Inter & Co, Inc. Q4 2024 Earnings Report

Inter & Co, Inc. EPS Results

• Actual EPS: $0.11
• Consensus EPS: $0.10
• Beat/Miss: Beat by +$0.01
• One Year Ago EPS: N/A

Inter & Co, Inc. Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $1.76 billion
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Inter & Co, Inc. Announcement Details

• Quarter: Q4 2024
• Date: 2/6/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, February 6, 2025
• Conference Call Time: 11:00AM ET

Inter & Co., Inc. Is a holding company, which engages in the provision of financial products and services. It operates through the following segments: Banking, Securities, Insurance Brokerage, Marketplace, Asset Management, Service, and Other. The Banking segment offers checking accounts cards, deposits, loans and advances, and other services through mobile application. The Securities segment is involved in the acquisition, sale and custody of securities, the structuring and distribution of securities in the capital market, and the provision of administration services to investment funds. The Insurance Brokerage segment includes insurance products underwritten by insurance companies, such as warranties, life, property and automobile insurance, and pension products, as well as consortium products provided by a third party. The Marketplace segment operates a digital platform, which offers goods and services to its customers. The Asset Management segment is composed of the operations related to the management of fund portfolios and other assets. The Service segment consists of collection and management of personal information, development and licensing of customized computer programs, development and licensing of non-customized computer programs and technical support, maintenance, and other information technology services. The company was founded on January 26, 2021 and is headquartered in Belo Horizonte, Brazil.

Inter & Co, Inc. Q4 2024 Earnings Call Transcript

Presentation

[Operator]

Good afternoon, and thank you for standing by. Welcome to InterContino's Fourth Quarter of twenty twenty four Earnings Conference Call. Today's speakers are Joao Widder Minin, Inter's Global CEO Alexandre Ritio, Brazil CEO, Santiago Stel, senior vice president and CFO. 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.

[Operator]

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 and 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 type no microphone at the end of your question.

[Operator]

In this case, our operator will read your question out loud. Please note that there is an interpretation button on 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 Enter and Co earnings release and earnings presentation appendix.

[Operator]

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 I would like to yield the floor to Mr. Joao Viter Menin. Sir, the floor is yours.

[João Vitor Nazareth Teixeira de Souza, Chief Executive Officer at Inter & Co]

Thank you, operator. Hello, everyone. Thanks for joining our fourth quarter earnings call. This is a very special earnings call for me. Let me tell you why.

[João Vitor Nazareth Teixeira de Souza, Chief Executive Officer at Inter & Co]

This year alone, we delivered more profits than in our entire history combined. I will repeat, 2024 net income was more than our prior years combined. I believe that this is a proof of the success of our business model, which we designed back in 2016 when we launched the first digital bank in Brazil. It also gives me strong confidence that we are in the right path. Following my remarks, Sanjay and Santi will cover the operational and financial results for the quarter and year.

[João Vitor Nazareth Teixeira de Souza, Chief Executive Officer at Inter & Co]

Our business model has the beauty of combining growth and profitability, resulting in a positive network effect. Each new cycle reinforces the power of the platform, creating a virtual cycle. This is how it works. Our complete product offering combined with a best in class UX help us attract and engage clients. The more clients we have, the more efficient we become.

[João Vitor Nazareth Teixeira de Souza, Chief Executive Officer at Inter & Co]

Our low cost structure allow us to price our products competitively. Operating in a capital efficient manner, together with strong share in services, we increase profitability and ROE. And this growing profitability enable us to keep innovating. As this cycle repeats itself, the platform becomes stronger and stronger. Jumping into 2024, let me provide a few highlights of the year.

[João Vitor Nazareth Teixeira de Souza, Chief Executive Officer at Inter & Co]

On the credit front, we made significant progress with our 100% digital payroll offering, which now accounts for more than 50% of the new underwritings. We also continued scaling our Consumer Finance two point zero portfolio and aim to increase the penetration rate within our current clients. Regarding products, Forum, launched in Q3 twenty twenty four, now has millions and millions of users who share investment tips, news and stay updated on Inter's products. Our commerce platform had an outstanding year in which we were able to crack the code on combining commerce with finance. Loop, our loyalty program, is expanding its options for earning and redeeming points and has surpassed 11,000,000 clients.

[João Vitor Nazareth Teixeira de Souza, Chief Executive Officer at Inter & Co]

Now let me take a moment to discuss our global expansion. By the end of twenty twenty four, we reached 3,900,000 clients using our global account. This success comes from our attractive value proposition. Our global account make it very easy to invest, travel, send money internationally and more. We also expanded our offerings with the highlight being the launch of our dollar credit cards last December.

[João Vitor Nazareth Teixeira de Souza, Chief Executive Officer at Inter & Co]

'20 '20 '4 was also a year of welcoming new talents to our team, enhancing our skills and capabilities. Julien and Marcelo Dantes joined the finance team. Monica Sacarelli and Fernando Bakin came on board on the business side. Our newest hire, Marco Antonio Rauju, joined as our Global Head of Legal. Sanji was promoted to Brazil CEO in the middle of the year.

[João Vitor Nazareth Teixeira de Souza, Chief Executive Officer at Inter & Co]

And also, half of Vitorra stepped in as the new IR officer. Gucci Minns, who held the CTO role since the launch of our digital bank, became our CIO last December. He is now our Chief Information Officer. Flavio Queijo expanded his responsibilities and now manages the real estate portfolio, FGTS and payroll loans. On the Board side, we added Jim Mahlen, former Morgan Stanley senior banker.

[João Vitor Nazareth Teixeira de Souza, Chief Executive Officer at Inter & Co]

Additionally, on the advisory side, Nicola Calicchio, former McKinsey Head of Brazil, is helping us as a senior advisor to the executive team, while Fernando Ferrari advised us on treasury and ALL. To conclude, we successfully executed the second year of our 06/3030 plan, which is key to continue growing and innovating our platform. Now I'd like to hand it over to Sanji, who will provide more details on the business side. Sanji, please go ahead.

[Alexandre Riccio, Senior Vice President of Retail Banking at Inter & Co]

Thank you, Joao. Hello, everyone, and thank you for joining us today. I'll go through an update of our seven business verticals, which together build our Super App platform. As Ron said on the virtuous cycle, we have created a powerful network effect with clients actively using our account, credit, investments, insurance, marketplace, and global services, all tied together by Loop, our loyalty program. This engagement across our financial super app enables us to effectively cross sell our products and continuously increase our market share.

[Alexandre Riccio, Senior Vice President of Retail Banking at Inter & Co]

Attracting customers is a key priority for us, and we're proud to finish one more year adding more than 4,000,000 clients while boosting activation. We finished 2024 with over 36,000,000 clients, achieving a 57% activation rate. Throughout the year, we successfully welcomed more than 1,000,000 new active clients each quarter. Our business clients grew by 21% year over year, reaching a total of 2,200,000. They show high engagement and increased ARPACK levels.

[Alexandre Riccio, Senior Vice President of Retail Banking at Inter & Co]

Now moving to the next slide, let's take a deeper look into our verticals. In banking, TPV has increased by 45% year over year, reaching BRL1.5 trillion run rate in 4Q 'twenty four. Transactions made through PIX totaled BRL1.1 trillion for the year. In the fourth quarter, Inter gained an additional 14 basis points in PIX market share, reaching 8.3%. Our mix between credit and debit volumes continues to improve with credit card transaction growth surpassing debit card transaction growth, leading to higher interchange revenues.

[Alexandre Riccio, Senior Vice President of Retail Banking at Inter & Co]

TPV levels across cohorts is steadily increasing, with newer clients transacting more and faster than older clients. On the credit front, we want to highlight the Consumer Finance two point zero portfolio, which includes PEAKS financing, Buy Now Pay Later and Overdraft. We started to scale this portfolio this year, and now it stands at almost R700 million, a 38% growth quarter over quarter. We're seeing consistent performance from these products from a credit quality perspective, eliminating the need to slow down our underwriting. While we remain cautious in our risk appetite, we found opportunities to underwrite card limits as our credit models continue to evolve, allowing us to better understand our clients.

[Alexandre Riccio, Senior Vice President of Retail Banking at Inter & Co]

Speaking of client behavior, another innovation this year was the launch of our Credit Hub, as called Clean, where clients can follow a step by step journey to earn their credit card limits with us. These steps involve actions like bringing their salary, direct deposits to enter, paying bills before the due date, and more. We allocate small limits as clients complete these steps. And by the end of the journey, we have enough data to provide them with the appropriate credit card limit. Moving to investments on the next slide, we see that AUC increased by 54% on a yearly basis, with active clients growing to over 6,800,000.

[Alexandre Riccio, Senior Vice President of Retail Banking at Inter & Co]

For the second consecutive quarter, we had record growth in AUC. One highlight of this quarter is that we achieved 20% market share in the number of investors of Chisolo Gereto, which is Brazil Treasury Direct. On the next page, I'll talk about insurance. The performance of this vertical was remarkable in 2024. The charts on the left hand side show the significant growth and penetration we can achieve with the right targeting, quality products, hyper personalization, and contextualized journeys.

[Alexandre Riccio, Senior Vice President of Retail Banking at Inter & Co]

We reached over 5,000,000 active contracts with more than 5,000,000 units sold in 2024, achieving a 312% growth in the year. We raised the bar with the introduction of FGTS life insurance and Sochi Zynia, two low ticket but recurrent products that we offered within existing product journeys. This strategy involves zero marginal cost to attract clients, taking full advantage of our integrated platform. Shifting to our marketplace, we had an exciting year with a 79% year over year growth in net revenues, 42% growth year over year in GMV that reached nearly BRL5 billion and all that done across more than 6,000,000 active clients. In the fourth quarter, '7 percent of our OnUs GMV was generated through Buy Now Pay Later, reinforcing our cross selling opportunities.

[Alexandre Riccio, Senior Vice President of Retail Banking at Inter & Co]

This unique combination enables us to leverage our fee revenues while also generating interest income from higher margin unsecured credit operations. In the next page, we highlight our global expansion continuous growth. We reached 3,900,000 clients, which is 19% of our active base. The deposits balance increased by 52% in one year. Within this vertical, we typically serve higher income Brazilians who typically travel and save money in The US.

[Alexandre Riccio, Senior Vice President of Retail Banking at Inter & Co]

We continue evolving on the product offering by replicating the Brazilian products into The US account. Recently, we launched our dollar denominated credit card, points for our US dollars debit card, purchases, and new investment products. On the next page, we talk about Loop, our seventh vertical. We finished 2024 with over 11,000,000 clients and continue to evolve in ways for people to earn and burn points. Clients can now redeem points for extra cash back on purchases in our marketplace, transfer points among family and friends, redeem points for PIX Insurance and more.

[Alexandre Riccio, Senior Vice President of Retail Banking at Inter & Co]

Clients who engage consistently with Loop are among those, that are most active within our platform. In the next slide, we talk about market share and show some of the evolution that we've been able to deliver in a few of our products. Peak's market share, which reached 8.3%, continues to be a benchmark we use to set the ambition of market share potential for the other products. We are excited with the evolution both in banking and in non banking products. Three highlights are FX transactions, the balance of our home equity portfolio and our FGTS loans, products that are strategic for engagement and profitability.

[Alexandre Riccio, Senior Vice President of Retail Banking at Inter & Co]

We are confident in our capacity to continue expanding share. And we'll see part of why on the next slide. I finished the business section showing how much room we have to grow. We're operating in markets with enormous TAMs, and having a large client base facilitates access to a good part of this market, and it explains why our share is moving so fast. Strategies like hyper personalization for activating and retaining clients have optimized our sales efficiency.

[Alexandre Riccio, Senior Vice President of Retail Banking at Inter & Co]

We're confident that our continuous product evolution, improved client service and enhanced overall value proposition are key to sustain our positive trends. Now I would like to pass the word to Santi, who will take us through the financial section.

[Santiago Stel, Senior VP of Finance and Risks & CFO at Inter & Co]

Thank you, Sande, and hello, everyone. Let's jump into our financial performance. Starting with the loans, this was another year focused on optimizing our capital allocation into our loan book. Our loans reached 41,000,000,000 reais, a 33% year over year growth with FTTS and home equity being the highlights by growing above 50% each. Both these products have the highest ROEs and have been crucial in improving our portfolio mix and expanding our NIM.

[Santiago Stel, Senior VP of Finance and Risks & CFO at Inter & Co]

In credit cards, we surpassed 11,800,000,000.0 reais with a 10% quarter on quarter and 25% year on year growth showcasing our progress and appetite in the non collateralized credit underwriting. Personal loans, mainly payroll, is starting to grow with digital underwriting being the main driver. In terms of relative growth, we can see here that we outpaced the market growth in most of our products. SGTS, home equity, and real estate, we are approximately twice as fast as the market gaining significant market share. Credit cards also grew nearly twice as the market, all while improving our asset quality metrics.

[Santiago Stel, Senior VP of Finance and Risks & CFO at Inter & Co]

Meanwhile, personal is reaccelerating despite the runoff of the acquired portfolio and thanks to the success of our digital payroll. In terms of asset quality, we continue improving for the third consecutive quarter with NPLs from fifteen to ninety days standing at 3.4% and NPLs greater than ninety days decreasing 30 bps to 4.2%. The credit card NPLs when analyzed across cohorts continue to show strong performance validating the progress made in their underwriting models and collection processes. NPL formation reduced to 1.2% as the older, weaker portfolios are decreasing representation in the mix while our stronger underwriting portfolios are gaining representation in the mix. We can see the evolution of our cost of risk metric, which decreased to 5% and presented a very stable trend throughout the year.

[Santiago Stel, Senior VP of Finance and Risks & CFO at Inter & Co]

Furthermore, our coverage ratio increased from 130% to 136. This increase is due to the improvement in the NPLs as seen in the prior page. With this picture on the asset quite different, we're starting 2025 even stronger than what we started 2024 a year ago. On this page, we can see the evolution of our funding franchise, which is one of the key strengths of our business model. We concluded 2024 with over 55,000,000,000 reais in funding, growing 10% quarter over quarter and 27% year on year.

[Santiago Stel, Senior VP of Finance and Risks & CFO at Inter & Co]

In terms of mix, we continue to have around one third of our funding in transactional deposit, which is the main driver of our loan funding cost. Our active clients had on average 2,000 reais in deposits, a record level that highlights the primary relationship with us. The attractive funding mix shown on the prior page enables us to have the lowest cost of funding in the banking industry in Brazil. In the fourth quarter of this year, it stood at 64% of CDI in line with the prior quarters. Here, we present our top line, which ended 2024 with over 10,000,000,000 reais in total gross revenues and 6,400,000,000.0 reais in total net revenues.

[Santiago Stel, Senior VP of Finance and Risks & CFO at Inter & Co]

This year, in AI and fee net fees were significantly increasing 3731% respectively. On a quarterly basis, the performance was also very strong with growth and net revenues growing 10%. Our distribution platform allows us to continue performing strong on the fee side, which accounts to 32% of our net revenues. On the credit front, higher NII growth highlights our ongoing repricing strategies as well as our focus on higher ROE products as already mentioned. With higher engagement, we achieved a record monthly ARPAK of 33.6 reais this quarter marking an 11% growth compared to last year.

[Santiago Stel, Senior VP of Finance and Risks & CFO at Inter & Co]

Hyper personalization and targeted marketing is becoming a driving force behind the increasing monetization of our clients. We also reached a record margin per active client of 20.6 KIs as we continue to increase the gap between our CTS and our RPAC. We believe this demonstrates our ability to effectively monetize our customer base while capturing economies of scale in cost, as John mentioned, while explained on the virtuous cycle. Let's now deep dive into our net margins. Both are NIM one point zero, which means including in the denominator, the non interest accruals of credit cards and the NIM two point zero, which excludes these non interest receivables, are showing an upward positive trend, increasing significantly when compared to a year ago.

[Santiago Stel, Senior VP of Finance and Risks & CFO at Inter & Co]

This is the validation, we think, of our marginal ROE strategy implemented since the beginning of last year. We have been successful on increasing revenue in a faster pace while maintaining expenses under control during the fourth quarter. As a result, our efficiency ratio improved and now stands at 50.1%. Worth mentioning that we continue working on the integration of InterPAX, which will be an attractive driving driver of operating leverage by both improving the cost base while increasing revenue through cross selling. To conclude, we can clearly see here our journey towards increasing profitability.

[Santiago Stel, Senior VP of Finance and Risks & CFO at Inter & Co]

We have tripled our net income this year, reaching 9 and 73,000,000 reais and an 11.7% ROE on an annual basis. Quarterly, our consistency is impressive in our view, reaching nearly 300,000,000 reais of net income, closing the year with strong momentum that enables us to start 2025 in a position of strength. Now Joao will step again to share his closing remarks. Thank you all.

[João Vitor Nazareth Teixeira de Souza, Chief Executive Officer at Inter & Co]

Thank you very much, Sanchi. To conclude, 2024 is a year to celebrate our evolution, discipline and consistency, not just the results. What a year. As you know, 2025 has already begun, and we're starting it with strong momentum. We are leveraging on technology and innovation, reaching new levels of market share in Brazil, also focused on operational leverage reinforcing our strong asset quality metrics and executing our global expansion plan.

[João Vitor Nazareth Teixeira de Souza, Chief Executive Officer at Inter & Co]

I would like to thank all our employees for the amazing 2024 we achieved together. Thank you all. Operator, you can open the Q and A session now. Thank you very much.

[Operator]

We will now begin the question and answer session. Once again, for this Q and A session, we ask you to write down your question via the Q and A icon at the bottom of your screen. Our first question comes from Mr. Mario Pierri from Bank of America. Sir, we're now opening the audio so you can ask your question live.

[Mario Pierry, Analyst at Bank of America]

Good morning, everybody. Congratulations, on the results. We thought was quite good. It shows right at the the benefits of all of your initiatives, over the past year. So it's it's really, really a good job that you guys have been doing.

[Mario Pierry, Analyst at Bank of America]

Let me ask you, Zhuang, a question looking forward, right? Like, we've been listening to the incumbent banks talking about a much more cautious outlook for 2025 given the high rate environment in Brazil. Everybody now is guiding for loan growth of about six to 8% at best. So I wanted to hear from you your perspective on your ability to continue to grow your loan book near the 30% level. And also, how do you expect your net interest margin to behave in this, rising rate environment?

[Mario Pierry, Analyst at Bank of America]

I know in the past it was, negative for you, but I think you have been making changes to your asset liability management strategy. So if you can update us on what to expect on margins and what do you think about loan growth

[Mario Pierry, Analyst at Bank of America]

in 2025, that'd be great.

[Mario Pierry, Analyst at Bank of America]

Thank you.

[João Vitor Nazareth Teixeira de Souza, Chief Executive Officer at Inter & Co]

Mario, Lou speaking. Thank you for the compliments on the earnings and going straight to the point. For those who have been listening to our earnings call for a while and that knows the company for a longer period of time, you all know that we have been taking a very cautious approach about credit underwrite since the beginning of the bank. We have been doing that since 1994. We also designed Inter to be a very established, a very diversified credit portfolio platform or bank.

[João Vitor Nazareth Teixeira de Souza, Chief Executive Officer at Inter & Co]

We wanted to be everything but a monolinear. With that design in place and with this approach, we have always been able to navigate the ups and downs of the macro, mostly in Brazil. That said, Mario, we never had a very spike growth on credit underwrite when the market was booming, but we don't foresee a reduce on our growth when the market is not that strong. Also, just remember, not only we're not a mono liner, but most of our credit portfolio has a very good level of collateralization. And last, we have a very good cost of funding that can help us to price the products and to cherry pick the best clients.

[João Vitor Nazareth Teixeira de Souza, Chief Executive Officer at Inter & Co]

We need to remember that unfortunately or fortunately, we don't have 15%, twenty % market share in most of the credit portfolios that we operate. We have close to 1%, one point five %. We have a big addressable market. It's still to grow in a 25%, thirty % -ish throughout the years, even with some challenge on the macro, okay? And Santi will cover now the impact on the NIMs.

[Santiago Stel, Senior VP of Finance and Risks & CFO at Inter & Co]

Hi, Mario. Thank you for the question. So, on the NIM environment or in the context of an environment of rising rates, As you know, we have been working on being very disciplined on deploying capital in a strong ROE or marginal ROE level. And in addition to that, we have been working to take away volatility in of our financials by hedging the originations of the loans that we originate with more than one year of the ratio since the beginning of 2023. As a consequence of doing that, mainly on the fixed rate long and on the inflation, we are now marginally positive to CDI movements in the context of increasing interest rates.

[Santiago Stel, Senior VP of Finance and Risks & CFO at Inter & Co]

We'll have a slightly positive result in terms of NII. So basically, what we have been trying to do is to not be volatile or not have additional volatility as a consequence of that. So if we isolate the movement of interest rates that is playing out, what we have is the ROE of the new loans are coming in stronger than the back book. We have an impact of loan mix that is positive as a consequence of having the higher ROE products gaining representation. If you see now in our loan book, SGTS plus home equity is nearly 20% of the loan book.

[Santiago Stel, Senior VP of Finance and Risks & CFO at Inter & Co]

And then in addition to that, we have a newer unsecured credit lines, fixed financing and buy now pay later, which are slowly but steadily growing. And those also add an improvement into the, into the overall NII. So all of that together, we expect to continue to have the trend that we had last year of around 20 bps on average of growth in the NIM per quarter. It's not linear. No, it doesn't happen every quarter.

[Santiago Stel, Senior VP of Finance and Risks & CFO at Inter & Co]

But if you see the NIMs that we had last year from the beginning of twenty twenty three to the end of twenty twenty four, that was the average growth per quarter. If we, on top of that, consider the cost of risk, what we have called the risk adjusted NIM, which is what we care the most about, is an even stronger impact as a consequence of having been able to do a good job in maintaining asset quality very strong. So all of that to say, we don't expect a change in the trend of the increasing NIMs that we had in 2024 coming into 2025 independently of the macro or rate environment that we're seeing.

[Mario Pierry, Analyst at Bank of America]

Very clear. So to summarize, you're comfortable with loan growth 25% to 30% and further NIM expansion in twenty

[Mario Pierry, Analyst at Bank of America]

twenty five percent, right?

[Santiago Stel, Senior VP of Finance and Risks & CFO at Inter & Co]

That's correct.

[Santiago Stel, Senior VP of Finance and Risks & CFO at Inter & Co]

We are.

[Mario Pierry, Analyst at Bank of America]

Thank you very much.

[Santiago Stel, Senior VP of Finance and Risks & CFO at Inter & Co]

Thanks, Mario.

[Operator]

The next question comes from Mr. Tito Labarta from Goldman Sachs. Mr. Labarta, we're now opening the audio so you can ask your question live. Please go ahead, sir.

[Tito Labarta, Analyst at Goldman Sachs]

Hi, good morning. Thanks for the call and taking my question as well. A couple of questions, if I can. I guess, first on just expenses and efficiency, we did see a slight improvement in efficiency in the quarter, but expense growth still a little bit elevated. If you look at efficiency, I know you had Interpac this year, so it throws off the numbers a little bit.

[Tito Labarta, Analyst at Goldman Sachs]

But how should we think about expense growth in 2025 and continued improvements in efficiency to get to that 30% longer term target? Just how much could we potentially see in 2025 or what's the incremental improvement we could see from here? And then just a question on your capital base. I mean, you paid a small dividend, core Tier one ratio is down to 15.2. I know you have excess capital at the holding, so maybe that compensates it.

[Tito Labarta, Analyst at Goldman Sachs]

Just to understand how you're thinking about capital, what's the right capital ratio in Brazil and how do you think about the excess capital at the holding or how should we think about that? Thank you.

[Alexandre Riccio, Senior Vice President of Retail Banking at Inter & Co]

Hi, Tito. This is Sanjay speaking. Thank you for your question. I'll start with like a 30,000 feet view and then Santo will deep dive on the expenses. And first point I'd like to highlight is that we're super committed to bringing our efficiency ratio to the 30% ballpark as per the sixty-thirty-thirty plan.

[Alexandre Riccio, Senior Vice President of Retail Banking at Inter & Co]

So we are on pace. We improved in 2024 if we compare to the end of twenty twenty three and will keep improving. We did see this spike in the third quarter followed by an inflection in terms of cost to income in the fourth quarter. And what we're going to keep doing is working disciplined on the cost reduction initiatives. We have all that institutionalized now.

[Alexandre Riccio, Senior Vice President of Retail Banking at Inter & Co]

And we're deploying in 2025 new strategies to have company wide engagement in bringing these numbers towards like the 2027 targets. And for example, we're deploying cost to income in each one of the areas, whether it's a P and L area or whether it's a cost center so that we keep things in the right direction as we navigate through the quarters.

[Santiago Stel, Senior VP of Finance and Risks & CFO at Inter & Co]

Santeo here complementing, Sande. So on the fourth quarter, what we had also was a higher than average at the volume being processed in the app, which is typical in the fourth quarters, and that increased the expenses of data processing and third party services. We were able to keep, a very tight leash on the advertising and marketing, which performed very well. And then on personal expenses, as we had, the the different teams meeting their goals, we had more provisioning of variable expenses that that hit that quarter. But we do think that we have the expenses under control as, as Alejandro said.

[Santiago Stel, Senior VP of Finance and Risks & CFO at Inter & Co]

We are measuring absolutely everything on a high frequency basis. And going to 2025, the the overall expense growth will be a function of the revenue growth. No? So what we're solving for is an increase in the ROE, and and we have variability or or flexibility to adjust the expense base depending on the overall level of revenue in order to be able to deliver the the bottom line that we expect to deliver. And finally, on the sixty-thirty-thirty, the metric where we are ahead the most is this metric of the efficiency ratio.

[Santiago Stel, Senior VP of Finance and Risks & CFO at Inter & Co]

We're able to keep expense fully flat in year one, so we actually run ahead of that in year one. Year two, it was 2024. The most significant improvement was on the NIM. For 2025, we expect it to be a combination of both to deliver the growing profitability.

[Tito Labarta, Analyst at Goldman Sachs]

Okay. Thanks. And just on the capital with the how do you think about the capital ratio in Brazil and the excess capital at the holding?

[João Vitor Nazareth Teixeira de Souza, Chief Executive Officer at Inter & Co]

Okay. Tito. Joao speaking here regarding capital on Brazil abroad and also I think you mentioned dividend. So first of all, this has been a top priority for me for a while, how we allocate the best possible way our equity, not only at the whole level but also in Brazil. We have designed the whole cost structure to optimize that and that's the reason why we are paying Giotto SEP IOC every month to have most of our equity at the whole level.

[João Vitor Nazareth Teixeira de Souza, Chief Executive Officer at Inter & Co]

Regarding Brazil, the CET1 at 15% should be would have been 170 bps higher if we deduct the market to market on our N2B position. So that said, we'll be pretty much flat quarter over quarter. At the end of the day, Tito, we want to leverage more our bank operation Brazil as much as we can with discipline, bring the best return for our shareholders. We want to keep deploying our capital, not on liquidity, not buying treasury bonds. We want to put on the FTTS, on the payroll loans.

[João Vitor Nazareth Teixeira de Souza, Chief Executive Officer at Inter & Co]

So that's what we have been doing recently. So I'm very, very optimistic about the returns that this deploy of capital will bring us such as the 15%, twenty % ROE most likely at the end of twenty twenty five. On dividends, we do pay dividends. As we mentioned, we paid dividends after today, announced 1.5, one point eight dividend yield, which for the shareholder is still not a good one, but we're working to get our dividend yield as big as possible. This is the most relevant thing for our shareholder.

[João Vitor Nazareth Teixeira de Souza, Chief Executive Officer at Inter & Co]

But on the other hand, we are a growth company. We're still deploying most of our earnings to keep innovating, growing the portfolio and expanding our operations. So this is how we see the capital allocation at Inter today. And it's a thing that we are always evaluating what's the best allocation for our shareholders.

[Tito Labarta, Analyst at Goldman Sachs]

Great. Thanks, Joao. Appreciate that.

[Operator]

Uh-huh.

[Operator]

The next question comes from Mr. Gustavo Schroden from Citi. Mr. Schroden, we're now opening the audio for you, so you can ask your question live. Please go ahead, sir.

[Gustavo Schroden, Equity Research Director at Citi]

Yes. Good afternoon and thanks for the call and congrats on the results. My first question is regarding, it's still a follow-up on NIM. I'd like to understand, you showed that your launch to the post ratio is at a 75%. So, if we compare with the average of the especially the incumbent banks or large banks, you still have room to increase this leverage.

[Gustavo Schroden, Equity Research Director at Citi]

So what should we think about this launch to deposit ratio in 2025 and 2026? Should we believe that there is some increase in this launch to deposit ratio to the same level of incumbent banks? And my second question is regarding asset quality. Another good quarter in terms of NPLs and asset quality indicators, cost of risk around the 5%, five %, one %. What should we expect for 2025 in terms of cost to cost of risk?

[Gustavo Schroden, Equity Research Director at Citi]

Thank you.

[Santiago Stel, Senior VP of Finance and Risks & CFO at Inter & Co]

Hi, Gustavo Santiago here. Thank you for the questions. So on NIM, it's it's hard to predict the loan deposit ratio. But what we have been able to see is that the on the deposit side, we continue to surprise ourselves on the on the upside, both in terms of the growth rate as well as in terms of the mix. Now we've been challenged that how long we would keep the mix and as a consequence of the mix, the low cost funding as a percentage of CI.

[Santiago Stel, Senior VP of Finance and Risks & CFO at Inter & Co]

And as the years go by, we are able to keep it. So what we see is that the clients continue to choose Inter primarily because of the transactional essence of the super app, which is reflected on on them having their core deposits at Inter. And another proxy of that that we we mentioned a lot to investors is the market share of peaks, no, which is high and increasing. Now this quarter increased to 8.3%. So all this to say that we would imagine the loan to deposit ratio to stay roughly at at this level, potentially going up to something closer to 80%.

[Santiago Stel, Senior VP of Finance and Risks & CFO at Inter & Co]

We did like to see the growth in the deposits per active client reaching the 2,000 EIS this quarter. And as that continues to happen together with the ROE driven marginal allocation of capital, we would expect the NIM to continue trending in the same trend that we had in 2024, as I mentioned in a prior question. In terms of asset quality, we have a few pieces playing out. On the one hand, we continue to to allocate in certain products that that tend to take the delinquency levels to a better levels, like, for example, FGTAs, home equity, and real estate. But we are taking marginal risk on the unsecured lines, which are risk, risk adjusted NIM accretive, but they do increase the cost of risk.

[Santiago Stel, Senior VP of Finance and Risks & CFO at Inter & Co]

So we will see which of those two impacts prevails. But overall, we don't see a major change in either direction, up or down, in the cost of risk of 5% to 5.2% that we've seen in 2024.

[Gustavo Schroden, Equity Research Director at Citi]

Okay. Great. Thank you very much.

[Operator]

The next question comes from Mr. Yuri Fernandez from JPMorgan. Mr. Fernandez, we're now opening the audio so you can ask your question live. Please go ahead, sir.

[Yuri Fernandes, Executive Director at JP Morgan]

I have one more detailed here on tax revenues. It was a little bit higher this quarter on this And for sure, you had higher revenues, but the ratio was higher. And when we look, it's the order inside the tax on revenue. So if you can explain what drove these, if this is sustainable or not, like just for us and the shareholders to understand the line of tax revenues. And if I may ask a second question here is on fees.

[Yuri Fernandes, Executive Director at JP Morgan]

It has been a good quarter for fees, interchange and commissions, they are doing fine, banking and credit commissions. So if you can provide some color on what to expect for fee in 2025, I would also appreciate. And finally, just a follow-up on Tito's on dividends. Joel, do you really think paying dividends, it's that important for investors? Because you are a the way I said this is a growth company.

[Yuri Fernandes, Executive Director at JP Morgan]

Your ROE is moving up and that's good, but should not be able should not be better to keep the dividend inside of Inter given the growth you have. Thank you.

[Santiago Stel, Senior VP of Finance and Risks & CFO at Inter & Co]

So on on taxes, Yuri, thank you for the question there. So what what led to the increase in the Pisco Fins this quarter were two factors. One, the natural growth in in revenues. And in addition to that, we paid IOC or Jotasipa like this in Portuguese in this quarter in a number of close to 160,000,000 reais, which creates Pisco fees, which is approximately 70% of what we paid in the entire year. We had a a a bigger payment in that quarter that as a consequence led to a higher, ILC, which we think will normalize to prior quarters in the starting this first quarter of twenty twenty five.

[Santiago Stel, Senior VP of Finance and Risks & CFO at Inter & Co]

Can we take the second one?

[Alexandre Riccio, Senior Vice President of Retail Banking at Inter & Co]

Yuri? Thank you for the question. So on fee income, we saw nice results in 2024. As per all the work we've been doing hyper personalization and launching products that are in the context of our clients' needs. And we see 2025 as a year to keep this trend.

[Alexandre Riccio, Senior Vice President of Retail Banking at Inter & Co]

So we're diving more into all these hyper personalized experiences, getting better and better on the choices that we make on products and where to sell which product in the journeys that we already have in the app. We saw that through the results of the marketplace, which grew a lot in GMV and revenue, and we had also impressive results in the insurance fronts. So we see similar trends in 2025 and we'll keep working to push the limits that we can there.

[João Vitor Nazareth Teixeira de Souza, Chief Executive Officer at Inter & Co]

Yuri, Joao speaking here. So going back to the dividends topic, it's fun because I have two hats here, controlling shareholder and CEO of the company. So on one side, I would like to say that the essence of a company is to reward all the shareholders for the capital that they have invested in that company. So we tend to pay I would love to pay the highest dividend yield on the market. We know that as you mentioned, we are still a growth story.

[João Vitor Nazareth Teixeira de Souza, Chief Executive Officer at Inter & Co]

And therefore, myself with the head of the CEO of the company, we try to bring the payout ratio down. As long as you can keep continue building organic capital, so above the threshold that we believe is the cost of the capital in Brazil or whatever. So let's put this 13%, fifteen % ratio. We will be able to increase that payout throughout the time. I like to say that we are designing India to be in a sense an asset light platform.

[João Vitor Nazareth Teixeira de Souza, Chief Executive Officer at Inter & Co]

We do have our credit portfolio that's grown, as we mentioned, 25% -ish. But connecting to your questions regarding fees, we're very proud of having 30% of the revenues on the fee side. So as long as we can generate fresh equity, new capital, we can have the fee income kicking in, we will be able to keep paying dividends on this 20%, twenty five % -ish pattern without sacrificing the growth and the innovation at Tinder. So that's how I try to balance and to do the right arbitrage, generating long term value for other shareholders of Tinder and not only short term value for any type of shareholder.

[Yuri Fernandes, Executive Director at JP Morgan]

No, thank you, Georgi. It is clear. I asked this because I think you mentioned like yield was super important in the 2025 payout you started to pay. I don't think it sacrificed growth, right, being blank honest with you. But when you said like dividend yield is something super important, I was a little bit concerned that you could do a higher payout or something like this and it seems not to be the case, so just confirm this.

[Yuri Fernandes, Executive Director at JP Morgan]

And as you said, I guess, ROE will move up over time and that's fine and you can pay more dividends in the future. But just trying to make sure like the 20%, twenty five % is somewhat the softer guidance you see for the payout. And thank you for the clarity here.

[João Vitor Nazareth Teixeira de Souza, Chief Executive Officer at Inter & Co]

Okay. Thank you, Yuri.

[Operator]

The next question comes from Mr. Eric Ito from Bradesco BBI. Mr. Eric Ito, we're now opening the audio, so you can ask your question live.

[Francisco Navarrete, Director of Research at Bradesco BBI]

Hi, Joel. Sanchi, Shenji. Have two on my side as well. My first one is regard is a follow-up on your NIM expansion of 20 bps per quarter, as you mentioned, for 2025. I just want to see your expectations maybe on the breakdown of this mix.

[Francisco Navarrete, Director of Research at Bradesco BBI]

First, what you see for how much would be for funding? If you see any pressure for your cost of funding as a percentage of CDI potentially increasing because of competition. Then, as the second, still on this topic, how much your treasury, results could be, could grow in 2025. If you see on the fourth quarter, it already increased around 300,000,000, reais. So if we just analyze this fourth quarter, it will be around $30.40 percent growth.

[Francisco Navarrete, Director of Research at Bradesco BBI]

So just want you to understand if that would be one of the main drivers for any expansion as well. And then my second question is specifically on credit cards. There was a strong growth in this quarter around 25% year on year, but I just want to explore a bit on your breakdown between transactor and non transactor, portfolio. I think it was the third quarter that we saw maybe a slight decrease in the share of the, of, of the, earning yield portfolio in the in the in the mix. I guess there there's a bit of seasonality here in the fourth quarter, maybe because of more debts.

[Francisco Navarrete, Director of Research at Bradesco BBI]

But just want to get your sense, as you're growing in customer finance portfolio, I thought maybe this mix will be increasing in the total share of your credit cards. So just want to get your sense on this trend and how we can expect this line to evolve going forward. Thank you.

[Santiago Stel, Senior VP of Finance and Risks & CFO at Inter & Co]

Thank you, Eric. I will take the first one, Santiago here, and Shanda will take the second one on credit cards. So what we're assuming on on the NIM evolution or or the continuation, let's say, of the trend that we've experienced in 2024, it's the combination of of of three factors. As I mentioned, one is the mix will continue to get richer as if you if you see it, rural or our business and SMEs, which are thinner margin products, grew significantly less. And in the case of FCDIS, home equity and real estate associated with inflation, grew significantly more.

[Santiago Stel, Senior VP of Finance and Risks & CFO at Inter & Co]

So the mix is playing out a very strong role. On the other hand, we continue to scale up with the consumer finance products and those, are starting on a lower base but are beginning to yield nice returns. The average rate both in the buy now pay later and on the fixed financing is around 6% per month. So it's a very attractive level, very attractive to pay the cost of risk that comes associated with it. And in terms of the funding cost, we are modeling that we'll continue in the mid-60s.

[Santiago Stel, Senior VP of Finance and Risks & CFO at Inter & Co]

We will see how the mix affects this, but we don't expect to deviate too much to something around the mid-60s as percentage of CDI. The fact that we didn't talk before that I'd add here is that we already have around R4 billion reais of the treasury liquidity investing in what we call the structure notes that are tax exempt, and this yield around 85% of CDI. So in the NIM, it appears penalized in a way because the benefit of those notes and the effective tax rate below. But we did add in the press release, and you can probably see that on page 14, we have around 30 bps of additional NIM that comes from the tax adjustment of those nodes. So the impact on NIM is further there.

[Santiago Stel, Senior VP of Finance and Risks & CFO at Inter & Co]

And into 2025, we expect to continue growing that portfolio of structure notes as the balance sheet grows, no, or proportionate to the growth of the balance sheet. And that's another thing that we we've been a key role in the evolution of the NIM. I'll pass it to Sande to probably the credit card's point.

[Alexandre Riccio, Senior Vice President of Retail Banking at Inter & Co]

Hi, Eric. So I'll start maybe complement a little bit on the cost of funding. So one thing that we developed that's super nice is like we have a good mix of transactional deposits and then the CDs and the LCIs. And within these transaction deposits, we're talking about 20,000,000 people with very small balances. And when they want to invest, when they want the yields, we have the most complete platform to serve them with low cost products, high cost products as per their decision.

[Alexandre Riccio, Senior Vice President of Retail Banking at Inter & Co]

And this has been like a secret to keep our cost of funding down. And we went through a few cycles of high interest rates and different competitive landscapes, and we've been able to keep this cost of funding low in this 60, little bit more level. Moving to the credit cards, the shape of the portfolio didn't change. So we finished 2024 with 80% being transactors, about close to 5% in fixed financing and the remaining in the mix between revolving and installments, more skewed towards revolving, which is where a lot of the opportunity sits, right, between this mix in fixed financing, revolving and installments. We are focused on minimizing the revolving, which includes the delinquent and moving customers towards the installments.

[Alexandre Riccio, Senior Vice President of Retail Banking at Inter & Co]

We've been implementing different solutions. So for example, in September, end of September, we implemented an interest rate differential. So that's more favorable to customers to go into installments instead of going to revolving. And we have to remember that typically from revolving to delinquent is faster than from installments to delinquent. So that's kind of what we're doing.

[Alexandre Riccio, Senior Vice President of Retail Banking at Inter & Co]

We want to change this shape of the portfolio a little bit, increasing the interest earning part. So that would reduce a little bit from the 80 in transactors to say 78, maybe 75 throughout 2025. Thanks, Eric.

[Francisco Navarrete, Director of Research at Bradesco BBI]

Thank you. Just one quick follow-up, if I may, on Senti's, answer. So maybe for going forward, as you guys expand the the portfolio, as you as as you mentioned, essentially, that maybe we can could still see some addition of structured notes at 85% of CDI, which benefits you with the with the taxation. Later, can we can we can we say that, the percentage of yield as a percentage of CDI could decrease on the securities for 2025 because of this effect? Maybe you're gonna capture on tax on better taxes, but, on the securities portfolio, we could see maybe a slight decrease as a percentage of CDI.

[Santiago Stel, Senior VP of Finance and Risks & CFO at Inter & Co]

No. Because the growth in the structured notes should be proportional to the growth of balance sheet. So we expect the yield on the on the loan portfolios per on the investment portfolio to remain relatively stable. We did had some catch up on on some investments that we could use to increase the yield. We have the weight of the NTNVs that that are approximately 3,800,000,000 AIs that is decreasing because the investment portfolio size is increasing.

[Santiago Stel, Senior VP of Finance and Risks & CFO at Inter & Co]

So when you put all that together, we expect it to remain roughly at the same level that we had in this fourth quarter, Eric.

[Francisco Navarrete, Director of Research at Bradesco BBI]

Perfect. Very clear. Thank you, guys.

[Operator]

The next question comes from Mr. Pedro Leduc from Itau BBA. Mr. Leduc, we're now opening the audio, so you can ask your question live. Please go ahead, sir.

[Pedro Leduc, Equity Research Analyst at Itau BBA]

Thank you, everyone. First question on credit cards, still a bit. We saw interest income on them falling this quarter despite what you mentioned is a stable mix of transactors or not. Can you elaborate a little bit on that if it's a strategy of lowering rates, and if you're seeing its sensitivity of volumes picking up in regards to that? And that's the first question.

[Pedro Leduc, Equity Research Analyst at Itau BBA]

And then second, just a quick technical one. There's a gains of capital or others of 39,000,000 this quarter. Just making sure that what it was is related to Interpac and if it was cash or not. Thank you.

[Alexandre Riccio, Senior Vice President of Retail Banking at Inter & Co]

Hi, Veduk. This is Sean speaking. Thank you for your question. So I'll kind of complete the answer of Eric. So as I mentioned, 80% of the portfolio is on transactors.

[Alexandre Riccio, Senior Vice President of Retail Banking at Inter & Co]

The 20% is mixed, but it's like 25 fixed financing and 50% revolving and delinquent and 525% in installments. And so what we need to do, which is our main mission and opportunity to improve the P and L of the credit cards, is to increase this interest earning portfolio, reducing the amount of clients that are delinquent and moving more of them to installments. As I mentioned in September, I believe, we implemented an interest rate differential, which was mainly driven to like reduce the interest rate on the installment piece of the portfolio. What's the short term effect that we expected to have by doing this change? We push people into a lower yield product, still super high rate.

[Alexandre Riccio, Senior Vice President of Retail Banking at Inter & Co]

We're talking like we move it from 14.9% to 11.9%, but a lower rate. So it was expected to have a period where we would see smaller revenues. This was by design. But we expect that as we have more customers that are not in delinquency, we're going to increase these revenues through time. That's the strategy.

[Alexandre Riccio, Senior Vice President of Retail Banking at Inter & Co]

And then there is a super large list of things like collection products, collection policies and different things that we're doing in the end of the day to help customers get out of the hardships that they may be going through in terms of their financial lives? Thank you.

[Santiago Stel, Senior VP of Finance and Risks & CFO at Inter & Co]

And, LeDuc, on the capital gains question, yes, it is related to the Interpac acquisition. We performed a purchase price allocation study, which was finalized in the fourth quarter. And as a consequence of that, we booked BRL30 million of recognition in the fourth quarter. That is the one you're mentioning. Thank

[Operator]

you. The next question comes from Ms. Neha Agarwalah from HSBC. Ms. Agarwala, we're now opening the audio so you can ask your question live.

[Operator]

Please go ahead, ma'am.

[Neha Agarwala, Analyst at HSBC]

Hi. Thank you so much for taking my question. Sorry if I'm making you repeat any of the things, but two quick questions. First on the consumer finance portfolio, how is the asset quality evolving versus expectations and what kind of growth should we expect for 2025 for this particular portfolio? And the second question is on private payroll.

[Neha Agarwala, Analyst at HSBC]

We are seeing some changes in this particular domain. Is this an area of interest for Inter and could you see growth coming as it becomes easier to operate in the prior payroll market? Thank you so much.

[João Vitor Nazareth Teixeira de Souza, Chief Executive Officer at Inter & Co]

Hi, Nihir. Joao speaking here. Thanks for the question. I'm going to do the first and Sanjay will do the second one. So consumer finance, I have been sharing with the market, with our shareholders and with most of the market how excited we are here at Inte to, I would say, reinvent the consumer finance in Brazil.

[João Vitor Nazareth Teixeira de Souza, Chief Executive Officer at Inter & Co]

So we have this consumer two point zero approach, as we say. We coined this term actually. And it's working well. It's working really well here in NIIIA. So we have the buy now, pay later.

[João Vitor Nazareth Teixeira de Souza, Chief Executive Officer at Inter & Co]

So we combine the success of the GMV in our shopping, in our e commerce platform with our capabilities of unbending credit to our consumers. As of today, the delinquency for this portfolio is lower than the delinquency of the credit card. The guys that are using our credit card on the streets. For that product, we have a very good take rate from the merchants that reward us for being the one giving credit to their clients. We have also a very good down payment upfront around 20% to 25% of the price of the product or the service.

[João Vitor Nazareth Teixeira de Souza, Chief Executive Officer at Inter & Co]

So this is something that we're doing under the radar, but we're very excited with this product. And I believe that we are the one ahead because we have this combination of commerce and finance here at India. So we have a very positive trends for 2025 as well. But again, always underwriting and checking the collection, checking the delinquents to make sure that we're not doing anything wrong. On Peaks Finance also we have been seeing good prints in terms of delinquents, also better than the credit cards.

[João Vitor Nazareth Teixeira de Souza, Chief Executive Officer at Inter & Co]

As we evolve, NIIHA, we see that more and more, we're trying to bring the credit underwriting for consumer finance inside our ecosystem, getting all the data that we capture from our shop and from our peaks and bring them to our ecosystem in order to improve. So we have a positive view for this type of credit underwriting. At the end of the day, having the best risk reward equation. That's what we look at the end of the day, the best risk reward equation for our portfolio. So we were very positive on this two products and very excited with the consumer finance two point zero approach.

[João Vitor Nazareth Teixeira de Souza, Chief Executive Officer at Inter & Co]

And Sanjay, now you covered the other question. Thank you very much.

[Neha Agarwala, Analyst at HSBC]

Joao, just quickly on that. Any targets that you can share with us that you might have in mind?

[João Vitor Nazareth Teixeira de Souza, Chief Executive Officer at Inter & Co]

Yeah, Nih, actually, for Q, 7% of our GMV was purchased through our buy now, pay later. We don't know if it's going to go up to 10%, fifteen %, twenty %, twenty %, twenty %, twenty %. Actually, we have a working group at Hintych really, really focused on that to make sure that the delinquents that we see today will persist that we're not looking on a that we're not too optimistic about that. But we really think that we are cracking the code on this consumer finance. So hard to give guidance.

[João Vitor Nazareth Teixeira de Souza, Chief Executive Officer at Inter & Co]

But again, so far good delinquency and good reward, very good reward, good take rates from the industry. The industry needs to reward us, the bank, for our ability to provide credit. So this combination has been performing very well. This is a concept that we envisioned, I'd say, maybe three or four years ago. And again, inter approach is always step by step, step by step, underwriting, collecting and learning, but I'm very optimistic about this product.

[Alexandre Riccio, Senior Vice President of Retail Banking at Inter & Co]

Hi, Neha. Thank you for our question. And quickly filling in on Joao's point on the consumer finance two point zero, we're excited about what we did in 2024. And one of the things that we've been focusing both on credit cards and on the consumer finance two point zero is on driving the outcome of delinquency. If we can drive the outcome, we feel more comfortable in growing and we're seeing that.

[Alexandre Riccio, Senior Vice President of Retail Banking at Inter & Co]

So every time we see early stage delinquency, we've been able to adjust policies, adjust models and drive the outcome on the next reading and that makes us comfortable to keep with a steady growth in the portfolio. Moving to the payroll loan to the private payroll loans, we see that a super promising new addressable market. We're estimating a market between BRL 100,000,000,000 and BRL 200,000,000,000 to begin with. The precedent that we set on the FGTS loans being able to do like more than 500,000 contracts a month without a single human intervention, is strong to believe that we can be a very competitive player. We're going to be ready on day one.

[Alexandre Riccio, Senior Vice President of Retail Banking at Inter & Co]

So whenever this product is there, we're going to be there on the very first day, something that we didn't do on the FGPS, by the way. So, we're going to start on day one. And finally, there is still a lot of information missing so that we can give more color. So as time progresses and the government unveils the details, I'm sure we're going to be talking more and be able to better estimate what's the impact of that in our business. Thank you.

[Neha Agarwala, Analyst at HSBC]

Very clear. Thank you so much, Ajay Andree. Just quickly on the GMV for the marketplace, despite strong seasonality in the fourth quarter, we did not see a big pickup in the GMV. Any reason for that?

[João Vitor Nazareth Teixeira de Souza, Chief Executive Officer at Inter & Co]

So sorry, Dina. Could you repeat because you were breaking a little bit?

[Neha Agarwala, Analyst at HSBC]

So on the marketplace business, typically fourth quarter has strong seasonality. We did not see a big pickup in the GMV for the marketplace in fourth quarter sequentially. Is there any specific reason for that?

[João Vitor Nazareth Teixeira de Souza, Chief Executive Officer at Inter & Co]

We actually had a big spike on 4Q Q, which I agree is a very good seasonality for it. And when you look year over year, we grew almost 40% on the GMV for the marketplace. And also, more and more, we're starting to develop new service offerings, not only goods offerings there. So we believe that combining goods and service, we can keep growing the GMV on this 40% -ish, 50% -ish year over year. So very excited with the success of the inter shopping initiative that started five years ago, okay?

[Neha Agarwala, Analyst at HSBC]

Perfect. Thank you so much, Joao and team. Very helpful.

[João Vitor Nazareth Teixeira de Souza, Chief Executive Officer at Inter & Co]

Thank you very much,

[Operator]

This concludes our question and answer session. I would like to turn the floor back over to Mr. Joao Widder Menin for his closing remarks.

[João Vitor Nazareth Teixeira de Souza, Chief Executive Officer at Inter & Co]

Again, everyone, thanks for taking the time to listen for our earnings call. We're beginning 2025 on our end. Everyone excited, energized, focused on delivering. I would say a very strong year for Inter as we did in 2024. Thank you very much.

[João Vitor Nazareth Teixeira de Souza, Chief Executive Officer at Inter & Co]

See you soon. Bye bye.

[Operator]

This conference is now concluded.

Participants

Analysts

• João Vitor Nazareth Teixeira de Souza, Chief Executive Officer at Inter & Co
• Alexandre Riccio, Senior Vice President of Retail Banking at Inter & Co
• Santiago Stel, Senior VP of Finance and Risks & CFO at Inter & Co
• Mario Pierry, Analyst at Bank of America
• Tito Labarta, Analyst at Goldman Sachs
• Gustavo Schroden, Equity Research Director at Citi
• Yuri Fernandes, Executive Director at JP Morgan
• Francisco Navarrete, Director of Research at Bradesco BBI
• Pedro Leduc, Equity Research Analyst at Itau BBA
• Neha Agarwala, Analyst at HSBC