Release Date: November 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Inter & Co Inc (INTR, Financial) reached 35 million clients, with a significant increase in activation rates, highlighting strong customer engagement.
- The company reported a 46% year-over-year increase in Total Payment Volume (TPV), indicating robust transaction growth.
- Inter & Co Inc (INTR) achieved a record-breaking ROE of 11.9%, showcasing strong profitability improvements.
- The company's hyper-personalization strategy is driving higher conversion rates and sales, particularly in their marketplace and insurance verticals.
- Inter & Co Inc (INTR) is expanding its global reach, with significant growth in assets under custody and a strong presence in the US market.
Negative Points
- The integration of Inter Pag resulted in increased expenses, impacting the company's efficiency ratio.
- Despite growth, the company faces challenges in maintaining cost control, particularly in personal expenses due to increased hiring and compensation.
- The Consumer Finance 2.0 portfolio, while growing, requires cautious management due to potential macroeconomic risks.
- The company is experiencing an uptick in NPL formation due to regulatory changes, which could impact future financial metrics.
- Inter & Co Inc (INTR) needs to carefully manage its expansion strategy to avoid overextending resources, especially in new international markets.
Q & A Highlights
Q: How should we think about expense growth and operating leverage following the incorporation of Inter Pag? Does this delay or accelerate the efficiency ratio target?
A: Santiago Stel, SVP, Finance & Risks, explained that the efficiency ratio is ahead of the 60/30/30 plan, having improved significantly from 70% to over halfway to the target in less than 40% of the planned time. The incorporation of Inter Pag, which has a higher efficiency ratio, presents opportunities for revenue growth and expense optimization through cross-selling and platform integration. The trend towards the 30% efficiency ratio target remains intact.
Q: What is the outlook for the Consumer Finance portfolio, and how does the macro environment affect loan growth?
A: João Vitor Menin, Global CEO, stated that the Consumer Finance 2.0 portfolio, including PIX financing and other products, is expected to grow to around BRL700 million by year-end. Despite macroeconomic challenges, Inter & Co plans to continue growing its credit portfolio by cherry-picking clients and leveraging its strong cost of funding and market share in deposits.
Q: Can you provide an update on the international expansion, particularly in the US, and any plans for other countries?
A: João Vitor Menin highlighted that the global account approach in the US is performing well, with 10% of clients using the feature. The company plans to expand to other markets using a Bank-as-a-Service model, focusing on asset-light, fee-oriented strategies. Specific markets for expansion in 2025 are yet to be decided.
Q: How is the credit card portfolio performing, and what are the plans for its growth?
A: Alexandre Riccio, SVP, Retail Banking, reported improvements in new credit card cohorts with low delinquency rates. The company aims to have about 30% of its portfolio in credit cards by 2025-2027, focusing on increasing the interest-earning portfolio through products like PIX financing.
Q: What are the expected impacts of the Central Bank's 4966 Resolution on capital and provision expenses?
A: Santiago Stel explained that most impacts from the resolution have been accounted for, with remaining effects on stage three formation and NPL formation due to extended periods for renegotiations. There will be no impact on cost of risk, provision expenses, or tier one capital.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
