAC (*) Annually 2029 S/ 150,000 150,000 -
150,000 -
Securitized Bonds First issuance– A and B series Colegios Peruanos 8.78% Semi-annually 2035 S/66,000 33,022 27,614
Second issuance– A series Colegios Peruanos 8.78% Semi-annually 2035 S/50,000 46,983 28,791
Third issuance– A series Colegios Peruanos 7.69% Semi-annually 2037 S/70,000 69,414 69,372
Fourth issuance– A series Colegios Peruanos 5.96% Semi-annually 2034 S/230,000 227,017 -
First issuance– A class, 1 series Homecenter Peruanos 6.59% Quarterly 2025 S/100,000 96,044 99,014
472,480 224,791
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
46
Issuance Issuer Annual interest rate
Interest
payment Maturity Amount issued
As of September
30, 2019
As of December
31, 2018
S/(000) S/(000) S/(000)
Negotiable certificates of deposit
Negotiable certificates of deposit Financiera OH! Between 4.41% and 4.97% Annually Between October 2019
and Jun 2020 370,740 361,328 368,815
Negotiable certificates of deposit Interbank 4.28% Annually 2020 150,000 146,986 -
508,314 368,815
Total local issuances 2,270,044 1,814,015
International issuances
Subordinated bonds Interbank 6.63% Semi-annually 2029 US$300,000 1,010,630 1,006,875
Junior subordinated notes Interbank 8.50% Semi-annually 2070 US$200,000 674,114 671,546
Senior bonds – first and second issue Interbank 5.75% Semi-annually 2020 US$650,000 1,311,009 1,309,248
Senior bonds (c) Interbank 5.00% Semi-annually 2026 S/312,400 312,000 -
Senior bonds (c) Interbank 3.25% Semi-annually 2026 US$400,000 1,352,420 -
Senior bonds Intercorp Financial Services 4.13% Semi-annually 2027 US$300,000 1,001,210 993,241
Corporate senior bonds Interbank 3.38% Semi-annually 2023 US$484,895 1,588,781 1,558,979
Senior bonds Intercorp Perú 7.66% Semi-annually 2030 S/301,500 298,213 288,224
Senior bonds (d) Intercorp Perú 5.88% Semi-annually 2025 US$250,000 - 788,018
Senior bonds (e) Intercorp Perú 3.88% Semi-annually 2029 US$325,000 1,052,223 -
Senior bonds (e) Intercorp Perú 5.78% Semi-annually 2029 S/300,000 295,969 -
Senior notes not guaranteed Inretail Shopping Malls 7.88% Semi-annually 2034 S/141,000 135,497 128,366
Senior notes not guaranteed Inretail Shopping Malls 5.75% Semi-annually 2028 US$350,000 1,107,608 1,095,755
Senior notes not guaranteed Inretail Shopping Malls 6.56% Semi-annually 2028 S/313,500 262,254 264,200
Senior notes not guaranteed Inretail Pharma 5.38% Semi-annually 2023 US$400,000 1,336,474 1,330,762
Senior notes not guaranteed Inretail Pharma 6.44% Semi-annually 2025 S/385,800 383,628 383,390
First issue Intercorp Retail 7.00% Annually 2020 US$25,000 84,624 84,475
Total international issuances 12,206,654 9,903,079
Total local and international issuances 14,476,698 11,717,094
Interest payable 274,849 212,534
Total 14,751,547 11,929,628
(*) The Spanish term “Valor de actualización constante“ is referred indexed amounts.
(**) On February 12, 2019, Interseguro performed the early redemption of said instruments and paid interest for approximately US$1,200,000.
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
47
(b) The international issuances are listed at the Luxembourg Stock Exchange. On the other hand, the local and international
issuances include standard clauses of compliance with financial ratios, the use of funds and other administrative
matters.
As of September 30, 2019 and December 31, 2018, the international issuances maintain mainly this covenant: Submit
audited financial statements on an annual basis and unaudited financial statements on a quarterly basis (both in
Spanish and English).
In the opinion of Management, this covenant has been met by the Group as of September 30, 2019 and December 31,
2018. See detailed information in Note 14 of the Annual Consolidated Financial Statements.
(c) On the other hand, during September 2019, Interbank issued corporate bonds called “5.00% Senior Notes due 2026” for
S/312,000,000 and corporate bonds called “3.250% Senior Notes due 2026” for US$400,000,000, both issuances
were made under Rule 144A and Regulation S of the U.S. Securities Act of 1933 of the United States of America. As of
September 30, 2019, proceeds from both issuances are recognized as an account receivable amounting to
S/1,665,200,000 and were collected on October 1 and October 4, 2019, see Note 10(a).
(d) In July 2019, Intercorp Perú performed the repurchase of corporate bonds denominated “5.875% Senior Notes due
2025”; which originated the premium payment for approximately US$11,400,000 (equivalent to S/36,027,000) which
is presented in the caption “Financial expenses” in the statements of income; see Nota 17.
(e) In July 2019, the Company performed a private offering abroad and on the local market of bonds denominated “3.875
Senior Notes due 2029” and “5.78125 Senior Notes due 2029” for US$325,000,000 and S/300,000,000,
respectively. The bonds were issued under Rule 114A and Regulation S of the U.S. Securities Act of 1993 of the United
States of America. The proceeds from these issuances were used mainly for the repurchase and redemption of corporate
bonds “5.875% Secured Notes due 2025” issued by Intercorp Perú and payment of the premium for the repurchase of
said bonds.
Issuance expenses amounted to approximately S/39,000,000, which are presented as an issued bonds deduction; as of
September 30, 2019, have accrued as part of the interest rate approximately S/542,000.
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
48
14. Insurance contract liabilities
(a) This caption is comprised of the following:
As of September
30, 2019 As of December
31, 2018
S/(000) S/(000)
Technical reserves for insurance premiums (b) 11,236,197 10,006,960
Technical reserves for claim 217,075 293,508
11,453,272 10,300,468
By term
Short term 949,066 935,182
Long term 10,504,206 9,365,286
Total 11,453,272 10,300,468
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
49
(b) The movement of technical reserves for insurance premiums disclosed by type of insurance for the nine-month periods ended September 30, 2019 and 2018, is as follows:
As of September 30, 2019 As of September 30, 2018
Annuities
Retirement,
disability and
survival annuities
Life
insurance General insurance Total
Annuities
Retirement,
disability and
survival annuities
Life
insurance General insurance Total
S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000)
Beginning of period balances 8,665,894 715,217 586,166 39,683 10,006,960 9,034,796 676,949 525,662 36,482 10,273,889
Insurance subscriptions 228,127 - 3,116 36,729 267,972 187,510 - 7,097 35,104 229,711
Interest rate effect 951,093 85,463 - - 1,036,556 (900,970) (99) - - (901,069)
Time passage adjustments (100,292) (12,047) 95,917 (34,644) (51,066) 31,963 12,823 58,414 (31,659) 71,541
Maturities and recoveries - - (36,777) - (36,777) - - (28,867) - (28,867)
Exchange differences 10,628 - 1,914 10 12,552 67,159 68 9,043 (669) 75,601
End of period balances 9,755,450 788,633 650,336 41,778 11,236,197 8,420,458 689,741 571,349 39,258 9,720,806
Balance as of December 31, 2018
8,665,894 715,217 586,166 39,683 10,006,960
(c) In Management’s opinion, these balances reflect the exposure of life and general insurance contracts as of September 30, 2019, and December 31, 2018, in accordance with IFRS 4.
(d) As of September 30, 2019 and December 31, 2018, the main assumptions used in the estimation of retirement, disability and survival annuities and individual life reserves are the following:
Technical rates
Type Mortality table 30.09.2019 31.12.2018
Annuities SPP-S-2017, SPP-I-2017 4.65% in US$ 5.63% in US$
with improvement factor 1.84% in Soles VAC 2.74% in S/ VAC
for mortality 4.93% in adjusted S/ 5.84% in adjusted S/
Retirement, disability and survival SPP-S-2017, SPP-I-2017 1.84% in Soles VAC 2.74% in S/ VAC
with improvement factor
for mortality
Individual life insurance contracts (included linked insurance contracts) CSO 80 adjusted 4.00 - 5.00% 4.00 - 6.00%
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
50
The sensitivity of the estimates used by the Group to measure its insurance risks is represented primarily by life insurance risks; the main variables as of September 30, 2019 and December 31, 2018, are the interest
rates and the mortality tables. The Group has assessed the changes of the reserves related to its most significant life insurance contracts included in the reserves of annuities, retirement, disability and survival of +/-
100 basis points (bps) in the interest rates and of +/- 500 bps of the mortality factors, being the results as follows:
As of September 30, 2019 As of December 31, 2018
Variation of the reserves Variation of the reserves
Reserves Amount Percentage Reserves Amount Percentage
S/(000) S/(000) % S/(000) S/(000) %
Portfolio in S/ and US Dollars - Basis amount
Changes in interest rate: + 100 bps 8,731,096 (1,024,355) (10.50) 7,816,973 (848,921) (9.80)
Changes in interest rate: - 100 bps 11,015,474 1,260,023 12.92 9,696,893 1,030,999 11.90
Changes in mortality table at 105% 9,655,380 (100,070) (1.03) 8,587,633 (78,261) (0.90)
Changes in mortality table at 95% 9,860,490 105,040 1.08 8,747,817 81,923 0.95
Retirements, disability and survival
Portfolio in S/ – Basis amount
Changes in interest rate: + 100 bps 694,792 (93,841) (11.90) 635,838 (79,379) (11.10)
Changes in interest rate: - 100 bps 906,276 117,643 14.92 813,614 98,397 13.76
Changes in mortality table at 105% 778,097 (10,536) (1.34) 706,495 (8,722) (1.22)
Changes in mortality table at 95% 799,714 11,081 1.41 724,366 9,149 1.28
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
51
15. Equity
(a) Capital stock and dividend distribution
As of September 30, 2019, and December 31, 2018, the Company’s capital stock was represented by 14,901,892 Class
A shares and 134,117,024 Class B shares. Both classes have the same economic rights. The difference between them is
that Class A shares grant the right to choose the majority of the Board of Directors’ members (5 directors), while Class B
shares can choose one director.
The shareholding structure of the Company as of September 30, 2019, and December 31,2018 is presented below:
Shareholder Total ownership
%
Class “A” shares:
International Financial Holding Inc. 7.73
Southern Hill Corp. 2.27
Class “B” shares:
Bank of New York-ADR Programs 39.78
International Financial Holding Inc. 21.79
Shetland Securities Inc. 16.37
Southern Hill Corp. 10.60
Others 1.46 _______
100.00 _______
The Board of Directors’ session, held on August 20, 2019, agreed to capitalize retained earnings and earnings generated
in the year for future capitalizations for the amount of S/200,000,000.
The Board of Directors’ session, held on May 21, 2019, agreed to capitalize the earnings generated in the year for future
capitalizations for the amount of S/420,000,000.
The General Shareholders’ Meeting held on April 1, 2019, agreed to capitalize approximately S/491,464,000 over
retained earnings. Likewise, it was agreed to distribute dividends for US$30,000,000 (equivalent to S/98,940,000),
which will be paid in four equal installments (US$7,500,000) from June 2019 to March 2020. In the same meeting, the
nominal value per share was modified from US$9 to US$10, while the number of shares was kept the same.
The Board of Directors’ session, held on February 27, 2019, agreed to capitalize the retained earnings for the amount of
S/320,000,000.
The General Shareholders’ Meeting held on April 2, 2018, agreed to capitalize approximately S/485,891,000. Likewise,
it was agreed to distribute dividends for US$30,000,000 (equivalent to 97,818,000), which will be paid in four quarterly
and equal installments (US$7,500,000) from June 2018 to March 2019. In the same meeting, the nominal value per
share was modified from US$8 to US$9, while the number of shares was kept the same.
The Board of Directors’ Meeting held on May 22, 2018, agreed to capitalize the earnings to be generated in 2018 up to
the amount of S/250,000,000, delegating in the general manager the decision of the exact amount to be capitalized.
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
52
(b) Shareholders’ equity for legal purposes (regulatory capital)
Intercorp Perú must meet certain capital requirements as well as global and concentration limits set out by the
Regulation on Consolidated Supervision of Financial and Mixed Conglomerates, approved on September 29, 2010, by
the SBS through Resolution No. 11823-2010, as amended. As of September 30, 2019 and December 31, 2018, the
regulatory capital required for Interbank, Interseguro and Financiera OH!, is calculated based on the separate financial
statements of each Subsidiary prepared following the accounting principles and practices stated by the SBS. Also, as of
those dates, the regulatory capital required for Inteligo Bank is calculated in accordance with the requirements of the
Central Bank of The Bahamas. The regulatory capital required for Interbank, Interseguro, Inteligo Bank and Financiera
OH!, is detailed in Note 18(e) of the 2018 Annual Consolidated Financial Statements.
As of September 30, 2019, and December 31, 2018, the Group has met the requirements and complementary provisions
established by the SBS as of said dates.
(c) Reserves
The General Shareholders’ Meeting held on April 1, 2019, agreed to constitute a reserve for S/58,536,000 charged to
retained earnings.
The General Shareholders’ Meeting held on April 2, 2018, agreed to constitute a reserve for S/114,109,000 charged to
retained earnings.
16. Tax situation
(a) Intercorp Perú and its Subsidiaries incorporated and domiciled in The Bahamas and Republic of Panama (see Note 3),
are not subject to any Income Tax or any taxes on capital gains, equity or property. The Subsidiaries of the Company
incorporated and domiciled in countries different to the mentioned before are subject to the Tax legislation of the country
where they operate; see paragraph (b).
Peruvian life insurance companies are exempted from Income Tax regarding the income derived from assets linked to
technical reserves for pension insurance (retirement, disability and survival pensions) and annuities from the Private
Pension Fund Administration System.
On the other hand, it is considered as Peruvian-source income those arisen from the direct or indirect sale of shares of
stock or ownership interests of legal entities domiciled in the country.
For that purpose, an indirect sale shall be considered to have occurred when shares of stock or ownership interests of a
legal entity are sold and this legal entity is not domiciled in the country and, in turn, is the holder — whether directly or
through other legal entity or entities — of shares or ownership interests of one or more legal entities domiciled in the
country, provided that certain conditions established by law.
In this sense, the Income Tax Act establishes that a case of indirect transfer of shares occurs when, in any of the twelve
(12) months prior to the sale, the market value of the shares or ownership interests of the domiciled legal entity is
equivalent to 50 percent or more of the market value of the shares of stock or ownership interests of the non-domiciled
legal entity. In addition, as a concurrent condition, it is established that, in any 12-month period, shares or ownership
interests that represent 10 percent or more of the capital stock of a non-domiciled legal entity shall be sold.
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
53
(b) The Company’s Subsidiaries are subject to the tax regime of the country in which they operate; and pay taxes on the basis
of their separate financial statements. As of September 30, 2019 and December 31, 2018, the applicable Income Tax
rates on the taxable income in the main countries where the Company and its Subsidiaries operate are presented below.
Tax rates __________________________________
2019 2018
% %
Spain (*) 25.00 25.00
Peru 29.50 29.50
Ecuador 25.00 25.00
Colombia 33.00 33.00
Bolivia 25.00 25.00
Mexico 30.00 30.00
According to existing legislation in some countries, as of September 30, 2019, and December 31, 2018, cash dividends
for non-domiciled shareholders are taxable for Income Tax according to the following rates:
Tax rates __________________________________
2019 2018
% %
Spain (*) - -
Peru 5.00 5.00
Ecuador 10.00 10.00
Colombia 7.50 5.00
Bolivia 12.50 12.50
Mexico (**) - -
(*) The distribution of dividends from Spain to The Bahamas is not subject to this tax.
(**) The distribution of dividends from Mexico to Spain is not subject to this tax.
(c) The Tax Authority is legally entitled to review and dispute tax returns for up to four years subsequent to the date at which
they are filed. It also has the legally entitled to challenge the income tax calculated for subsidiaries on their tax return.
Given the possible interpretations that the Tax Authority may have for the current legal regulations, it is not possible to
determine as of the corresponding date if future revisions will result or not in additional liabilities for Subsidiaries of the
Intercorp Group, therefore, if eventual tax revisions result in higher taxes, they will be applied to the profit or loss of the
fiscal year in which they are determined.
(d) Financial and insurance entities -
Interbank -
In the case of Interbank, in April 2004, June 2006, February 2007, June 2007, November 2007, October 2008 and
December 2010, it received several of Tax Determination and Tax Penalty notices corresponding mainly to the Income Tax
determination for the fiscal years 2000 to 2006. As a result, claims and appeals were filed and subsequent contentious
administrative proceedings were started, with the exception of Income Tax 2006, which is still pending in the Tax Court.
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
54
Regarding the tax litigations followed by Interbank related to the annual Income Tax returns for the years 2000 to 2006,
the most relevant matter subject to discrepancy with SUNAT corresponds to whether the “interest in suspense” are
subject to Income Tax or not. In this sense, Interbank considers that the interest in suspense do not constitute accrued
income, in accordance with the SBS and the IFRS, which is also supported by a ruling of the Permanent Constitutional
and Social Law Chamber of the Supreme Court issued in August 2009.
Notwithstanding the foregoing, in February 2018, Interbank was informed that the Third Transitory Chamber of
Constitutional and Social Law of the Supreme Court, issued a ruling regarding a third bank that impacts Interbank’s
original estimation regarding the degree of contingency indicated in the previous paragraph; which, based on this new
circumstance and in compliance with the IFRS, Interbank estimates as possible as of the date of this report.
Afterwards, in September 2019, the Permanent Chamber of Constitutional and Social Law of the Supreme Court of
Justice of the Republic, in an identical case, has resolved in favor of the taxing treatment on the suspended interest
followed by the financial institution; which based on this new circumstance and in compliance with the IFRS, Interbank
deems as remote.
The tax liability requested for this concept and other minor matters by SUNAT as of September 30, 2019, amounts to
approximately S/300,000,000 of which S/34,000,000 correspond to taxes and the difference to fines and default
interests.
From the tax and legal analysis carried out, Interbank's Management and its external legal advisors consider that there is
sufficient technical support for the prevalence of Interbank's position; as a result, it has not recorded any provision for
this contingency as of September 30, 2019 and December 31, 2018.
On the other hand, during the years 2013 and 2014, SUNAT closed the audit processes corresponding to the assessment
of the Income Tax of the fiscal years 2007, 2008 and 2009, respectively, thus issuing a series of Assessment Resolutions
without any additional levying of said tax.
On January 11, 2016, SUNAT closed the partial audit corresponding to the fiscal year 2013 for withholding of Income Tax
from non-domiciled beneficiaries, issuing a series of Final Assessment Resolutions without any additional levying of the
tax in question.
On February 3, 2017, SUNAT closed the inspection corresponding to the fiscal year 2010 related to Income Tax. The Bank
paid the amount of the deficiency under protest and filed a complaint. On November 6, 2018, the Tax Authority closed
again the inspection corresponding to the fiscal year 2010 in relation to the Income Tax. Interbank paid the amount
indebted under protest and files a tax complaint and later on, a fiscal appeal. Currently, the appeal is pending resolution
by the Tax Court.
On February 14, 2018, SUNAT notified Interbank of the beginning of the partial inspection process for the Income Tax for
the year 2014.
On September 7, 2018, SUNAT closed the partial inspection process for the income tax for the year 2014; without
additional tax request.
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
55
On January 14, 2019, Interbank was notified of the Determination and Penalty Resolutions corresponding to the audit of
the Income Tax for the fiscal year 2013. The tax debt sought by SUNAT amounts to approximately S/56,000,000. In
February and October 2019, Interbank Management has submitted the respective complaint to the resolutions indicated
above. In Management opinion and its legal advisors, any additional tax assessment would not be significant for the
interim condensed consolidated financial statements as of September 30, 2019 and December 31, 2018.
On April 26, 2019, SUNAT notified of the beginning of the definitive inspection process for withholding of Income Tax from
non-domiciled beneficiaries for the year 2018.
Interseguro -
On January 4, 2019, Interseguro was notified through a Tax Determination notice about the partial auditing of the Income
Tax for non-domiciled entities for Sura corresponding to January 2015. The tax debt claimed by SUNAT amounts to
approximately S/19,000,000. Considering that this debt corresponds to a period prior to the acquisition of Seguros Sura
by the Group, and according to the conditions of the purchase and sale agreement of this entity, this tax assessment, if
confirmed after the legal actions that Management is to file, would be assumed by the sellers. On January 30, 2019, the
Company filed an appeal against the determination decision with the Tax Authority.
On August 28, 2019, Interseguro was notified by the Tax Authority through official letter and requirement in relation to the
Income Tax of the fiscal year 2008, as definitive inspection to Seguros Sura.
Finally, as of the date of this report, SUNAT is reviewing the 2012 tax return of Interbank. In the opinion of Management,
any eventual additional tax assessment would not be significant for the interim condensed consolidated financial
statements as of September 30, 2019 and December 31, 2018.
(e) Retail and real estate -
Supermercados Peruanos S.A. has been audited by SUNAT on its Income Tax returns and its monthly IGV returns for the
years 2004 to 2010. Said audits resulted in Determination Resolutions generating higher tax payments, fines and
interest for an approximate total of S/167,666,000 as of September 30, 2019 (S/175,000,000 as of December 31,
2018).
The resolutions issued for the years 2004 to 2010 have been challenged and these cases are pending resolution by the
Tax Court. In the opinion of Management and its legal advisors, Supermercados Peruanos S.A. has sufficient arguments
that defend its position.
Eckerd Amazonia S.A.C. filed claims against several Determination and Fine Resolutions on alleged omissions of the
payment of IGV for the period between January 2013 and June 2015 for approximately S/17,431,000. In Management
opinion and its legal advisors, any additional tax assessment would not be significant for the interim condensed
consolidated financial statements.
Mifarma S.A.C. (formerly Farmacias Peruanas S.A.C.) filed an appeal against SUNAT for resolutions with alleged
omissions in the determination of tax base for the profits of 2001, 2003, 2008, 2009, 2011, 2012, 2013, 2014 and
2015, as well as the IGV of the year 2001 for approximately S/9,037,000 as of September 30, 2019. Management and
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
56
its legal advisors do not consider it necessary to create additional provisions to those that are already recorded as of
September 30, 2019, for these processes.
(f) Educational business -
As of September 30, 2019, and December 31, 2018, UTP S.A.C. maintains several lawsuits (labor, tax and civil) and
contentious administrative procedures with different municipalities and SUNAT, which have been assessed and qualified
by Management and its legal advisors as possible. As of September 30, 2019, the approximate amount of such
proceedings and procedures amounts to approximately S/6,778,000 (S/5,006,000 as of December 31, 2018). In the
opinion of Management and its legal advisors, these legal actions will not generate liabilities of importance to the
financial statements.
(g) Regarding the determination of the Income Tax, transfer prices of transactions with related companies and companies
located in non-cooperating countries or territories or with low or zero taxation, or with legal persons or permanent
establishments whose profits, income or earnings from such contracts are subject to a preferential fiscal regime, must be
supported with documentation and information about valuation methods and criteria considered for its determination.
Based on the analysis of the Company’s and its Subsidiaries’ operations, Management and its legal advisors believe that,
as a result of the application of these standards, there will not be significant contingencies for the Company and its
Subsidiaries as of September 30, 2019, and December 31, 2018.
Through Legislative Decree No. 1312, published on December 31, 2016, the formal obligations for entities included
within the scope of application of transfer pricing are modified, thus incorporating three new informative affidavits: (i)
Local Report; (ii) Master Report; and (iii) Country Report. The first validity of the first affidavit started in 2017 for the
operations that occurred during 2016, while the validity of the latest two started in 2018 for the operations that have
occurred since the fiscal year 2017.
(h) Through Legislative Decree No.1381, published on August 24, 2018, it was incorporated in the Income Tax Act the
concept of “non-cooperating” countries or territories and preferential tax regimes to which are imposed the defensive
measures already existing for countries and territories with low or zero taxation.
In this regard, it is important to emphasize that, at present, Interbank maintains a branch in Panama, a country that is
considered “non-cooperating”, in accordance with Legislative Decree No. 1381.
(i) In July 2018, Act No. 30823 was published, whereby the Congress delegated power to the Executive Branch to legislate
on various issues, including tax and financial matters. In this sense, the main tax regulations issued are the following:
(i) Beginning on January 1, 2019, the treatment applicable to royalties and remuneration for services rendered by
non-domiciled persons was modified, eliminating the obligation to pay the amount equivalent to the
withholding due to the accounting record of the cost or expense. Now the Income Tax is withheld at the
payment or accreditation of the compensation. In order for said cost or expense to be deductible for the local
company, the remuneration must have been paid or credited up to the filing date of the annual tax return for
the Income Tax (Legislative Decree No. 1369).
(ii) The rules that regulate the obligation of legal persons and/or legal entities to inform the identification of their
final beneficiaries (Legislative Decree No. 1372) were established. These rules are applicable to legal entities
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
57
domiciled in the country, in accordance with the provisions of Article 7 of the Income Tax Act, and legal entities
established in the country. The obligation covers non-domiciled legal entities and legal entities established
abroad, provided that: a) they have a branch, agency or other permanent establishment in the country; b) the
natural or juridical person who manages the autonomous patrimony or the investment funds from abroad, or
the natural or juridical person who has the status of protector or administrator, is domiciled in the country; c)
any of the parts of a consortium is domiciled in the country. This obligation will be fulfilled through the
presentation to SUNAT of an informative report, which must contain the information of the final beneficiary and
be submitted, in accordance with the regulations and within the deadlines established by Superintendence
Resolution issued by SUNAT.
(iii) The Tax Code was amended regarding the application of the general anti-avoidance rule (Rule XVI of the
Preliminary Title of the Tax Code - Legislative Decree No. 1422).
As part of this amendment, a new assumption of joint and several liability is envisaged, when the tax debtor is
subject to the application of the measures provided by Rule XVI in the event that tax evasion cases are
detected; in such case, the joint and several liability shall be attributed to the legal representatives provided
that they have collaborated with the design or approval or execution of actions or situations or economic
relations viewed as evasion in Rule XVI. In the case of companies that have a Board of Directors, it is up to this
corporate body to define the tax strategy of the entity, having to decide on the approval or not of actions,
situations or economic relations to be carried out within the framework of tax planning, this power being non-
delegable. The actions, situations and economic relations carried out within the framework of tax planning and
implemented at the date of entry into force of Legislative Decree No. 1422 (September 14, 2018) and which
continue to have effect, must be evaluated by the Board of Directors of the legal entity for the purpose of
ratification or modification until March 29, 2019, without prejudice to the fact that the management or other
administrators of the Company and its Subsidiaries have approved the aforementioned actions, situations and
economic relations.
Likewise, it has been established that the application of Rule XVI, regarding the re-characterization of tax
evasion cases, will take place in the final inspection procedures in which actions, events or situations
produced since July 19, 2012, are reviewed.
(iv) Amendments to the Income Tax Act were included, effective as of January 1, 2019, to improve the tax
treatment applicable to the following (Legislative Decree No. 1424):
- Income obtained from the indirect transfer of shares of stock or capital representing
participations of legal persons domiciled in the country. Among the most relevant changes is the
inclusion of a new indirect sale assumption, which is configured when the total amount of the
shares of the domiciled legal entity whose indirect disposal is made is equal to or higher than
40,000 Tax Units.
- Permanent establishments of sole proprietorship, companies and entities of any nature
incorporated abroad. For this purpose, new cases of permanent establishment have been included,
among them, when the rendering of services in the country occurs, with respect to the same project,
service or related one, for a period that exceeds 183 calendar days in total within any 12-month
period.
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58
- The regime of credits against Income Tax for taxes paid abroad, to be included in the indirect
credit (corporate tax paid by foreign subsidiaries) as credit applicable against the Income Tax of
domiciled legal persons, in order to avoid the double economic imposition.
- The deduction of interest expenses for the determination of corporate Income Tax. In the years
2019 and 2020, it shall be applicable the debt limit set at up to three times the net equity as of
December 31 of the previous year will be applicable, both to loans with related parties, and to
loans with third parties contracted as of September 14, 2018. Beginning in 2021, the limit for
the deduction of financial expenses shall be equivalent to 30 percent of the entity’s EBITDA.
(v) Regulations have been established for the accrual of income and expenses for tax purposes as of January 1,
2019 (Legislative Decree No. 1425). Until 2018, there was no normative definition of this concept, so in many
cases accounting rules were used for its interpretation. In general terms, with the new criterion, for the purpose
of determining the Income Tax, it shall be considered whether the substantial events for the generation of the
income or expense agreed upon by the parties have occurred, provided they are not subject to a subsequent
condition, in which case the recognition shall take place when it is fulfilled and when collection or payment
established is to take place shall not be taken into account; and, if the determination of the consideration
depends on a future action or event, the total or part of the corresponding income or expense will be deferred
until that action or event occurs.
(j) Intercorp Perú calculates the period’s Income Tax expense using the best estimate of the weighted average annual tax
rate expected for the full annual earnings. The table below presents the amounts reported in the interim condensed
consolidated statements of income for the nine-month periods ended September 30, 2019 and 2018:
For the nine-month periods
ended September 30
2019 2018
S/(000)
S/(000)
Current – Expense (594,384) (429,497)
Deferred – (Income) expense 14,940 (66,673)
(579,444) (496,170)
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59
17. Interest and similar income; Interest and similar expenses
(a) This caption is comprised of the following:
For the nine-month periods
ended September 30
2019 2018
S/(000) S/(000)
Interest and similar income -
Interest on loan portfolio 3,261,114 2,813,851
Interest on investments at fair value through other comprehensive income 546,130 577,050
Interest on due from banks and inter-bank funds 105,121 46,927
Interest on investments at amortized cost 67,903 63,783
Dividends on financial instruments 54,522 51,898
Other interest and similar income 1,979 5,135
Total 4,036,769 3,558,644
Interest and similar expenses
Interest on bonds, notes and other obligations (488,414) (493,337)
Interest and fees on deposits and obligations (601,890) (404,050)
Interest and fees on obligations with financial institutions (291,123) (334,968)
Interest on leases, Note 4.2.2 (113,731) -
Deposit insurance fund premium (33,967) (30,175)
Result from hedging transactions (6,912) (6,912)
Time value of Call Spreads premium (11,415) (28,232)
Premium for early cancellation of bonds, notes and other obligations (36,027) (52,942)
Expenses for early settlement of Call Spreads, Note 10(b) - (24,129)
Other interest and similar expenses (33,640) (22,855)
Total (1,617,119) (1,397,600)
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
60
18. Fee income from financial services, net
This caption is comprised of the following:
For the nine-month periods
ended September 30
2019 2018
S/(000) S/(000)
Income
Maintenance and mailing of accounts, transfer fees and commissions on credit and debit
card 509,232 483,631
Commissions for banking services 158,481 127,131
Funds management 104,293 110,560
Fees from indirect loans 42,421 46,841
Collection services fees 28,971 26,623
Brokerage and custody services fees 6,168 7,410
Others 32,204 23,388
Total 881,770 825,584
Expenses
Credit cards (87,750) (62,748)
Debtor’s life insurance premiums (37,273) (50,172)
Fees paid to foreign banks (12,748) (11,306)
Brokerage and custody services (467) (1,747)
Others (36,911) (32,202)
Total (175,149) (158,175)
Total, net 706,621 667,409
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19. Other income and expenses
This caption is comprised of the following:
For the nine-month periods
ended September 30
2019 2018
S/(000) S/(000)
Other income
Income from lease 30,005 29,237
Income from investments in associates 12,912 14,640
Other technical income from insurance operations 9,766 9,103
Services rendered to third parties 2,455 4,408
Others 22,130 27,107
Total other income 77,268 84,495
Other expenses
Provision for accounts receivable (48,612) (49,843)
Sundry technical insurance expenses (31,519) (29,782)
Commissions from insurance activities (8,702) (18,699)
Provision for sundry risks (5,713) (6,203)
Donations (3,982) (3,576)
Administrative and tax penalties (1,610) (2,976)
Expenses related to rental income (1,020) -
Others (39,527) (42,961)
Total other expenses (140,685) (154,040)
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
62
20. Net premiums earned
For the nine-month periods ended September 30, 2019, and 2018, this caption is comprised of the following:
Premiums assumed Adjustment of technical reserves
Gross
premiums earned (*) Premiums ceded to reinsurers Net premiums earned
2019 2018 2019 2018 2019 2018 2019 2018 2019 2018
S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000)
Life insurance
Annuities (**) 214,148 187,732 (35,373) (213,499) 178,775 (25,767) - - 178,775 (25,767)
Group life 100,685 80,999 (417) 1,065 100,268 82,064 (3,901) (3,342) 96,367 78,722
Individual life 100,436 96,895 (58,843) (36,150) 41,593 60,745 (3,319) (4,365) 38,274 56,380
Retirement, disability and survival 10,476 119,801 (74,031) (12,822) (63,555) 106,979 (2,812) (75,605) (66,367) 31,374
Others 2 3 (2,993) (1,559) (2,991) (1,556) - - (2,991) (1,556)
Total life insurance 425,747 485,430 (171,657) (262,965) 254,090 222,465 (10,032) (83,312) 244,058 139,153
Total general insurance 77,512 72,323 (2,691) (3,445) 74,821 68,878 (156) (1,333) 74,665 67,545
Total 503,259 557,753 (174,348) (266,410) 328,911 291,343 (10,188) (84,645) 318,723 206,698
(*) Includes the annual variation of technical reserves and unearned premiums.
(**) The variation of the adjustment of technical reserves is due to variation in the rates with which technical reserves are determined, see rates in Note 14(d).
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
63
21. Gross profit from retail business
(a) This caption is comprised of the following:
For the nine-month periods
ended September 30
2019 2018
S/(000) S/(000)
Net sales (b) 10,864,764 10,056,305
Cost of sales (7,885,377) (7,378,267)
Total 2,979,387 2,678,038
(b) Net sales corresponding to retail activities mainly comprise the sale of goods. These sales were mainly made in Peru.
22. Earnings per share
The following table presents the calculation of the weighted average number of shares and the basic and diluted earnings per
share, determined and calculated based on the earnings attributable to the Group:
Outstanding
shares
Shares
considered in
computation
Effective days in
the year
Weighted average
number of shares
(in thousands) (in thousands) (in thousands)
2018
Balance as of January 1, 2018 149,019 149,019 270 149,019
Balance as of September 30, 2018 149,019 149,019 149,019
Net earnings attributable to Intercorp Perú S/(000) 542,479
Basic and diluted net earnings per share attributable to
Intercorp (Soles) 3.64
2019
Balance as of January 1, 2019 149,019 149,019 270 149,019
Balance as of September 30, 2019 149,019 149,019 149,019
Net earnings attributable to Intercorp Perú S/(000) 755,610
Basic and diluted net earnings per share attributable to
Intercorp (Soles) 5.07
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
64
23. Transactions with shareholders, related parties and affiliated entities
(a) The table below presents the main transactions with shareholders, related parties and affiliated companies as of September
30, 2019 and December 31, 2018:
As of September
30, 2019
As of December
31, 2018
S/(000) S/(000)
Assets
Financial instruments at fair value through profit or loss
Mutual and investment funds - NG Capital Partners II 321,143 290,314
Participations - Royalty Pharma, Note 6(d) 105,706 78,808
Mutual and investment funds - NG Capital Partners I 19,350 46,165
Others 66 12,571
Financial instruments at fair value through other comprehensive income
Corporate bonds - Cineplex S.A. - 7,317
Loans, net (c) 368,577 371,758
Accounts receivable related to derivative financial instruments 2,627 3,908
Liabilities
Deposits and obligations 266,121 106,521
Loans payable (b) - 232,876
Off-balance sheet accounts
Indirect loans (c) 69,173 91,962
For the nine-month periods
ended September 30
2019 2018
S/(000)
S/(000)
Income (expenses)
Interest and similar income 19,206 22,511
Interest and similar expenses (2,129) (911)
Income from rental of investment property 25,173 29,133
Administrative expenses (17,964) (13,811)
Others 28,376 31,529
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
65
(b) As of September 30, 2019 and December 31, 2018, the directors, executives and employees of the Intercorp Group have
been involved, directly and indirectly, in credit transactions with certain subsidiaries of the Group, as permitted by
Peruvian law, which regulates and limits on certain transactions with employees, directors and officers of financial
entities. As of September 30, 2019 and December 31, 2018, direct loans to employees, directors and officers amounted
to S/242,474,000 and S/233,813,000, respectively; said loans are repaid monthly and bear interest at market rates.
There are no loans to the Company’s directors and key personnel guaranteed with shares of any Subsidiary.
(c) The Group’s key personnel compensations, including the Income Tax assumed for the nine-month periods ended
September 30, 2019 and 2018, are presented below:
For the nine-month periods
ended September 30
2019
2018
S/(000)
S/(000)
Salaries 78,942
88,190
Board of Directors’ compensations 1,415
1,496
Total 80,357
89,686
(d) In Management’s opinion, transactions with related companies have been performed under standard market conditions
and within the limits permitted by the SBS. Taxes generated by these transactions and the taxable base used for
computing them are those customarily used in the industry and they are determined according to the tax rules in force.
24. Business segments
The Chief Operating Decision Maker (CODM) of Intercorp Group is the General Manager (CEO). The Group has six operating
segments: (i) Banking, (ii) Insurance, (iii) Wealth management, (iv) Food retail, (v) Pharma and (vi) Shopping malls, based on
products and services.
Banking -
Mainly loans, credit facilities, deposits and demand deposits.
Insurance -
Provides annuities and conventional life insurance products, as well as other retail insurance products.
Wealth management -
Provides brokerage and investment management services. Inteligo serves mainly Peruvian citizens.
Food retail -
Engaged in the retail sale of consumer products, through chain stores at a national level.
Pharma -
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66
Provides pharmaceuthical products, cosmetics, nutritional medical products and other items intended for the protection and
recovery of health through its chain of drugstores. Also provides manufacturing, distribution and marketing services to the
drugstores.
Shopping malls -
It is engaged in the management and administration of shopping malls consisting of department stores, medium stores and sales
booths; some shopping malls include cinema complexes and entertainment areas.
The consolidated entities monitor the operating results of their business units separately for the purpose of making decisions on
the distribution of resources and performance assessment. Segments performance is evaluated based on operating profit or loss,
and it is measured consistently with operating profit or loss in the consolidated financial statements.
Transfer prices between operating segments are on an arm’s length basis in a manner similar to transactions with third parties.
No revenue from transactions with a single external customer or counterparty exceeded 10 percent of the Company’s total
revenues in the nine-month periods ended September 30, 2019 and 2018.
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67
The following table presents the Group’s financial information by business segments for the nine-month periods ended September 30, 2019 and 2018:
As of September 30, 2019
Banking Insurance Wealth management Shopping Malls Food retail Pharma
Holding, others and
consolidation adjustments
Total
consolidated
S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000)
Total income (*) Third party 3,956,642 890,912 272,758 310,161 1,136,339 1,590,518 1,256,730 9,414,060
Inter-segment (62,878) - (1,420) (126,290) (55,220) (52,409) 298,217 -
Total income 3,893,764 890,912 271,338 183,871 1,081,119 1,538,109 1,554,947 9,414,060
Interest and similar income 3,022,293 456,941 126,999 22,337 2,088 12,490 393,621 4,036,769
Interest and similar expenses (***) (936,848) (40,429) (45,201) (108,224) (106,834) (151,710) (227,873) (1,617,119)
Net interest and similar income 2,085,445 416,512 81,798 (85,887) (104,746) (139,220) 165,748 2,419,650
Impairment loss on loans, net of recoveries (602,908) - (49) - - - (161,020) (763,977)
Recovery (loss) due to impairment of financial investments 42 2,133 (646) - - - - 1,529
Net interest and similar income after impairment loss 1,482,579 418,645 81,103 (85,887) (104,746) (139,220) 4,728 1,657,202
Net sales from retail business (****) - - - (517) 1,037,701 1,527,903 414,300 2,979,387
Fee income from financial services, net 607,346 (3,148) 117,314 225 37,048 2,792 (54,956) 706,621
Income from educational services - - - - - - 682,212 682,212
Net gain on investment property (*****) - 75,192 - 288,116 61,897 48,603 (161,401) 312,407
Net gain on exchange operations 191,542 - - - - - - 191,542
Net gain on sale of financial investments 37,213 25,767 42,316 - - - (1) 105,295
Net gains (losses) on financial assets at fair value through profit or loss (3,257) 6,286 (9,592) - - - 10,399 3,836
Other income (**) 101,505 11,151 (4,280) - (2,395) (1,270) (27,443) 77,268
934,349 115,248 145,758 287,824 1,134,251 1,578,028 863,110 5,058,568
Insurance premiums and claims Net premiums earned - 318,723 - - - - - 318,723
Net claims and benefits incurred for life insurance contracts and others - (535,145) - - - - - (535,145)
- (216,422) - - - - - (216,422)
Other expenses Salaries and employee benefits (495,431) (53,998) (46,985) (18,900) (288,143) (558,039) (546,000) (2,007,496)
Selling and administrative expenses (507,937) (38,305) (29,210) (6,908) (476,047) (328,608) (414,873) (1,801,888)
Depreciation and amortization (168,727) (16,677) (13,721) (8,675) (178,022) (253,110) (134,306) (773,238)
Other expenses (26,281) (110,875) (244) 896 (7,774) (3,628) 7,221 (140,685)
(1,198,376) (219,855) (90,160) (33,587) (949,986) (1,143,385) (1,087,958) (4,723,307)
Income before translation result and Income Tax 1,218,552 97,616 136,701 168,350 79,519 295,423 (220,120) 1,776,041
Translation result (2,272) (1,888) (912) (738) (556) 825 4,658 (883)
Income Tax (325,209) - (5,159) (50,250) (35,794) (97,277) (65,755) (579,444)
Net profit for the period 891,071 95,728 130,630 117,362 43,169 198,971 (281,217) 1,195,714
Attributable to: Intercorp Perú Ltd.‘s shareholders 891,071 95,728 130,630 117,362 43,169 198,971 (721,321) 755,610
Non-controlling interest - - - - - - 440,104 440,104
891,071 95,728 130,630 117,362 43,169 198,971 (281,217) 1,195,714
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Notes to the interim condensed consolidated financial statements (continued)
68
As of September 30, 2018
Banking Insurance Wealth management Shopping Malls Food retail Pharma
Holding, others and
consolidation adjustments
Total
consolidated
S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000)
Total income (*) Third party 3,403,177 714,449 263,296 274,398 976,666 1,457,070 1,186,821 8,275,877
Inter-segment (39,427) - 11,251 274,398 976,666 1,457,070 (2,679,958) -
Total income 3,363,750 714,449 274,547 548,796 1,953,332 2,914,140 (1,493,137) 8,275,877
Interest and similar income 2,621,388 462,489 111,986 16,690 2,705 20,845 322,541 3,558,644
Interest and similar expenses (***) (782,321) (40,853) (31,534) (134,380) (53,803) (134,776) (219,933) (1,397,600)
Net interest and similar income 1,839,067 421,636 80,452 (117,690) (51,098) (113,931) 102,608 2,161,044
Impairment loss on loans, net of recoveries (452,031) - 772 - - - (111,349) (562,608)
Recovery (loss) due to impairment of financial investments 9 316 2,001 - - - - 2,326
Net interest and similar income after impairment loss 1,387,045 421,952 83,225 (117,690) (51,098) (113,931) (8,741) 1,600,762
Net sales from retail business (****) - - - (7,660) 906,424 1,387,149 392,125 2,678,038
Fee income from financial services, net 550,705 (3,445) 122,575 1,892 - 13,829 (18,147) 667,409
Income from educational services - - - - - - 568,442 568,442
Net gain on investment property (*****) - 56,936 - 267,437 51,093 47,651 (146,942) 276,175
Net gain on exchange operations 163,017 - - - - - 1 163,018
Net gain on sale of financial investments 11,529 (9,560) 19,400 1,256 - - 3,236 25,861
Net gains (losses) on financial assets at fair value through profit or loss 13,063 (10,667) 17,346 (5,217) - - 32,572 47,097
Other income (**) 43,475 11,885 (8,011) - 16,444 (12,404) 33,106 84,495
781,789 45,149 151,310 257,708 973,961 1,436,225 864,393 4,510,535
Insurance premiums and claims Net premiums earned - 206,811 - - - - (113) 206,698
Net claims and benefits incurred for life insurance contracts and others - (546,557) - - - - - (546,557)
- (339,746) - - - - (113) (339,859)
Other expenses Salaries and employee benefits (460,550) (55,122) (43,799) (18,149) (254,192) (568,340) (466,807) (1,866,959)
Selling and administrative expenses (512,584) (30,210) (29,161) (7,357) (485,705) (495,266) (386,774) (1,947,057)
Depreciation and amortization (99,908) (11,986) (6,683) (2,939) (96,947) (62,374) (119,855) (400,692)
Other expenses (30,605) (103,161) 1,817 (1,200) (7,842) (4,000) (9,049) (154,040)
(1,103,647) (200,479) (77,826) (29,645) (844,686) (1,129,980) (982,485) (4,368,748)
Income before translation result and Income Tax 1,065,187 (73,124) 156,709 110,373 78,177 192,314 (126,946) 1,402,690
Translation result (5,193) (6,139) (277) (2,351) (2,022) (31,671) (22,579) (70,232)
Income Tax (287,931) - (3,942) (33,461) (37,819) (63,816) (69,201) (496,170)
Net profit for the period 772,063 (79,263) 152,490 74,561 38,336 96,827 (218,726) 836,288
Attributable to: Intercorp Perú Ltd.‘s shareholders 772,063 (79,263) 152,490 74,561 38,336 96,827 (512,535) 542,479
Non-controlling interest - - - - - - 293,809 293,809
772,063 (79,263) 152,490 74,561 38,336 96,827 (218,726) 836,288
Translation of consolidated financial statements originally issued in Spanish – Note 29
Notes to the interim condensed consolidated financial statements (continued)
69
As of September 30, 2019
Banking Insurance Wealth management Food retail Pharma Shopping Malls
Holding, others and
consolidation
adjustments Total Consolidated
S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000)
Total assets 52,769,236 14,046,380 4,265,376 4,888,492 5,508,154 4,970,215 6,404,420 92,852,273
Total liabilities 46,731,023 13,127,574 3,462,524 3,845,057 4,797,419 2,603,153 3,850,581 78,417,331
As of December 31, 2018
Banking Insurance Wealth management Food retail Pharma Shopping Malls
Holding, others and
consolidation
adjustments Total Consolidated
S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000)
Total assets 47,440,393 12,572,396 3,808,939 3,697,162 5,079,488 4,460,486 5,065,978 82,124,842
Total liabilities 41,986,416 11,795,308 2,996,179 2,682,732 4,480,422 2,232,549 3,550,652 69,724,258
(*) Corresponds to interest and similar income, other income and net premiums earned.
(**) For the banking segment, “Other income” for the nine-month period ended September 30, 2019, included approximately S/32,422,000, after taxes, as gain on the sale of Interfondos to Inteligo Perú Holding S.A.C., which is eliminated upon consolidation, see Note 4.4.
(***) For corporate purposes, interest expenses from the food retail, pharma and shopping malls, that represents the finance cost of each non-financial segment, are presented in this caption.
(****) For corporate purposes, Income for rental of investment property is presented in the caption “Net gain on investment property”.
(*****) For the nine-month period ended September 30, 2019, includes income for rental of investment property for S/54,111,000, S/48,603,000, S/269,010,000 from the food retail, pharma and shopping malls segments, respectively (for the nine-month period ended September 30, 2018, amounts to S/51,049,000,
S/47,651,000 and S/254,608,000 from the food retail, pharma and shopping malls segments, respectively).
(i) The distribution of the Group’s total income based on the location of its customers and its assets, for the nine-month period ended September 30, 2019, amounts to S/8,527,586,000 in Peru and S/916,795,000 in Panama, Ecuador and other countries (for the nine-month period
ended September 30, 2018, amounts to S/7,289,366,000 in Peru and S/986,511,000 in Panama and other countries). The distribution of the Group’s total assets based on the location of the customer and its assets, as of September 30, 2019 is S/88,189,450,000 in Peru and
S/4,662,823,000 in Panama, Ecuador and other countries (S/78,284,467,000 in Peru and S/3,840,195,000 in Panama and other countries as of December 31, 2018). It should be noted that both income and assets located in Panama correspond mainly to Peruvian citizens.
Translation of consolidated financial statements originally issued in Spanish – Note 29
Notes to the interim condensed consolidated financial statements (continued)
70
25. Financial instruments classification
The financial assets and liabilities of the interim condensed consolidated statements of financial position as of September 30, 2019 and December 31, 2018, are presented below:
As of September 30, 2019
At fair value
through profit or
loss
Debt instruments at fair
value through other
comprehensive income
Equity instruments at fair
value through other
comprehensive income
Amortized
cost Total
S/(000) S/(000) S/(000) S/(000) S/(000)
Financial assets
Cash and due from banks - - - 12,341,733 12,341,733
Inter-bank funds - - - - -
Financial investments 1,990,447 13,683,199 684,428 2,130,794 18,488,868
Loans, net - - - 36,206,964 36,206,964
Due from customers on acceptances - - - 124,691 124,691
Accounts receivable and other assets, net 434,665 - - 3,239,790 3,674,455
2,425,112 13,683,199 684,428 54,044,597 70,836,711
Financial liabilities
Deposits and obligations - - - 35,765,012 35,765,012
Inter-bank funds - - - 15,001 15,001
Due to banks and correspondents - - - 7,352,704 7,352,704
Bonds, notes and other obligations - - - 14,751,547 14,751,547
Due from customers on acceptances - - - 124,691 124,691
Insurance contract liabilities - - - 11,453,272 11,453,272
Accounts payable, provisions and other liabilities 261,028 - - 7,392,597 7,653,625
261,028 - - 76,854,824 77,115,852
Translation of consolidated financial statements originally issued in Spanish – Note 29
Notes to the interim condensed consolidated financial statements (continued)
71
As of December 31, 2018
At fair value
through profit or
loss
Debt instruments at fair
value through other
comprehensive income
Equity instruments at fair
value through other
comprehensive income
Amortized
cost Total
S/(000) S/(000) S/(000) S/(000) S/(000)
Financial assets
Cash and due from banks - - - 8,915,974 8,915,974
Inter-bank funds - - - 495,037 495,037
Financial investments 1,967,553 13,194,186 617,289 1,884,067 17,663,095
Loans, net - - - 33,424,704 33,424,704
Due from customers on acceptances - - - 132,437 132,437
Accounts receivable and other assets, net 349,718 - - 1,894,815 2,244,533
2,317,271 13,194,186 617,289 46,747,034 62,875,780
Financial liabilities
Deposits and obligations - - - 33,262,266 33,262,266
Inter-bank funds - - - - -
Due to banks and correspondents - - - 7,226,209 7,226,209
Bonds, notes and other obligations - - - 11,929,628 11,929,628
Due from customers on acceptances - - - 132,437 132,437
Insurance contract liabilities - - - 10,300,468 10,300,468
Accounts payable, provisions and other liabilities 154,116 - - 5,361,971 5,516,087
154,116 - - 68,212,979 68,367,095
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
72
26. Financial risk management
In order to manage financial risks, every Subsidiary of the Group has a specialized structure and organization in their
management, measurement systems, mitigation and coverage processes that considers the specific needs and regulatory
requirements to develop its business. The Group and its Subsidiaries operate independently but in coordination with the general
provisions issued by the Directors and Management of Intercorp Perú; however, the Board of Directors and Management of
Intercorp Perú are ultimately responsible for identifying and controlling risks. In addition, the Board of Directors of Intercorp Perú
has among its objectives is to verify the adequacy of the accounting processes and financial information of each Subsidiary, as
well as to evaluate the activities carried out by internal and external auditors. The Board of Directors of Intercorp Perú is comprised
of three Directors and the Management, and directly reports to the General Shareholders’ Meeting.
A full description of the Group’s financial risk management is presented in Note 34 “Financial risk management” of the 2018
Annual Consolidated Financial Statements; following is presented the financial information related to credit risk management for
the loan portfolio, offsetting of financial assets and liabilities, and foreign exchange risk.
(a) Credit risk management for loans
Interbank’s loan portfolio is segmented into homogeneous groups that share similar credit risk characteristics. These
groups are: (i) Retail Banking (credit card, mortgage, payroll loan, consumer loan and vehicular loan), (ii) Small Business
Banking (segments S1, S2 and S3), and (iii) Commercial Banking (corporate, institutional, companies and real estate). In
addition, at Inteligo Bank, the internal model developed (scorecard) assigns 5 levels of credit risk classified as follows:
low risk, medium low risk, medium risk, medium high risk, and high risk. These categories are described in Note 34.1(d)
of the 2018 Annual Consolidated Financial Statements.
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
73
The following table shows the credit quality and maximum exposure to credit risk of loans (direct and indirect) based on the Group's internal credit rating as of September 30, 2019, and December 31, 2018. The amounts
presented do not consider impairment.
As of September 30, 2019 As of December 31, 2018
Total direct loans Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total
S/(000) S/(000) S/(000) S/(000)
S/(000) S/(000) S/(000) S/(000)
Not impaired
High grade 27,345,820 150,822 - 27,496,642
25,147,872 372,459 - 25,520,331
Standard grade 4,705,343 601,062 - 5,306,405
3,941,247 881,975 - 4,823,222
Sub-standard grade 478,762 1,084,373 - 1,563,135
506,499 936,441 - 1,442,940
Past due but not impaired 1,101,982 1,030,239 - 2,132,221
1,082,215 858,950 - 1,941,165
Impaired
Individually impaired - - 9,752 9,752
- - 7,349 7,349
Collectively impaired - - 967,910 967,910
- - 867,947 867,947
Total direct loans 33,631,907 2,866,496 977,662 37,476,065
30,677,833 3,049,825 875,296 34,602,954
Commercial loans As of September 30, 2019
As of December 31, 2018
Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total
S/(000) S/(000) S/(000) S/(000)
S/(000) S/(000) S/(000) S/(000)
Not impaired
High grade 10,788,281 58,653 - 10,846,934
11,305,223 106,480 - 11,411,703
Standard grade 3,181,645 52,321 - 3,233,966
2,305,607 125,090 - 2,430,697
Sub-standard grade 169,896 287,614 - 457,510
226,849 124,051 - 350,900
Past due but not impaired 753,620 254,420 - 1,008,040
714,034 134,730 - 848,764
Impaired
Individually impaired - - 9,752 9,752
- - 7,349 7,349
Collectively impaired - - 226,990 226,990
- - 199,132 199,132
Total direct loans 14,893,442 653,008 236,742 15,783,192
14,551,713 490,351 206,481 15,248,545
Translation of consolidated financial statements originally issued in Spanish – Note 29
Notes to the interim condensed consolidated financial statements (continued)
74
As of September 30, 2019
As of December 31, 2018
Consumer loans Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total
S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000)
Not impaired
High grade 10,499,368 49,922 - 10,549,290
8,349,176 223,523 - 8,572,699
Standard grade 884,009 460,470 - 1,344,479
1,068,431 676,414 - 1,744,845
Sub-standard grade 280,873 584,063 - 864,936
251,813 624,476 - 876,289
Past due but not impaired 174,548 553,229 - 727,777
131,537 510,141 - 641,678
Impaired
Collectively impaired - - 445,606 445,606
- - 384,794 384,794
Total direct loans 11,838,798 1,647,684 445,606 13,932,088
9,800,957 2,034,554 384,794 12,220,305
As of September 30, 2019
As of December 31, 2018
Mortgage loans Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total
S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000)
Not impaired
High grade 5,547,901 24,823 - 5,572,724
5,003,914 22,297 - 5,026,211
Standard grade 550,183 67,441 - 617,624
478,576 56,958 - 535,534
Sub-standard grade 23,488 196,140 - 219,628
22,575 170,556 - 193,131
Past due but not impaired 161,880 189,481 - 351,361
224,588 188,839 - 413,427
Impaired
Collectively impaired - - 250,128 250,128
- - 239,176 239,176
Total direct loans 6,283,452 477,885 250,128 7,011,465
5,729,653 438,650 239,176 6,407,479
Translation of consolidated financial statements originally issued in Spanish – Note 29
Notes to the interim condensed consolidated financial statements (continued)
75
As of September 30, 2019
As of December 31, 2018
Small and micro-business loans Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total
S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000)
Not impaired
High grade 510,270 17,424 - 527,694
489,559 20,159 - 509,718
Standard grade 89,506 20,830 - 110,336
88,633 23,513 - 112,146
Sub-standard grade 4,505 16,556 - 21,061
5,262 17,358 - 22,620
Past due but not impaired 11,934 33,109 - 45,043
12,056 25,240 - 37,296
Impaired
Collectively impaired - - 45,186 45,186
- - 44,845 44,845
Total direct loans 616,215 87,919 45,186 749,320
595,510 86,270 44,845 726,625
Total indirect loans (substantially all indirect loans correspond to commercial loans)
As of September 30, 2019
As of December 31, 2018
Contingent Credits Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total
S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000)
Not impaired
High grade 3,271,610 113,447 - 3,385,057
3,209,064 223,735 - 3,432,799
Standard grade 448,200 43,674 - 491,874
211,784 110,420 - 322,204
Sub-standard grade 33,403 18,099 - 51,502
33,472 192,699 - 226,171
Impaired
Individually impaired - - 22,607 22,607
- - 35,738 35,738
Collectively impaired - - 9,003 9,003
- - 7,332 7,332
Total indirect loans 3,753,213 175,220 31,610 3,960,043
3,454,320 526,854 43,070 4,024,244
(b) Offsetting of financial assets and liabilities
The information contained in the tables below includes financial assets and liabilities that: (i) are offset in the interim condensed consolidated statements of financial position of the Group or; (ii) are subject to an enforceable master netting arrangement or similar agreement that covers similar
financial instruments, regardless of whether they are offset in the interim condensed consolidated statements of financial position or not.
Similar arrangements of the Group include derivatives clearing agreements. Financial instruments such as loans and deposits are not disclosed in the following tables since they are offset in the interim condensed consolidated statements of financial position.
The offsetting framework agreement issued by the International Swaps and Derivatives Association Inc. (“ISDA”) and similar master netting arrangements do not meet the criteria for offsetting in the interim condensed consolidated statements of financial position because of such agreements were
created in order for both parties to have an enforceable offsetting right in cases of default, insolvency or bankruptcy of the Group or the counterparties or following other predetermined events. In addition, the Group and its counterparties do not intend to settle such instruments on a net basis or to
realize the assets and settle the liabilities simultaneousl
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
76
The Group receives and delivers guarantees collaterals in the form of cash with respect to transactions with derivatives; see Note 5.
Financial assets and liabilities subject to offsetting, enforceable master netting arrangement and similar agreements as of September 30, 2019, and December 31, 2018 are as follows:
Related amounts not offset in the interim condensed
consolidated statements of financial position
Gross amounts of
recognized financial
instruments
Gross amounts of
recognized financial
instruments and offset in
the interim condensed
consolidated statements
of financial position
Net amounts of financial
instruments presented in
the interim condensed
consolidated statements
of financial position
Financial instruments
(including non-cash
collateral)
Cash collateral
received (pledged),
Note 5(b)
Net amount
S/(000) S/(000) S/(000) S/(000) S/(000) S/(000)
Assets
As of September 30, 2019
Derivatives, Note 10(b) 434,665 - 434,665 (159,250) - 275,415
Total assets 434,665 - 434,665 (159,250) - 275,415
As of December 31, 2018
Derivatives, Note 10(b) 349,718 - 349,718 (41) - 349,677
Total assets 349,718 - 349,718 (41) - 349,677
Liabilities
As of September 30, 2019
Derivatives, Note 10(b) 261,028 - 261,028 (159,250) (78,306) 23,472
Total liabilities 261,028 - 261,028 (159,250) (78,306) 23,472
As of December 31, 2018
Derivatives, Note 10(b) 154,116 - 154,116 (41) 61,619 215,694
Total liabilities 154,116 - 154,116 (41) 61,619 215,694
(c) Foreign exchange risk
The Company and its Subsidiaries are exposed to fluctuations in the exchange rates of the foreign currency prevailing in its financial position and cash flows. Management sets limits on the levels of exposure by currency and total daily and overnight positions, which are
monitored daily. Most of the assets and liabilities in foreign currency are stated in US Dollars. Transactions in foreign currency are made at the exchange rates of free market.
As of September 30, 2019, the weighted average exchange rate of free market published by the SBS for transactions in US Dollars was S/3.382 per US$1 ask and S/3.385 per US$1 bid (S/3.369 and S/3.379 as of December 31, 2018, respectively). As of September 30,
2019, the exchange rate for the accounting of asset and liability accounts in foreign currency set by the SBS was S/3.383 per US$1 (S/3.373 as of December 31, 2018).
Translation of consolidated financial statements originally issued in Spanish – Note 29
Notes to the interim condensed consolidated financial statements (continued)
77
The table below presents a detail of the Group’s position:
As of September 30, 2019 As of December 31, 2018
US Dollars Soles Other currencies Total US Dollars Soles Other currencies Total
S/(000) S/(000) S/(000) S/(000)
S/(000) S/(000) S/(000) S/(000)
Assets
Cash and due from banks 9,960,550 1,971,429 409,754 12,341,733
6,819,952 1,728,019 368,003 8,915,974
Inter-bank funds - - - -
- 495,037 - 495,037
Financial investments 7,106,544 11,352,237 30,087 18,488,868
7,821,764 9,823,428 17,903 17,663,095
Loans, net 10,530,383 25,676,581 - 36,206,964
10,017,269 23,407,435 - 33,424,704
Due from customers on acceptances 124,691 - - 124,691
112,129 - 20,308 132,437
Accounts receivable and other assets, net 1,861,163 1,760,596 52,696 3,674,455
212,637 1,996,822 35,074 2,244,533
29,583,331 40,760,843 492,537 70,836,711
24,983,751 37,450,741 441,288 62,875,780
Liabilities
Deposits and obligations 14,094,283 21,299,478 371,251 35,765,012
13,584,983 19,387,960 289,323 33,262,266
Inter-bank funds - 15,001 - 15,001
- - - -
Due to banks and correspondents 1,183,334 6,165,850 3,520 7,352,704
1,526,240 5,699,969 - 7,226,209
Bonds, notes and other obligations 10,559,355 4,192,192 - 14,751,547
9,432,234 2,497,394 - 11,929,628
Due from customers on acceptances 124,691 - - 124,691
112,129 - 20,308 132,437
Insurance contract liabilities 4,283,790 7,169,482 - 11,453,272
4,072,811 6,227,657 - 10,300,468
Accounts payable, provisions and other liabilities 2,245,412 5,353,634 54,580 7,653,625
764,727 4,739,676 11,684 5,516,087
32,490,865 44,195,636 429,351 77,115,852
29,493,124 38,552,656 321,315 68,367,095
Forwards position, net (2,479,396) 2,475,403 3,993 - (646,042) 702,708 (56,666) -
Currency swaps position, net 1,298 (1,298) - -
(59,991) 59,991 - -
Cross currency swaps position, net 1,853,496 (1,853,496) - - 1,724,081 (1,724,081) - -
Options position, net (214) 214 - - 81 (81) - -
“Call Spreads” position (*) 2,538,750 (2,538,750) - - 2,534,250 (2,534,250) - -
Monetary position, net (993,600) (5,352,720) 67,179 (6,279,142)
(956,994) (4,597,628) 63,307 (5,491,315)
(*) These call spread agreements were entered into during 2018 with JP Morgan Chase & Co. and Citibank N.A. for a total reference value of US$350,000,000 and US$400,000,000, respectively, agreed with the purpose of reducing the exposure to foreign currency risk
originated by foreign currency debts issued by InRetail Shopping Malls and InRetail Pharma SA, in April and May 2018, respectively, see Note 10 (b).
As of September 30, 2019, the Group granted indirect loans (contingent operations) in foreign currency for approximately US$605,834,000, equivalent to S/2,049,536,000 (US$635,543,000, equivalent to S/2,143,687,000 as of December 31, 2018).
Translation of consolidated financial statements originally issued in Spanish – Note 29
Notes to the interim condensed consolidated financial statements (continued)
78
27. Fair value
(a) Financial instruments measured at their fair value and fair value hierarchy
The following table presents an analysis of the financial instruments that are measured at their fair value, including the level of hierarchy of fair value. The amounts are based on the balances presented in the interim condensed consolidated statements of
financial position:
As of September 30, 2019
Level 1 Level 2 Level 3 Total
S/(000) S/(000) S/(000) S/(000)
Financial assets
Financial investments At fair value through profit or loss (*) 842,718 327,446 820,283 1,990,447
Debt instruments at fair value through other comprehensive income 10,795,318 2,742,266 - 13,537,584
Equity instruments at fair value through other comprehensive income 682,752 1,676 - 684,428
Derivatives receivable - 434,665 - 434,665
12,320,788 3,506,053 820,283 16,647,124
Accrued interest 145,615
16,792,739
Financial liabilities Derivatives payable - 261,028 - 261,028
(*) As of September 30, 2019, and December 31, 2018, correspond mainly to participations in mutual funds and investment funds.
Financial assets included in Level 1 are those measured on the basis of information that is available on the market, to the extent that their quoted prices reflect an active and liquid market and that are available in some centralized trading mechanism, trading
agent, price supplier or regulatory entity.
Financial instruments included in Level 2 are valued based on the market prices of other instruments with similar characteristics or with financial valuation models based on information of variables observable on the market (interest rate curves, price vectors, etc.).
Financial assets included in Level 3 are valued by using assumptions and data that do not correspond to prices of operations traded on the market. Fair value is estimated using a discounted cash flow (DCF) model. The valuation requires Management to make
certain assumptions about the model variables and data, including the forecasting of cash flows, discount rate, credit risk and volatility.
Translation of consolidated financial statements originally issued in Spanish – Note 29
Notes to the interim condensed consolidated financial statements (continued)
79
The table below presents a description of significant unobservable data used in valuation:
Valuation
technique
Insumos significativos no
observables Valuation Sensitivity of inputs to fair value
Royalty Pharma DCF Method Sales forecast Average sector analysis, estimates
10 percent increase (decrease) in the sales forecast would result in increase (decrease) in
fair value by S/14,963,000.
WACC 8.00%
500 basis points increase in the WACC would result in decrease in fair value by
S/27,561,000.
500 basis points decrease in the WACC would result in increase in fair value by
S/39,463,000.
Mutual funds and investment funds participations DCF Method Discount rate Depends on the credit risk
500 basis points increase in the discount rate would result in decrease in fair value by
S/4,861,000.
500 basis points decrease in the discount rate would result in increase in fair value by
S/6,343,000.
WACC 9.00%
500 basis points increase in the discount rate would result in increase in fair value by
S/1,370,000.
500 basis points decrease in the discount rate would result in increase in fair value by
S/1,664,000.
Comparable multiples Price-to-sales ratio Depends on industry’s entity
10 percent increase (decrease) in the price-to-sales ratio would result in increase (decrease)
in fair value by S/2,507,000.
Equity value Depends on the credit risk
500 basis points increase (decrease) in the discount rate would result in increase (decrease)
in fair value by S/294,000.
Market Value Price Depends on the business sector
500 basis points increase (decrease) in the price would result in increase (decrease) in fair
value by S/701,000
Discount rate 15.35%
500 basis points increase in the discount rate would result in increase in fair value by
S/4,124,000.
500 basis points decrease in the discount rate would result in increase in fair value by
S/3,878,000.
EBITDA Multiple Total value of the company /
EBITDA of the last 12 months Depends on the business sector
500 basis points increase (decrease) in the price-to-sales ratio would result in increase
(decrease) in fair value by S/5,392,000.
The table below includes a reconciliation of fair value measurement of financial instruments classified by the Group within Level 3 of the valuation hierarchy:
As of September
30, 2019
As of December
31, 2018 S/(000) S/(000)
Initial balance as of January 1 743,617 500,182
Purchases 232,261 207,059
Sales (140,624) (61,328)
Total gain recognized on the consolidated income statements (14,971) 97,704
Balance as of September 30 820,283 743,617
During the nine-month period ended September 30, 2019, and during the year 2018, there were no transfers of financial instruments from Level 3 to Level 1 or to Level 2. Also, during the nine-month period ended September 30, 2019 and uring the year 2018, there were no
transfers of financial instruments between Level 1 and Level 2.
Translation of consolidated financial statements originally issued in Spanish – Note 29
Notes to the interim condensed consolidated financial statements (continued)
80
(b) Financial instruments not measured at their fair value -
The table below presents the disclosure of the comparison between the carrying amounts and fair values of the Group’s financial instruments that are not measured at their fair value, presented by level of fair value hierarchy:
As of September 30, 2019 As of September 30, 2018
Level 1 Level 2 Level 3 Fair value Book value
Level 1 Level 2 Level 3 Fair value Book value
S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000) S/(000)
Assets
Cash and due from banks - 12,341,733 - 12,341,733 12,341,733 - 8,915,974 - 8,915,974 8,915,974
Inter-bank funds - - - - - - 495,037 - 495,037 495,037
Investments at amortized cost 2,244,611 - - 2,244,611 2,130,794 700,177 1,156,148 - 1,856,325 1,884,067
Loans, net - 36,873,219 - 36,873,219 36,206,964 - 33,740,717 - 33,740,717 33,424,704
Due from customers on acceptances - 124,691 - 124,691 124,691 - 132,437 - 132,437 132,437
Accounts receivable and other assets, net - 3,239,790 - 3,239,790 3,239,790 - 1,894,815 - 1,894,815 1,894,815
Total 2,244,611 52,579,433 - 54,824,044 54,043,972 700,177 46,335,128 - 47,035,305 46,747,034
Liabilities
Deposits and obligations - 35,772,037 - 35,772,037 35,765,012 - 33,279,942 - 33,279,942 33,262,266
Inter-bank funds - 15,001 - 15,001 15,001 - - - - -
Due to banks and correspondents - 7,455,122 - 7,455,122 7,352,704 - 7,343,640 - 7,343,640 7,226,209
Bonds, notes and notes issued 7,471,011 7,687,234 - 15,158,245 14,751,547 5,569,970 6,507,870 - 12,077,840 11,929,628
Due from customers on acceptances - 124,691 - 124,691 124,691 - 132,437 - 132,437 132,437
Insurance contract liabilities - 11,453,272 - 11,453,272 11,453,272 - 10,300,468 - 10,300,468 10,300,468
Accounts payable and other liabilities - 7,392,598 - 7,392,598 7,392,597 - 5,361,971 - 5,361,971 5,361,971
Total 7,471,011 69,899,955 - 77,370,966 76,854,824 5,569,970 62,926,328 - 68,496,298 68,212,979
The methodologies and assumptions used to determine fair values depend on the terms and risk characteristics of each financial instrument and they include the following:
(i) Long-term fixed-rate and variable-rate loans are assessed by the Group based on parameters such as interest rates, specific country risk factors, individual creditworthiness of the customer and the risk characteristics of the financed project. Based on this evaluation,
allowances are taken into account for the estimated losses of these loans. As of September 30, 2019, and December 31, 2018, the book value of loans, net of allowances, was not significantly different from the calculated fair values.
(ii) Instruments whose fair value approximates their book value: For financial assets and financial liabilities that are liquid or have short-term maturity (less than 3 months) it is assumed that the carrying amounts approximate to their fair values. This assumption is also
applied to demand deposits, savings accounts without a specific maturity and variable-rate financial instruments.
(iii) Fixed-rate financial instruments: The fair value of fixed-rate financial assets and financial liabilities at amortized cost is determined by comparing market interest rates when they were first recognized with current market rates related to similar financial instruments for
their remaining term to maturity. The fair value of fixed interest rate deposits is based on discounted cash flows using market interest rates for financial instruments with similar credit risk and maturity. For quoted debt issued, the fair value is determined based on
quoted market prices. When quotations are not available, a discounted cash flow model is used based on the yield curve of the appropriate interest rate for the remaining term to maturity.
Translation of consolidated financial statements originally issued in Spanish – Note 29 Notes to the interim condensed consolidated financial statements (continued)
81
28. Fiduciary activities and management of funds
The Group provides custody, trustee, investment management and advisory services to third parties; therefore, the Group makes
purchase and sale decisions in relation to a wide range of financial instruments. Assets that are held in trust are not included in
the consolidated financial statements. These services give rise to the risk that the Group could eventually be held responsible of
poor yielding of the assets under its administration.
As of September 30, 2019, and December 31, 2018, the value of the managed off-balance sheet financial assets is as follows:
As of September 30,
2019 As of December
31, 2018
S/(000) S/(000)
Investment funds 13,233,985 12,924,575
Mutual funds 4,852,777 4,668,076
Total 18,086,762 17,592,651
29. Additional explanation for English translation
Thge accompanying financial statements are presented on the basis of the IFRS. In the event of any discrepancy, the Spanish
language version prevails.