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

Hello, everyone. Rafaela Vitoria here, and I serve as IR Officer at Inter. It's my pleasure to welcome each of you to Inter & Co's First Quarter 2026 Earnings Conference Call. <<operator_script>> that this conference is being recorded. You'll be able to find a replay on the company's IR website. Joining us today are João Vitor Menin, who is our Global CEO; Alexandre Riccio, our Brazil CEO; and Santiago Stel, our CFO. To begin with the CEO overview, let me invite João. João, the floor is yours.

Thanks for being here today as we walk through the results from our first quarter of 2026. It's clear we kicked off the year on a solid footing, and the numbers from Q1 confirm we're on track toward growth that's both sustainable and profitable. Momentum is strong across a number of measures. For instance, our gross loan portfolio has grown beyond BRL 50 billion. Structural profitability is starting to materialize. Net income came in at close to BRL 400 million for the first quarter, which works out to a run rate of BRL 1.6 billion on an annual basis, alongside a TPV run rate exceeding BRL 1.7 trillion during this first quarter. Xandre and Santi will be with me shortly to go deeper into all of this. I also want to point out that we delivered these results while staying disciplined, and they tie directly into the vision we hold for what's ahead. On earnings calls, I typically cover the strategic side of Inter — our vision. That said, this coming Monday we're putting on our Owners Day, so I'll hold back the broader picture for that event, which has me personally quite excited. There, we'll lay out our ambition to lead via innovation and to bring growth and profitability together, building a business model that lasts for our owners. I'd really urge you to be with us this Monday at Nasdaq. For the first time ever, our senior leadership team will share their perspectives on subjects including client principality, credit penetration, monetization via upsell and cross-sell, and naturally, our newest tech developments — how we're opening up AI opportunities at Inter. We'll talk through our vision, our financial strategy, our execution plan, and the key enablers underpinning everything. As you already know, on every earnings day I like to show not just the financial KPIs but also the new products and solutions we're bringing to our clients. This quarter, I want to call attention to something we announced just 2 days ago; in case you missed it, we rolled out Seven, our brand-new multi-agent AI tool. Its potential is enormous, because it isn't merely a user interface. It's a robust Agentic platform constructed from the ground up. It links the complete strength of our data infrastructure to provide the very best experience for clients. Starting in 2025, our AI moved beyond just answering questions into actually completing tasks. Today it's a fully transactional AI tool. Clients can request investment advice, send PIX transfers via text, and purchase gift cards too. They're also able to handle credit card installments and a whole lot more. Seven turns even the most complicated products into something incredibly easy to grasp and use. You'll get the full picture during our Owners Day, when we'll show how Seven plays a vital role in our business model going forward. Now I'd like to bring in our Brazil CEO, Xandre, to walk through the business update for the first quarter of 2026. Xandre, over to you.

Thanks, João. We can't wait to walk everyone through our long-term strategy during the Owners Day happening on May 11. That said, let's begin by digging into what happened in the first quarter. I'll kick things off by talking about our client base. The overall count of customers continues to climb, and this base has never been more solid. We got to 44 million clients in total. Activation rate just posted its biggest quarterly increase since 2024, hitting nearly 60%. It's not merely account openings — people are genuinely engaging with what we offer. We manage to combine that strong engagement with an intentionally tight, disciplined cost to acquire customers. What drives us above all is boosting principality and turning into the main bank for each and every user. That requires expanding cross-sell and pushing monetization to far greater levels. That's yet another subject we'll dig into at the upcoming Owners Day. Such elevated activation figures feed straight into enormous payment volumes. Looking at the cohort chart displayed on the right of this slide, you'll notice our customers are transacting at record levels; during the first quarter, cards plus PIX together hit a BRL 1.7 trillion run rate, expanding 25% year-over-year, and that's the tool people rely on for everyday needs. Thanks to this everyday usage, 8.5% of all PIX transactions in Brazil run through Inter. Now turning to credit. Across our whole credit portfolio, growth remains healthy and well balanced; we're expanding quickly at over 30% year-over-year, yet we're doing so with diversification. Some form of collateral secures close to 70% of what we hold in that portfolio. We pull this off by keeping growth balanced among products including mortgages, payroll loans and credit cards; thanks to this strategic mix, returns stay steady while asset quality stays protected. Over the last year, private payroll stood out as our biggest success. Our outlook on this product remains favorable. We got to a BRL 2.5 billion portfolio along with 600,000 active clients. That demonstrates just how powerful our digital distribution is and how fast we can scale something new. With credit cards, we're advancing on raising the share of installments as well as the total interest-earning volume. We refer to this effort as reshaping. Interest-earning portfolios like these now make up more than 25% of our credit card portfolio, climbing from 21% a year ago. Revolving went up since clients are no longer forced into installments. Later on, Santi will share additional specifics about how strongly our loan book has performed. I'll wrap up by discussing market shares. The business continues to gain materiality, reinforcing where we stand as a platform with high volume and heavy engagement serving tens of millions of people. Thanks to our full ecosystem, we keep taking share in each key product. Whether it's PIX, credit cards, mortgages or investments, our figures keep rising consistently. Our base is sturdy, and we're set to deliver another strong year and an even more extraordinary future. I'll now hand things over to Santiago, who will walk through our financial results in detail.

Thanks, Xandre. Hi, everyone. Let's get right into the financial results. Like Santi said, our loan book is expanding quickly. We got to almost BRL 50 billion, up 33% over the last 12 months, or 3% compared with the previous quarter. If we take out the SME portfolio, which has a short duration and typically declines in the first quarter, our expansion is actually higher, at 37% year-on-year and 5% versus the prior quarter; when it comes to loan balance per active client, a really key KPI that pushes ARPAC growth, we stayed at BRL 1,930 after very strong growth in the quarter before. Now I'll go through this growth product by product, beginning at the bottom of the page; on the real estate side, mortgages were up 42% year-on-year, while home equity rose an impressive 43%. In the payroll and personal loans portfolio, which covers both private and private payroll, we posted 38% year-on-year growth. The standout in that group was private payroll, which got to a BRL 2.5 billion portfolio, exactly as Xandre pointed out earlier. Lastly, credit cards were up 27% year-on-year, backed by solid risk management and ongoing progress from our reshaping strategy, which is driving better monetization and profitability for the product. To wrap up this slide, it's worth noting that we have three products expanding at close to 40%. Meanwhile, credit cards are growing at roughly 30% year-on-year; that lets us keep building a strong balance sheet, fueling NIM and ARPAC expansion while keeping strict control of risk management. This rapid loan growth we just discussed came alongside healthy asset quality metrics. We have three factors at play this quarter. On the macro side, as all of you know, system delinquency is on the rise. On seasonality, first quarters usually bring a bit more pressure on these metrics. And third, on growth strategy, we're expanding private payroll plus working on cards reshaping, which pays off on the NIM side but does create pressure on the asset quality metrics. With all these factors combined, we saw NPLs rise from 4.7% to 5.1%. When it comes to NPL and Stage 3 formation, we had a stable quarter, with metrics almost the same as the prior quarter; on cost of risk, though, it did go up because private payroll has been on our books for several quarters, and you can see that if you exclude it, it stayed fairly flat over the past 3 quarters. Finally, on credit cards, our cohorts keep performing well, much better than 2 to 3 years ago and now with far greater monetization. Turning to the funding side. Our total funding got to BRL 74 billion, which is 25% annual growth. Another great figure to point out is the loan-to-deposit ratio. It rose 4 percentage points in 1 year as our loan growth is expanding faster than our deposit base. Our deposits per active client remain strong, sitting above BRL 2,000 per active client. The modest dip we saw in Q1 comes down to seasonality. It shows up when you put it next to Q4, a period when 13th salary payments and year-end bonuses landed in people's pockets. Growth across the year came mostly from time deposits, helped by the Selic rate sitting at a high level and by the continued traction of My Piggy Bank, which has now passed 5 million clients. We've repeated on many earlier calls that our strong funding franchise is still among our main competitive edges, since our cost of funding ranks among the lowest and steadiest in the industry. Market rates swing quite sharply, yet we manage to hold our funding costs steady; this quarter our cost of funding came in at 64% of CDI, better than the 66% posted the quarter before and essentially the same as it was 1 year ago. Turning to revenue, our net interest income and fee income are both still expanding quickly. Gross revenue in total came in above BRL 4.3 billion, which works out to an impressive 37% increase versus a year earlier. That scale makes clear just how big and how fast-moving our business has become as we keep growing. Net revenue overall also put up strong numbers, up 33% year-on-year to BRL 2.4 billion. The clearest engine behind that expansion was our credit portfolio. Our NIM rose 38% year-on-year. Much of that pickup came from strong results in payroll loans, credit card, mortgages and home equity loans. Those are key segments where we've achieved considerable scale and efficiency. On the fee side, net fee revenue was up 18% year-on-year. That underscores how much our full ecosystem matters — having Seven verticals and 180 products lets us cross-sell with ease and lift our fee mix. The completeness of our platform makes cross-selling and deeper monetization possible. Thanks to that, most cohorts monetize better with each passing quarter. That pushes our ARPAC up while our cost to serve holds flat. This dynamic sits at the heart of our structural profitability. Consequently, our net ARPAC hit BRL 34, a solid 9% gain year-on-year even with strong growth in active clients. Beyond that, margin per active client is BRL 21, a 15% annual improvement and our second best quarter on record. Clients who have matured with us show even more upside; they already produce above BRL 130 in gross ARPAC, which further highlights the appealing opportunity waiting once clients mature within our base. These results are genuine proof of how strong our ecosystem is. We'll explore this far more deeply in our unit economics and principality work at our Owners Day on May 11. Now I'll walk through the NIM page. My first point is that starting this year, we'll treat the NIM 2.0 as our headline NIM. This NIM puts the interest earnings portfolio in the denominator and matches what the industry shows, both in incumbents' and disruptors' disclosure. Now let me get into the metric itself. Our net interest margin came in at 9.54%, which ranks as our second strongest figure ever, trailing the fourth quarter of 2025 by just 3 basis points — and that quarter was exceptionally strong. Looking at it across 12 months, that represents a gain of 70 basis points, or roughly 15 basis points each quarter, which lands right in the middle of the 10 to 20 basis points per quarter range we've communicated to the market. When you adjust for risk, what we're observing is the effect of provisioning for private payroll loans upfront, since those costs hit before the product generates interest, following the natural J-Curve. All in all, what this page shows leaves us quite proud, because it reflects capital allocation that is both disciplined and consistent. Even with volatility in macro variables and a balance sheet carrying more leverage as we keep growing and scaling, we're producing margins that are rising and steady. Revenue was up 33% over the last 12 months, yet because of how we approach cost control, expenses rose only 20% — a gap of 13 percentage points. I'd like to walk through a few items on this page. To start with personal loans: our headcount stayed flat at roughly 4,000 employees across the last 12 months, and we keep seniorizing several teams.

Next, on the admin side, those costs increased 17% compared to a year earlier, which is roughly half the rate of our top line expansion, even with significantly greater transaction activity flowing through our super app as it keeps growing. And third, something that spans both personnel and administrative areas: we're capturing AI possibilities throughout the entire company. At this point, it goes well beyond fraud, customer service and credit underwriting, since it has expanded across every division and turned into a routine part of how we operate; we'll examine this closely during the Investor Day on May 11. When you place revenue and expenses side by side, here, the core of our digital banking approach becomes clear, and that is significant operating leverage potential. Over on the left, you can see it indexed from the start of 2023. Then on the right-hand side, the efficiency ratio demonstrates that we enjoyed a remarkably strong quarter, hitting a record low of 43.8%, which represents 170 basis points of improvement compared with the previous quarter, so we begin the year carrying very strong momentum on this measure. Operating leverage is fully at work and is pushing outstanding results directly into our bottom line. This entire set of strong execution efforts together shows up on this profitability page, which once again fills us with pride. We achieved a net income of BRL 395 million in this quarter, which implies a run rate of nearly BRL 1.6 billion. We posted 15.5% ROE and 1.59% ROA, both of which are records. One additional metric we introduced this quarter, and which we believe is worth tracking, is our return on tangible equity, which came in at 19.5%, an extremely impressive figure from our perspective. To wrap up on my part, I want to emphasize that these outcomes demonstrate discipline in capital allocation, risk management and cost control, all paired with a growth mindset that is ambitious. At this point João Vitor will come to the stage for the closing remarks. Thank you.

Thanks, Santiago. Beyond the strong numbers the team has just walked through, I'd like to offer one last point. A decade ago, our company underwent a total overhaul. The choice we made was to be mobile only, rather than putting mobile first. We introduced Brazil's inaugural digital bank, setting a strategic course around the idea of a banking revolution. Now, 10 years on, we find ourselves in a genuine deja vu situation; a fresh trend is emerging, and it's just as significant as that banking revolution was at the time. Our name for it is the banking AI revolution; this is an enormous new wave of technology, and here at Inter, we're capturing it. The results from our first quarter demonstrate that we've got the ideal blend of expansion and profit; building on that powerful momentum, we can aim to reshape the retail banking market once more, precisely the way we did in 2016. Plenty more lies ahead. Keep watching. Many thanks for being with us today. Rafa, let's now begin the Q&A session.

Thanks, Joao. This quarter makes us quite proud, though what lies ahead excites us even more. Prior to taking your questions, I'd love for everyone here to mark May 11 on your calendars for our Owners Day. That gathering will give us a wonderful chance to look back at the remarkable path we've traveled and to offer a glimpse of the tomorrow we're creating side by side; we'll be streaming live from the NASDAQ market site in New York City, with things kicking off at 9:00 a.m. next Monday; anyone able to come in person is welcome, and the whole event will also go out over a live broadcast. Just scan the QR code shown on the screen to sign up for that live broadcast. Looking forward to having you all with us. With that, let's begin the Q&A portion. Gustavo Schroden will ask the first question.

I want to dig into what's happening with asset quality, since these metrics have kept worsening quarter after quarter. That has also hit the cost of risk; you said this ties back to faster growth in private payroll loans, which demand provisions booked upfront. But I'd like — could you walk us through how this private payroll loan works? In other words, how much expected credit loss must be set aside at the start? What's the outlook for reaching breakeven? I think that would help a lot, since investors keep asking us about this rise in NPLs, the formation of new NPLs, and the higher cost of risk. And what level of cost of risk should we anticipate across the year?

First I'll take the strategic angle, covering how we view delinquency ahead and how that could shape our growth. Then Santi will address the cost of risk and NPLs going forward; it's worth noting this may sound contradictory, but I actually see an opportunity for Inter right now. We're aware it's a hot topic today, above all in Brazil, where there's heavy pressure on cost of risk. The macro backdrop isn't favorable. So why do I view this as an opportunity? Let me try to be clear on that. As you probably know, those who've tracked Inter for some time know we've worked hard over the past 10 years, ever since launching the first digital bank in Brazil, to build a very strong funding franchise. That gives us the best funding to keep underwriting well. Plus, thanks to the digital model, the digital distribution model, we can originate and service loans more cheaply than our competitors. That said, we see the last credit cycle was positive. And now we see some deterioration in Brazil's credit cycle; we see Inter as well positioned to stay ahead of the competition and therefore keep growing at the 30%-ish level we've delivered for about the past year. We do see our transactional side of the business, the TPV, the fixed volume performing really well. It will help us keep delivering the best cost of funding, the best distribution channel and the best way to serve; with all that in place, we're excited to keep producing more loans, mainly in the secured portfolio, worth emphasizing, as of today, roughly 70% of our portfolio is collateralized, and also keep growing the unsecured portion through credit cards. Xandre has already explained in his remarks. And now with all that said, I'll hand it over to Santi to cover delinquency and NPLs going forward.

Regarding private payroll and the delinquency tied to it, this offering keeps displaying the kind of conduct you'd anticipate from a book in its early phase, and results are staying in line with what we projected. During this quarter, we hit a record amount of originations, since we began distributing it via WhatsApp alongside the app and the portal. That channel is also generating greater client conversion. So from a commercial standpoint, we're happy with how things are developing. Xandre can go into more detail on that afterward. NPL 90 days rose largely because of private payroll, since it began at roughly 0 in the prior year, and its portion of provisions and the delinquency mix continues to expand inside the portfolio. In this quarter, we observed operational gains including, first, the ability to shift contracts between companies when clients change jobs, and second, a more seamless way to gather payments from employers. We anticipate numerous additional operational gains ahead, for instance, the option to apply severance funds as collateral once employees are let go, plus automatic re-inclusion across employers, and finally, using FGTS as collateral. These are gains we believe will ultimately arrive and will likewise affect delinquency favorably. Gustavo, it also matters to recognize that the present pricing for this offering already reflects a double-digit delinquency; and given these present delinquency levels, the product's ROE at the rates we're originating stands at roughly 30%. As we've said on earlier calls too, the offering follows its inherent J-Curve, where initially we must provision upfront, and afterward, once interest income flows through the P&L, we observe the results turning positive. We crossed the breakeven point one quarter back. And once the portfolio begins expanding — once the portfolio's stock expands faster than fresh originations — that NPL ought to keep progressing. So overall, we're satisfied with it. This is an investment aimed at the future. It aligns extremely well with the inter by design formula. Those receiving these loans gain an advantage compared with pricier alternatives; and as we keep capitalizing on this opportunity, that's exactly what we'll do.

All right. If I could just ask one more thing here. How long does it typically take, on average, before you hit breakeven, correct? Since I assume that, like you said, it follows a J-Curve. You start writing business at the contract's outset, you face that elevated cost of risk, and eventually you get to breakeven. So, on average, how many periods does it take to get to that breakeven point?

For private payroll vintages, at the pricing we're putting on the books and given the delinquency we're observing, breakeven arrives at roughly 2 quarters, or 6 months, Gustavo. We did speed up originations during the prior quarter because of that. So the volumes coming in had steepness to them, but a normal cohort reaches breakeven at 6 months.

All right. And one last thing — for this year, does the anticipated cost of risk remain 5% to 5.5%, or has that shifted?

Given the scenario we're currently observing, what we anticipate is something nearer to 6%. And we — once more, as has been said on many occasions, this is a business of optimizing, or solving for, risk-adjusted NIM. And with the scenarios we're observing in this particular year, and as we take more marginal exposure to private payroll and, within cards, with the reshaping as well, we see something nearer to 6% for the remainder of the year.

Ricardo Buchpiguel.

We noticed NIM stayed more or less steady this quarter even with shifts in portfolio mix, which you referenced — the private payroll loan carrying better yields, and that likewise contributed to a bigger cost of risk. So it would help if you could walk us through what we should reasonably anticipate regarding NIM across upcoming quarters? And what caused this in Q1 — maybe seasonality plays a part, plus that J-Curve you brought up — but I just wanted your perspective there.

Thanks, Ricardo. Santiago here once more. Regarding NIM — let me start with the longer-term view; our consistent message has been that NIM ought to rise 10 to 20 basis points each quarter on average. And looking at how the metrics grew over the past 12 months, that growth was 70%, so 15 basis points on average, which leaves us quite pleased to observe that improvement carrying on. During the fourth quarter, our increase was larger, moving from 9.28% to 9.57%. Everything works in NIM's favor in Q4. Somewhat the reverse occurs in Q1, especially since deposit balance for the cheapest deposit category came in lower this quarter, and that produces the opposing picture. So compared with last quarter, we get a 3 basis point gap, 9.57% versus 9.54%, which we describe as roughly flat. Even so, we keep observing additional NIM expansion. We estimate it nearer to about 10 bps on average this quarter, NIM expansion resulting from plenty of the easier wins when it comes to repricing the older portfolio and deploying the liquidity at better yields. There remains much work ahead. We have numerous initiatives on the treasury side too. That said, this first quarter is more — the flatness relates more to seasonality on the funding side during Q1, which had the reverse impact in Q4; and as a result, we were roughly flat against fourth quarter '25.

Understood. Moving to a different subject, I'd like to hear your thoughts on how the payroll loan rule adjustments announced this week might affect things, whether near term or further out. I realize this may not be applicable to your business.

Alexandre here, Ricardo. Appreciate the question. To begin with private payroll, our outlook on this product is quite positive. That's worth stating clearly; and our credit assessment standards aren't meaningfully altered by the revised caps. Looking back to when we started, this would represent under 5% of all underwriting. As for what's taking place with how we underwrite, we're developing our distribution channels, including our in-house ones, and we're confident this development will counterbalance the effect of that 5% that could potentially be reduced. To share some figures, our portfolio has hit BRL 2.5 billion. The typical rate stands at 3.7%, substantially below the levels observed in the caps; and let me also mention some aspects of how private payroll loans perform and why it benefits Inter. Cross-selling runs at roughly twice the product's typical cross-selling. ARPAC comes in at approximately four times the usual client ARPAC. That's excellent. During the prior quarter, we mentioned WhatsApp origination, saying we'd launch it in this year's first quarter. We got it started — and at this stage, it remains early. Already, roughly 30% of what we originate arrives via the WhatsApp channel. So that's a positive; and I'd also like to wrap up by addressing public payroll briefly. We likewise observed some rule adjustments there. The primary — the largest effect falls on public payroll cards, which aren't part of our operations, plus benefit cards, which we also don't operate. Consequently, no business impact is expected, and we view these adjustments as beneficial for the public, beneficial for our clients. So whatever benefits our clients will ultimately benefit Inter over the long run. Thanks, Ricardo.

And a brief additional question about that. Cutting payroll margins for public employees until they eventually hit 30% — would that hurt you folks, or is it maybe not so important? Could you also say more about that side of things?

Yes. Looking at underwriting volume and how much of our overall portfolio this product accounts for, it isn't significant. And since the portfolio is still expanding, we think no material shifts should appear as we consider what lies ahead for the products.

Our next question comes from Tito Labarta.