IFS is a leading provider of banking, insurance and wealth management services for retail customers and commercial clients in Peru. Our purpose is to empower all Peruvians to achieve financial well-being, and as such, we have built an integrated financial services platform in the fast-growing, underpenetrated and profitable Peruvian financial system. We have invested in building a leading and scalable digital platform (mobile and online), which is rapidly being adopted by existing and new customers. Our digital platform is complemented by one of the largest distribution networks in the country which includes financial stores, ATMs, correspondent agents, dedicated sales forces, financial advisors, and call centers. Together our digital platform and distribution network provide our more than three million customers and a potential market of more than 30 million Peruvians and 9 million businesses with access to our products and services and a distinctive and convenient customer experience.
Use of proceeds:We will not receive any of the net proceeds from the sale of our common shares by the selling shareholders.We expect that the net proceeds from the sale of our common shares by us and Interbank will be used by each of us and Interbank for general corporate purposes.In particular, Interbank expects to use the proceeds to strengthen its capital position and increase business activity, and IFS expects to use the proceeds to invest in strengthening its digital and analytical capabilities across its platform by developing a common data infrastructure and new digital products and services.
Competition:We face intense competition in all of our segments, which can affect our margins, growth and profitability.Peruvian Banking System Interbank is currently the fourth-largest bank in Peru, as measured by total assets, gross loans and deposits, as of March 31, 2019, and has faced strong competition, including increased pressure on margins, primarily as a result of the presence of commercial banks in the Peruvian market with substantial capital, technology and marketing resources, as well as from Peruvian pension funds that lend to Interbank’s current and potential commercial customers.This increased competition has affected the average interest rates that the Peruvian banking system has been able to charge its customers.Despite being the fourth-largest bank in Peru, Interbank is strongly positioned in the consumer sector, being the second largest bank in gross consumer loans and largest in consumer credit cards as of March 31, 2019, according to the SBS.Peruvian Insurance Industry The Peruvian insurance market, particularly the annuity and life insurance sectors, is also highly competitive.Interseguro’s principal competitors are large insurance companies that may have greater resources and offer a wider range of products.These insurance companies may have better access to independent brokers who sell insurance to customers.In addition, Interseguro may also face competition from private pension funds (AFPs), which could in the future be allowed to offer annuities.Moreover, under the private pension system, upon retirement, retirees have the option of choosing to remain with their pension fund, choose an annuity or, since 2016, withdraw 95.5% of their capital accumulated in cash, which potentially reduces demand for Interseguro’s annuities.Any adverse impact on Interseguro resulting from increased competition, as well as a reform of the private pension system, could have a material adverse effect on our financial condition and results of operations.Wealth Management Industry Inteligo Bank operates in the highly competitive and regulated wealth management industry, competing with independent advisors, global banks and Peruvian firms, such as its main competitor Credicorp Ltd. through its subsidiary Atlantic Security Bank (“ASB”).The Peruvian wealth management industry has also recently attracted several new participants, including representative offices of global banks such as JP Morgan, UBS, RBC, Credit Suisse, and Julius Baer among others.