Inter & Co, Inc. (INTR) Earnings Call Transcript

Hello, everyone. This is Rafa Vitória, IR Officer at Inter, and I want to welcome all of you to Inter's third. It's available in Portuguese. To get to it, click the globe icon at the bottom right of your Zoom screen and choose the Portuguese room. Please note that everyone attending will be in listen-only mode and that this conference is being recorded. You can send in online questions at any point today through the Q&A box on the webcast. A replay is going to be posted on the company's IR website. Joining me today are João Vitor Menin, our CEO, Alexandre Riccio, our COO, Francisco Santos, our CGO, and Santiago Stel, our CFO. João will begin with the strategic overview. João, please go ahead.

Thank you so much, Rafa. Morning, everyone. Appreciate you being with us once more to go over the results for our third quarter. Before we open any page, there's one key message I'd like to leave with you. I have tremendous confidence in the model we've been building at Inter for some time now. I refer to it as the BanTech model, and it delivers results. Today I'll walk you through how we constructed our story and how it gives us the strength to view what lies ahead with enthusiasm. To explain where that confidence originates, let me begin at the start. This is the way we presented Inter to the market back in 2018, at the time of our IPO. I still recall showing this page during the roadshow and how significant it was for all of us. Back then, the market observed traditional banks attempting to go digital and fintechs attempting to become a bank, and Inter sat right at that intersection. That intersection was never about compromise; it reflected our conviction, and it remains one of our greatest strengths today. We were born from banking, yet also powered by tech. Being a licensed bank, we provide the complete range of banking products, including credit, deposits, payments, investments, and insurance. Being a tech company, we move fast; we operate asset-light, with no branch network, and distribution at fintech cost. This combination is what we call the BanTech model I mentioned earlier, and it remains just as true today, perhaps even more so. I'm certain you've heard this story already. So why bring it up once more today? Because this design is exactly what makes Inter resilient in any environment. We aren't stuck in a single product or in one particular credit cycle. The BanTech model produces something powerful, and it's designed for any cycle, for any moment. Let me dig into it a little more. First, our balance sheet fortress. 70% of our loan book is secured, and our cost of funding stays consistently below that of our peers, digital and traditional banks; that gives us resilience when conditions become harder and room to keep growing when they improve. Second, regulation. The regulator is moving toward the book we have already built, secured credit, such as private payroll, real estate, or invoice discount. We are ahead of where the market is heading. Third, the competitive landscape. In a crowded market of banks and fintechs, clients continue choosing Inter; we take great pride that today we have 90% of all the Pix transactions in Brazil. Our daily logins just reached a new record this month. We stand out because clients find everything in one place and use it every day. This is what we call the strong combination of serving clients with convenience, savings, and trust. The fourth reason is technology. AI is already part of how we run Inter, and we are building on top of strong foundations, especially our data vault. Most importantly, we have the DNA to innovate. If you were to ask me how Inter manages to innovate to this degree, my answer would be that boldness is the key. The future isn't something we adapt to; we design it, and we've proven that over time. Back in 2015 we became Brazil's first digital bank, in 2017 the first bank to move to cloud, and in 2020 the first super app in the Americas. Each time it came down to the same decision, to lead and to disrupt, and each time we built it alongside the best partners. Today we're making that same decision with the next technological wave, AI; this isn't a plan, it's a red run, and for Inter it's another great opportunity, one we're already capturing. We don't just have superior models and greater efficiency within our teams, we're pushing even further. As I said at our Owners' Day, we have the ideal blend of our data vault, our 3SA approach, and our agentic engine named Seven. Just as we've released hundreds of versions of our super app, I'm confident we'll release hundreds of versions of Seven going forward. Our ambition is for Seven to sit at the heart of our client experience, and I'm certain we're only scratching the surface right now. As we did during the earlier technological waves, once again we're partnering with the best; we recently connected with SpaceX AI, and they are now our strategic partner in the AI world. But AI doesn't operate on its own. Data feeds it, and that data stems from the relationship we have with our clients. That's where the magic starts, and that's why our model stands out. The BanTech approach produced something larger, a flywheel of learning effects, now further strengthened by AI. Let me walk you through how our flywheel operates. It begins with the relationship. Customers choose Inter first, and they choose it most frequently. The more of their financial life they keep with us, the more data we hold, and the more trust they place in us. Greater data brings greater intelligence. Each decision and its result feed our data vault, and AI converts that data into more personalized experiences, improved credit models, and quicker operations; with that intelligence, our capabilities expand. The client receives better service, uses more products with us, and contributes more data to the vault. That's what makes every loop bigger, and the flywheel starts again. More relationship, more data, more learning, each round faster and bigger. When this flywheel spins, Inter achieves continuous growth and sustainable profitability; this isn't theory. It's already visible in our numbers. For example, this quarter our ARPAC hit its highest level ever. Santi will take you through it later today. But the message is fairly simple. The more the flywheel turns, the more value each client generates, and the more data flows into our data vault. This is what we call the learning effect. But technology by itself doesn't turn the flywheel. People do. So to take Inter into the future, we're reshaping our structure around two clear areas: growth and operational excellence, and we're bringing in Francisco Santos as our Chief Growth Officer. His focus will be growth and monetization. Using the flywheel I just walked through, Francisco will expand not just our client base but our monetization too, with our data vault and our learning effects backing that journey. Xande, whom you may already know, comes in as our COO, concentrating on operational excellence and on strengthening our credit and collection capabilities. He'll convert the intelligence in our data vault and the power of AI into smarter credit decisions and leaner operations. Santi, meanwhile, remains our CFO, centered on profitability and capital allocation, converting growth into returns with discipline. Consider this flywheel. Francisco makes each turn larger, Xande makes each turn run smoother, and Santi ensures every turn is profitable. As I mentioned, people are what turn the flywheel. Alongside these leaders, our 4,000 employees do that daily, guided by our strong culture. With the right team and the right culture, I'm confident we'll keep building Inter ahead; now it's my pleasure to invite Francisco to say a few words to you. He'll share his first impressions of Inter. Francisco, welcome, and the floor is yours.

Thanks, João. Being here is genuinely a pleasure. Inter's journey has been remarkable, and I've respected what this company has built for quite some time. I'm wrapping up week two at Inter, and it's been wonderful watching customers pick Inter and engage with us so actively. Our customer base is one most companies would envy, and I see enormous opportunity to deepen those relationships and grow monetization. Data, cloud, and AI aren't side initiatives at this company—they're woven into how it operates, which lets us move faster and keep learning and improving. Most of all, I see a team that's highly motivated to accomplish more and eager to try things differently. My main priority right now is those three areas. Let me start with retail banking: we're looking to strengthen primary banking relationships and boost monetization — meaning more customers pick Inter as their main bank and each relationship delivers more value. Second, SMBs. I believe there's a big opportunity in this segment. Business customers already keep their deposits at Inter. What comes next is making those ties deeper with products, drawing on the data and technology capabilities that proved so effective in retail. To head up this work, we've brought Frederico Alves on board at Inter. He has more than 20 years of experience in payments and banking, and he led products and businesses at Itaú and Fiserv. He's a fantastic addition to the team. Finally, as we look forward, I’d like to contribute new points of view and collaborate with the team in helping shape Inter’s next stage of growth. I truly appreciate the warm reception I’ve received, and I’m glad to be joining this team. I’m eager to collaborate closely with Xande, since growth and operational excellence must move together. Thank you, Xande, for welcoming me. Thanks, João. Xande, the floor is yours.

Thank you, Francisco. I can't wait to work alongside you. Hi, everyone. This new chapter at Inter has me genuinely excited, and leading operations during such a significant moment for the company is an honor. As João mentioned, my mandate is to convert the intelligence in our data vault and the strength of AI into smarter credit decisions and leaner operations. Put differently, excellence in credit underwriting plus AI-driven operations at scale, and it stands on three focuses. First, credit: we're bringing our next-gen foundation models up to full scale, shifting to one single model per client, so each decision becomes smarter and more consistent by drawing on the data our client relationships generate. Second, collections: we aim to reach full maturity in collection execution and products, rebuilding our processes with GenAI and automation. Third, operations. We're ramping up the transformation of our processes with agentic AI, automating steps, and making things simpler for our clients. João demonstrated that AI is already running at Inter. Our task is to bring it into the core of our operations. The logic holds across all three. Deploy technology to strip out what doesn't add value and give our teams time for what does; that makes us more efficient, and efficiency is what converts operational excellence into financial results, lower cost to serve, better credit decisions, and more profitable growth. As Francisco said, growth and operational excellence must move together, and the numbers show it. With that, I'll pass it to Santi, who will walk you through our financial performance for the quarter. Thank you.

Good morning, everyone. I want to give Francisco a warm public welcome. It's genuinely wonderful to have you with us on the team. Xande, having you concentrating on credit underwriting and operational excellence is excellent, since those areas are essential drivers for delivering on our ambitions. Now let me take you through how we performed financially this quarter. Beginning with revenue, on a net basis we hit BRL 2.7 billion, which is 26% higher year-on-year and 3% higher quarter-on-quarter. That works out to a net revenue run rate of BRL 10.9 billion, or close to BRL 20 billion gross, a very substantial number that demonstrates how material our performance is. Net interest income came to BRL 2.1 billion, 30% above year-on-year, accounting for 78% of our revenue. Fee income stood at BRL 611 million, up 13%, which tracks the growth of our active client base. What really matters is that these results demonstrate our flywheel is functioning very well. Every quarter we have more clients, a loan portfolio that is growing quickly, and a solid suite of products and services that complements our revenue base; now let me show you how this appears on a per-client basis. We got to 46.8 million clients in total, 13% more year-on-year, and over 27 million of those are active. When it comes to monetizing these clients, we are advancing strongly quarter after quarter. Our gross ARPAC hit BRL 59.7 per month, 5% higher year-on-year, setting a new record. Net ARPAC, after interest expense is deducted, was BRL 35.6, up 7%, which is also a record. Expanding revenue faster than our client count is a crucial element of our strategy, particularly given the considerable existing client base we have already built. On costs, our cost to serve came in at BRL 13.3 per client per month, roughly flat compared with prior quarters. That gap between ARPAC and cost to serve represents our margin per active client, which hit BRL 22.3 per month, delivering yet another record quarter. Two factors drive this performance. To start, there's deeper engagement and more credit penetration because our flywheel is getting quicker, larger, and stronger, as João mentioned earlier. Next, our more recent cohorts are starting off better; their initial ARPAC is BRL 10 above what earlier quarters had; that's how client growth turns into returns, and NIM is where we can see it. NIM 2.0 reached 9.96% in this quarter, still very close to the 10% mark. Let me walk you through two main points this quarter. First, we're up 70 basis points year-on-year, averaging 15 basis points higher quarter-on-quarter; this remains true even as our leverage rises. So on a same capital structure basis, the NIM gain is actually even bigger. Second, as we had expected coming into this call, this quarter was characterized by reduced inflation, and that had an impact on NII. Once you strip out the inflation effect, we still posted average quarterly growth of 10 to 15 basis points starting in Q4 2025; that reflects the way mix and pricing have moved, with cards rebalancing and private payroll serving as the main engines. The upshot of all this is that the NIM expansion of roughly 40 basis points we projected for calendar year 2026 remains very much on track, and we expect to close out the year at a NIM of about 10%, consistent with what we have been telling you. Looking at risk-adjusted returns, we gained 12 basis points compared with a year earlier, and that held up despite changes in the cost of risk. This improvement in margin comes from a credit approach centered on ROE that we've implemented consistently over many years. Our loan book grew to BRL 58.1 billion, up 25% from a year ago and 5% versus the prior quarter. The approach is straightforward: we aim for a credit mix the client can sustain across the cycle, which creates real value for both sides. At present, roughly 70% of the portfolio is covered by some form of guarantee, which is particularly important given today's environment of elevated household leverage and high interest rates. Growth is powered by these product types, primarily mortgages and private payroll. Home loans reached BRL 19.9 billion, a 37% year-on-year increase, and are now the biggest product portfolio in our lineup, making up 34% of the total; this is where our expertise shines brightest, with the best experience and least red tape in the market for securing these loans. That translates into an efficient operation, low delinquency, and a highly profitable product; in private payroll, we hit BRL 3.1 billion, 2.5 times higher than a year earlier. I'll go into private payroll in detail on a later page. In cards, we posted 18% growth as we intentionally shifted the book toward interest-bearing installments, which are now up 37%. Personal loans have stayed roughly level, since FGTS is winding down and we remain cautious about unsecured credit lines including buy now, pay later and overdraft. On the whole, our growth is outpacing the credit market in Brazil, which itself is expanding at a high single-digit rate. We are steering through the credit cycle with discipline. Let me take you through this page carefully, beginning with NPL and then NPL and stage 3 formations. NPL over 90 days came to 5.3% on the expanded portfolio, an increase of 29 basis points. That rise was driven mainly by our portfolio mix shifting into products I will cover on dedicated pages immediately after this one. Desenrola also contributed 14 basis points to this KPI. Short-term delinquency — measured as NPL from 90 to 15 days — fell to 4.2% versus 4.5% the previous quarter, an early indicator that delinquency trends are getting better. NPL formation, shown at the bottom left of this page, came in at 1.74% this quarter, down from 1.83% last quarter. The gain came mainly from private payroll — helped by the automatic relinkage — and from credit cards, consistent with the early delinquency numbers we just went through. Newer loans are seeing slower delinquency growth. I'll cover that in more depth shortly. Turning to stage 3 formation, shown at the bottom right of the page, it came in at 2.10%, compared with 2.12% in the previous quarter, and the Desenrola program affected it. That program launched in May and was aimed at credit card debt and unsecured personal loans. Because unsecured personal loans aren't part of our offering, the credit card was the product of ours that entered the program. By the end of September, we had renegotiated slightly more than BRL 160 million. That contributed roughly 20 basis points to stage 3 formation, since it shifted contracts that had been fully written off into stage 3. Without the program, stage 3 formation would have stayed flat at 1.9%, in both the second and third quarters. Now, on cost of risk and coverage, the all-in cost of risk for this quarter was 5.9%, essentially matching the previous one and in line with the 6% level we have been signaling as our new steady state. As we've noted, two internal decisions account for most of the increase relative to last year: first, the growth of private payroll, and second, the reshaping of credit cards. Leaving out private payroll, cost of risk stood at 5.3%.

On the other hand, the coverage ratio moved up a little, from 134% to 135%. The provisions we hold cover the delinquent balance with a comfortable margin. We added a dedicated page here for private payroll so we can deep dive into it. Twelve months ago, our loan portfolio for this product stood at BRL 1.3 billion, and today it sits at BRL 3.1 billion. Active clients rose from 282,000 to 759,000. As I said, this is the product that pushed delinquency higher, but most missed payments occur when an employee switches employer, and we have two levers to address this. The first is automatic relinkage. About 30% of the delinquent balance has already been relinked, which lets us track the client to the new employer and continue collecting. Next, private payroll insurance, where penetration stands at roughly 40%. You can see the impact in asset quality. NPL formation for private payroll fell to 3.2% this quarter, down from 4.9% in the prior one. Stage 3 formation was 5.8%, up from 4.8%, since our stage transfer policy holds loans under observation before they cross stages; that isn't a sign of new delinquency, and NPL formation bears this out. On the right-hand side, the J-curve for this product is visible, with break-even at month three and a positive return profile after that. Now I'll turn to funding. Overall funding reached BRL 81 billion — a 19% rise versus a year earlier and 5% higher than the prior quarter. This is a funding franchise that's growing fast and spread across many sources. Demand deposits stood at BRL 20.7 billion, 13% above the year-ago level. Time deposits came in at BRL 37 billion, 20% higher year-on-year. Securities issued were BRL 17.8 billion, a 45% increase, as we keep widening our sources past deposits alone. A key metric — deposits per active client — reached BRL 2.1 billion, a fresh record and 3% up year-on-year. Our loans-to-deposit ratio is now 69% versus 65% a year ago, meaning we're deploying surplus liquidity into the credit book. Let me walk you through how that affects funding costs. As we've mentioned repeatedly, one of our biggest competitive edges is our cost of funding, and this quarter it hit 70% of CDI. Two things were driving that. Seasonality was the first. The chart makes clear that the third quarter goes up since business days — 65% this quarter — exceed the 61% seen in the second quarter. Had we normalized for business days, funding cost would have come in at 68%, matching prior quarters. Selic is the second factor, and along with it the composition of our deposits. Since Selic remains elevated, our deposit mix has been shifting toward higher-yielding deposits, which lifts funding cost. That accounts for most of the gap versus last year. Our funding costs continue to be a major competitive edge, as we've noted repeatedly. We've held expenses in check even as the business keeps expanding, which is among the benefits of the digital banking model we've constructed. Expenses totaled slightly above BRL 1 billion, up 3% from the prior quarter. Several factors produced that outcome. To begin with, administrative expenses climbed 2% during the quarter, and 17% compared with a year earlier, driven by spending on branding and technology. Other categories benefited from scale, offsetting the shift overall. Next, personnel expenses increased 4% in the quarter and only 10% for the year, while average headcount stayed about level. Next, depreciation and amortization rose 6% for the quarter and 38% for the year, driven by amortization from prior investments in technology infrastructure and our super app. Looking ahead, we expect the fourth quarter to carry seasonally higher expenses, while 2027 should bring a meaningful gain in operational leverage as the benefits of our business model come through. On operational leverage, our efficiency ratio reached 41.9%, more than 3 percentage points better than a year earlier. From the first quarter of 2023 onward, revenue has grown 2.7 times while personal administrative expenses grew 1.8 times. That is operational leverage in action. Across three and a half years, our efficiency ratio went from 62% to 42%. Growth during the quarter came in lower, at 15 basis points, as revenue expansion was somewhat slower — driven in part by the inflation effect I referenced earlier. The trajectory remains evident, and further gains are still available as we realize additional advantages from our recent investments. Turning to profitability, this slide, as we've noted repeatedly, is a source of great pride for us; we posted our 14th straight quarter of net income growth — the 14th consecutive quarter of net income growth — hitting BRL 425 million in this quarter, a 26% increase over the BRL 336 million recorded in last year's third quarter. Annualized ROE came to 15.8%, which is 160 basis points higher than one year ago. Inflation made this quarter a bit softer than the last one, and the equity base—the denominator in the ROE calculation—also grew thanks to positive mark-to-market on securities. Taken as a whole, this page reveals a clear trend that fills us with pride, and we anticipate keeping up that performance. Looking at our profitability against the banking industry, you can see it on both an ROE and an ROA basis. At the top, on ROE, we rank 12th when we examine the first semester of the banking industry. Even more significantly, ROA—which accounts for how capital structures vary widely among banks—places us within the industry's top third. Given that we're expanding and putting substantial money into investments, landing in that top third is something we take real pride in, especially at our current size, which remains well below where we anticipate being as we keep acting as a disruptor and a rapid-growth participant in the sector. During the prior quarter, we noted that our capital position was neutral. This quarter reveals a pattern that is even more pronounced. Looking at Banco Inter's CT1 ratio, it reached 12.2% — that's 70 basis points above the 11.5% we posted the quarter before. Banco Inter's profits produced 100 basis points of capital, whereas growth in credit and operational risk consumed 70 basis points; so the operational result ended up adding 30 net basis points of capital, and that happened even with our loan portfolio growing 5% during the quarter. As the middle chart illustrates, we're sitting on a meaningful amount of excess capital that's ready to be put to work in the business. That comes from how efficient our corporate structure is. With that said, I'll turn things back over to João for his closing remarks. Thank you.

Thank you, Santi, Francisco, and Xande. Hearing what you had to say about Inter, plus the opportunities that lie ahead and how the results came out this quarter, leaves me feeling even more enthusiastic about where we are headed. Now I want to return to the things that mattered most this quarter. There are four points I would like to emphasize. First, credit growth. Our expanded credit portfolio rose 25%, which is nearly 3x the market. The strongest products drove that: real estate, private payroll, and cards — the BanTech in credit, banking products combined with the power of technology. Second, asset quality. Our cost of risk stands at 5.9%, unchanged from the prior quarter, even as the market kept deteriorating; this is a balance sheet we built to withstand any cycle, with 70% of our book secured. That is not luck, it is design. Third, our NIMs; we are at roughly 10%, 70 basis points higher than a year ago, even with the IPCA impact. This is our data vault empowered by AI, translating into smarter pricing and improved credit decisions. Last, efficiency. Our efficiency ratio this quarter reached 41.9%, 322 basis points better than last year, with operating leverage at work; so growth, asset quality, margins, and efficiency are all moving together. This is a flywheel in motion and a model built for any cycle. I am certain that the best for Inter is still to come. Thank you very much.

We'll now begin the question-and-answer portion. The first question comes from Fernanda Sayão of JP Morgan. Fernanda, your microphone is live. Please proceed.

Hi João, Santi, and Rafa. Thanks for giving me the chance to ask questions. I'd like to ask about private payroll. Now that the operational improvements have been live since September, how are the newer cohorts performing relative to the older ones? And how is the cost of risk trending at the margin? One last thing, if you could also share what impacts you're seeing from the bundled insurance. Thank you.

Hello, Fernanda. Xande here. Thanks for the question. Let me step back regarding the private payroll loans, and the first thing to note is our enthusiasm for the product. We're still excited about what lies ahead for the product, its profitability, and we view it as strategic for Inter, in line with our distribution channels. That's the first message. When it comes to the processes, we know, and we've been saying on earnings calls since last year, that this would be a journey, and a journey it has been. Perhaps somewhat slower than what everyone first imagined; but in the last quarter, the reality is that we did see a material improvement with automatic relinkage. That said, I'd note that three very important things happened with the product this past quarter. The first one, again, is relinkage. Relinkage helped us on both NPLs and cost of risk, with roughly 2% improvements on NPLs and a 1% improvement in cost of risk. As we move forward, we're going to see these improvements mature further. That's our expectation. The second point is insurance. As we said on the last call, we were beginning to do the insurances. We're now at about 40% penetration, and that too is a process that matures as we go, and it ties into your question about cohorts. Our expectation is that newer cohorts will begin behaving better than older cohorts, given relinkage and given that we have 40% penetration on insurance. Finally, a third factor that's very important to us is pricing, and the thing about pricing is that it drives production. For us, the volume of underwriting is much more an output than an input, so we drive it through ROE, we drive it by observing how delinquency behavior is. As we make pricing adjustments, we see sensitivity in underwriting volume, and we've been laser-focused on ensuring that we grow at a steady pace. Thank you, Fernanda.

Thanks.

We move to our following question, which comes from Tito Labarta. Tito, your microphone is now open. Kindly proceed.

Alright, thank you, Rafa. Good morning, everybody. I appreciate you hosting the call and for taking my question. I want to ask about loan growth. When you look at 2027 and the worries around the macro picture, right? On credit cards, you said you're intentionally pulling back somewhat because of that, even though you also noted that credit card NPLs may be close to peaking. Now with private payroll, perhaps that can support growth. So how should we frame loan growth in light of this difficult macro backdrop? Will the main focus be on secured lines? Is it possible to grow unsecured if credit card NPLs, as you said, are peaking, or do additional risks exist there that will keep you cautious? Thank you.

Tito, this is João Vitor. Thanks for the question. Before I respond on how we expect the portfolio to grow in 2027, it's worth linking back to what I said earlier today on the call. I'm very glad that, starting in 2015 when we launched the first digital bank in Brazil, we've been developing our capabilities to handle a tougher macro environment like the one we're in now. So we have, once again, the right funding in place. We have the client count, many clients also in place. We have a secured portfolio that we've built steadily over the past 10 years, and we have stronger credit and collection capability going forward. We recognize that the macro isn't in the best, isn't at the best moment at all. But given that we see an edge versus our competitors, we see an edge on funding, we see the regulator moving toward the secured portfolio, and very importantly, Tito, we still have a modest credit portfolio size in Brazil. Only, let's say, only BRL 60 billion. With that in place, we're comfortable growing between 20%-25% going forward, which is, I'd say, almost 2.5x the market. I think anyone who has followed Inter for a while knows we've always been cautious and prudent with credit underwriting, especially on the unsecured side. Again, considering the opportunities we still have on cards, private payroll, mortgage, home equity, and SMEs, I do see that 20%-25% range as quite feasible and prudent. Finally, it's about team. I mean, we're doing everything we can to grow consistently without jeopardizing our balance sheet, our economics. As I said, we now have, in my view, a dream team here to help us on that. Francisco just joined us, 100% focused on client growth and client monetization. He might add later about a few opportunities that we have. Also, Xande, 100% focused on operational excellence and credit and underwriting capabilities; with all that in place, Tito, despite the macro, I see a great chance for Inter to differentiate against our competitors. The message is a prudent one, though we're excited about how fast growth is coming in the period ahead.

All right, that's really useful, João Vitor. Thanks. Perhaps just a single quick follow-up — thinking segment by segment, ought we to anticipate that secured lending will expand more quickly? What's your view on unsecured lending as we look to 2027?

Tito, honestly, we've been fielding these kinds of questions across a great many quarters now. Folks assumed we'd grow extremely rapidly in credit card once we, so to speak, figured out underwriting and collection. What's actually true is that we continue to see plenty of opportunity within the secured portfolio. If you go back to how large our portfolio is, our share of the market at Pix stands at 9%, yet our share at private payroll, public payroll, SMEs collateralized by receivables, home equity, mortgage remains small, in a sense. So I genuinely see plenty of opportunity for us to continue growing strongly within the secured portfolio. Once more, a solid opportunity on cards too, as Xande was saying — improved collections, improved underwriting. Having said that, on the whole, more or less this 7%-ish ratio between secured and unsecured ought to preserve this trend, I'd say, going forward for at least the coming, I'd say, one or two years. So that's how I see the balance between secured and unsecured going forward.

All right, that's great. Thanks a lot, João Vitor.

Moving on, Thiago Batista has the following question. Thiago, the floor is yours.

Hello. Hi, João, Alexandre, Francisco, Santi, Rafa. Hi, everyone. I've got a follow-up to Tito's questions regarding next year's loan growth, but with a focus on asset quality. Would you say it's already possible to state that we're reaching some kind of peak in this asset quality cycle, or not yet? My question would concern Inter's capital. What's the best way to look at and think about Inter's capital position? When I check Inter's Tier 1 ratio, and if I add the BRL 2.1 billion held at the holding company, Tier 1 would come to almost 18%. You point out on the slide that we're nearly at a point where the pace at which we consume capital is stabilizing. Still, how should we think about Inter's capital over time? Could a higher payout ratio or a buyback be possible, or do you not believe we've already reached the stage of discussing a larger capital distribution?

Yeah, good morning. I'll handle that question. This is Santiago. Regarding asset quality, what we're reporting this quarter is something we're very proud of. The presentation contains plenty of metrics indicating improvement — early delinquency, the 15 to 90 day range, NPL formation. This comes from really solid effort across multiple areas — perhaps most notably in our two flagship offerings, credit cards and private payroll, which have been fueling NIM expansion. Still, our aim is to generate risk-adjusted NIM growth that holds up over the long term. That outcome stems from how actively we've managed those two particular products, since all the other products have held up strongly and steadily throughout the cycle. So those two have brought in a meaningful amount of revenue; regarding costs, we've been addressing the operational side of private payroll, as Xande noted, and on the credit side too — around UX, collections, and similar areas. Once that happens, the cost of risk lands at the 5.9% we reported—identical to the prior quarter’s figure, or in fact 3 basis points lower. That aligns with the roughly 6% cost of risk we had been signaling. Desenrola is also still in play, and it helped us during the second and third quarters. Looking ahead, however, we believe the cost of risk we reported—once adjusted for the Desenrola effect—is what we expect to persist over the coming quarters, at approximately 6%. That's really encouraging, since it lets us keep up that favorable direction in our margins. Turning to capital, we've also been putting in a lot of effort on return-on-equity density and making our capital more efficient. Naturally, a rising ROE is a help. The structure we have, with the holding company positioned at the top, runs very efficiently, and across the last two or three years we've been paying JCP, or tax on capital, so that surplus capital can be moved up to the holding, where it generates a better return. As a result, the math involving excess capital becomes somewhat more involved, even though we try hard to keep things straightforward in our disclosures. At the holding level, we hold BRL 2.1 billion in excess capital. If you ask how many percentage points that would represent at the bank were we to push that capital down, the answer is roughly 4 percentage points. So the consolidated total comes to about 19.5% of total capital. And what do we intend to do with this excess capital? Our main role would be putting it to work in the business; that's precisely why we hold it; so naturally we'd want to do that carefully, as João said, and after that the shareholders will set the dividend policy as they see fit. Still, the chief aim for the excess capital is to be deployed into the business so that it grows over time.

Thank you very much, Santiago. That was quite clear.

Moving on, our next question comes from Pedro Leduc. Pedro, the floor is yours.

Hi everyone, and thanks for taking the call, for the question, and congratulations on the results. I'd like a bit more detail on credit cards, please. For some time now you've been signaling that you're reducing risk, probably since late last year and early this year. We're seeing the portfolio grow at 18%, yet the interest-bearing portfolio is still expanding significantly faster, above 30% a year. If you could update us on where you believe you stand in the credit card de-risking process, and how comfortable you are with this mix, with interest-bearing still growing somewhat faster. Could you walk us through how we ought to frame the product's place in this journey and against the broader macro backdrop? Thanks.

Hello, Leduc. Xande here. Let's begin. When we examine the credit cards, there are several steps to walk through. First — and this is something we take encouragement from in what we're seeing on our side — we've been able to draw on all the credit work we've built in order to steer delinquency. That carries real weight for us; we know we watch early NPLs and the impact they have on cost of risk as well as on NPLs further out. We managed to move the portfolio forward, though the truth is that near term we let growth decelerate. In our management meetings, we're talking about when the point arrives to speed things back up; to do that, clearly, we need to keep an eye on the macro picture and observe how things react. Generally speaking, the close of the year is not the ideal time to expand credit within credit cards. When would I say the right moment to step on the gas arrives? My view leans toward early next year rather than late this year—not the fourth quarter—because of the macro picture and the seasonal delinquency pattern we see annually around this period. I also want to stress how much attention credit and collections will receive under the new structure. The changes we've implemented have me genuinely enthusiastic. My expectation is that we can devote more resources—my own involvement included—to building further on everything achieved across the past three to four years, which is what carried us to a credit card portfolio of BRL 16 billion to BRL 17 billion. The first thing to say is that this is a structural update. There's been a lot of attention on it. Where will it land, and on what timeline? Our long-term aim isn't near-term, but by the close of 2027 we want the foundation models live for both consumers and business clients; with those foundation models we'll be able to underwrite more effectively, so we can sort through the client base better and approve more credit card limits, again for consumers and for businesses. Because these models are generic, they'll sharpen our collections work and our propensity models for cross-selling and AML. Looking ahead, there's a great deal more still to come. In addition, we will continue concentrating on three areas: controlling, optimizing, and scaling. Controlling is the piece I started discussing. Optimizing is something we are already doing. Scaling is what we anticipate being able to accomplish more of next year. Given these improvements to the models, I would note that we should be able to return to growth even if the macro deteriorates, should that occur. Whatever the macro environment, we want to be prepared to grow. Thank you, Leduc.