Principal Financial Group Boosts IFS Stake Amid Attractive Valuation and Operational Resilience

What happened

Principal Financial Group increased its stake in Intercorp Financial Services Inc. (IFS) by 24.4%, acquiring 104,792 shares to own 534,609 shares, as reported in a recent SEC filing. This move occurs against the backdrop of IFS's strong fundamentals, highlighted in the DeepValue master report, including a P/E of ~8x and a ~16% ROE in 3Q25 from diversified banking, insurance, wealth, and payments segments. The master report emphasizes IFS's resilience, with tailwinds from government lending programs and fee growth, but also flags risks such as investment volatility and credit performance that require monitoring. While the stake increase signals institutional confidence, it does not alter the core operational metrics or address the key watch items like risk-adjusted NIM and cost of risk. Investors should therefore view this as a minor positive within the context of IFS's ongoing execution on loan growth and capital returns, which remain central to the investment thesis.

Implication

The acquisition by Principal Financial Group suggests institutional belief in IFS's value, potentially providing some support to share price and liquidity in the near term. However, it does not address the critical watch items from the master report, such as credit risk from legacy loans or potential investment mark-to-market losses that could impact earnings quality. Investors should remain focused on IFS's quarterly performance metrics, including efficiency ratio and AUM growth, to assess underlying momentum beyond this ownership change. Capital return execution, including the planned 2025 dividend and buyback program, remains a key driver of total return, and this news does not directly influence those outcomes. Overall, while the stake increase is a positive signal, it is peripheral to the core investment thesis and should not prompt a strategic shift without further evidence of operational improvement or risk mitigation.

Thesis delta

The investment thesis for IFS remains unchanged, with the BUY rating anchored in valuation and operational momentum rather than ownership dynamics. This news slightly reinforces the attractiveness but does not shift the fundamental drivers or risks, such as credit performance and investment volatility, that are central to the master report's analysis. Investors should continue monitoring the identified watch items for any material changes that could affect the thesis.