INTR — Inter & Co, Inc.

Summary of INTR Q1 2026 Earnings Call

1. Key Financial Results and Metrics

• Net Income: BRL 395 million for Q1 2026, with a run rate of BRL 1.6 billion.
• Gross Loan Portfolio: Exceeded BRL 50 billion, growing 33% year-over-year.
• Total Revenue: Gross revenue reached BRL 4.3 billion, a 37% increase year-over-year; net revenue grew 33% to BRL 2.4 billion.
• Net Interest Margin (NIM): Recorded at 9.54%, slightly down from 9.57% in Q4 2025 but up 70 basis points year-over-year.
• Return on Equity (ROE): 15.5%, with a Return on Assets (ROA) of 1.59%.
• Non-Performing Loans (NPL): Increased from 4.7% to 5.1%, attributed to seasonal factors and the growth of private payroll loans.

2. Strategic Updates and Business Highlights

• Client Growth: Total client base reached 44 million, with a 60% activation rate, marking the highest quarterly increase since 2024.
• Transaction Volume: Combined cards and PIX volume reached a run rate of BRL 1.7 trillion, up 25% year-over-year.
• AI Tool Launch: Introduced "Seven," a multi-agent AI tool enhancing client interactions and transactional capabilities.
• Credit Portfolio: Strong growth in secured loans, with 70% of the portfolio collateralized. Notable growth in private payroll loans (BRL 2.5 billion) and credit cards (27% growth year-over-year).

3. Forward Guidance and Outlook

• Cost of Risk: Expected to be around 6% for the year, reflecting higher risk from private payroll loans.
• NIM Guidance: Anticipated to grow by 10-20 basis points per quarter, with a stable outlook for risk-adjusted NIM.
• Future Initiatives: Plans to enhance cross-selling and product offerings, particularly in the SME sector and through the new AI tool.

4. Challenges and Points of Concern

• Asset Quality: Ongoing increase in NPLs raises concerns about credit quality, particularly with the growth of private payroll loans.
• Cost of Risk: Rising costs due to higher delinquency rates and upfront provisioning for new loans.
• Market Reaction: Despite strong results, the stock declined by 12% post-earnings, indicating market skepticism about future performance and asset quality.

5. Notable Q&A Insights

• Asset Quality Concerns: Management acknowledged the deterioration in asset quality but emphasized their strong funding position and ability to underwrite loans effectively.
• Private Payroll Loans: Expected to stabilize with operational improvements; breakeven point for these loans is around six months.
• Impact of Regulatory Changes: New debt renegotiation programs in Brazil are seen as positive but not materially changing business dynamics.
• Efficiency Ratio: Current efficiency ratio at 43.8% is a concern, with personnel expenses growing faster than revenue, but management believes this is a temporary trade-off for long-term growth.

Overall, Inter & Co's Q1 2026 results demonstrate strong growth and strategic initiatives, but challenges related to asset quality and market perceptions remain critical areas to monitor.