UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 OF THE

SECURITIES EXCHANGE ACT OF 1934

May 10, 2023

Commission File Number 001-38965

INTERCORP FINANCIAL SERVICES INC.

(Registrant’s name)

Intercorp Financial Services Inc.

Torre Interbank, Av. Carlos Villarán 140

La Victoria

Lima 13, Peru

(51) (1) 615-9011

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F: Form 20-F  ☒ Form 40-F  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ☐

On May 10, 2023, Intercorp Financial Services Inc. (“IFS”) announced its unaudited results for the first quarter of 2023, which were approved by the Board on May 10, 2023. IFS’ interim condensed consolidated unaudited results as of March 31, 2023, December 31, 2022 and for the three-month periods ended March 31, 2023 and 2022 and the corresponding Management Discussion and Analysis are attached hereto.

EXHIBIT INDEX

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Intercorp Financial Services Inc.

First Quarter 2023 Earnings

Lima, Peru, May 10, 2023. Intercorp Financial Services Inc. (Lima Stock Exchange/NYSE: IFS) announced today its unaudited results for the first quarter 2023. These results are reported on a consolidated basis under IFRS in nominal Peruvian soles.

Intercorp Financial Services: 1Q23 recurring earnings of S/ 308 mm impacted by CoR and investment results

Banking: 1Q23 profitability impacted by cost of risk

Insurance: 1Q23 earnings of S/ 31.3 million, ROE at 40.5% after IFRS17 adoption

Wealth Management: Positive quarter, but performance is still impacted by market conditions

Payments: Continuous growth in payments

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Intercorp Financial Services

SUMMARY

Intercorp Financial Services’ Statement of financial position ⁽¹⁾

Intercorp Financial Services’ net profit was S/ 266.9 million in 1Q23, representing a decrease of S/ 117.3 million QoQ, or 30.5%, and S/ 210.8 million YoY, or 44.1%.

It is worth mentioning that IFS’ results in 1Q23 were impacted by the booking of an impairment affecting interest on loans for S/ 70.0 million or S/ 41.5 million after taxes. This was related to rescheduled loans granted in 1Q23 to help customers affected by the protests and rains that occurred during the quarter, in line with SBS guidelines. Excluding such impairment, profits would have resulted in S/ 308.4 million in 1Q23.

IFS’s annualized ROAE was 11.5% in 1Q23, below the 16.7% registered in 4Q22 and the 22.4% reported in 1Q22. Excluding the above-mentioned impairment, ROE would have resulted in 13.3% in 1Q23.

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Intercorp Financial Services’ P&L statement ⁽¹⁾

Quarter-on-quarter performance

Profits decreased S/ 117.3 million QoQ, or 30.5%, mainly due to an increase in loan loss provisions in our Banking business. The negative performance was also explained by a reduction in net interest and similar income in most of our businesses, but particularly due to an impairment on interest on loans in 1Q23, as well as a lower translation result and a seasonal decrease in net fee income in our Banking and Payments businesses. These factors were partially offset by an improvement in insurance results, together with lower other expenses across all businesses.

Net interest and similar income decreased S/ 70.3 million, or 6.1% QoQ, mainly attributed to the booking of an impairment affecting interest on loans for S/ 70.0 million in our Banking business.

Impairment loss on loans, net of recoveries grew S/ 89.6 million QoQ, or 32.2%, explained by higher provision requirements in the commercial loan book, partially offset by lower provision requirements in the retail loan book, which do not consider the adjustments in loan loss provisions due to refined calculations of the expert criteria registered in 4Q22.

Net fee income from financial services decreased 2.1% QoQ, due to year-end seasonality in our Banking and Payments business, partially compensated by 5.9% growth in net fees in our Wealth Management business.

Other income grew S/ 6.2 million, or 4.5%, due to a positive performance in Insurance, which offset decreases in the rest of businesses.

Insurance results improved on a sequential basis, following the implementation of IFRS17 in our Insurance business.

Oher expenses decreased S/ 35.0 million QoQ, or 4.8%, explained by expense reductions across all businesses.

IFS’ effective tax rate increased, from 21.6% in 4Q22 to 28.1% in 1Q23, as the consequence of a lower translation result and a higher effective tax rate in our Banking business.

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Year-on-year performance

Profits decreased S/ 210.8 million YoY, or 44.1%, mainly due to increases of S/ 218.0 million in impairment loss on loans, net of recoveries, and S/ 128.1 million in other expenses, in addition to negative developments in insurance results and translation result. These effects were partially compensated by growth of S/ 133.2 million in net interest and similar income, S/ 112.3 million in net fee income from financial services, and S/ 39.2 million in other income.

Net interest and similar income increased S/ 133.2 million, or 14.1%, attributed to growth in our Banking, Insurance and Payments businesses, partially offset by a decrease in our Wealth Management business.

Impairment loss on loans, net of recoveries grew S/ 218.0 million, or more than two-fold, mainly due to higher provision requirements in the retail and commercial loan book. Higher requirements in the retail loan book were mostly related to credit cards and mortgages. The increase in the commercial loan book was due to higher provision requirements in the mid-sized segment.

Net fee income from financial services surged 54.9% YoY on a reported basis, but also grew 11.3% when considering proforma information of our Payments business, which was not yet consolidated in 1Q22.

Other income increased S/ 39.2 million, or 37.8%, explained by positive performances in our Banking, Insurance and Wealth Management businesses, partially offset by a decrease in our Payments business.

Insurance results deteriorated by S/ 79.3 million compared to 1Q22, following the implementation of IFRS17 in our Insurance business.

Reported other expenses grew S/ 128.1 million YoY, or 22.6%, due to expense increases in all our businesses. However, when normalizing for attributable expenses of our Payments business in 1Q22, when it was not yet consolidated, other expenses grew 10.5% YoY.

IFS’ effective tax rate increased, from 16.6% in 1Q22 to 28.1% in 1Q23, as the consequence of a lower translation result and a higher effective tax rate in our Banking business.

CONTRIBUTION BY BUSINESS

The following table shows the contribution of Banking, Insurance, Wealth Management and Payments businesses to Intercorp Financial Services’ net profit. The performance of each of the four segments is discussed in detail in the following sections.

Intercorp Financial Services’ Profit by business ⁽¹⁾

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Interbank

SUMMARY

Interbank’s profits were S/ 250.2 million in 1Q23, a decrease of S/ 114.7 million QoQ, or 31.4%, and a reduction of S/ 72.2 million YoY, or 22.4%. The quarterly performance was mainly attributed to an increase of S/ 89.5 million in impairment loss on loans, net of recoveries, in addition to decreases of S/ 57.8 million in net interest and similar income, S/ 4.4 million in net fee income from financial services and S/ 3.4 million in other income. These factors were partially offset by a S/ 21.2 million reduction in other expenses, together with a positive performance in translation result.

It is important to note that the lower net interest and similar income was mainly explained by the booking of an impairment for S/ 70.0 million, or S/ 41.5 million after taxes in 1Q23. This was related to rescheduled loans granted in 1Q23 to help customers affected by the protests and rains that occurred during the quarter, in line with SBS guidelines. Excluding such impairment, net interest and similar income would have grown 1.3% QoQ.

The annual performance in net profit was mainly explained by growth of S/ 216.0 million in impairment loss on loans, net of recoveries, as well as S/ 32.1 million in other expenses. These factors were partially compensated by increases of S/ 111.1 million in net interest and similar income, S/ 23.8 million in net fee income from financial services and S/ 16.2 million in other income, together with a positive performance in translation result.

Interbank’s ROE was 13.6% in 1Q23, below the 20.2% and 19.1% registered in 4Q22 and 1Q22, respectively. However, Interbank’s profits and ROE excluding the impairment on interest on loans would have been S/ 291.7 million and 15.8%, respectively.

Banking Segment’s P&L Statement

INTEREST-EARNING ASSETS

Interbank’s profits were S/ 250.2 million in 1Q23, a decrease of S/ 114.7 million QoQ, or 31.4%, and a reduction of S/ 72.2 million YoY, or 22.4%. The quarterly performance was mainly attributed to an increase of S/ 89.5 million in impairment loss on loans, net of recoveries, in addition to decreases of S/ 57.8 million in net interest and similar income, S/ 4.4 million in net fee income from financial services and S/ 3.4 million in other income. These factors were partially offset by a S/ 21.2 million reduction in other expenses, together with a positive performance in translation result.

It is important to note that the lower net interest and similar income was mainly explained by the booking of an impairment for S/ 70.0 million, or S/ 41.5 million after taxes in 1Q23. This was related to rescheduled loans granted in 1Q23 to help customers affected by the protests and rains that occurred during the quarter, in line with SBS guidelines. Excluding such impairment, net interest and similar income would have grown 1.3% QoQ.

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The annual performance in net profit was mainly explained by growth of S/ 216.0 million in impairment loss on loans, net of recoveries, as well as S/ 32.1 million in other expenses. These factors were partially compensated by increases of S/ 111.1 million in net interest and similar income, S/ 23.8 million in net fee income from financial services and S/ 16.2 million in other income, together with a positive performance in translation result.

Interbank’s ROE was 13.6% in 1Q23, below the 20.2% and 19.1% registered in 4Q22 and 1Q22, respectively. However, Interbank’s profits and ROE excluding the impairment on interest on loans would have been S/ 291.7 million and 15.8%, respectively.

Interest-earning assets

Loan portfolio

The evolution of performing loans continued to be affected by the disbursement and maturity of prepayment of commercial loans under the Reactiva Peru Program. As of March 31, 2023, these performing loans amounted S/ 1,452.1 million, compared to balances of S/ 2,020.3 million as of December 31, 2022 and S/ 3,877.5 million as of March 31, 2022.

Performing loans increased 0.8% QoQ, as retail loans sequentially grew 4.2%, while commercial loans decreased 3.2%. Excluding the effect of the Reactiva Peru Program in the comparing periods, total performing loans would have increased 2.2% and commercial loans would have decreased 0.4%.

Retail loans grew 4.2% QoQ due to increases of 6.1% in consumer loans and 1.2% in mortgages. Growth in consumer loans resulted from higher balances of cash loans, vehicle loans, payroll deduction loans and credit cards.

The quarterly reduction in commercial loans was a result of lower trade finance loans in the corporate segment, as well as lower working capital loans in the mid-sized segment. These factors were partially offset by higher balances of working capital loans in the corporate segment.

Performing loans grew 7.9% YoY explained by a 15.5% increase in retail loans, partially offset by a slight 0.2% reduction in commercial loans. Excluding the effect of the Reactiva Peru Program in the comparing periods, performing loans and commercial loans would have increased 15.3% and 15.2% YoY, respectively.

The YoY growth in retail loans was due to increases of 19.7% in consumer loans and 9.0% in mortgages. The increase in consumer loans resulted from higher balances of cash loans, vehicle loans, credit cards and payroll deduction loans.

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The annual reduction in commercial loans was mainly explained by lower balances of Reactiva Peru loans, particularly lower working capital loans in the mid-sized segment, partially compensated by higher balances across all lines of credit in the corporate segment.

In 1Q23, 4Q22 and 1Q22, Interbank’s rescheduled portfolio of Reactiva Peru loans amounted to S/ 1,265.6 million, S/ 1,476.4 million and S/ 1,932.4 million, respectively, representing 67.9% of total balances of Reactiva Peru loans in 1Q23, 64.6% in 4Q22 and 46.1% in 1Q22.

It is worth mentioning that these loans are guaranteed in large part by the Peruvian government. As of March 31, 2023, Interbank activated the guarantee coverage for an amount of S/ 834.7 million.

Breakdown of retail loans

FUNDING STRUCTURE

Funding structure

Interbank's funding base was still influenced by the funds provided by the Central Bank, associated with the bank’s involvement in the Reactiva Peru Program. As of March 31, 2023, the balance of such special funding was S/ 1,356.7 million, compared to S/ 1,909.4 million as of December 31, 2022 and S/ 3,688.1 million as of March 31, 2022.

The bank’s total funding base increased 1.1% QoQ, compared to the 1.4% growth of interest-earning assets. This was explained by increases of 16.2% in due to banks and correspondents and inter-bank funds, and 3.7% in deposits and obligations. These factors were partially offset by a 31.9% reduction in bonds, notes and other obligations. Excluding the effect of the Reactiva Peru Program’s funds, the bank’s total funding base would have increased 2.1% QoQ, while due to banks and correspondents and inter-bank funds would have grown 33.9%.

The quarterly increase in due to banks and correspondents and inter-bank funds was mainly the result of higher long-term funding provided by the Central Bank, through repos, and COFIDE, as well as higher funding provided by correspondent banks abroad.

The QoQ growth in deposits and obligations was mainly due to an increase of 49.0% in institutional deposits, partially offset by a reduction of 7.7% in commercial deposits.

The quarterly decline in bonds, notes and other obligations was mainly attributable to the maturity and cancellation of senior unsecured bonds in the international market for US$ 485.0 million and subordinated bonds in the local market for S/ 150.0 million, both in January 2023.

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The bank’s total funding base increased 3.5% YoY, compared to the 4.6% growth of interest-earning assets. This was explained by increases of 8.4% in due to banks and correspondents and inter-bank funds, and 7.8% in deposits and obligations. These factors were partially compensated by a 30.8% decrease in bonds, notes and other obligations. Excluding the effect of the Reactiva Peru Program’s funds, the bank’s total funding base and due to banks and correspondents and inter-bank funds would have increased 8.1% and 82.9% YoY, respectively.

The YoY growth in due to banks and correspondents and inter-bank funds was mainly the result of higher long-term funding provided by correspondent banks abroad and COFIDE, as well as higher inter-bank funds. These effects were partially offset by lower long-term funding provided by the Central Bank and short-term funding from correspondent banks abroad.

The annual increase in deposits and obligations was mainly attributable to growth of 71.5% in institutional deposits and 6.1% in retail deposits, partially offset by a 11.1% reduction in commercial deposits.

The annual decrease in bonds, notes and other obligations was due to the maturity and cancellation of senior unsecured bonds in the international market for US$ 485.0 million in January 2023, as well as subordinated bonds in the local market for S/ 137.9 million in June 2022 and S/ 150.0 million in January 2023.

As of March 31, 2023, the proportion of deposits and obligations to total funding was 79.0%, higher than the 75.8% reported as of March 31, 2022. Likewise, the proportion of institutional deposits to total deposits grew from 11.4% as of March 31, 2022 to 18.2% as of March 31, 2023.

Breakdown of deposits

NET INTEREST AND SIMILAR INCOME

Net interest and similar income

Interest and similar income

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Interest and similar expense

QoQ Performance

Net interest and similar income decreased 6.3% QoQ due to a 0.8% reduction in interest and similar income, in addition to 9.6% growth in interest and similar expense.

The lower interest and similar income was mainly explained by the booking of an impairment for S/ 70.0 million in 1Q23, resulting in a 1.4% reduction in interest on loans. This was related to rescheduled loans granted in 1Q23 to help customers affected by the protests and rains that occurred during the quarter, in line with SBS guidelines. Excluding such impairment, interest on loans would have increased 4.4%, while interest and similar income and net interest and similar income would have grown 4.2% and 1.3%, respectively.

Interest on loans decreased S/ 17.3 million QoQ, or 1.4%, as the result of a 20 basis point reduction in the average yield due to the impairment, despite a 1.0% growth in the average loan portfolio. Excluding the impairment on interest on loans, the average yield would have increased 40 basis points.

The higher average volume of loans was attributed to 4.3% growth in retail loans, partially offset by 2.5% lower commercial loans. In the retail portfolio, average volumes increased 6.0% in consumer loans and 1.4% in mortgages. In the commercial portfolio, average volumes decreased 7.6% in trade finance loans and 2.2% in working capital loans, partially compensated by 2.0% higher leasing operations.

Interest on financial investments decreased S/ 12.7 million QoQ, or 9.5%, due to reductions of 6.0% in the average volume and 20 basis points in the average yield, from 5.0% in 4Q22 to 4.8% in 1Q23.

Contrary to the performance of interest on loans and investments, interest on due from banks and inter-bank funds grew S/ 18.2 million QoQ, or 28.2%, explained by a 70 basis point increase in the nominal average rate, in line with higher reference rates locally, despite a 1.5% reduction in the average volume.

The nominal average yield on interest-earning assets decreased 10 basis points QoQ, from 8.3% in 4Q22 to 8.2% in 1Q23. However, excluding the impairment on interest on loans, the average return on interest-earning assets would have increased 40 basis points, to 8.7%.

The higher interest and similar expense was due to increases of 20.6% in interest on deposits and obligations, and 6.7% in interest on due to banks and correspondents, partially compensated by a 27.1% reduction in interest on bonds, notes and other obligations.

The quarterly growth in interest on deposits and obligations was due to a 50 basis point increase in the average cost, from 2.8% in 4Q22 to 3.3% in 1Q23, in addition to a 0.8% increase in the average volume. The increase in the average cost was due to higher rates paid to

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commercial deposits, institutional deposits and retail time deposits, following the additional rate hikes globally. By currency, average balances of soles-denominated deposits grew 1.5% while average dollar-denominated deposits decreased 0.3%.

Interest on due to banks and correspondents increased S/ 5.2 million QoQ, or 6.7%, explained by a 30 basis point increase in the average cost, partially offset by a 0.5% reduction in the average volume. The higher average cost was explained by higher rates paid to funds from the Central Bank. The decrease in the average volume was mostly attributed to lower funding from the Central Bank, partially offset by higher funds provided by correspondent banks abroad.

The reduction in interest on bonds, notes and other obligations was mostly attributed to a 17.3% lower average volume, as a result of the maturity of US$ 485.0 million senior bonds in the international market and S/ 150.0 million subordinated bonds in the local market, both in January 2023.

The average cost of funding increased 40 basis points, from 3.2% in 4Q22 to 3.6% in 1Q23, as consequence of the higher cost of deposits, and due to banks and correspondents.

As a result of the above, net interest margin was 5.1% in 1Q23, 30 basis points lower than the 5.4% reported in 4Q22. However, excluding the impairment on interest on loans, net interest margin would have increased 10 basis points, to 5.5%.

YoY Performance

Net interest and similar income grew 14.9% YoY due to a 37.1% increase in interest and similar income, partially offset by growth of more than two-fold in interest and similar expense.

The higher interest and similar income was due to increases of more than two-fold in interest on due from banks and inter-bank funds, 39.7% in interest on financial investments and 32.8% in interest on loans.

Interest on due from banks and inter-bank funds grew S/ 48.4 million YoY, or more than two-fold, explained by growth of 190 basis points in the average yield, despite a 14.6% reduction in the average volume, mostly due to lower deposits at the Central Bank.

Interest on financial investments increased S/ 34.7 million YoY, or 39.7%, due to growth of 140 basis point in the average yield, despite a 1.5% reduction in the average volume. The increase in the nominal average rate, from 3.4% in 1Q22 to 4.8% in 1Q23, was the result of higher returns on CDBCR, corporate bonds and global bonds. The slight decrease in the average volume was the result of lower volumes of corporate bonds, global bonds and sovereign bonds, partially offset by higher balances of CDBCR.

Interest on loans grew S/ 291.5 million YoY, or 32.8%, explained by increases of 200 basis points in the average yield and 6.8% in the average volume.

The increase in the average rate on loans, from 8.3% in 1Q22 to 10.3% in 1Q23, was mainly due to higher yields on commercial, consumer and mortgage loans. Moreover, excluding the impairment on interest on loans in 1Q23, the average yield would have increased 260 basis points, to 10.9%.

The higher average volume of loans was attributed to growth of 15.8% in retail loans, partially offset by a 2.1% reduction in commercial loans. In the retail portfolio, average volumes grew due to increases of 20.5% in consumer loans and 8.6% in mortgages. In the commercial portfolio, the lower average volume was mainly attributed to decreasing volumes in working capital loans, partially offset by higher trade finance loans and leasing operations.

The nominal average yield on interest-earning assets increased 210 basis points, from 6.1% in 1Q22 to 8.2% in 1Q23, in line with the higher returns on all components of interest-earning assets. Excluding the impairment on interest on loans in 1Q23, the average return on interest-earning assets would have increased 260 basis points, to 8.7%.

The higher interest and similar expense was due to increases of more than two-fold in interest on deposits and obligations, and in interest on due to banks and correspondents, while interest on bonds, notes and other obligations decreased 27.9%.

Interest on deposits and obligations increased S/ 243.3 million YoY, or more than two-fold, explained by a 210 basis point growth in the average cost, from 1.2% in 1Q22 to 3.3% in 1Q23, in addition to a 3.4% increase in the average volume. By currency, average balances of soles-denominated deposits increased 6.1% while average dollar-denominated deposits decreased 1.2%.

Interest on due to banks and correspondents grew S/ 45.0 million YoY, or more than two-fold, as the result of a 260 basis point increase in the average cost, from 2.0% in 1Q22 to 4.6% in 1Q23, partially compensated by a 4.9% decrease in the average volume. The increase

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in the average cost was due to higher rates paid to funds from correspondent banks abroad, as well as inter-bank funds and the Central Bank, being this last component the one that explained the lower average volume.

The lower interest on bonds, notes and other obligations was mainly explained by a 17.6% decrease in the average volume, attributable to the maturity of S/ 137.9 million subordinated bonds in the local market in June 2022, and more recently US$ 485.0 million senior bonds in the international market and S/ 150.0 million subordinated bonds in the local market, both in January 2023.

The average cost of funding increased 180 basis points, from 1.8% in 1Q22 to 3.6% in 1Q23, as consequence of the higher implicit cost of due to banks and correspondents, and deposits.

As a result of the above, net interest margin was 5.1% in 1Q23, 60 basis points higher than the 4.5% reported in 1Q22. Furthermore, excluding the impairment on interest on loans in 1Q23, net interest margin would have increased 100 basis points, to 5.5%.

IMPAIRMENT LOSS ON LOANS, NET OF RECOVERIES

Impairment loss on loans, net of recoveries increased 32.2% QoQ and more than two-fold YoY.

The quarterly increase was explained by higher provision requirements in the commercial loan book, partially offset by lower provision requirements in the retail loan book. These performances do not consider the adjustments in loan loss provisions due to refined calculations of the expert criteria registered in 4Q22. In the commercial portfolio, the increase in provisions was mainly driven by higher requirements across most segments, except in the mid-sized segment. Conversely, the decrease in provisions in the retail portfolio was explained by lower requirements in credit cards, partially compensated by higher requirements in mortgages.

The annual increase in provisions was mainly explained by higher requirements in the retail and commercial loan book. Higher requirements in the retail loan book were mostly related to credit cards and mortgages. The increase in the commercial loan book was due to higher requirements in the mid-sized segment.

As a result of the above, the annualized ratio of impairment loss on loans to average loans was 3.2% in 1Q23, higher than the 2.5% and 1.4% reported in 4Q22 and 1Q22, respectively.

Impairment loss on loans, net of recoveries

The Stage 3 NPL ratio remained stable QoQ but decreased 30 basis points YoY, to 2.6% in 1Q23. The quarterly performance was due to a stable performance in the commercial and retail NPL ratio. The lower Stage 3 NPL ratio YoY was explained by a 60 basis point decrease in commercial loans’ NPL as well as a stable retail loans’.

Furthermore, the S3 NPL coverage ratio was 177.9% as of March 31, 2023, higher than the 173.5% registered as of December 31, 2022 and the 168.7% reported as of March 31, 2022.

FEE INCOME FROM FINANCIAL SERVICES, NET

Net fee income from financial services decreased S/ 4.4 million QoQ, or 2.1%, mainly explained by lower income related to commissions from banking services, commissions from credit card services, and fees from maintenance and mailing of accounts, transfer fees and commissions on debit card services. These factors were partially offset by lower expenses related to insurance and other charges.

Net fee income from financial services grew S/ 23.8 million YoY, or 13.0%, mainly due to higher commissions from credit card services, fees from maintenance and mailing of accounts, transfer fees and commissions on debit card services, as well as fees from collection services and indirect loans.

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Fee income from financial services, net

OTHER INCOME

Other income decreased S/ 3.4 million QoQ, mainly explained by lower net gain on foreign exchange transactions and on financial assets at fair value through profit or loss. These results were partially offset by a positive performance in net gain on sale of financial investments.

Other income increased S/ 16.2 million YoY, mostly due to a higher net gain on foreign exchange transactions and on financial assets at fair value through profit or loss.

Other income

OTHER EXPENSES

Other expenses decreased S/ 21.2 million QoQ, or 4.2%, but increased S/ 32.1 million YoY, or 7.1%.

The quarterly decrease in other expenses was explained by lower administrative expenses, depreciation and amortization, among other charges, partially offset by higher salaries and employee benefits.

The annual increase was the result of higher administrative expenses, in addition to salaries and employee benefits, and higher depreciation and amortization charges.

The efficiency ratio was 39.1% in 1Q23, an improvement compared to the 37.9% reported in 4Q22, and the 41.7% registered in 1Q22. It is important to mention that, excluding the impairment on interest on loans of S/ 70.0 million, the efficiency ratio would have been 36.9% in 1Q23.

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Other expenses

REGULATORY CAPITAL

The ratio of regulatory capital to risk-weighted assets (RWA) was 15.2% as of March 31, 2023, slightly above the 15.1% reported as of December 31, 2022, but below the 15.5% registered as of March 31, 2022.

In 1Q23, risk-weighted assets (APR) decreased 5.9% QoQ due to lower capital requirements for credit risk and market risk, partially offset by higher capital requirements for operational risk. The lower RWA for credit risk were attributed to a decrease of RWA for financial investments and other assets, partially offset by higher RWA for loans.

Total regulatory capital decreased 5.3% QoQ, mainly attributed to the distribution of dividends, in addition to the impact of unrealized losses on investments available for sale compared to 4Q22, and the deduction of intangible assets, as a result of the implementation of the new SBS regulation on solvency.

The annual reduction in the total capital ratio was due to a 4.9% increase in RWA, partially offset by 2.8% growth in regulatory capital. The YoY increase in RWA was mostly attributed to higher capital requirements for credit risk, market risk and operational risk. RWA for credit risk grew due to higher RWA for loans, partially offset by lower RWA for financial investments and other assets. The lower capital requirement for other assets was a result of the exclusion of RWA for intangibles from the calculation of RWA, given its deduction from regulatory capital, by disposition of the new SBS regulation.

Regulatory capital increased YoY mainly as a result of the addition of S/ 585.8 million in capital and reserves during the last quarter. This was partially compensated by a lower capital treatment of local subordinated debt for S/ 38.5 million, as well as the deduction of intangible assets, due to the implementation of the new SBS regulation on solvency.

Also, it is worth mentioning that, in December 2022, the SBS issued the Official Document No. 03952-2022, by which it established that, from January 2023 to March 2023, the minimum regulatory capital ratio requirement would remain at 8.5%. After that, the minimum regulatory capital ratio requirement would gradually climb to 10.0% by March 2024.

As of March 31, 2023, Interbank’s capital ratio of 15.2% was significantly higher than its risk-adjusted minimum capital ratio requirement, established at 9.5%. As previously mentioned, the minimum regulatory capital ratio requirement was 8.5%, while the new regulatory buffers and additional risk capital requirement for Interbank was 1.0% as of March 31, 2023. Furthermore, Core Equity Tier 1 (CET1) was 11.1% as of March 31, 2023, above the 12.0% reported as of December 31, 2022, and the 10.9% registered as of March 31, 2022. It is important to mention that under the new SBS regulation, CET1 is the main component of the Tier I capital ratio.

Regulatory capital