Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Inter & Co Inc (INTR, Financial) achieved a significant increase in active clients, welcoming 1 million new active clients this quarter, leading to a total of 33 million clients.
- The company reported a remarkable 47% year-over-year increase in total TPV, reaching BRL290 billion, with PIX transactions capturing 8% market share.
- Inter & Co Inc (INTR) saw a 90% increase in new credit lines, including PIX financing and buy now pay later, reaching a combined portfolio of BRL330 million.
- The insurance vertical had its best quarter ever, with sales exceeding 1 million and a 39% increase in active clients, reaching 2.6 million.
- The company achieved a record-breaking ROE of 10.4% and a net income of BRL223 million, reflecting strong profitability and financial performance.
Negative Points
- Despite the growth in insurance policies, revenue from insurance only grew by 10%, indicating that the new policies have a much lower ticket size.
- The cost of funding as a percentage of market rates increased to 64%, up from 55% in the first quarter of 2022, suggesting potential pressure in raising deposits.
- Marketing expenses saw a significant increase, raising concerns about the sustainability of these costs and their impact on profitability.
- The implied rates on personal loans and credit cards showed a decrease, which could indicate challenges in maintaining higher interest rates.
- The company faces potential volatility in cost of risk, with expectations to operate within a range of 5.0% to 5.5%, which may impact future financial stability.
Q & A Highlights
Q: Hi, good afternoon, everybody, and thanks for taking my question. My question is regarding the NIM adjusted by risk. We could see an improvement quarter by quarter, but the increase was mainly driven by the lower cost of risk, while the NIM was stable quarter on quarter. How should we think about this in the coming quarters?
A: Hi, Gustavo, thank you for the question. On the cost of risk side, we think that we should continue to be able to operate in the range of 5.0% to 5.5% cost of risk. On the NIM side, we have a few dynamics playing out. We still have upside in terms of increasing the average rate of payroll and real estate loans. We also have a better mix playing out with FGTS and home equity gaining share in the portfolio. We do see upsides in the NIM before cost of risk, around 20 bps per quarter over the coming quarters.
Q: Perfect. Very clear, Santi. If I may, just a follow-up here, especially on the PIX financing and buy now pay later and the other unsecured loans, you reached BRL330 million in the quarter, so a 90% growth quarter on quarter. Do you think it is reasonable to work with this number?
A: Gustavo, this is Xande speaking. We are aiming something close to BRL1 billion in all unsecured lines, including PIX financing, bill pay, cash financing, buy now pay later, and overdraft. The idea is to move closer to a 1 to 2 ratio in interchange fees to credit revenue, maintaining our risk appetite and delinquency under control.
Q: Hi, everyone, congrats on the numbers. Inter has been very successful in improving its ROEs. How do you balance growth investments and profitability, especially considering medium to long-term projects like US expansion?
A: Thanks for the question. We are a growth company, and we aim to grow both revenue and profitability. The operational leverage is kicking in, adding more revenue and diluting fixed costs. We are comfortable with both growing and improving profitability. It's about balancing these two aspects in the right way and at the right time.
Q: Thank you, everybody. Congrats Alexandre again for the promotion. I have a follow-up on the margins on the implied rate. Should we not see those lines moving up as you continue to deliver on this mix towards more profitable products?
A: Hi, Yuri. On personal loans, the improvements will be slow but steady. We do see a continuation of the improvement in the coming quarters. On credit cards, the main driver is PIX financing. As it gains share within credit cards, interest rates of cards will go up. The average interest rate on these loans is 6% per month.
Q: Hi, good afternoon, thanks for the call and taking my questions. First, just on the hiring in the quarter. Do you expect to do more hiring? And second, with João Vitor now more of a global CEO, how do you think about other potential geographies and their contribution to earnings?
A: On hiring, we are investing in technology and commercial teams, but we are committed to our efficiency ratio target. Regarding global expansion, we believe our global account initiative can be offered to individuals worldwide. We are focused on enhancing UX, UI, and technology to stay ahead of the competition.
Q: First, on the service revenue, it's a nice increase here. If you can talk a little bit more about it, if this quarter had any specific boost to it? And on the loan book side, credit portfolio had a significant increase in credit card anticipation. Is this related to the integration of Granito?
A: On service revenue, the main drivers were Inter Shop and insurance, with no one-offs. On credit card anticipation, it is not related to Granito yet. We are deploying excess liquidity into liquid assets that yield more than CDI until we can deploy it into the loan portfolio.
Q: Can you talk a bit more about what is your ambition regarding the SMEs? And my second question is on the BNPL product. Could you talk a bit more about the BNPL product that you have mostly on your Inter Shop?
A: On SMEs, we have almost 2 million clients with a variety of profiles. We are excited about the integration with Inter Pag and the opportunities it brings. On BNPL, we are seeing significant growth with good risk-reward. It is already a big percentage of our GMV at Inter Shop.
Q: How are you seeing the competitive environment to raise deposits?
A: We have a good problem with a strong inflow of deposits. We could reduce the percentage of CDI we pay, but it wouldn't move the needle in terms of profitability. Our deposit franchise is getting more efficient, and we see it as a differentiator among our competitors.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
