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spk01: Good morning and thank you for standing by.
spk00: The panelists today are João Vitor Menin, CEO, Alexander Hitch, VP of Technology, Operations and Finance, Helena Caldeira, CFO, Financial Director, and Santiago Stel, Strategy and R&D Director. Please be aware that today's conference is being recorded and the replay will be available on the company's R&D website. At this moment, all participants are with their microphones off, and after the observations have been prepared, there will be a Q&A session. In this session, we ask you to write down your question through the Q&A of your screen. Your name will be announced and you will be able to ask your question live. At this moment, a request to activate the microphone will appear on your screen. If you do not want to open your microphone live, please write it down without the microphone at the end of your question. In this case, our operator will read your question. Please... Note that there is a translation button on your screen where you can choose the language you wish to hear, English or Portuguese. Throughout this teleconference, we will present non-IFRS financial information. These are important financial measures for the company, but they are not financial measures as defined by the IFRS. The reconciliation of the company's non-IFRS financial information The financial information in EVRS is available in the Interenco's result materials annex. Today's discussion can include prospective statements that are not a guarantee of future performance. Consult the disclosure of prospective statements in the results statement and in the company's results presentation. Now, I would like to pass the floor to Mr. João Vitor Menin. Sir, the floor is yours. Good morning everyone. Thank you very much for participating in our fourth quarter. On page 4, I would like to guide you through today's agenda. I will start with a brief overview of our performance in 2022. The team will go through our banking capabilities, the credit engine, and our funding base. Then we will discuss the transactional platform, and then we will finish with a discussion about our financial performance. During 2022, we reached several milestones that I believe will position us for greater success in the future. In relation to growth, we have conquered customers and gained adoption of the different products on our platform. As a result, we have had significant gains in market participation, improving the quality and diversification of our recipe. From the point of view of profitability, we strengthen unit economics by increasing monetization and engagement. Our focus on operational efficiency is beginning to translate into expansion of our margins. And finally, all of this is done on the basis of a strong patrimonial balance. What I mean by strong is, on the asset side, we build a highly collateralized loan portfolio, and on the passive side, we have the best funding base in the segment, of which 39% is made up of deposits in view of more than 10 million retail customers. And besides that, high levels of liquidity and capital. On page 6, I will guide you through some important highlights. On the revenue side, it is possible to see an important growth trend, growing 4.5 times from 2020 to 2022, reaching almost R$ 6 billion. On the operational front, we also demonstrated an improvement in cost efficiency with 1, our service cost falling 29% year-on-year to R$16. Number two, our funding cost falling 3.5 percentage points to 59.5% of the GDP. And three, our efficiency index falling to 69%, an improvement of 24 percentage points. E como resultado direto do nosso foco em crescimento, com as despesas controladas, tenho o prazer de observar que continuamos entregando uma melhoria constante e sequencial na lucratividade que atingiu 29 milhões de reais no quarto trimestre de 2022. On page 7, I would like to provide a panorama of the client's journey, which represents the way we think about value generation from now on. We already have about 11.8% of the country's banking population, and we continue to increase this penetration day by day. This is the starting point for transactional products, such as PIX and sighted deposits, in which we already have relevant market slices. The journey continues with higher ARPAC products, such as cards, credit cards, and much more. We have constantly increased our market share in these higher ARPAC products and we intend to replicate the success levels achieved in transactional products. Currently, 66% of our customers already use three or more products, which means that this journey is progressing well and is resulting in a better customer priming index, which is now 69%. In summary, this slide shows the sequence of a customer at Inter, from the moment they open an account to the complete adoption of our platform. O resultado disso é uma melhoria constante no Unit Economics da base de clientes. Agora vou passar para o Alexandre que vai cobrir a sessão de motor de crédito. Obrigado. Obrigado, João. Bom dia a todos. Agora vamos passar para... page 9, the credit card. As you can see, our portfolio reached R$ 24.5 billion by the end of 2022, reflecting a 40% increase compared to 2021 and an 11% increase compared to the third quarter. The growth has been focused mainly on lower-risk segments, such as anticipation of credit card receivables, anticipation of receivables for companies, loans from FGTS and rural credit. All these segments have growth rates of two digits per quarter. In credit cards, we grew 7% in relation to the third quarter, reflecting a more conservative approach to the origin of clean credit that we have implemented since the beginning of 2022. Regarding the longer-term portfolio, Duration, which includes joint credit and real estate credit, the focus has been on the initiative of disciplinary repricing of the portfolio, which has resulted in a lower growth rate, however, with considerably higher return levels. Moving on to page 10, we can see our originating performance. When we analyze the composition of originations, we see that, from the second half of 2022, growth is much more focused on lower-risk segments. These low-risk segments, although they offer lower margins, consume significantly less capital and require less supply. On page 11, we highlight our asset quality metrics. When we look at the metrics from 15 to 90 days, we see a stable NPL trend, driven by the most recent yields of particularly in credit cards that are performing better than in the older markets. In terms of NPL above 90 days, it grew 0.3 percentage points in the quarter, mainly due to the lower growth and performance of the credit card portfolio, which is in line with the general trend of the market. Finally, when we look at NPL formation, we see consistency and a marginally higher trend, also explained by the older credit cards, showing marginal deterioration. Finally, on page 12, our cost of risk decreased to 4.8% in the quarter, and the coverage index reached 132%. This reflects the change of MIX in our portfolio for lower-risk products, such as anticipation of receivables for companies, FGTS withdrawals, and anticipation of receivables for credit cards, therefore requiring lower provision expenses. Helena will now cover the funding and transactional platform sessions. Thank you, Alexandre. Good morning. On page 14, we can see the evolution of our funding base. Our deposits grew 36% year-on-year, or 5% quarter-by-quarter, reaching R$ 29.8 billion. When we compare this value with our loan balance described on page 10, you can see that our loan balance metric in relation to deposits remains very healthy, significantly below 100%. In addition, I also highlight the growth of two digits in our deposits in this quarter, increasing participation on the total funding from 37% to 39%. one of the highest in the Brazilian financial system. It is worth noting that this deposit base is highly diversified in the nature of our retail customer base. On page 15, Mostramos nossos depósitos juntamente com investimentos de renda fixa, de emissão de terceiros e ativos sob gestão da Inter Asset, com uma base por cliente ativo. Mesmo com o elevado crescimento de clientes ativos, conseguimos aumentar o saldo ao longo do ano para 3.5 mil reais por cliente ativo. Esse padrão positivo nos orgulha quando olhamos para o ambiente de inflação e taxas de juros elevadas no Brasil. About the funding cost on page 16, we have great results this quarter. The all-in cost decreased in the quarter to 81, 8.1%, excuse me, which represents 59.5% of the CDI, a number that we consider the best in the segment. This reduction can be explained by two factors. One, a better and lower-cost funding mix, and two, the effect of pre-payment of the holding debt at the beginning of October. Thank you. Now let's go to page 18. On page 18, we can see the strong traction of products by customers in our different business verticals. We can see a growth of between 40% and 55% in all verticals, especially In the case of Interglobal, launched at the beginning of this year, we went from zero to 1.1 million customers, exceeding our own expectations. Note that these are products that offer good returns without the consumption of capital and generate strong customer engagement. Moving on to page 19, here we show how these products helped increase customer engagement. First, in the graph on the left, we can see that approximately two-thirds of our active customers use more than three products, as mentioned by João. Secondly, on the right side, we can see the evolution of customers who use Inter as their main bank, which now equates to 69% of active customers. In addition, when we analyze by rates, it can be seen that both the starting point and the inclination improve, reaching levels close to 75% in the most recent rates. This banking and transactional platform combination has a very relevant and powerful effect on the service revenue. As we can see on page 20, our service revenue increased by 10 times between 2019 and 2022. This demonstrates the success we had in diversifying our revenue reaching a service receipt rate in relation to total receipts of more than 34%. We believe that this is one of the highest levels observed by banks in Brazil and Latin America. Now I'm going to go to Santiago, who will cover the financial section. Thank you, Helena, and welcome everyone. We now go to the financial performance section on page 22. Here we can see the evolution of the total number of customers. We added a record of 8.3 million new customers in 2022. Many times we get questions about the cost of adding these new customers, so you can see here the evolution of the CAC, which varied from R$ 27 to R$ 32 and is now around R$ 30. When we look at the composition of this CAC, it is also quite stable between marketing expenses and operating costs. It is worth noting that the percentage of clients added organically continues to grow and is now over 80%. In terms of volume transacted in debit and credit cards, in addition to PIX, we reached an impressive R$ 178 billion in the fourth quarter, as you can see on page 23. This value, which amounts to approximately US$ 35 billion, makes us very proud and demonstrates our strong presence in banking activities. When we look at the volume of transactions per saffron, we can see a continuous improvement as the saffron matures, with the most recent saffron reaching higher levels and a much faster rate than that of the older saffron. Now, moving on to ARPAC, on page 24, you can see an increase in relation to the previous quarter, both gross and liquid, in funding costs. On a saffron basis, ARPAC continues to increase over time. with more recent yields, surpassing the older ones. This is a reflection of our ability to increase engagement and make cross-sells over time, resulting in greater monetization. Moving on to page 25, we added a new perspective on the evolution of our interest rates. I'll start by explaining this slide with bar charts. In the lower left corner, you can see the NIM as traditionally reported. The numerator includes the entire credit card, including approximately 5.4 billion reais in credit card receivables that do not generate and sells on-the-spot transactions made with cards. This NIN recovered from the deflation impact in the third quarter, and is now back at 7%. In the lower right corner, we have the NIN calculated, including only the balance sheet or remunerated account, making the numerator and denominator more comparable and providing a more accurate image of our credit margin profile. We took our fourth quarter NIM to 8%, using the most accurate methodology. Finally, at the top of the page, we have a marginal NIM, a NIM using the rate of origin in the quarter. We believe that this metric is indicative of where our NIM would converge if we maintained the current origination rates and funding costs. Page 26. We can see a growth of revenue of 90% in 2022. In terms of liquid revenue, growth remains remarkable, 59% year-on-year, despite the rapid increase in interest rates during the year. In a quarterly basis, we can see the liquid revenue growing by 18%, faster than the 11% growth rate of the gross revenue, which is the result of ongoing repricing initiatives. On page 27, we have the improvements in our operational leverage. From the left, you can see an evolution in the rate of active customers per employee. We went from a 2.3 thousand active customers per employee ratio a year to 3.1 thousand active customers per employee in the fourth quarter. We see a continuous improvement in this ratio during the first quarter of 2023. As a result, we have a lower cost of service, now at R$ 0.1610 on an adjusted basis. It is worth noting that our calculation of the cost of service is very simple. We take the expenses of SDNA minus CAC and divide by the active clients. And finally, our efficiency index continues to improve, reaching 69% on an adjusted basis. And as mentioned in Investor Day, these are the three main indicators we use to monitor the company's performance in our business plan. Finally, I would like to pass on to you our improved profitability on page 28. The liquid profit, which has increased constantly over the semesters, due to many of the factors that we have just addressed. For example, our repricing initiatives, conservative origin, our funding base, increasing revenue base, services, cost control. We think this is the basis for what is to come, and we are excited to start the year with this impulse, both on the operational and financial side. Now I will pass the word back to João Vítor for his final considerations. Thank you, Santiago. Allow me to finish with the final observations on the financial priorities for this year that has already begun. Operational leverage is one of the main priorities, as already discussed. With the products and functionalities implemented, we hope to continue to gain market share and generate economies of scale. The expansion of NIN as a result of our re-pricing the portfolio is another priority. We have already made a lot of progress, with more to come over the year. The quality of our assets, based on a diversified and collateralized portfolio, will continue to allow us to have highly resilient performance. And finally, all of this with a strong balance that has the best liquidity and the Basel index in the category as well, to continue to support our growth. Dito isso, gostaria de reforçar o meu compromisso com a rentabilidade e um plano de negócios autossustentável. Obrigado a todos pela participação. Podemos agora passar para a sessão de perguntas e respostas. Again, the question and answer session. Once again, in this session, we ask you to write the question in the Q&A icon. Your name will be announced and you will be able to ask your question live. At this moment, a request for... Our first question comes from Tiago Batista from UBS. We're opening the audio. You can now ask your question, Mr. Thiago Batista. The floor is yours. You may begin. Hello. Hello, everyone. Is that clear? Yes, sir. Hello, everyone. Good morning. I have two questions. The first one, about the improvement of profitability. If I'm not mistaken, one of the main drivers of this is the pricing of the portfolio, or the loan portfolio. And we saw that the government reduced the cap for consigned credit. Is this reduction so important that it can affect its profitability strategy, or is it not the case? Is it possible to expand, including with this cap? And the second question, Wynter doesn't have an exposition. Could you confirm if there is any exposition or not for the bank? Thank you for the question, Tiago. I don't really... This is easy to answer. I'll go to the first question. Expansion is based on a series of factors. Regarding repricing and short-duration portfolios, we see the credit card part, and the total of the MIX and also in consigned credit, we will reduce to 15% and 10%, a rate then originated at 1.7%. And in the portfolio, we have 15% of ARPAC. And at the end of the year, we will reach two-thirds of the portfolio will be repriced and we will have a total of 75% of repricing. Especially in relation to your other comment, we see the origin of 7% producing 25% and we have this
spk02: The next question comes from Mr. Fabio Yoshida from Bank of America. Mr. Yoshida, we are now opening your microphone.
spk00: You can ask your question live. Please. Hello everyone, good morning. Thank you for the opportunity to ask questions. I have two questions too. The first one is about asset quality. We saw that asset quality deteriorated by 4%, and in the last results call, you said that you expected some stability from this indicator. At the same time, we have an emission of 1.1%. Could you explain what happened, how the products were affected by this indicator, and what we can expect from now on. Another question, about funding costs. We saw an improvement in funding costs, and what led to this improvement, and also when they showed a higher marginal NIM, what led to that? A lower price or a lower funding cost? Thank you. I'll ask this question to Alexandre here. In general, when we think about inadimplency and evolution, we mainly talk about the credit card portfolio that led to this situation. in September 2021 and the beginning of 2022. So, from the beginning of last year, 2022, we decreased the approval rate by 10%, which is a significant decrease compared to previous years. We also observed an increase due to these older courts, the older safras. The other portfolio has consistent performance. In real estate, for example, it was at the same level observed in September. It should also be noted that the strong deceleration that we have, also in the growth of the credit, from 2021 to 2022, we didn't grow that much. So, to try to explain the effects of what is happening today, we also need to understand the 90-day NPS with more stable trends. Regarding the future, as we have already said, we expect a maximum NPL in the first quarter of the year, and then we hope to see a stabilization. If we think about the negative growth, we also see this happening in credit cards and other cards so far. We also see stability. And this is related to non-performing loans. And now let's move on. Helena, regarding the cost of funding, we have a number of important factors here that affected our cost of funding. First, seasonality. There's more liquidity because of the 13th salary, for example. And also what happened in October. more expensive when compared to our traditional cost, CDI plus 1.95%. And when we look here at the effects of these factors on our margins, it's not as significant when compared to the funding cost that we traditionally have of 60% of CDI. with the expectation of having a share of the deposits in sight, which we had in 2022. We hope, then, that the funding cost will remain at this 60% of the GDP. Okay, thanks a lot. The next question is from Mr. Pedro Leduc, from Itaú BBA. We are opening the audio here for you to ask your question. Feel free to do so. Thank you all very much. First of all, regarding the growth of SMI credit and housing, I don't know... SMI is practically the financing of the There was also the case of American stores. So I ask myself, how did business change after this event of the first three? Volume, demand, spread. And what additional precautionary measures should you take to avoid the same outcome? And what is the profitability above the portfolio? I know that the cost of risk is quite low, but what has changed in this product line in the first quarter? Thank you. Good morning, Leduc. Great question. We do have supply chain financing, which is pretty good. And we have an approach that is the following. First, location, diversification and monetization. In other words, we are always analyzing the appropriate spreads for each risk, trying to have the maximum number of portals. We have a series of supply chain contracts, with the biggest payers concentrated, and also working with the collateralization of this SME approach. And what we saw is that we managed to improve, not significantly, but we did manage to improve the margins of this product, which is quite connected to the funding capacity we have. really for the very short term, that is, they are sighted deposits and also franchise deposits, and, in addition, we believe that we can keep this portfolio growing safely, also improving it from now on. So there are small changes in the product, trying to diversify even more, some of the tickets we had before, trying to lower them, but we are very comfortable and excited about the growth of this business. You said you have more opportunities to spread now, João Victor? Yes, Leduc, we see that happening. We are using this product We see a bit of a credit crunch, a certain amount of credit, but we've already tried to repricify and work on it. We must remember that it is such a short duration that portfolios, this is really already happening.
spk02: Thank you very much, thank you very much.
spk00: The next question comes from Mr. Yuri Fernandes from GP Morgan. Mr. Fernandes, we're opening the audio here. You can ask your question live, please. Good morning. Hi. I have a question regarding personal expenses. What led to higher costs this quarter? I saw that it's 40 million M&A related to these expenses. I think that's also based on the compensation. So, my question is, is it a non-recurring item of these expenses, if they have a better performance, will it grow a lot or is it under control? And another aspect of the question, what is the performance driver inside the company? If Scorecard, for example, is working within the company, it was a better year in relation to many KPIs, but in relation to profitability, we really don't know how to think about personal expenses from now on. Will there be an increase in inflation? What are you expecting, this kind of volatility in personal expenses? Very well, Yuri. Thank you for the question. I'll start with the second one, and then Helena will cover the first one, about personal expenses. We do have, yes, in both cases, as we've already said, we have growth, right? And when we have some impact from NPS, as we saw last year, This ends up affecting our profitability a little more than we would like. But this trend of improvement, we hope to be able to combine growth and profitability. That's how we think we manage the business here at Inter. we always have profitability and growth, both. And we can continue to grow without sacrificing profitability. Especially in the commercial part, we can continue to grow without taking risks. And now, Helena will talk about personal expenses. Thank you. Yuri. Talking a little bit about this issue, I'm going to talk a little bit about the acquisition issue in general. We have two components in the acquisition. First, payments, and the second deferred payment. This deferred payment It means that we were selling what we were selling to the shareholders at the time of the transaction and there is a compensation according to the IFRS. There was an impact on the compensation expenses in 2022, 2023 and 2024. As a reference, the impact throughout the year, in 2022, It was 63 million. In 23, we expect 33 million. And in 24, 19 million is expected. In other words, with this payment of 115 million reais. And in the fourth tier, we made the allocation of the purchase price. And once it was concluded, there are allocations that are required in the balance sheet, and then it appears in the results demonstration. That is, there was also the influence of all software licenses And in the financial demonstration, there is also a review here, and also the allocation of depreciation throughout the year. And as a result, in the fourth TRI, we had the compensation of the shareholder stock, UM&A, which represented 43 million reais. A depreciation of 12 million reais. and it had a non-operational impact on our M&A of 85 million reais. So, just to conclude, I really want to differentiate the M&A spending from the personal spending. So, I'd like to show you on page 33 in the appendix of our presentation, where we show the expenses decomposed for each quarter. And then there was a 14% increase, tri to tri, of personal expenses, especially the increase in sales and what we call decedium. And we closed the year with 4.1, basically constant. despite the acquisition that brought 150 employees. And besides that, at the moment of this call, we have this number of employees leading the operational leverage It's pretty clear, Helena, at M&A, the only portion that wasn't clear to me was in relation to 2023, the impact of 2023, 2024. Is this linear or not? In 2022, of course, a part of the impact was concentrated in the fourth tri. In 2023, for example, will we see a more gradual impact throughout the year, or will there be a seasonal impact in the third or fourth trimester, for example? How will it work? And in relation to depreciation and amortization, I know there is a lot of pressure, will that come back? Or will it be the same level or will there be a new level in relation to assets at a higher pace now? At a faster pace, will it be? Yes, correct. The impact in 2022 was higher in the fourth TRI, which was the conclusion of the PPA. And that's when the allocation was made. Now, for 2023 and 2024, we will see a more linear impact throughout the year, without seasonality in the fourth TRI. That is, the DIA, right? DNA, and also personal expenses. Thank you very much. Very clear. Our next question comes from Mr. Neha Agarwala from HSBC. Ms. Agarwala, we are opening the audio, so you can ask your question, please. Hello, thank you very much for accepting my question. I would like to talk about the type of growth we can expect for this year. As you said, you continue to gain market participation. What are your plans to bring cost efficiency to 2023? In other words, what are the plans and what can we expect in 2023? And the second question is about capital. In 2022, you achieved a growth in relation to capital at 24% now, right? What do you think would be a comfortable level at which the bank would like to operate? And how do you see the support for what they're expecting to happen throughout this year, Tier 1? Good morning and thank you very much for your question. Regarding the fund, we grew in 2022, leading to 2023 with a number that will depend on the overall image of growth, of what can happen. And the plan is to grow to around 30. And that will allow us to gain market share. And as Helena said, there is this component too. Our plan is to keep the more constant staff side and we have our portfolio also having this value. With regard to capital, there are some points that occurred here. In the first place, we have the U-Send, the acquisition of U-Send, and also the reduction of capital. The first quarter was the first and the second near the end of the year, in the fourth quarter. And that explains a part of the reduction that we saw. Now, we are building capital more efficiently. We closed 2022 at 24%. And considering our estimated profit and an additional capital opportunity that can be incorporated in 2024, we hope in the fourth TRI of 23 is approximately 20%. Thank you. Joel, could you please elaborate on the capital opportunities, elaborate a little more on the capital opportunities you mentioned? Nisha, there are a few different elements. First, the operational risk methodology, We are thinking of changing the methodology. A little bit above 1% is what we are expecting. We are also working with credit cards that would lead to 1% more, that is, this kind of thing, and some more tuning that will lead to small improvements, of course, but that will have an overall importance. Thank you.
spk02: Thank you very much.
spk00: The next question, Mr. Yuri Fernandes from JP Morgan. We're now opening the door and ask your question live. Thank you very much. With regard to profitability, as João said earlier, in the final observations, comments on profitability, Santiago also talked about pricing longer. Can you talk a little bit about short-term profitability? What would be the goal for 2023? Anything in that sense that we can expect from the company this year? Thank you. Thank you, Yuri. As you know, we are not giving an orientation, but with the consensus of the research and the actions, we are doing according to the plan for 2023, the basic plan, and in the second semester, we will have numbers, we expect a sequential improvement.
spk02: Thank you, Santiago.
spk00: This concludes our question and answer session. The conference is now closed. In our RI area, we will be at your disposal to answer any additional questions. Thank you for your presence. Have a great day.
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