Business context and reporting period
Inter & Co, Inc. (formerly Inter Platform, Inc.) filed this Form 20-F on May 2, 2022, covering the fiscal year ended December 31, 2021, with audited IFRS financial statements and comparisons for 2020 and 2019. The operating business is primarily Banco Inter, a Brazilian digital bank and financial-services platform spanning banking, credit, marketplace, securities, asset management and insurance brokerage. Inter & Co was formed in 2021; following the May 7, 2021 reorganization, the statements include Banco Inter’s historical results before that date and the group’s results thereafter. Accordingly, comparisons reflect a predecessor-company structure, not a full-year standalone operating history for the holding company. This is an annual report, not a quarterly filing; it does not provide a clear standalone Q4 income statement or cash-flow result.
Financial and operating performance
| Metric | 2021 | 2020 |
|---|---|---|
| Revenue | R$2,221.8 million | R$1,011.5 million |
| Net interest income | R$892.2 million | R$758.5 million |
| Net services and commissions | R$442.3 million | R$185.5 million |
| Profit (loss) before tax | (R$231.1 million) | (R$7.0 million) |
| Income-tax benefit | R$176.0 million | R$37.7 million |
| Net profit (loss) | (R$55.1 million) | R$30.7 million |
| Operating cash flow | R$91.6 million | R$2,980.9 million |
| Investing cash flow | (R$7,175.8 million) | (R$5,049.0 million) |
| Financing cash flow | R$5,429.9 million | R$1,107.0 million |
| Cash and cash equivalents, year-end | R$500.4 million | R$2,154.7 million |
Revenue rose 119.6% year over year, while the net loss followed higher credit-impairment charges and substantial investment in personnel, technology, marketing and other administration. Net margin was approximately (2.5%) in 2021 versus 3.0% in 2020, based on reported revenue and net result. Income from securities increased to R$745.6 million from R$12.1 million, reflecting a larger securities portfolio and higher returns on Brazilian government securities; this made a significant contribution to 2021 revenue.
Total assets were R$36.6 billion and total liabilities R$28.2 billion at year-end; total equity was R$8.45 billion. Customer liabilities (principally deposits) were R$18.33 billion, securities issued R$3.57 billion, and liabilities with financial institutions R$5.34 billion. Borrowings and onlending were R$25.1 million. Gross loans reached R$17.22 billion, up 96% from R$8.79 billion. The expected-credit-loss allowance was R$680.9 million, or 4.0% of gross loans, compared with 3.2% in 2020. The filing reports a 44.3% regulatory capital ratio, above the stated 10.5% minimum, and says current assets exceeded current liabilities by more than 2.0 times. Management reported approximately R$16 billion of cash and securities and more than R$10 billion in high-quality liquid assets; the text does not clearly reconcile those figures to the balance-sheet cash-and-cash-equivalents amount.
Business metrics included 16.3 million customers at December 31, 2021, up 87% year over year; 8.8 million active customers across verticals; R$3.5 billion of marketplace GMV, up 201%; and R$56.9 billion in investment assets under custody, up 29.2%. The loan portfolio grew 96%. Reported credit-quality figures are not fully consistent: management cited non-performing loans over 90 days of 3.0% in one section, while the results discussion reports 3.8% at year-end 2021 versus 3.4% in 2020. Investors should verify the definition and source of each figure.
Material changes versus prior comparable period
- Revenue increased 119.6%; net interest income increased 17.6%, and net services and commissions increased 138.4%.
- Interest expense increased to R$543.2 million from R$184.3 million, while impairment losses increased to R$595.6 million from R$213.7 million.
- Personnel expenses rose 93.5% to R$443.3 million; other administrative expenses rose 104.4% to R$1,311.0 million. Data-processing costs alone increased to R$409.7 million from R$189.4 million.
- The group recorded a R$55.1 million net loss after R$30.7 million net profit in 2020. The 2021 tax benefit of R$176.0 million substantially offset the pretax loss.
- Operating cash flow fell to R$91.6 million from R$2,980.9 million. The cash balance declined by R$1.65 billion, reflecting, among other items, loan growth and securities investment; financing included R$5.48 billion of non-controlling-interest funding, including Banco Inter’s June follow-on offering.
- The allowance for expected credit losses increased, while reported net charge-offs were R$55.4 million. Management attributed increased identification of charge-offs partly to enhanced credit-information and risk-management processes.
Outlook, risks, contingencies and unusual items
The filing gives no formal revenue, earnings or margin guidance. Management’s strategy is to grow the digital Super-App and cross-sell across its businesses. It reported R$164 million invested in development initiatives during 2021 and disclosed planned 2022 spending on named projects, including R$75 million for internationalization, R$29 million for the app, R$27.8 million for Inter Shop, R$27 million for core banking, R$16.5 million for card processing, R$7 million for InterPay and R$1.3 million for customer service. These are project estimates, not consolidated guidance.
Inter completed its acquisition of U.S.-based USEND in January 2022, after year-end, and expects to use it as a platform for cross-border services and U.S. expansion. The Corporate Reorganization and intended Nasdaq listing were described as pending at the filing date. The proposed cash-redemption option for eligible Banco Inter shareholders was capped at R$1.131 billion; financing, regulatory approval and possible dilution were identified as risks. A new 10-year Mastercard strategic agreement and an operational agreement with Banco Mercantil were also announced after year-end.
Key risks include Brazilian economic and political volatility, inflation, interest-rate and currency movements, competitive pressure, credit defaults and funding costs, regulatory changes, cybersecurity and data-protection failures, operational resilience, and the execution and integration of acquisitions. The company also warned that a controlling shareholder would retain roughly 79%–81% of voting power after the proposed reorganization under the scenarios shown, through high-vote Class B shares. No cash dividend policy or foreseeable dividend payment was promised.
Legal provisions totaled R$21.7 million at year-end (R$18.4 million civil and R$3.3 million labor; no tax-proceeding provision was recorded). Management classified tax matters involving R$63.8 million and COFINS proceedings involving R$260.2 million as possible losses, not probable; R$62.1 million of the latter amount was secured by insurance. Separately, approximately 9,000 civil customer cases sought R$388.9 million in aggregate damages, and labor plaintiffs sought R$20.1 million. The filing also describes a past customer-data disclosure incident and a R$1.5 million settlement payment. These claim amounts are not equivalent to recognized liabilities.
KPMG issued an unqualified audit opinion on the consolidated financial statements. However, management reported material weaknesses in financial-reporting controls involving reconciliations, manual journal entries, significant-disclosure processes and formal accounting policies. Management concluded disclosure controls were ineffective at December 31, 2021; neither management’s internal-control effectiveness assessment nor an auditor attestation was included.
Most important facts for investors to verify
- Confirm the 2021 consolidated results and the predecessor-accounting treatment around the May 2021 reorganization; do not treat the report as a standalone Q4 filing.
- Reconcile the different reported 90-day NPL ratios (3.0% and 3.8%) and assess loan growth, credit-card exposure, provisions and charge-offs.
- Assess the sustainability of securities income, cash generation and liquidity, including the reported R$16 billion cash-and-securities figure versus balance-sheet cash and cash equivalents.
- Track remediation of the material internal-control weaknesses and any subsequent assessment or auditor attestation.
- Review outcomes and updated estimates for the possible tax claims and substantial civil claims, and distinguish gross claim amounts from provisions.
- Verify completion and terms of the Corporate Reorganization, cash-redemption financing, Nasdaq listing, USEND integration and post-year-end related-party transactions.