Business Context and Reporting Period
Company: Inter & Co, Inc.
Filing Type: Form 6-K (Report of Foreign Private Issuer)
Reporting Period: Third Quarter ended September 30, 2023 (3Q23)
Release Date: November 6, 2023
Inter & Co, a Brazilian digital bank and financial "Super App," reported a record-breaking quarter, marking the fourth consecutive quarter of bottom-line growth. The company stated it is ahead of schedule in meeting its "60-30-30" strategic goals (60 million clients, 30% ROE, 30% Efficiency Ratio by 2027).
Key Financial Metrics
| Metric | 3Q23 Value | 2Q23 Value | 3Q22 Value |
|---|---|---|---|
| Total Gross Revenue | R$ 2,143 million | R$ 1,939 million | R$ 1,540 million |
| Net Revenue | R$ 1,265 million | R$ 1,150 million | R$ 850 million |
| Pre-Tax Net Income | R$ 145 million | R$ 80 million | (R$ 70 million) |
| Net Income | R$ 104 million | R$ 64 million | (R$ 30 million) |
| Return on Equity (ROE) | 5.7% | 3.6% | -1.7% |
| Efficiency Ratio | 52.4% | 53.0% | 75.0% |
| Gross Loan Portfolio | R$ 28.4 billion | R$ 26.5 billion | R$ 22.0 billion |
| Total Funding | R$ 39.6 billion | R$ 35.7 billion | R$ 30.7 billion |
| Tier I Capital Ratio | 23.7% | 22.8% | 29.8% |
| Active Clients | 15.5 million | 14.5 million | 11.6 million |
| Gross ARPAC (Monthly) | R$ 48 | R$ 46.1 | R$ 45.9 |
Material Changes vs. Prior Period
- Profitability Surge: Net Income reached a record R$ 104 million, a 62.3% increase quarter-over-quarter (QoQ) and a turnaround from a R$ 30 million loss in 3Q22. Pre-tax income improved from a loss of R$ 70 million in 3Q22 to a profit of R$ 145 million.
- Revenue Growth: Total Gross Revenue grew 39.2% year-over-year (YoY) and 10.6% QoQ. Net Revenue increased 48.8% YoY.
- Operational Efficiency: The Efficiency Ratio improved significantly to 52.4%, down 22.6 percentage points YoY and 1.0 percentage point QoQ, driven by administrative expense management.
- Loan Portfolio Expansion: The Gross Loan Portfolio grew 28.8% YoY to R$ 28.4 billion. Credit card loans accelerated with 34.9% YoY growth, while FGTS and Home Equity loans also showed strong expansion.
- Client Acquisition: Active clients increased by 1.0 million in the quarter (6.7% QoQ), reaching 15.5 million. The Activation Rate improved to 52.7% (+49 bps QoQ).
- Asset Quality: Cost of Risk improved by 30 basis points (bps) QoQ. NPLs > 90 days remained stable at 4.7% QoQ but increased 90 bps YoY. The Coverage Ratio improved to 132% (+200 bps QoQ).
Guidance, Outlook, and Management Commentary
- Strategic Progress: Management expressed strong conviction in the "60-30-30" strategy, noting the company is ahead of schedule. The CEO highlighted a "virtuous cycle" where value creation drives client engagement and profitability.
- Outlook: Management expects the positive trend in gross revenues to continue. They anticipate a reversal of lower inflation impacts on real estate loan revenue starting in 4Q23.
- Key Drivers: Growth is being driven by the re-acceleration of credit card portfolios, expansion of high-ROE products (FGTS, Home Equity), and the "Conta com Pontos" funding program, which now represents nearly 80% of transactional accounts.
- Risks and Contingencies: The filing includes standard forward-looking statement disclaimers regarding economic, competitive, and regulatory risks. Specific operational risks mentioned include the impact of inflation on real estate loan yields and the need to maintain asset quality while accelerating credit growth.
- Unusual Items: The filing notes that 3Q22 results were impacted by deflationary adjustments in the prior year, making the current year's comparison particularly strong. No specific one-time charges were highlighted as material for 3Q23.
Investor Verification Checklist
- Non-IFRS Reconciliation: Verify the reconciliation of managerial metrics (e.g., Efficiency Ratio, Cost of Risk, ARPAC) to IFRS financial statements, as noted in the glossary and disclaimer.
- Asset Quality Trends: Monitor the NPL > 90 days ratio (4.7%) and Cost of Risk trends closely, given the acceleration in credit card lending.
- Funding Cost Stability: Confirm the sustainability of the All-in Cost of Funding at 61.7% of CDI, which is a key competitive advantage.
- Capital Adequacy: Review the Tier I Ratio (23.7%) and its trajectory relative to regulatory requirements and loan growth.
- Revenue Mix: Analyze the composition of Fee Income (35% of Net Revenue) to ensure diversification beyond interest income.