Inter_ 4Q24 Conference Call Highlights. Thu Feb 06 2025

Summary of Inter's 4Q24 Conference Call Highlights Company Overview - Company: Inter (Ticker: INTR) - Date of Conference Call: February 6, 2025 Key Highlights Loans and Growth - The company is comfortable growing its loan book at a 25-30% year-over-year pace despite macroeconomic challenges [7] - Efforts have been made to reduce volatility by hedging loan origination with durations greater than 1 year since early 2023 [7] - The return on equity (ROE) for new loans is better than that of the back-book, indicating improved loan performance [7] Net Interest Margin (NIM) - The company continues to guide for an average 20 basis points (bps) NIM expansion per quarter, although this is not linear [7] - Key drivers for NIM expansion include: - Changes in loan mix - Scaling up consumer finance products with interest rates around 6% per month - Funding costs remaining around 65% of the CDI [7] Asset Quality and Risk Management - The cost of risk is expected to remain around 5-5.2%, similar to levels observed in 2024 [7] - The company is taking marginal risks in Pix finance while focusing on growing secured lines like FGTS and home equity [7] Efficiency and Cost Management - The company aims to achieve a 30% efficiency target and is committed to cost reduction initiatives [7] - Higher than average volume processed in the app has led to increased data processing and third-party expenses [7] - Personnel expenses have risen as some teams met their goals and provisions for variable expenses were made [7] Capital and Dividends - The CET1 ratio for the bank stands at 15.2%, impacted by 170 bps mark-to-market from inflation-linked bonds [7] - Dividend distributions remain important, with a payout ratio of 20-25% in recent years, and a recent announcement implies a yield of approximately 1.5% (~R$200 million) [7] Credit Card and Consumer Finance - Breakdown of credit card usage: 80% transactor, 5% Pix finance, with the remainder being revolving vs. installments [11] - The company aims to increase interest-earning balances, expecting transactor usage to decrease to 75-78% in 2025 [11] - The BNPL (Buy Now Pay Later) segment shows lower non-performing loans (NPL) compared to credit cards, with 20-25% down payment [11] - The LDR (Loan to Deposit Ratio) is expected to remain around 75%, potentially increasing to 80% [11] Market Outlook - The private payroll segment is viewed as promising, with an estimated total addressable market (TAM) of R$100-200 billion [11] Additional Insights - The company has invested approximately R$4 billion in liquidity through tax-exempt structured notes, which penalize NIM but contribute positively when considering tax rates [7] - The company has been paying IOC (Interest on Capital) to maintain equity at the holding level, which is more tax-efficient [7] This summary encapsulates the critical points discussed during Inter's 4Q24 conference call, highlighting the company's growth strategies, financial performance, and market outlook.