Business Context and Reporting Period
Company: Inter & Co, Inc.
Filing Type: Form 6-K (Earnings Release)
Reporting Period: Second Quarter ended June 30, 2024 (2Q24)
Overview: Inter & Co, a Brazilian digital bank and financial super app, reported record profitability and significant growth in its loan portfolio and client base. The company executed a strategic acquisition of merchant acquirer Granito (rebranded Inter Pag) and appointed Alexandre Riccio as the new Brazil CEO.
Key Financial Metrics
| Metric | 2Q24 Value | YoY Change | QoQ Change |
|---|---|---|---|
| Total Gross Revenue | R$ 2,404 million | +24.0% | +4.9% |
| Net Revenue | R$ 1,479 million | +28.6% | +5.5% |
| Net Income | R$ 223 million | +247% | +14.1% |
| Pre-Tax Net Income | R$ 298 million | N/M | +8.8% |
| Return on Equity (ROE) | 10.4% | +6.8 p.p. | +0.7 p.p. |
| Gross Loan Portfolio | R$ 35.7 billion | +34.8% | +11.0% |
| Total Funding (Deposits) | R$ 47.8 billion | +33.9% | +9.1% |
| Cost of Funding | 6.8% (64.3% of CDI) | -1.25 p.p. | +0.23 p.p. |
| Efficiency Ratio | 47.9% | -5.5 p.p. | +0.1 p.p. |
| Tier I Capital Ratio | 19.3% | -3.5 p.p. | -1.0 p.p. |
Material Changes vs. Prior Period
- Profitability Surge: Net income jumped 247% year-over-year to R$ 223 million, driven by a 28% increase in net revenue and improved cost efficiency. ROE surpassed double digits for the first time at 10.4%.
- Loan Growth: The gross loan portfolio grew 35% YoY to R$ 35.7 billion. Notable growth occurred in FGTS (+93% YoY), Home Equity (+50% YoY), and consumer finance (+89% QoQ).
- Client Expansion: Total clients reached 33.3 million (+20% YoY), with active clients rising to 18.4 million (+27% YoY). Activation rates improved to 55.3%.
- Transaction Volume: Cards + PIX transaction volume (TPV) hit a record R$ 290 billion, a 47% increase YoY, with PIX volume alone reaching R$ 266 billion.
- Asset Quality: Non-performing loans (NPL) > 90 days remained stable at 4.7%. The cost of risk decreased to 5.0%, the lowest level since 2022.
Guidance, Outlook, and Strategic Updates
- Strategic Acquisition: Inter completed the full acquisition of merchant acquirer Granito (now Inter Pag) in May 2024 to expand its small and medium business (SMB) offerings. Inter now holds a ~9% market share of business accounts in Brazil.
- 60/30/30 Plan: Management reaffirmed commitment to the long-term strategic plan targeting growth, profitability, and efficiency. The efficiency ratio of 47.9% remains on track.
- Organizational Changes: Alexandre Riccio was appointed Brazil CEO. Rafaela Vitória assumed the role of Investor Relations Officer alongside her role as Chief Economist. New officers were appointed for Investments, Tax, Transactional Products, and Finance.
- Outlook: Management expressed confidence in overcoming challenges and achieving sustainable growth. They anticipate no further material impact from the renegotiation of loans related to the Rio Grande do Sul floods, which was a one-time proactive measure.
- Risks: The filing notes standard forward-looking statement risks, including economic factors, competition, and the ability to realize projected synergies from acquisitions.
Investor Verification Checklist
- Non-IFRS Measures: Verify the reconciliation of non-IFRS metrics (e.g., Net Revenue, Efficiency Ratio, Cost-to-Serve) against IFRS financial statements in the Appendix.
- Capital Adequacy: Monitor the Tier I ratio trend, which declined to 19.3% due to loan growth and dividend payments, ensuring it remains well above regulatory minimums.
- Asset Quality Trends: Review the cohort analysis for credit card delinquency and the impact of the 2Q23 cohort on NPL formation.
- Integration of Inter Pag: Assess the timeline and financial impact of integrating the newly acquired merchant acquirer into the core platform.
- Cost of Funding: Track the cost of funding relative to CDI, which rose slightly QoQ to 64.3% of CDI, to ensure deposit franchise stability.