Inter & Co, Inc. Q1 FY2026 earnings call

• Client Growth and Engagement

  • Total client base reached 44 million, with the highest quarterly activation rate (nearly 60%) since 2024, while maintaining disciplined low customer acquisition costs
  • 8.5% of all PIX transactions in Brazil now flow through Inter, with combined card and PIX total payment volume reaching a BRL 1.7 trillion annual run rate, growing 25% year-over-year
  • SME segment achieved record monthly client acquisition of ~100,000 accounts, with an 80% activation rate (higher than retail clients)

• New Product and Technology Innovation

  • Launched Seven, a new fully transactional multi-agent AI platform built in-house that connects to Inter's full data infrastructure. The tool enables clients to access investment advice, complete PIX transfers, purchase gift cards, manage credit installments and more, simplifying complex products for end users
  • AI has scaled across all internal divisions, beyond traditional use cases like fraud, customer service, and credit underwriting, with deeper details to be shared at the upcoming Owners Day
  • Private payroll loan origination expanded to WhatsApp, which already contributes 30% of total originations in early results, driving higher client conversion

• Profitability and Operational Efficiency

  • Net ARPAC reached BRL 34, growing 9% year-over-year despite strong active client growth; margin per active client hit BRL 21, growing 15% year-over-year as the second best quarter on record
  • Total headcount has remained stable at ~4,000 employees for 2.5 years while revenue has doubled, with expense growth (20% year-over-year) significantly outpaced by revenue growth (33% year-over-year), delivering strong operating leverage
  • The efficiency ratio reached a record low 43.8% in Q1 2026, a 170 basis point improvement from the prior quarter
  • Record profitability metrics: 15.5% ROE, 1.59% ROA, and 19.5% return on tangible equity

Inter & Co's total gross loan portfolio reached nearly BRL 50 billion, representing 33% year-over-year growth, or 37% year-over-year when excluding the short-duration SME portfolio that typically declines in Q1. Broken down by product segment:

• Mortgages: 42% year-over-year growth, part of the secured credit portfolio that makes up 70% of total gross loans
• Home equity: 43% year-over-year growth, also secured
• Payroll and personal loans: 38% year-over-year growth, led by private payroll loans which reached a BRL 2.5 billion portfolio with 600,000 active clients, contributing ~5% to total loan portfolio
• Credit cards: 27% year-over-year growth, with interest-earning portfolios now representing over 25% of the total credit card portfolio (up from 21% year-over-year)

Total funding reached BRL 74 billion, growing 25% year-over-year, with 40% of total deposits coming from the SME segment. Total gross revenue surpassed BRL 4.3 billion, growing 37% year-over-year, while total net revenue grew 33% year-over-year to BRL 2.4 billion. Net interest income (NIM) drove most growth at 38% year-over-year, while net fee revenue grew 18% year-over-year. Net income for Q1 2026 was BRL 395 million, for an annualized run rate of ~BRL 1.6 billion.

• NIM expansion is expected to continue at an average of ~10 basis points per quarter in 2026, consistent with the 10 to 20 basis points per quarterly growth range previously guided
• Full year 2026 cost of risk is now expected to be closer to 6%, up from the prior guidance range of 5% to 5.5%, due to higher marginal exposure to growing private payroll loans and credit card reshaping
• Risk-adjusted NIM is expected to be relatively stable throughout 2026, with NIM expansion and higher cost of risk growing marginally, leaving full year 2026 levels similar to 2025 before resuming an upward trend in future years
• Inter expects to maintain total loan portfolio growth of ~30% year-over-year, supported by its low-cost funding advantage and strong digital distribution
• Long-term, private payroll loan delinquency is expected to converge to high single digits (potentially mid-single digits depending on operational improvements), with the product maintaining 30% ROE at current pricing and delinquency levels
• A typical private payroll loan cohort reaches breakeven in approximately 6 months

• System-wide delinquency in Brazil is increasing, and Q1 seasonality typically puts additional pressure on asset quality metrics, leading to a 40 basis point increase in NPL from 4.7% to 5.1% in Q1 2026
• Growing the private payroll loan portfolio, which requires upfront credit provisioning following a J-Curve profitability dynamic, has put near-term pressure on NPL and cost of risk metrics, even though the product is expected to become more profitable over time
• Private payroll delinquency is still above 10% in the current early growth stage, with full convergence to target levels dependent on future operational improvements (including integration of FGTS/severance as collateral and system improvements from Dataprev)
• Revenue growth from fees has lagged net interest income growth recently, with interchange growing just 11% year-over-year on a normalized basis, requiring new product launches (such as new insurance offerings) and AI-driven conversational sales to reaccelerate growth
• The Granito (Inter Pag) acquisition is still undergoing platform modernization, with growth expected to remain muted for several more quarters before resuming

Q: Investors have noted rising NPL and cost of risk, driven largely by growing private payroll loans. What is the expected full year cost of risk, and how does the product's J-Curve breakeven dynamic work? / A: Private payroll performance is in line with management's initial assumptions, with record originations following the launch of the WhatsApp origination channel. The product requires upfront provisions, with current pricing already accounting for double-digit expected delinquency, and it currently delivers ~30% ROE. The portfolio passed the overall breakeven point last quarter, with a typical cohort hitting breakeven in 6 months. Full year 2026 cost of risk is now expected to be near 6%, up from the prior 5-5.5% guidance, driven by the growing private payroll exposure and credit card reshaping. (378 characters)

Q: What impact do the recent changes to Brazilian payroll loan interest caps have on Inter's business? / A: Changes to the interest caps will not materially impact Inter's underwriting, as less than 5% of total private payroll originations would have been affected by the new caps. Inter's average private payroll rate is already significantly below the cap, and the growth of the new WhatsApp origination channel (which already contributes 30% of originations) will offset any minor impact. Changes to public payroll lending rules do not affect Inter, as Inter does not operate the public benefit or payroll card products impacted. (339 characters)

Q: Why are personnel expenses growing 20% year-over-year with a stable headcount of 4,000 employees, and when will expense growth normalize to hit Inter's 30% efficiency ratio target? / A: Inter has maintained the same 4,000 employee headcount for 2.5 years while doubling total revenue, already delivering significant efficiency gains. The 20% expense growth is driven by hiring more senior experienced managers to improve credit underwriting, collections, risk management, and innovation, which supports sustainable long-term growth. Inter is prioritizing revenue growth, innovation, and market share gains over hitting the 30% efficiency target earlier, and will continue to grow expenses slower than revenue. (356 characters)

Q: Why have fee revenues grown slower than expected, even with strong client and loan growth? / A: Net fee revenue still grew 18% year-over-year, with some verticals like Inter Shop growing 30% despite industry headwinds. Management has launched new product initiatives (including new insurance offerings) and expects interchange revenue growth to reaccelerate from 11% to over 20% as credit card growth continues. The new Seven AI platform is also expected to drive higher conversational cross-sales of fee-generating products, boosting future fee growth. (296 characters)