BELO HORIZONTE, Brazil, May 09, 2024 (GLOBE NEWSWIRE) -- Inter&Co Inc. (NASDAQ:INTR, B3: INBR32))), the premier financial super app that provides financial and digital commerce services to over 31 million customers, today reported financial results for the first quarter of 2024. Highlights: Record net income of R$195 million. A 37% YoY increase in net revenue.Transactional Volume (TPV) increased to R$257 billion.A 5th consecutive quarter of increased account activations, reaching 54.9%. Inter&Co reported s ...

Financial Performance - Gross Loan Portfolio increased to R$31,020,837 thousand in 2023, up from R$24,543,993 thousand in 2022, representing a growth of 26.5%[25] - SG&A expenses totaled R$2,412,527 thousand in 2023, slightly up from R$2,392,061 thousand in 2022, indicating a marginal increase of 0.8%[26] - Efficiency Ratio improved to 54.5% in 2023 from 72.2% in 2022, reflecting enhanced operational efficiency[28] - Return On Average Equity (ROAE) was 4.8% in 2023, a significant recovery from a loss of (0.2)% in 2022[29] - Net Fee Revenue rose to R$1,544,488 thousand in 2023, up from R$1,227,268 thousand in 2022, marking an increase of 26%[33] - Total Gross Revenue reached R$8,079,000 thousand in 2023, compared to R$5,986,000 thousand in 2022, reflecting a growth of 35%[40] Risk Management - Cost of Risk increased to 5.5% in 2023 from 5.2% in 2022, indicating a rise in credit risk[31] - Liquidity risk management structure is designed to monitor and prevent breaches of liquidity ratio limits[744] - Market risk includes potential losses from fluctuations in stock prices, interest rates, exchange rates, and commodity prices[745] - Operational risk arises from failures in internal processes, people, systems, or external events, with processes in place to mitigate these risks[746] Funding and Costs - Funding increased to R$43,513,032 thousand in 2023 from R$32,516,818 thousand in 2022, a growth of 33.7%[36] - Cost of Funding rose to 7.6% in 2023 from 7.1% in 2022, indicating higher interest expenses relative to funding[38] Interest Income and Portfolio Growth - As of December 31, 2023, the net interest income and income from securities and derivatives increased to R$3,208,088 thousand, up from R$2,335,429 thousand in 2022, representing a growth of approximately 37.3%[46] - The net interest margin (NIM) improved to 7.4% in 2023, compared to 6.7% in 2022, indicating enhanced efficiency in generating interest income[46] - The average interest-earning portfolio rose to R$43,289,368 thousand in 2023, up from R$34,759,632 thousand in 2022, reflecting a growth of about 24.5%[46] - The NIM excluding the credit card transactor portfolio increased to 8.7% in 2023 from 7.8% in 2022, highlighting the company's ability to generate interest income from its asset portfolio[50] Loan and Securities Growth - The total loans and advances to customers, net of provisions for expected loss, reached R$27,900,543 thousand in 2023, compared to R$21,379,916 thousand in 2022, marking an increase of approximately 30.5%[43] - The amount due from financial institutions, net of provisions for expected loss, decreased to R$3,718,506 thousand in 2023 from R$4,258,856 thousand in 2022, a decline of about 12.7%[43] - The securities held by the company increased significantly to R$16,868,112 thousand in 2023, up from R$12,448,565 thousand in 2022, representing a growth of approximately 35.5%[43] - The credit card transactor portfolio also grew, reaching R$7,490,011 thousand in 2023, compared to R$5,411,798 thousand in 2022, an increase of about 38.5%[50] Strategic Initiatives - The company continues to focus on expanding its market presence, particularly through the acquisition of Inter&Co Payments in the United States, aiming to integrate operations and enhance growth opportunities[58] - The company emphasizes the importance of client acquisition cost (CAC) as a metric to monitor the efficiency of its growth strategies, reflecting its commitment to optimizing operational expenses[55]

akinbostanci/iStock via Getty Images Investment Thesis I recommend buying Inter & Co (NASDAQ:NASDAQ:INTR) shares. Inter & Co was one of the first digital banks to carry out an IPO in the West and simply quadrupled the number of customers between 2018 and 2020, reaching more than 8 million. At that time, Inter & Co had a P/B multiple of 6x, and the strategy of all fintechs in the world was to grow without worrying about profitability. However, Brazil and the world went through a major cycle of rising int ...

Financial Data and Key Metrics Changes - The company achieved a record revenue of BRL2.2 billion in Q4 2023, with annual net revenues reaching BRL8.1 billion, reflecting a 31% year-over-year growth in net interest income [51][54] - The return on equity (ROE) reached a record 8.5%, with net income increasing by BRL160 million, translating to an annual total of BRL640 million combined with EBITDA [54] - The efficiency ratio improved to a record low of 51.4%, indicating strong operational leverage [53] Business Line Data and Key Metrics Changes - The credit portfolio grew to BRL31 billion, with a sequential growth of 7% in Q3 and 10% in Q4 2023, indicating strong momentum entering 2024 [18] - The e-commerce vertical surpassed 3 million clients and achieved over 10 million transactions in the quarter, setting a new record [6] - The investments vertical saw a 66% year-over-year client growth, with assets under custody (AuC) reaching BRL92 billion [15] Market Data and Key Metrics Changes - The company reported a 45% growth in total payment volume (TPV) in 2023, surpassing BRL250 billion in Q4 alone [40] - The global vertical achieved over 2 million clients and $360 million in AuC and deposits, marking a 4x growth compared to 2022 [43] - The company maintained an 8% market share in PIX transactions in Brazil, with expectations to increase this share [28] Company Strategy and Development Direction - The company aims to achieve 60 million clients, a 30% efficiency ratio, and a 10% ROE by 2027 as part of its 60-30-30 business plan [9] - The financial Super App continues to evolve, with a focus on innovation and operational efficiency to enhance client engagement and profitability [10][17] - The company is expanding its Buy Now Pay Later (BNPL) partnerships, which are expected to significantly contribute to revenue growth [14][69] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the sustainability of the business model and the ability to maintain growth and profitability [3][26] - The company anticipates continued improvement in efficiency and revenue generation, driven by innovative product offerings and a strong client base [37][72] - Management highlighted the importance of maintaining a competitive funding mix and defending the deposit base through transactional business growth [98] Other Important Information - The company launched several new products in 2023, including PIX Crédit and Overdraft, enhancing its service offerings [17] - The company reported a significant decrease in the cost of risk, driven by improved underwriting and recovery processes [49] Q&A Session Summary Question: Initial impressions on PIX Finance and its relevance - Management expressed excitement about PIX Finance, noting an 8% market share and excellent user experience, with expectations to outpace market share in the future [28] Question: Insights on delinquent loans and cost of risk - Management confirmed proactive renegotiation of delinquent loans, resulting in a BRL60 million impact on net interest income and cost of risk [31] Question: Future improvements in funding costs and efficiency - Management indicated that while funding costs have improved, further reductions are expected, with efficiency improvements driven by revenue growth outpacing expense growth [32][61] Question: Revenue growth drivers for 2024 - Management highlighted BNPL as a key revenue driver, with expectations of significant growth in loan products and overall revenue [69][70] Question: Contribution of FGTS loans to the portfolio - Management expects FGTS loans to grow from 6% to around 10% of the portfolio by the end of 2024, citing strong demand and operational improvements [104]

Customer Base and Growth - As of December 31, 2023, the total customer base reached 30.4 million, with an activation rate increase of 300 basis points to 54.0% compared to December 31, 2022[6]. - The loan portfolio balance reached R$29.8 billion, reflecting a 31% increase compared to December 31, 2022[7]. - Total funding amounted to R$40.7 billion, representing a 36.5% increase compared to December 31, 2022[8]. - Total assets grew to R$60.4 billion, marking a 30.2% increase compared to December 2022[12]. - Total assets increased to R$60,351,797 in 2023, up from R$46,343,100 in 2022, representing a growth of 30.2%[33]. - The company reported net cash from operating activities of R$7,545,050 in 2023, significantly higher than R$2,103,405 in 2022[39]. Financial Performance - The accumulated profit for the period was R$352.3 million, a significant turnaround from a loss of R$14.1 million in the same period of 2022[9]. - Revenues reached R$7,775.7 million, an increase of R$2,111.0 million compared to the same period in 2022[10]. - Profit for the year reached R$352,260 in 2023, a significant recovery from a loss of R$14,079 in 2022[37]. - Basic earnings per share improved to R$0.75 in 2023, compared to a loss of R$0.03 in 2022[35]. - Other comprehensive income for the year was R$149,813 in 2023, compared to a loss of R$753,017 in 2022, indicating a positive turnaround[37]. - Total revenues for the year ended December 31, 2023, reached $4,752,576, an increase from $3,562,697 in 2022, representing a growth of approximately 33.4%[190]. - Interest income for the year was $4,549,827, significantly higher than $2,802,658 in 2022, representing an increase of approximately 62.2%[190]. Expenses and Liabilities - Administrative and personnel expenses totaled R$1,461.3 million, a decrease of R$33.1 million compared to the same period in 2022[11]. - Total liabilities rose to R$52,755,107 in 2023, compared to R$39,253,996 in 2022, an increase of 34.5%[33]. - The company reported impairment losses on financial assets of $1,541,584 for 2023, compared to $1,083,237 in 2022, indicating an increase in credit risk exposure[190]. - Administrative expenses for the year were $1,461,348, up from $1,494,484 in the previous year, showing a decrease of approximately 2.2%[190]. Shareholder Equity - Shareholder's equity totaled R$7.6 billion, reflecting a 7.2% growth compared to December 31, 2022[13]. - The company maintained a total equity of $7,596,691 as of December 31, 2023, compared to $7,089,104 in 2022, reflecting an increase of about 7.1%[190]. Acquisitions and Corporate Strategy - The company completed the acquisition of Inter&Co Payments, Inc. in January 2022 to enhance its global expansion strategy[45]. - Inter acquired 100% of the share capital of Inter US Finance, LLC and Inter US Management, LLC for a total consideration of R$3,317 thousand, with R$1,990 thousand for Inter US Finance and R$1,327 thousand for Inter US Management[70][72]. - The acquisition allows Inter to expand its operations in Florida, Georgia, and Colorado, enhancing its mortgage origination and distribution capabilities[71]. - The acquisition is expected to provide future economic benefits through synergies and a broader range of financial services for customers[73]. Risk Management and Compliance - The company has implemented significant internal controls related to credit loss measurement, which is a key audit matter due to its complexity and material measurement uncertainties[26]. - Inter & Co's financial statements are prepared in accordance with International Financial Reporting Standards (IFRS), ensuring compliance and transparency[48]. - The company continues to refine its internal risk management processes without any material changes to the nature of credit risk exposures in 2023[198]. Revenue Recognition - The Group recognizes revenue from interchange fees as commission income from card transactions, with the transaction price being a predefined percentage of the total payment[166]. - Management fees from asset management activities are recognized as the service is performed, while performance fees are recognized at the end of each performance period[167]. - Income from bank fees, primarily related to account opening and interbank transfer fees, is recognized when the services are provided[168]. - The Group does not have any single customer accounting for more than 10% of its total net revenue[183].

Inter & Co, Inc. (NASDAQ:INTR) Q3 2023 Earnings Conference Call November 6, 2023 11:00 AM ET Company Participants João Vitor Menin - CEO Alexandre Riccio - SVP, Retail Banking Santiago Stel - SVP, Finance and Risks Conference Call Participants Flavio Yoshida - Bank of America Rafael Frade - Citi Neha Agarwala - HSBC Yuri Fernandes - JPMorgan Eduardo Rosman - BTG Pedro Leduc - Itau BBA Thiago Batista - UBS Operator Good afternoon, and thank you for standing by. Welcome to the Inter & Co's Third Quarter Earni ...

+1.5 mm QoQ Launching Releasing Operational & Innovative EARNINGS PRESENTATION | 2Q23 / Engagement BANKING & SPENDING CREDIT SHOP INSURANCE INVEST GLOBAL LOYALTY CEO Overview Banking Transactional Platform Financial Performance Closing Remarks Appendix 7 Business Model Cards + PIX TPV1 In R$ Billion 60 .0 62% 62% 61% 58% 55% 54% 54% 55% 54% 53% 38% 38% 39% 42% 45% 46% 46% 45% 46% 47% 8 9 12 14 14 16 17 19 18 20 37 58 80 94 97 118 138 158 163 177 44 67 92 109 111 134 155 178 181 197 0. 0 10. 0 20 .0 30 .0 40 ...

Inter & Co, Inc. (NASDAQ:INTR) Q2 2023 Results Conference Call August 14, 2023 2:00 PM ET Company Participants João Vitor Menin - CEO Alexandre Riccio - SVP, Retail Banking Santiago Stel - SVP, Finance and Risks Conference Call Participants Thiago Batista - UBS Yuri Fernandes - JPMorgan Eduardo Rosman - BTG Rafael Frade - Citi Pedro Leduc - Itaú BBA Neha Agarwala - HSBC Tito Labarta - Goldman Sachs Operator Good afternoon, and thank you for standing by. Welcome to the Inter & Co Second Quarter Earnings Conf ...

[Management Report](index=4&type=section&id=Management%20report) This section summarizes the company's operational, financial, and equity performance, alongside its independent auditor relationship [Operating Highlights](index=4&type=section&id=Operating%20highlights) As of June 30, 2023, the company surpassed 27.8 million customers with an activation rate of 52% The loan portfolio grew to R$25.1 billion, an 11% increase from December 2022, and total funding reached R$33.3 billion, up 11.6% from year-end 2022 - Surpassed **27.8 million customers** as of June 30, 2023, with the activation rate increasing by **68 bps** from the previous quarter to **52%**[6](index=6&type=chunk) Key Operating Metrics as of June 30, 2023 | Metric | Value (R$ billion) | Change vs. Dec 31, 2022 | | :--- | :--- | :--- | | Loan Portfolio | 25.1 | +11.0% | | Total Funding | 33.3 | +11.6% | [Economic and Financial Highlights](index=4&type=section&id=Economic%20and%20financial%20highlights) For the six months ended June 30, 2023, the company recorded a profit of R$88.4 million, a significant turnaround from a R$13.3 million loss in the same period of 2022 Revenues for the first half of 2023 reached R$3.61 billion, an increase of R$1.03 billion year-over-year, while administrative and personnel expenses rose by R$49.1 million to R$1.09 billion Financial Performance for the Six Months Ended June 30 | Metric | 2023 (R$ million) | 2022 (R$ million) | Change | | :--- | :--- | :--- | :--- | | Profit / (Loss) | 88.4 | (13.3) | Turnaround to profit | | Revenues | 3,606.5 | 2,574.8 | +R$1,031.7 million | | Admin & Personnel Expenses | 1,092.1 | 1,043.0 | +R$49.1 million | [Equity Highlights](index=4&type=section&id=Equity%20highlights) As of June 30, 2023, total assets grew to R$50.0 billion, a 7.9% increase from December 2022 Shareholders' equity also increased by 3.2% to R$7.3 billion over the same period Balance Sheet Highlights vs. Dec 31, 2022 | Metric | June 30, 2023 (R$ billion) | Change vs. Dec 31, 2022 | | :--- | :--- | :--- | | Total Assets | 50.0 | +7.9% | | Shareholder's Equity | 7.3 | +3.2% | [Relationship with the Independent Auditors](index=5&type=section&id=Relationship%20with%20the%20independent%20auditors) The company maintains a policy to ensure the independence of its independent auditor, KPMG Auditores Independentes Ltda The Audit Committee evaluates the effectiveness of the audits and confirms that non-audit services performed during the quarter did not compromise the auditor's independence and objectivity - The company has a policy and an Audit Committee to ensure the independence and objectivity of its independent auditor, **KPMG Auditores Independentes Ltda**[14](index=14&type=chunk) - The performance of non-audit services by KPMG during the quarter ended June 30, 2023, did not affect their independence[15](index=15&type=chunk) [Report of the Independent Auditors](index=6&type=section&id=Report%20of%20the%20independent%20auditors%20on%20the%20condensed%20consolidated%20interim%20financial%20statements) This section presents the independent auditors' conclusion on the condensed consolidated interim financial statements and the supplementary statement of value added [Conclusion on the Consolidated Interim Financial Information](index=6&type=section&id=Conclusion%20on%20the%20consolidated%20interim%20financial%20information) KPMG Auditores Independentes Ltda. conducted a review of Inter & Co's condensed consolidated interim financial information for the period ended June 30, 2023 Based on their review, nothing came to their attention that would suggest the financial information was not prepared, in all material respects, in accordance with IAS 34 - The review was conducted in accordance with Brazilian and international review standards (**NBC TR 2410** and **ISRE 2410**)[22](index=22&type=chunk) - The auditors concluded that they are not aware of any material modifications that should be made to the condensed consolidated interim financial information for it to be in conformity with **IAS 34**[23](index=23&type=chunk) [Statement of Value Added](index=7&type=section&id=Statement%20of%20value%20added) The auditors also reviewed the supplementary consolidated statements of value added for the six-month period ended June 30, 2023 They concluded that this statement was prepared, in all material respects, according to the criteria of Technical Pronouncement CPC 09 and is consistent with the overall interim financial information - The consolidated statements of value added are presented as supplementary information for **IAS 34** purposes[25](index=25&type=chunk) - The auditors found no reason to believe the statement of value added was not prepared in accordance with **CPC 09** and consistent with the primary financial statements[25](index=25&type=chunk) [Consolidated Financial Statements](index=8&type=section&id=Consolidated%20financial%20statements) This section presents the company's consolidated balance sheets, income statements, comprehensive income, cash flows, changes in equity, and statements of added value [Consolidated Balance Sheets](index=8&type=section&id=Consolidated%20balance%20sheets) As of June 30, 2023, Inter & Co's total assets stood at R$50.0 billion, an increase from R$46.3 billion at year-end 2022 This growth was driven by increases in cash and cash equivalents, securities, and loans to customers Total liabilities rose to R$42.7 billion from R$39.3 billion, primarily due to higher liabilities with customers and securities issued Total equity increased to R$7.3 billion Consolidated Balance Sheet Highlights (in thousands of BRL) | Account | 06/30/2023 | 12/31/2022 | | :--- | :--- | :--- | | **Total Assets** | **50,003,329** | **46,343,100** | | Cash and cash equivalents | 3,672,219 | 1,331,648 | | Securities | 14,169,684 | 12,448,565 | | Loans and advances to customers, net | 23,523,982 | 21,379,916 | | **Total Liabilities** | **42,685,671** | **39,253,996** | | Liabilities with customers | 26,299,326 | 23,642,804 | | Securities issued | 7,006,191 | 6,202,165 | | **Total Equity** | **7,317,658** | **7,089,104** | [Consolidated Statements of Income](index=9&type=section&id=Consolidated%20statements%20of%20income) For the six months ended June 30, 2023, the company reported a net profit of R$88.4 million, compared to a net loss of R$13.3 million in the prior-year period Net interest income grew to R$1.51 billion from R$1.10 billion Total revenues increased to R$2.17 billion, while impairment losses on financial assets also rose to R$749.2 million Consolidated Income Statement Highlights (Six Months Ended June 30, in thousands of BRL) | Account | 2023 | 2022 | | :--- | :--- | :--- | | Net interest income | 1,513,637 | 1,104,498 | | Revenues | 2,174,148 | 1,710,541 | | Impairment losses on financial assets | (749,241) | (555,410) | | **Profit / (loss) for the period** | **88,388** | **(13,297)** | | Basic earnings (loss) per share (BRL) | 0.1497 | (0.0318) | | Diluted earnings (loss) per share (BRL) | 0.1486 | (0.0318) | [Consolidated Statements of Comprehensive Income](index=10&type=section&id=Consolidated%20statements%20of%20comprehensive%20income) For the six months ended June 30, 2023, total comprehensive income was R$231.5 million, a significant improvement from a total comprehensive loss of R$749.6 million in the same period of 2022 The positive result was driven by the net profit for the period and a R$151.5 million positive change in the fair value of financial assets at FVOCI Consolidated Comprehensive Income (Six Months Ended June 30, in thousands of BRL) | Account | 2023 | 2022 | | :--- | :--- | :--- | | Profit (loss) for the period | 88,388 | (13,297) | | Financial assets at fair value through other comprehensive income | 151,492 | (111,911) | | **Total comprehensive income for the period** | **231,465** | **(749,597)** | [Consolidated Statements of Cash Flows](index=11&type=section&id=Consolidated%20statements%20of%20cash%20flows) For the six months ended June 30, 2023, net cash from operating activities was R$4.13 billion Net cash used in investing activities was R$1.80 billion, mainly due to the net acquisition of financial assets Financing activities used R$27.6 million This resulted in a net increase in cash and cash equivalents of R$2.30 billion, bringing the ending balance to R$3.67 billion Consolidated Cash Flow Summary (Six Months Ended June 30, in thousands of BRL) | Account | 2023 | 2022 | | :--- | :--- | :--- | | Net cash from operating activities | 4,127,654 | 2,597,174 | | Net cash used in investing activities | (1,800,550) | (392,534) | | Net cash from financing activities | (27,643) | (1,198,524) | | **(Decrease)/ Increase in cash and cash equivalents** | **2,299,461** | **1,006,116** | | Cash and cash equivalents at the beginning of the period | 1,331,648 | 500,446 | | **Cash and cash equivalents at end of period** | **3,672,219** | **1,549,158** | [Consolidated Statements of Changes in Equity](index=12&type=section&id=Consolidated%20statements%20of%20changes%20in%20equity) Total equity increased from R$7.09 billion at the start of 2023 to R$7.32 billion as of June 30, 2023 The increase was primarily driven by the R$88.4 million profit for the period and a R$151.5 million positive net change in the fair value of financial assets at FVOCI, partially offset by the repurchase of R$16.4 million in treasury shares Changes in Equity (Six Months Ended June 30, 2023, in thousands of BRL) | Description | Amount | | :--- | :--- | | Balance at January 1, 2023 | 7,089,104 | | Profit for the period | 88,388 | | Net change in fair value - financial assets at FVOCI | 151,492 | | Repurchase of treasury shares | (16,409) | | Other changes | 4,083 | | **Balance at June 30, 2023** | **7,317,658** | [Consolidated Statements of Added Value](index=13&type=section&id=Consolidated%20statements%20of%20added%20value) For the six months ended June 30, 2023, the total added value to distribute was R$610.5 million, up from R$368.6 million in the same period of 2022 The distribution was primarily allocated to personnel and taxes (R$313.5 million), taxes, contributions and fees (R$184.3 million), and retained earnings (R$60.2 million) Distribution of Added Value (Six Months Ended June 30, in thousands of BRL) | Category | 2023 | 2022 | | :--- | :--- | :--- | | **Total added value to distribute** | **610,546** | **368,610** | | Personnel and tax | 313,509 | 274,446 | | Taxes, contributions and fees | 184,275 | 86,216 | | Rent | 24,374 | 21,245 | | Profit (losses) retained | 60,151 | (13,318) | | Non-controlling interest | 28,237 | 21 | [Notes to the Condensed Consolidated Interim Financial Statements](index=14&type=section&id=Notes%20to%20the%20condensed%20consolidated%20interim%20financial%20statements) This section provides detailed notes on the company's activities, accounting policies, operating segments, financial risk management, fair values, specific asset and equity accounts, share-based payments, related party transactions, and subsequent events [Note 1. Activity and Structure](index=14&type=section&id=Note%201.%20Activity%20and%20structure%20of%20Inter%20%26%20Co,%20Inc.%20and%20its%20subsidiaries) Inter & Co, Inc. is a Cayman Islands holding company and the parent of the Inter Group Its shares trade on Nasdaq (INTR) and its BDRs on Brazil's B3 (INBR32) The Group provides a digital ecosystem of financial and e-commerce services to over 27.7 million customers in Brazil and the US A key corporate reorganization was completed in June 2022, making Inter & Co the indirect owner of all shares of Banco Inter S.A - Inter & Co, Inc. is a holding company for the Inter Group, providing integrated financial and e-commerce services[42](index=42&type=chunk)[44](index=44&type=chunk) - The company's shares trade on **Nasdaq (INTR)** and **B3 (INBR32)** following a corporate reorganization in June 2022[43](index=43&type=chunk)[44](index=44&type=chunk) - In January 2022, the company acquired **Inter&Co Payments, Inc. (formerly USEND)** to accelerate its global expansion, particularly in the US[45](index=45&type=chunk) [Note 4. Significant Accounting Policies](index=16&type=section&id=Note%204.%20Significant%20accounting%20policies) The accounting policies are consistent with those from the 2022 annual report The statements are prepared on a consolidated basis, including all subsidiaries where Inter has control A significant event was the acquisition of Inter US Finance, LLC and Inter US Management, LLC in January 2023, accounted for as a business combination, to expand real estate-focused credit operations in the US [Basis for Consolidation](index=16&type=section&id=4.a%20Basis%20for%20consolidation) The Group consolidates all entities it controls The primary restriction on transferring assets within the group relates to compulsory reserves required by the Central Bank of Brazil In February 2023, Banco Inter acquired the remaining shares of its subsidiary Inter DTVM, making it a wholly-owned subsidiary - Subsidiaries are fully consolidated from the date control is gained The main restriction on asset transfers is the regulatory compulsory reserves held at the **Central Bank of Brazil**[58](index=58&type=chunk) - On February 15, 2023, **Banco Inter S.A.** acquired the remaining shares of its subsidiary '**Inter Distribuidora de Títulos e Valores Mobiliários Ltda**', making it a **100% owned entity**[61](index=61&type=chunk) [Business Combination](index=17&type=section&id=4.b%20Business%20combination) On January 24, 2023, the company acquired 100% of Inter US Finance, LLC and Inter US Management, LLC to expand its real estate-focused credit offerings in the US The total consideration was R$3.3 million, resulting in a preliminary goodwill of R$3.0 million The purchase price allocation (PPA) study is still in progress - Acquired **100%** of **Inter US Finance, LLC** and **Inter US Management, LLC** on January 24, 2023, to expand real estate credit operations in **Florida, Georgia, and Colorado**[70](index=70&type=chunk)[71](index=71&type=chunk) Acquisition Consideration and Preliminary Goodwill (in thousands of BRL) | Company | Consideration Transferred | Preliminary Goodwill | | :--- | :--- | :--- | | Inter US Finance, LLC | 1,990 | 1,918 | | Inter US Management, LLC | 1,327 | 1,114 | - The purchase price allocation (**PPA**) study for the acquisition was not yet complete as of the report date[73](index=73&type=chunk) [Note 5. Operating Segments](index=19&type=section&id=Note%205.%20Operating%20segments) The Group's operations are divided into five segments: Banking & Spending, Investments, Insurance Brokerage, Inter Shop & Commerce Plus, and Others For the first half of 2023, the Banking & Spending segment generated the highest revenue (R$1.90 billion) and held the vast majority of assets (R$48.7 billion) The Insurance Brokerage and Inter Shop & Commerce Plus segments were the most profitable before tax, with profits of R$43.4 million and R$50.0 million, respectively - The Group is organized into five reportable segments: **Banking & Spending, Investments, Insurance Brokerage, Inter Shop & Commerce Plus, and Others**[77](index=77&type=chunk)[78](index=78&type=chunk)[79](index=79&type=chunk)[80](index=80&type=chunk)[81](index=81&type=chunk) Segment Performance for Six Months Ended June 30, 2023 (in thousands of BRL) | Segment | Revenues | Profit / (Loss) before Tax | Total Assets | | :--- | :--- | :--- | :--- | | Banking & Spending | 1,898,048 | (2,519) | 48,700,501 | | Investments | 76,178 | 6,565 | 605,303 | | Insurance Brokerage | 79,086 | 43,354 | 168,205 | | Inter Shop & Commerce Plus | 121,089 | 50,021 | 588,806 | | **Consolidated Total** | **2,174,148** | **86,196** | **50,003,329** | [Note 6. Financial Risk Management](index=23&type=section&id=Note%206.%20Financial%20risk%20management) The company actively manages credit, market, liquidity, and operational risks through independent structures and defined policies Credit risk is managed via careful evaluation of borrowers Liquidity risk is managed to ensure obligations can be met Market risk is monitored using models like Value at Risk (VaR), with the banking book showing a VaR of R$274.7 million and the trading book R$4.4 million as of June 30, 2023 [Credit Risk](index=23&type=section&id=6.a%20Credit%20risk) Credit risk arises from the potential failure of a borrower to meet financial obligations The Group manages this by evaluating the borrower's financial capacity and reputation The loan portfolio includes credit cards, business loans, real estate loans, personal loans, and agribusiness loans For real estate loans, the majority have a loan-to-value ratio between 31% and 70% - Credit risk is managed through careful evaluation of the borrower's economic capacity, payment history, and reputation before contracting[88](index=88&type=chunk) Real Estate Loans by Loan-to-Value (LTV) Ratio (in thousands of BRL) | LTV Ratio | 06/30/2023 | 12/31/2022 | | :--- | :--- | :--- | | Lower than 30% | 719,923 | 693,322 | | 31 - 50% | 1,766,391 | 1,689,190 | | 51 - 70% | 2,542,254 | 2,308,020 | | 71 - 90% | 1,933,436 | 1,503,703 | | Higher than 90% | 58,429 | 57,577 | | **Total** | **7,020,433** | **6,251,812** | [Liquidity Risk](index=24&type=section&id=6.c%20Liquidity%20risk) Liquidity risk is the possibility of not being able to meet financial obligations The company analyzes its financial instruments by contractual term As of June 30, 2023, financial liabilities maturing in up to 3 months totaled R$20.8 billion, primarily from liabilities with customers and financial institutions, while financial assets maturing in the same period were R$15.3 billion Financial Instruments by Remaining Contractual Term (Up to 3 months, as of 06/30/2023, in thousands of BRL) | Category | Amount | | :--- | :--- | | **Financial Assets** | **15,321,162** | | Cash and cash equivalents | 3,672,219 | | Loans and advances to customers | 6,767,656 | | **Financial Liabilities** | **20,813,801** | | Liabilities with financial and similar institutions | 8,023,953 | | Liabilities with customers | 12,428,677 | [Market Risk](index=26&type=section&id=6.e%20Market%20risk) Market risk is managed by classifying operations into a trading book and a banking book, with risk levels monitored using Value at Risk (VaR) As of June 30, 2023, the 21-day VaR for the trading book was R$4.4 million, and for the much larger banking book, it was R$274.7 million, a decrease from R$337.3 million at year-end 2022 Sensitivity analysis shows potential losses under various interest rate shock scenarios Value-at-Risk (VaR) 21 days (in thousands of BRL) | Book | 06/30/2023 | 12/31/2022 | | :--- | :--- | :--- | | Trading Book | 4,417 | 4,751 | | Banking Book | 274,722 | 337,254 | - Sensitivity analysis under a scenario of a **50% shock** in coupon rates indicates potential losses of **R$843.7 million** for **IPCA coupon risk** and **R$676.4 million** for pre-fixed rate risk[105](index=105&type=chunk) [Note 7. Fair Values of Financial Instruments](index=28&type=section&id=Note%207.%20Fair%20values%20of%20financial%20instruments) The Group classifies its financial instruments measured at fair value into a three-level hierarchy As of June 30, 2023, of the R$13.06 billion in financial assets measured at fair value, R$10.96 billion were classified as Level 1 (quoted prices in active markets), R$2.01 billion as Level 2 (observable inputs), and R$93.2 million as Level 3 (unobservable inputs) The Level 3 assets relate to contingent consideration from the sale of Inter Seguros Fair Value Hierarchy of Financial Assets (as of 06/30/2023, in thousands of BRL) | Level | Fair Value | | :--- | :--- | | Level 1 | 10,955,333 | | Level 2 | 2,014,557 | | Level 3 | 93,199 | | **Total** | **13,063,089** | - Level 3 financial assets consist substantially of the variable portion receivable from the 2019 sale of **40%** of the subsidiary **Inter Digital Corretora e Consultoria de Seguros Ltda. ('Inter Seguros')**[109](index=109&type=chunk) [Note 10. Securities](index=31&type=section&id=Note%2010.%20Securities) The Group's securities portfolio totaled R$14.17 billion as of June 30, 2023, up from R$12.45 billion at year-end 2022 The majority of securities, R$11.50 billion, are classified as Fair Value Through Other Comprehensive Income (FVOCI), consisting mainly of government treasury bills (LFT and NTN) Securities by Classification (as of 06/30/2023, in thousands of BRL) | Classification | Amount | | :--- | :--- | | Fair value through other comprehensive income (FVOCI) | 11,497,605 | | Fair value through profit or loss (FVTPL) | 1,472,285 | | Amortized cost | 1,199,794 | | **Total** | **14,169,684** | [Note 12. Loans and Advances to Customers](index=34&type=section&id=Note%2012.%20Loans%20and%20advances%20to%20customers) The total loan portfolio reached R$25.14 billion as of June 30, 2023, an increase from R$22.70 billion at year-end 2022 The portfolio is diversified, with credit cards (30.5%), real estate loans (27.8%), and personal loans (25.5%) being the largest components The provision for expected losses increased to R$1.62 billion from R$1.32 billion Loan Portfolio Breakdown (in thousands of BRL) | Loan Type | 06/30/2023 | % of Total | | :--- | :--- | :--- | | Credit card | 7,681,011 | 30.52% | | Real estate loans | 7,020,433 | 27.76% | | Personal loans | 6,500,480 | 25.45% | | Business loans | 3,215,316 | 13.12% | | Agribusiness loans | 724,143 | 3.15% | | **Total** | **25,141,383** | **100.00%** | | Provision for expected loss | (1,617,401) | - | - The loan portfolio shows low concentration, with the **100 largest debtors** accounting for **12.78%** of the total portfolio, down from **16.56%** at year-end 2022[131](index=131&type=chunk) Changes in Provision for Expected Losses (in thousands of BRL) | Stage | Balance at 12/31/2022 | Constitution/(Reversal) | Write-off | Balance at 06/30/2023 | | :--- | :--- | :--- | :--- | :--- | | Stage 1 | 485,614 | 172,637 | - | 489,235 | | Stage 2 | 282,392 | 410,573 | - | 344,562 | | Stage 3 | 550,406 | 196,609 | (480,830) | 783,604 | | **Total** | **1,318,412** | **779,819** | **(480,830)** | **1,617,401** | [Note 16. Intangible Assets](index=40&type=section&id=Note%2016.%20Intangible%20assets) Intangible assets totaled R$1.30 billion as of June 30, 2023, up from R$1.24 billion at year-end 2022 The main components are goodwill (R$635.6 million), intangible assets in progress (R$246.7 million), and development costs (R$215.4 million) The increase in goodwill is related to the acquisition of US entities Intangible Assets Breakdown (as of 06/30/2023, in thousands of BRL) | Asset Type | Carrying Amount | | :--- | :--- | | Goodwill | 635,625 | | Intangible assets in progress | 246,742 | | Development costs | 215,395 | | Right of use | 161,197 | | Others | 44,223 | | **Total** | **1,303,182** | - Goodwill increased by **R$2.8 million** during the period due to the business combination involving the acquisition of **Inter US Finance** and **Inter US Management**[148](index=148&type=chunk) [Note 25. Equity](index=45&type=section&id=Note%2025.%20Equity) As of June 30, 2023, Inter & Co's share capital consisted of 284.8 million Class A shares and 117.0 million Class B shares The company did not pay dividends during the period, but a subsidiary paid R$16.0 million in interest on equity to non-controlling interests Basic earnings per share for the first half of 2023 was R$0.1497 The company also repurchased 104,876 Class A shares, now held in treasury - At an April 2023 meeting, a stock split by a factor of **3** was approved, to be effective on a future date set by the Board[174](index=174&type=chunk)[175](index=175&type=chunk)[176](index=176&type=chunk) Earnings Per Share (Semester ended 06/30/2023) | Metric | Value (BRL) | | :--- | :--- | | Basic earnings per share | 0.1497 | | Diluted earnings per share | 0.1486 | - As of June 30, 2023, the company holds **R$16,409 thousand** in treasury shares, consisting of **104,876 Class A shares**[183](index=183&type=chunk) [Note 34. Share-Based Payment](index=51&type=section&id=Note%2034.%20Share-based%20payment) The company manages several share-based payment plans In January 2023, Banco Inter's plans were migrated to Inter & Co, and a repricing of 2022 options resulted in an incremental expense of R$16.0 million A new Omnibus Incentive Plan was created, under which 2.14 million Restricted Share Units (RSUs) were granted to executives and employees on June 1, 2023, with a four-year vesting period - In January 2023, share-based payment plans from **Banco Inter S.A.** were migrated to **Inter&Co, Inc** A repricing of 2022 options resulted in an additional incremental expense of **R$15,990 thousand**[201](index=201&type=chunk) - On June 1, 2023, **2,140,500 restricted share units (RSUs)** were granted under the new **Omnibus Incentive Plan** with a **4-year vesting schedule**[210](index=210&type=chunk) - Total share-based payment costs recognized in H1 2023 were **R$15,802 thousand** for the legacy plan, **R$16,765 thousand** for the Inter & Co Payments plan, and **R$2,430 thousand** for the new RSU plan[204](index=204&type=chunk)[207](index=207&type=chunk)[210](index=210&type=chunk) [Note 35. Transactions with Related Parties](index=55&type=section&id=Note%2035.%20Transactions%20with%20related%20parties) The Group engages in transactions with related parties, including its parent company, associates, key management personnel, and other related entities As of June 30, 2023, total assets with related parties amounted to R$1.44 billion, primarily in loans (R$579.4 million) and amounts due from financial institutions (R$755.7 million) The global compensation for management personnel approved for 2023 is R$99.8 million Assets with Related Parties (as of 06/30/2023, in thousands of BRL) | Asset Type | Amount | | :--- | :--- | | Loans and advances to customers | 579,427 | | Amounts due from financial institutions | 755,745 | | Securities | 109,374 | | **Total** | **1,444,546** | - The global compensation for key management personnel approved for 2023 is **R$99,791 thousand**[217](index=217&type=chunk) - In February 2023, **Stone** sold its entire interest in Inter and is no longer considered a related party[213](index=213&type=chunk) [Note 36. Subsequent Events](index=58&type=section&id=Note%2036.%20Subsequent%20events) On August 7, 2023, a capital increase of R$100 million was approved for the associate company, Granito Instituição de Pagamento S.A Inter will subscribe and pay in R$50 million of this amount, pending approval from the Central Bank of Brazil - On August 7, 2023, a **R$100 million** capital increase was approved for associate **Granito**, with Inter contributing **R$50 million** The transaction is subject to approval by the **Central Bank of Brazil**[219](index=219&type=chunk)

In 2008, we received from the Central Bank of Brazil authorization to operate as a Multiple Bank, which allowed us to perform all banking activities in Brazil. Thus, we began to operate as a full-service bank, offering financing, investments, and real estate lending, under the name Banco Intermedium S.A. ("Banco Intermedium"). In 2012, we launched our insurance brokerage activities, offering a broad set of insurance products to our customers. In 2013, we also created our investment brokerage Inter DTVM, reg ...