Inter & Co. Inc.

Good afternoon and thank you for standing by. Welcome to the Inter & Co. Second Quarter Earnings Conference Call. Today's speakers are João Vitor Menon, CEO, Alexandre Riccio, Senior Vice President of Retail Banking, and Santiago Stell, Senior Vice President of Finance and Risks. Please be advised that today's conference is being recorded and a replay will be available at the company's IR website. at this time all participants are in listen only mode after the prepared remarks there will be a question and answer session for this session we ask you to write down your question via the q a icon on your screen your name will then be announced and you will be able to ask your question live at that point a request to activate your microphone will appear on your screen If you do not want to open your microphone live, please write no microphone at the end of your question. In this case, our operator will read your question. Please note that there is an interpretation button at the bottom of your screen where you can choose the language you want to hear, English or Portuguese. Throughout this conference call, we will be presenting non-IFRS financial information. These are important financial measures for the company, but are not financial measures as defined by IFRS. Reconciliations of the company's non-IFRS financial information to the IFRS financial information are available in Inter's earnings release and earnings presentation appendix. Today's discussion might include forward-looking statements, which are not guarantees of future performance. Please refer to the forward-looking statements disclosure in the company's earnings release and earnings presentation. Now, let me introduce the agenda for today. Mr. Juan Vitor Menon will start the presentation sharing with you an overview of the vision and the main achievements of the quarter. Then, Mr. Alexandre Riccio will cover the banking and transactional platform sections. Mr. Santiago Stell will present the financial performance section. Then Mr. João Vitor Menon will make some closing remarks and we will proceed to the Q&A session. Now, I would like to yield the floor to Mr. João Vitor Menon. Sir, the floor is yours.

Thank you, operator. Good afternoon, everyone. And thank you for joining our earnings call. This is a truly special quarter On one hand, it marks the one year anniversary of our US listing, which is why we are broadcasting from NASDAQ New York studios. And more importantly, it is a quarter of records representing an inflection point in our history. If you recall what I said in the last quarter earnings call, I mentioned that our results were just a glimpse of our strong potential. Well, the glimpse is now a reality, reflected in the multiple records we were able to print in a single quarter. First, we combined both top and bottom line record performance. Second, we delivered our strongest operational results, with record new active clients and activation. Third, we launched our seventh vertical, which is loyalty, improving the value proposition for our clients with the new rewards program called Interloop. And lastly, we launched our global app, the first ever in the banking industry. With all of that, I could not be more excited I believe this shows our huge effort to deliver the best platform for all stakeholders. On page six, we delivered an impressive combination of record figures. From a financial side, our gross revenue reached 1.9 billion reais, 33% higher than a year ago. and it continues to be highly diversified with a great balance between fees and NII. The top line growth was combined with a very disciplined cost control, which enables us to deliver our record efficiency of 53%. We continued with our ROE-driven underwriting, enabling us to have strong NIEM expansion. On bottom line, we had our highest ever profitability, both on pre- and post-tax basis. This is not just a few percentage points higher than in the prior periods, but multiple times higher, particularly on pre-tax basis, reaching 80 billion HECs. When we look at operations and innovations, I'm flattered to see also a series of remarkable milestones. We had another quarter adding 1 million active clients, and we reached a total of 28 million clients. We continued improving our activation ratio by an impressive 68 bps, surpassing 52%, our highest level since 2021. We continued innovating by launching Interloop, which we believe will drive strong engagement and activation. Additionally, we started operating our global app, Now we have our super app working seamlessly across geographies, same as Uber or Netflix. On page seven, as an engineer, I am a builder by heart. And in that sense, I'm very excited with the launch of our loyal product called Interloop. I had the same excitement when we launched our digital account in 2015 and also when we launched InterShop back in 2019. I'm fully convinced that we have all the elements to succeed in this new journey, such as 28 million clients, 200 billion reais transacting per quarter, a state-of-the-art technology platform, and full banking infrastructure behind. I'm sure that we will disrupt this market in the same way that we did with digital banking a few years ago. On page eight, in summary, this is a quarter of records, the best one ever. It's a truly inflection point in our history. that enable us to start seeing the full potential of Inter. Despite still being in day one and to have a lot to deliver in the next years, I'm happy to report real operational excellence and profitability. This innovative and profitable business model is gaining momentum as we continue to grow, gain market share, keep innovating, enhancing our super app for our clients. And lastly, expand our profitability for our shareholders. We're starting the second half of this year on a very strong note with a momentum that enable us to continue delivering results over what was built so far. Thanks again for listening. Shandy, please go ahead.

Thank you, João, and good afternoon, everyone. I'll start talking about our credit and funding capabilities. Jumping into our loans on page 10, I'll pass through some important highlights. Our portfolio grew by 5% this quarter, focused on high ROE products, such as FGTS loans, which grew 26%, and home equity, which grew nearly 10% in a quarter-over-quarter basis. In credit cards, we grew 6%. In payroll and real estate, we continued improving our pricing and materially increased the average yields. The word that better describes this quarter in terms of credit underwriting is consistency. This discipline has enabled us to improve more and more the average yield of our portfolio, with 200 basis points increase in a single quarter. We have been doing a very diligent job related to our underwriting capabilities and are already seeing the strong results of it. now on page 11 we present our asset quality metrics starting with the 15 to 90 day npl we saw an impressive decrease of 30 bps in a year-over-year comparison on the 90 days metric which has an impact of changes in growth rates the ratio increased 30 bps on a quarterly basis in line with the general market trend We're happy to report that newer cohorts are consistently improving as a result of our more assertive and data-driven credit underwriting, as you can see in the bottom left chart. Finally, the NPL and Stage 3 formation reached 1.6% in line with the market trends and our past performance. On page 12, we see that our cost of risk reached 6.5% in the quarter. The increase, as mentioned in the prior page, is mainly associated with older cohorts of credit cards. Aside of cards, our cost of risk is demonstrating a solid and stable trend of around 1% since the fourth quarter of 2022. Our coverage ratio remained constant at 130% by provisioning in line with the NPL trend. Overall, we see that our asset quality metrics are following the macro trend with similar behavior when compared to peers. On page 13, we can see the evolution of our funding base, one of the key competitive advantages of our platform. Our deposits grew 29% year over year, reaching 33.5 billion reais in a highly fragmented base with more than 13 million clients trusting us with their deposits. We continue delivering best in class cost of funding, reaching 63% of CDI in the quarter. Now, Let's move forward to the transactional platform session. We're glad to report our second consecutive quarter adding 1 million new active clients combined with the lower CAC in over two years. Our activation rate showed strong progress, increasing 68 basis points, surpassing the trend that started last quarter. We achieved these results with big data and AI, which allowed us to advance towards much stronger understanding of our customer profiles, behaviors, and product preferences. In addition, we have advanced significantly in the app personalization, which we presented early this year in our investor day. As an example, we have more than doubled the number of app home screens when comparing to the end of the first quarter. In terms of volumes, on page 16, you can see that debit and credit cards, as well as PICs, reached 197 billion reais in TPV, which demonstrate our strong position in banking and in the daily lives of our customers. Interesting to note that credit cards continues to outpace debit transactions, providing us with a much higher interchange and profitability profile. In a cohort basis, as presented in the right chart, we can see the positive evolution in one, increasing DPV across cohorts and two, higher starting points, which is a strong evidence of better quality clients. With our clients transacting almost 200 billion reais per quarter in their daily banking activities, the cross-selling opportunities are notably higher. As we keep enhancing communication channels and create new engagement solutions, such as Interloop, this opportunity can scale even more in the future. On e-commerce, we reached 2.7 million clients transacting during the quarter. Our momentum allowed us to continue growing our net take rate, which now stands at 9%, our highest level ever. On insurance, we saw a 46% increase in active clients as we evolve with our upselling and cross-selling initiatives. And finally, on investments, which reached 3.6 million clients, we saw an impressive 66% year-over-year growth, along with a strong AUC that increased These products boost ROE and consume no capital. As Raul mentioned in the beginning of the presentation, we are super excited with all the possibilities that Interlook is bringing as our seventh business vertical. We're using our robust banking structure as the backbone of this program. The breadth of our platform dramatically facilitates the earn and burn opportunities, with the marketplace being the most obvious synergy. The solutions are already built. We just need to connect them. In that sense, Interloop leverages not only a strong potential of cross-selling, but also can create revenue streams such as one earn versus burn spread, two, breakage, three, point sales, and four, subscriptions and much more. The idea is to connect all of our verticals with Interloop, creating a true gamification experience. Talking about our global solutions on page 19, we illustrate the evolution of this vertical. We're glad to say that it is performing at a pace much stronger than we anticipated, reaching almost 1.9 million global clients and 220 million US dollars in deposits in the AUC. The strong adoption of these products is related to its seamless UX and to our go-to-market strategy that's focused on One, Brazilians who travel abroad and want to spend in the US issued card. Two, Brazilians who want to invest on NASDAQ or NICE. Three, people who live abroad and send remittances worldwide, mainly immigrants. And four, people who want to invest in real estate funds. We continue evolving to replicate our Brazilian offering in the US with minimal investment by taking advantage of our flexible and scalable technology. By now, we already have deployed five or seven of our business verticals in the US, all of them integrated into our global app. In terms of products, we have in place remittances, store discounts, gift cards, debit cards, mortgages, and investments. And as we move forward, we plan to add a full e-commerce platform, BNPL, and credit cards. Important to note that we're coding in reais and monetizing in US dollars. Now, Santi will pass through the financial highlights of our quarter of records. Thanks, everyone.