Business Context and Reporting Period
Company: Inter & Co, Inc. (INTR)
Filing Type: Form 20-F (Annual Report)
Reporting Period: Fiscal Year Ended December 31, 2024
Accounting Standards: International Financial Reporting Standards (IFRS)
Reporting Currency: Brazilian Reais (R$)
Inter & Co is a Cayman Islands holding company that operates a digital financial super app in Brazil, offering banking, credit, investments, insurance, e-commerce (Inter Shop), and global payment services. The company operates primarily through its subsidiary, Banco Inter S.A.
Key Financial Metrics (Year Ended Dec 31, 2024)
| Metric | 2024 (R$) | 2023 (R$) | Variance |
|---|---|---|---|
| Total Revenues | 6,400,165 | 4,752,576 | +34.7% |
| Profit for the Year | 972,841 | 352,260 | +176.2% |
| Net Interest Income & Securities Income | 4,456,744 | 3,296,797 | +35.2% |
| Impairment Losses on Financial Assets | (1,799,452) | (1,541,584) | +16.7% (Increase in expense) |
| SG&A Expenses (Non-GAAP) | 2,915,645 | 2,412,527 | +20.9% |
| Gross Loan Portfolio (Non-GAAP) | 41,182,813 | 31,020,837 | +32.8% |
| Total Assets | 76,458,430 | 60,351,797 | +26.7% |
| Total Equity | 9,072,307 | 7,596,691 | +19.4% |
Note: All figures in thousands of Brazilian Reais (R$) unless otherwise noted.
Key Non-GAAP Performance Indicators
- Return on Average Equity (ROAE): 11.7% (vs. 4.8% in 2023)
- Efficiency Ratio: 49.2% (vs. 54.5% in 2023)
- Cost of Risk: 5.0% (vs. 5.5% in 2023)
- Cost of Funding: 6.7% (vs. 7.6% in 2023)
- Net Interest Margin (NIM): 7.8% (vs. 7.4% in 2023)
- Active Clients: Approximately 20.6 million (57% activation rate)
Material Changes vs. Prior Period
- Revenue Growth: Driven by a 35.2% increase in net interest income and income from securities, largely due to portfolio growth and higher yields on Brazilian government securities. Net fee revenue grew 34.4% due to increased card interchange fees.
- Profitability Surge: Net profit more than doubled (176.2%) primarily due to revenue expansion outpacing expense growth and a significant reduction in the share of profit/loss of associates (which was a loss of R$32.0 million in 2023 vs. R$2.5 million in 2024).
- Expense Increases: Administrative expenses rose 21.1% (driven by third-party services and marketing) and personnel expenses rose 18.6% (due to profit-sharing bonuses). Tax expenses increased 46.1% due to higher taxable income.
- Asset Quality: Non-performing loans (NPL) > 90 days decreased to 4.2% of the Gross Loan Portfolio (from 4.6% in 2023). The coverage ratio for NPL > 90 days was 136%.
- Capital Adequacy: The Capital Adequacy Ratio (Basel Index) decreased to 15.2% from 23.0% in 2023, primarily due to the rapid growth of the loan portfolio and the acquisition of Inter Pag. This remains well above the regulatory minimum of 10.5%.
Guidance, Outlook, Risks, and Unusual Items
Management Commentary and Outlook
Management emphasizes a strategy of expanding the "financial super app" ecosystem to increase wallet share per client. Key growth drivers include the expansion of credit portfolios (particularly credit cards and personal loans), the Inter Shop marketplace (GMV of R$5.0 billion in 2024), and international expansion (US and Latin America). The company expects to continue investing in technology and customer acquisition.
Material Weakness in Internal Controls
Critical Issue: The company identified a material weakness in its internal control over financial reporting as of December 31, 2024. This weakness relates to deficiencies in General Information Technology Controls (GITC) regarding the concession, revocation, revision, and monitoring of privileged user access. Consequently, the independent auditor (KPMG) issued an adverse opinion on the effectiveness of internal control over financial reporting, though the financial statements themselves received an unqualified opinion.
Key Risks
- Regulatory & Political Risk: Significant exposure to Brazilian government policies, including tax reforms, interest rate changes (SELIC rate), and potential changes in banking regulations (e.g., Open Finance, compulsory deposits).
- Credit Risk: Expansion of unsecured credit (credit cards, personal loans) increases exposure to defaults, particularly in a high-interest-rate environment.
- Cybersecurity & Operational Risk: As a digital-native bank, the company faces high risks related to system failures, cyber-attacks, and data breaches.
- Competition: Intense competition from traditional banks and other fintechs in Brazil, potentially leading to margin compression.
- Internal Control Remediation: The company is implementing a remediation plan for the identified material weakness, but there is no guarantee it will be fully effective in the near term.
Important Facts for Investor Verification
- Internal Control Adverse Opinion: Verify the progress of the remediation plan for the material weakness in IT controls and the potential impact on future reporting reliability.
- Capital Adequacy Trend: Monitor the Capital Adequacy Ratio, which dropped significantly (from 23.0% to 15.2%) due to loan growth; ensure it remains comfortably above regulatory thresholds.
- Credit Quality Metrics: Track the Cost of Risk and NPL ratios closely, especially given the aggressive expansion of unsecured credit products.
- Related Party Transactions: Review the significant related party transactions, including loans to entities controlled by the controlling shareholder (e.g., MRV Engenharia, Log Commercial Properties).
- Dividend Policy: Note that the company has not adopted a formal dividend policy, though it paid dividends in 2024 and 2025. Future distributions depend on regulatory capital requirements and board discretion.
- Non-GAAP Reconciliations: Investors should reconcile Non-GAAP metrics (like Gross Loan Portfolio and Efficiency Ratio) to GAAP figures to understand the full financial picture.