Inter & Co. Inc. Q2 2026 Earnings Report

Inter & Co. Inc. EPS Results

• Actual EPS: $0.19
• Consensus EPS: $0.18
• Beat/Miss: Beat by +$0.01
• One Year Ago EPS: N/A

Inter & Co. Inc. Revenue Results

• Actual Revenue: $475.45 million
• Expected Revenue: $513.31 million
• Beat/Miss: Missed by -$37.86 million
• YoY Revenue Growth: N/A

Inter & Co. Inc. Announcement Details

• Quarter: Q2 2026
• Date: 8/5/2026
• Time: After Market Closes
• Conference Call Date: Thursday, August 6, 2026
• Conference Call Time: 8:30AM 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. Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Strong growth and profitability: Second-quarter net revenue rose 32% year over year, net income reached a record BRL 421 million, and ROE increased to a record 16.3%, achieving the company’s “Rule of 50” target.
• Positive Sentiment: Improving banking economics: NIM surpassed 10% for the first time at 10.1%, while the efficiency ratio fell to a record-low 42.1% as expenses grew more slowly than revenue.
• Positive Sentiment: Scale and funding advantages expanded: Inter surpassed BRL 100 billion in assets, reached 45.3 million clients, and maintained a low, stable funding cost of 66% of CDI; the company also said it is now generating enough capital to fund its own growth.
• Neutral Sentiment: Credit and fee-income expansion remain key growth drivers: The loan portfolio grew 29% year over year, credit-card interest income rose 64%, and new initiatives such as insurance, subscriptions, investment advisory, and Inter Ads are expected to accelerate fee income.
• Negative Sentiment: Asset-quality risks remain elevated in unsecured products: Private payroll loans contributed more than half of the annual increase in NPLs, with delinquency running above expectations, while credit-card growth is also bringing higher provisions; management expects the cost of risk to remain around 6% and coverage near 130%–135% in coming quarters.

Presentation

[Rafa Vitória, Investor Relations Officer at Inter & Co]

Hi everyone. I'm Rafa Vitória, IR Officer at Inter, and I would like to welcome all to Inter & Co.'s earnings conference call. First of all, some instructions. This call is also available in Portuguese. To access it, press the globe icon on the lower right side of your Zoom screen, then select the Portuguese room. Please be advised that all participants will be in listen-only mode and that the conference is being recorded. You may submit online questions at any time today using the Q&A box on the webcast. A replay will be available at the company's IR website. With me today are João Vitor Menin, our Global CEO, Alexandre Riccio, our Brazil CEO, and Santiago Stel, our CFO. To start with the CEO overview, I would like to invite João. João, please go ahead.

[João Vitor Menin, Global CEO at Inter & Co]

Thank you, Rafa. Thank you all for joining us today to discuss our second quarter results for 2026. I want to start with something that is truly meaningful for Inter. Back in May, at our Owners' Day, we introduced the Rule of 50 as our long-term plan, proving that growth and profitability are not a trade-off, but a combination we can deliver together. Here we are, just one quarter after announcing the plan, and the Rule of 50 is already a reality. Total net revenue grew 32%. ROE reached over 16%. We are already executing the plan. The Rule of 50 does not stand alone. It is built on top of our 60-30-30 North Star. The goal of 60 million clients, 30% efficiency ratio, and 30% ROE. That compass continues to guide everything we do.

[João Vitor Menin, Global CEO at Inter & Co]

The trend on this chart reflects years of disciplined capital allocation, high growth, and consistent execution, supported by a solid balance sheet. Results like this don't happen by accident. Delivering the Rule of 50 is only possible because of our Inter by Design approach. It combines three reinforcing pillars: sustainable revenue growth, scalable distribution capabilities, and unique cost efficiencies. That compounding effect is what you see in our numbers. We tripled our revenue growth while simultaneously doubling our active client base, meaning we are getting more engaged clients. We are doing all of this while improving our efficiency ratio by 32 percentage points and expanding ROE by 18 percentage points as well. Growth and profitability moving in the same direction at the same time. That is what Inter by Design produces.

[João Vitor Menin, Global CEO at Inter & Co]

When this flywheel runs at full speed, the natural consequence is market share gains across every product and segment. That is what I want to show you next. More clients bring more transactions. More transactions bring more data. Better data drives better products and smarter credit decisions. Better products attract even more clients, the cycle keeps compounding. That is what the flywheel concept means for Inter. What makes our flywheel particularly powerful is the breadth of our ecosystem. The more products we offer across more verticals, the more entry points we create for clients and the faster the cycle spins. Whether you look at Pix, credit cards, investments, or home equity, our market share numbers are climbing across the board faster than many of the most important players in Brazil. We are not just growing.

[João Vitor Menin, Global CEO at Inter & Co]

We are growing in every segment at the same time, but with discipline. That's the strength of our ecosystem, and it's only getting stronger. This flywheel guides not just how we grow, but also where we choose to grow. The opportunity in front of us is bigger than ever because we are actively deepening and widening our addressable market. Our core is secured lending. That was a deliberate choice from the start. Mortgages, home equity, and payroll, for instance. Nearly 82% of secured personal loans in Brazil are still concentrated in the top five players. That is massive, under-penetrated market, and we have the distribution, the product experience, the data, and the cost structure to keep gaining market share. We are widening into unsecured as well, and we're doing it carefully, with discipline, and the results are already showing up.

[João Vitor Menin, Global CEO at Inter & Co]

For the first time ever, we surpassed 2% market share in credit cards TPV in Brazil. We have never been more profitable in this product than we are today. In summary, secured loans remains our foundation. Strong asset quality, stable returns, resilient through different credit cycles. On top of that, unsecured credit such as credit card Pix Credit and buy now, pay later are deepening principality and widening our addressable market further on. We are seizing the opportunity in both, that is what gives us the confidence to keep growing 30% or more for many years to come. Now to conclude, as you can see on page nine, I would like to highlight three important milestones for our company. Number one, on gaining scale. For the first time ever, we reached over BRL 100 billion in total assets. Second, on expanding margins.

[João Vitor Menin, Global CEO at Inter & Co]

For the first time, we crossed double-digit NIMs. Third, on creating value. For the first time, we surpassed capital neutrality, meaning our business now generates more capital than it consumes to grow, even in a fast pace of growth. These are not just milestones, they are proof that the model we have been building with discipline, consistency and ambition is delivering real results for our shareholders. Now Xande and Santi will bring this story to life with the full numbers behind it. Xande will walk you through the business update while Santi will take you through the financial performance in detail. Xande, please go ahead.

[Alexandre Riccio, Brazil CEO at Inter & Co]

Thank you, João, good morning everyone. Let's now dive into our second quarter operational results. We reached 45.3 million clients and over the last 12 months added 3.7 million new active clients. The size of our base is not the main story here, the quality of it is. We have been deliberate about how we grow, being more selective, prioritizing clients that engage faster. That means a sharper focus on ARPA growth, building a stronger and more profitable base. The strategy is showing up directly into our numbers. Our new cohorts are starting with an initial ARPA approximately BRL 10 higher than older cohorts. A key driver of ARPA growth is credit penetration. As clients deepen their relationship with Inter and adopt credit products, their monetization increases significantly. Private payroll is a great example of this, I'll explore this subject later.

[Alexandre Riccio, Brazil CEO at Inter & Co]

We also see evidence of engagement in the behavior of our clients overall. We averaged 22 million daily logins this quarter, up from 18 million a year ago. These clients are not only active, they're truly engaged in bringing primary relationships to Inter. That engagement is translating directly into monetization while we keep our cost to serve flat. ARPA goes up, CTS stays stable. The gap is what drives margin expansion and the results speak for themselves. Margin per active client just reached its best level ever. This is the financial outcome of everything I just described. Better clients, deeper relationships, higher credit penetration. It compounds quarter after quarter. This engagement we talked about also translates into transaction volume. Our cards and Pix TPV reached 1.8 trillion on a run rate basis. TPV is growing faster than our client base, an evidence of deeper relationships.

[Alexandre Riccio, Brazil CEO at Inter & Co]

True market share numbers tell this story best. First, we now hold approximately 9% of all Pix transactions in Brazil. We are still expanding, growing 31 basis points over the past year. Second, for the first time ever, we crossed 2% market share in credit card TPV, as João mentioned earlier. Our new cohorts are starting at an engagement level that's higher than ever before. The flywheel is not just working, it's accelerating. Now, I want to deep dive into two of our hero credit products, credit cards and private payroll loans. Santi will cover the full portfolio performance later. I want to give you the strategic view on both. Starting with credit cards and our reshaping strategy, the thesis is simple. Shift our portfolio towards more interest-earning balances, more installment usage, better monetization, bringing higher revenues.

[Alexandre Riccio, Brazil CEO at Inter & Co]

Our interest-earning portfolio keeps growing as a share of the total and now stands for 26% of the credit card book. The interest income of this product grew 64% year-over-year. Here's a key message. Interest income is growing faster than provisions. A larger interest-earning portfolio does come with more provisioning. That's expected. We're comfortable with it. The income is outpacing the costs and the margins are expanding. We'll maintain our discipline in this strategy, growing the right balances with the right clients at the right time. Now let me turn to private payroll loans. We maintain our confidence in the product and its fit to our platform. It generates strong revenue expansion. It scales through our own digital distribution. It is efficient to originate and serve. That's exactly the kind of product we want more of.

[Alexandre Riccio, Brazil CEO at Inter & Co]

In the second quarter, we surpassed 600,000 clients with private payroll loans. These clients have an ARPAC that's 3.7x that of our average, making it a true principals and monetization accelerator. There are operational improvements in progress. We're managing through them with discipline. We believe the product will only get better as Dataprev introduces new features such as automatic employee relinkage. We're growing. We believe we're doing it at the right pace, building a proprietary portfolio that will be healthy and profitable for the long term. That will strengthen principals. The next step is already coming. Insurance launches in August. We estimate that insurance adoption can reduce provisions and increase fee revenues, a meaningful improvement in the product's overall performance. I will now talk about business accounts, a significant opportunity we have in front of us.

[Alexandre Riccio, Brazil CEO at Inter & Co]

We reached 2.9 million business clients, growing 24% year-over-year. Our market penetration is already at 12% in these types of accounts. Business clients generate 2.8x the ARPAC of our average client. We have built a complete suite of products for businesses, including payments, investments, acquiring, cards, and credit. The electronic trade invoice as a collateral, or as called in Portuguese, duplicata escritural, to be launched by the Central Bank of Brazil, is currently in testing, and once live, it will deepen our product suite, drive higher ARPAC, and compound directly into NII growth. The more products a business client uses, the more they consolidate their financial transactions at Inter. This is the same flywheel we see on the retail side, now on the business account side. Let me shift to another important dimension of our business: fee income. Credit is a powerful engine of our results.

[Alexandre Riccio, Brazil CEO at Inter & Co]

What makes Inter truly unique is that we have seven verticals that reinforce each other and together generate a fee income base that is diversified and resilient. We have two engines that will drive future growth. On the commission side, we are launching subscription plans, giving clients the opportunity to upgrade to our One, Prime, and Win segments and unlock more benefits. We are also expanding our investment advisory services for higher-income clients. We just launched Inter Ads, a new ads monetization layer in our app with significant potential ahead. On the credit-related fees, interchange is accelerating as our credit card TPV crosses the 2% market share for the first time and keeps outpacing debit. Inter Pag will resume growth as we mature the company and leverage the products amongst our business clients.

[Alexandre Riccio, Brazil CEO at Inter & Co]

Private payroll loans credit insurance will add a meaningful new fee revenue stream through a product that is already profitable on the credit side. These are not just plans. They are initiatives already in motion, and together, they are what will bring fee income growth back to the pace we want to see. The reason we are confident that fee income will accelerate is not just because of the initiatives I just described. It is the distribution power behind them. As seen on this slide, multiple products across our seven verticals have already surpassed the mark of 1 million active clients. What is even more remarkable is the speed. Each new product is reaching that milestone faster than the one before it. The curves are getting steeper. Adoption is accelerating. This is what distribution at scale looks like.

[Alexandre Riccio, Brazil CEO at Inter & Co]

When you have 26 million active clients who log in 22 million times a day, launching a new product is not starting from zero. It is dropping a new solution into one of the most engaged financial ecosystems in Brazil. Clients are ready to adopt, and they are doing it faster every time. That is the compounding power of our flywheel, and that is what gives us the confidence that the fee income initiatives will gain traction quickly. With that, I will hand it over to Santi for the financial performance. Santi, please go ahead.

[Santiago Stel, CFO at Inter & Co]

Thank you, Xande. Good morning, everyone. I'll jump directly into the financial performance of the quarter. The Rule of 50 that we introduced in New York back in May is showing up directly here, with revenue growing 32% year-over-year. Draw or refresh the framework, this slide is exactly what it looks like in practice. What I find even more compelling than the level itself is the consistency behind it. For eight consecutive quarters, NII has been growing around 40% year-over-year. Eight quarters in a row. That is the result of intentional execution, a portfolio that keeps growing, a NIM that keeps expanding, private payroll gaining traction exactly as Xande described, and a credit book that his team has been deliberately reshaping towards higher-yielding balances. Fee income had a strong quarter, growing alongside our client base.

[Santiago Stel, CFO at Inter & Co]

With the initiatives Xande walked through, we have a clear and intentional path to accelerate this revenue going forward. The result is a revenue base that is diversified, resilient, and structurally built to keep compounding, with strong momentum across every driver. The consistency you just saw in NII has a direct driver, NIM. This quarter, our NIM reached 10.1%, the highest level we have ever recorded, and the first time that we have crossed the double-digit mark. This is a milestone worth pausing on. Three factors drove the expansion this quarter. The first is structural and ongoing, the continued deployment of capital into high ROE products quarter after quarter. This is the compounding effect of disciplined capital allocation. The second is strategic. Our hyper-personalization pricing approach, which we outlined on the Owners' Day, is working.

[Santiago Stel, CFO at Inter & Co]

On the asset side, we reprice buy now, pay later, Big Credit, and private payroll. On the liability side, we reduce interest rates on LCIs. This is not a one-time adjustment. It is an active, ongoing strategy that will continue to support our NIM expansion going forward. The third is one tailwind from our inflation hedge, which, as we flagged in the first quarter of 2026, we expect to flow through in this quarter. That is exactly what happened. The underlying trend supported this impact. Now, I want to zoom out because there is a point that often gets overlooked. Since the 60-30-30 announcement back in January of 2023, our NIM 2.0 has expanded 30%, from 7.8%-10.1%. Our capital structure also changed significantly over the same time period, with our leverage going from 6.7x-9.7x today.

[Santiago Stel, CFO at Inter & Co]

When you normalize for that and hold the capital structure constant through time, the true NIM expansion is closer to 50%. That is a number that reflects the real depth of the improvement in our core banking economics. Taken together, these results reflect exactly what disciplined capital allocation and consistent execution of our produto bancário or our banking business looks like in practice. That capital deployment we just described, that is showing up directly in the loan growth. Our expanded loan portfolio reached BRL 55.4 billion, up 5% quarter-over-quarter and 29% year-over-year. You will notice that we introduced a new concept this quarter, the expanded loan portfolio, which now includes our private securities book, CDBs, debentures, and similar instruments.

[Santiago Stel, CFO at Inter & Co]

We're bringing this into our core credit metrics because treasury optimization is one of the ROE drivers we committed to at the Owners' Day as part of the Rule of 50. We asked ourselves this question: Is deploying capital here a truly franchise-accretive business? We think that the answer is yes. These are client deposits being deployed into market-originated credits, generating strong returns that we then reinvest back into our business. You should expect this business to continue growing. Within the portfolio, each product line is pulling its own weight. Private payroll is gaining share and is progressively absorbing the natural runoff of the FGTS book. On credit cards, the reshaping strategy described continues to deliver strong performance, with interest income from this product growing 64% year-over-year. Real estate remains a standout.

[Santiago Stel, CFO at Inter & Co]

Mortgages and home equity have grown at an average 40% since the second quarter of last year. Not a single strong quarter, but sustained compounding growth in one of the most important and most secure products in our portfolio. One number ties all this together, loan balance per active client, which reached our highest level ever. Credit penetration, one of the key pillars of our Rule of 50 execution, is not a future ambition. It's a reality that continues to move forward. This diversification across products is what allows us to grow at pace without concentrating risk, neither credit nor regulatory, with revenue, NIM, and loan growth expansion all moving in the same direction by design. Loan growth, NIM expansion, revenue consistency. All of that has a credit strategy behind it, and this slide is where we show it.

[Santiago Stel, CFO at Inter & Co]

Before going into the numbers, let me frame how we think about asset quality strategically. Our goal is not to minimize NPL in isolation. It's to maximize risk-adjusted NIM, efficiency, and ultimately, returns. That means that we deliberately take more credit risk in certain portfolios. Those same portfolios are becoming an increasing driver of our profitability quarter after quarter. This is an intentional trade-off, and one we are making with full conviction. We'll also notice this page is busier than usual. As we introduced the expanded loan portfolio concept in the prior page, we apply the same lens here, showing NPL and Stage 3 formation under both expanded and prior methodologies side by side. This allows investors to see both views clearly during the transition. Within the portfolio, there are three distinctive stories.

[Santiago Stel, CFO at Inter & Co]

The first is our secured portfolio, excluding private payroll, which is roughly about half of our loan book. Asset quality here is stable and performing well, with strong ROE dynamics. This gives us confidence to keep deploying capital and growing this product accordingly. The second is on credit cards. NPL's performance here reflects a deliberate strategic choice: a growing interest-earning portfolio in an unsecured segment that still faces a challenging macro environment. Here, the key point is that revenues are growing significantly faster than provisions in this book. That is the metric that matters for us and is moving in the right direction. With our disciplined, niched approach and interest rates on a downward trend, we expect NPL performance to improve in the coming quarters. The third component is private payroll, but I will cover that in the next page.

[Santiago Stel, CFO at Inter & Co]

As the NPL bridge shows, this product is the largest contributor of the NPL movement, responsible for over half of the yearly increase. We're not going to look past this number. We'll address it here. Delinquency has been running higher for longer than we planned, not because the product deteriorated, but because operationally, maturity is taking more time than expected. We're actively working on it. Our own re-linkage solution is underway, ensures launches in August, and further data-driven improvements are expected this month, as Xande walked through. Here is what keeps our conviction intact. Even at current delinquency levels, the ROE on private payroll loans remains at around 30%. The economics are compelling for our clients and for us, and it fits very well in the Inter by Design approach.

[Santiago Stel, CFO at Inter & Co]

When you look at private payroll and credit cards together, these two portfolios have been delivering strong returns. ROE holding strong even before the operational maturity of private payrolls, and NIM expanding very strongly. This is intentional execution, and our confidence continues to grow stronger as the results come in. Now let me turn to funding, one of our most important competitive advantages. Our total funding reached BRL 77.2 billion this quarter, growing 24% year-on-year. This growth reflects the trust our clients place in us as our primary financial platform. The composition of that funding tells an equally important story. On the transactional side, deposits grew 17% year-on-year, and we generated nearly BRL 1 billion in nearly free funding just this quarter. This is a direct result of clients choosing us for their daily financial lives.

[Santiago Stel, CFO at Inter & Co]

On the higher-yielding deposits, time deposits grew 27%, and securities issued grew 42%, reflecting the continued diversification of our funding base in an environment of high interest rates. We are attracting funding across the full spectrum and doing it efficiently. Lastly, and most importantly, deposits per active client reached BRL 2,000.08 thousand, growing 6% year-on-year. This is where our funding franchise truly shines. Our cost of funding stood at 66% of CDI this quarter, one of the lowest and most stable in the industry. I want to emphasize the word stable here. Market rates have moved a lot over the past few years, and our cost of funding barely moved. This is by design. It comes from the depth of our transactional deposit base. It's our clients who give Inter as their primary bank, as Xande mentioned. This advantage compounds over time.

[Santiago Stel, CFO at Inter & Co]

A lower, more stable cost funding means we can price loans more competitively, protect our NIM through the cycle, and generate better risk-adjusted return than peers. It's one of the most durable competitive advantages that we have built, and honestly, one that is the hardest to replicate. Now let me talk about expenses. There are three factors playing out here. The first is personnel. Headcount is stable at around 4,000 employees, which is the same number that we had four years ago when we announced the 60-30-30 plan. Cost grew 18%, and the main driver here is the profit sharing, which we can think about it, is actually good news. It means the team is being rewarded for stronger profitability that we are delivering. Second, D&A came in 44% higher year-on-year in the amortization of prior investments in our Super App.

[Santiago Stel, CFO at Inter & Co]

This line will keep growing as we launch new projects. Importantly, the ratio of intangibles to total assets continued to decrease. Third, administrative expenses grew just 15%, broadly in line with the natural growth in clients and transactional volumes. We're handling significantly more scale without a proportional increase in costs. That is a digital model doing exactly what it's supposed to do. This is what makes all of that sustainable. Revenue growing at 32% year-on-year, expenses growing at 19%. That gap of 13 percentage points is operational leverage flowing directly to the bottom line. We look at the client chart index, both since 2023, when we launched the 60-30-30 plan, the picture is clear. Revenue has compounded, expenses have grown in a controlled manner, and the gap between the two keeps widening. That is a digital banking model at scale.

[Santiago Stel, CFO at Inter & Co]

No branches, no legacy systems, no linear cost growth as we add clients and products. The efficiency ratio reached 42.1% this quarter, a new record low. That reflects years of consistent cost discipline combined with the scaling dynamics for our model. There's more room to run on efficiency, and we're committed to continue delivering returns. Revenue, NIM, loan growth, asset quality, and now operational leverage, all moving in the same direction. That is the financial picture of Inter this quarter. Everything we walk through comes together right in this page. Net income reached BRL 421 million this quarter, a new record. ROE, also a record, reached 16.3%. Honestly, the quarterly number alone does not tell the full story. If we look at the trajectory of this chart, we have 13 consecutive quarters of net income growth.

[Santiago Stel, CFO at Inter & Co]

Quarter after quarter, year after year, net income and ROE keep moving in the same direction, up. That is not a one-quarter story. It's a compounding track record. ROA also hit a record this quarter, now in line with some of the most established traditional banks in Brazil. If you think about it, a platform that is growing at 30%+, delivering returns comparable to institutions that have been around for decades. Everything we have built, the disciplined capital allocation, the risk management, and the cost control shows up here. Growth and profitability moving together. That is the Rule of 50 in action. Finally, I'd like to close with capital. For the first time, our business is generating more capital than it consumes to fund its own loan growth. Inter is now self-sustained from a capital perspective. We grow, and we fund the growth ourselves through growing profitability.

[Santiago Stel, CFO at Inter & Co]

Additionally, at Inter & Co level, we hold BRL 2.3 billion in excess capital that sits ready to be deployed in the bank whenever we need. You factor that in, the Basel ratio at the holding level reached 19.3%, a position of real strength. With that, I'll turn it over to Rafa to open the Q&A questions. Thank you all.

[Rafa Vitória, Investor Relations Officer at Inter & Co]

We'll open the Q&A session. Our first question is from Eduardo Rosman. Rosman, please go ahead.

[Analyst]

Hi, everyone. Congrats on the numbers, thanks for the opportunity here. I would like to follow up on the NIM and asset quality. I think Santiago explained well, the three main drivers, I think we're gonna continue seeing improvements in the next couple of quarters. This quarter, specifically, NIM was a little bit too strong, right? I wanted to understand the magnitude of these three main drivers in this quarter. Trying to understand if we should assume that NIMs would still improve in the third quarter or if maybe in the third quarter, it should adjust a little bit, then continue moving up in the following quarters, right? Then, also on asset quality, right? I think early NPLs moved up again. I assume that matters more for provisions than 90 days NPLs. What are your expectations for the next couple of quarters, right?

[Analyst]

I know you are taking a little bit more risks, that's part of the plan. Just trying to understand here, probably the trends for risk-adjusted NIM, how we should think about throughout the next couple of quarters. That's it. Thanks.

[Santiago Stel, CFO at Inter & Co]

Good morning, Rosman. Starting with NIM, let me back a quarter. What we said back then when we explained the first quarter performance is that we had an inflation dynamic playing out in the first quarter of around BRL 30 million or lower inflation hitting that quarter. That would have an effect going forward into the second, which is what we're seeing now with the 10.1. The prior NIM was a bit lower than what it should have been on a normalized basis, the current one has a bit of that embedded in there as a consequence of inflation. I'll walk you through that. We have approximately BRL 11 billion of inflation-linked exposure, which we hedge around BRL 6 billion of it, that gets us a net loan exposure of around BRL 5 billion. Right.

[Santiago Stel, CFO at Inter & Co]

With that, we have the timing mismatch, where the BRL 30 million of lower revenues in the prior quarter are hitting positively in this quarter. With that factored in, you should adjust around 15 basis points in this quarter lower and 15 basis points in the prior quarter higher. That would be a more smooth performance, and that would reflect a bit more what really happened, if inflation would have been constant through time and we wouldn't have hedged. What I would like to highlight is that when you look at the overall long-term curve of our NIM and our risk-adjusted NIM, it has performed quite stable and has become quite predictable, despite inflation going from very low numbers to very high numbers throughout the year, also with the movement in CDI. We're able to manage that volatility.

[Santiago Stel, CFO at Inter & Co]

We'd like to have the NIM more predictable and stable, but we do see some dynamic throughout the year playing out, particularly in this first half. On an annual basis, we said this the last quarter, we expect a 40 basis points increase in the annual NIM from the prior year into this one. We continue to think that will be the case considering the loan mix that we're originating at. On asset quality, we are quite happy with the performance. It is in line with what we expected. Remember that we mentioned three drivers last quarter, two were internals, the additional growth that we're taking in private payroll, and the credit card mix reshaping that Xande commented. The external one, which has to do with high interest rates and seasonality.

[Santiago Stel, CFO at Inter & Co]

On those two that are internal, private payroll, we continue very excited with it. Alexander can touch upon in more detail, but this is a product that fits, as we said, perfectly well in the Inter by Design, and credit card has been our stellar P&L product internally. We are monetizing it a lot more. As you saw, 64% interest income increase in the last 12 months. That comes together with more delinquency. We're not solving for lower delinquency, we're solving, as we mentioned, for higher returns. The evolution or the shape of the delinquency curves going forward will depend a bit on the mix. The guidance that we gave last time was cost of risk at around 6%. We continue to think that's the case. This quarter we're a bit better than that.

[Santiago Stel, CFO at Inter & Co]

The outlook for the rest of the year remains unchanged, both on the NIM side, as I mentioned in the first question, as well as with the asset quality.

[Analyst]

Okay. Thanks a lot, Santiago.

[Rafa Vitória, Investor Relations Officer at Inter & Co]

Our next question is from Henrique Navarro. Navarro, please go ahead. Navarro, your mic is open. Our next question is from Mario Pierry. Mario, please go ahead.

[Analyst]

Good morning. Thanks for taking my question. Congratulations on the results. Let me ask you a more general question about asset quality trends in Brazil. If you continue to grow your loan book at a very rapid pace, close to 30%, you are seeing higher cost of risk, but you're compensating that with higher revenues. However, there's a perception that families in Brazil are highly indebted, debt service ratios are very high. We have an uncertain environment second half of the year with the elections. There's a perception that next year the fiscal spending in Brazil is going to have to decline, because the government has been very populist this year. If you can discuss how are you seeing the operating environments in Brazil, and key concerns that you have about asset quality, going forward. Thank you.

[João Vitor Menin, Global CEO at Inter & Co]

Mario, João Vitor speaking here. Thanks for the question, and I'm going to take this one. Look, we IPO-ed the company back in 2018. It's been what? Eight years or so that the analysts, the investors, they have been following Inter. We have always been very, very careful on approaching credit risk, credit underwriting, and so on. That said, we have a very, I'd say, good tailwind that help Inter, and it's pretty much a simple thing. We are still a small loan portfolio with a lot of clients, very good cost of funding and a very good distribution channel. That said, of course, that as Santi just mentioned, we will adjust according. We might expand unsecured portfolio in a good credit cycle. We might reduce it in a bad credit cycle, the opportunity ahead of us, the time ahead of us is just big.

[João Vitor Menin, Global CEO at Inter & Co]

When we see on the page that we show the growth opportunities, the BRL 2.7 trillion portfolio, the BRL 1.3 portfolio on the left side, and the BRL 2.6 trillion portfolio addressable market on the right side, we have, as I mentioned, the tools to attack all of these three addressable markets. Still with inflation pressure on the families, with elections and everything, we can still grow at a 30%-ish, I'd say maybe a few years to come.

[João Vitor Menin, Global CEO at Inter & Co]

Doing the right risk reward approach, this is very important. We are in a business of taking risks. We need to manage that. We need to use all the tools that we have, and we have been doing that carefully. Again, because we are still a small loan portfolio platform, we can keep growing on that pace ahead without putting the balance sheet at risk. That's the overall view from my side, from my end, on how Inter will perform on this current credit cycle in Brazil. When you think on the mid, long term, we have all the tools on the platform to keep gaining momentum, to produce enough. Again, the best cost of funding, the right distribution channel, a very efficient business model by being digital.

[João Vitor Menin, Global CEO at Inter & Co]

We see a very great opportunity for Inter to keep compounding our loan portfolio, both on secured and unsecured portfolios ahead. Okay? That's the view for the business in terms of risk reward and credit cycles.

[Analyst]

Very clear, João. Thank you. Let me ask a second question really quick. You guys didn't mention anything about the debt renegotiation program in Brazil, Desenrola. I just wanted to know, did that have any impact on your asset quality ratios? Were you active renegotiating loans?

[João Vitor Menin, Global CEO at Inter & Co]

Xande, I'll let you take this one, Mario.

[Analyst]

Thank you.

[Alexandre Riccio, Brazil CEO at Inter & Co]

Hi, Mario. Good morning. Mario, the Desenrola was good, much better than what we saw in the first Desenrola. What we saw was, first, renegotiations of BRL 100 million. A good volume driven by Desenrola. An overall impact in the P&L of around BRL 40 million. Although we believe that half of this, we would have realized in other ways. Using a safe or a collection company, also using our internal team, which is very strong and doing a lot of actions to control delinquency. We can say that Desenrola brought BRL 12 million of EBT impact. When we look at delinquency metrics, we had -10 basis points in NPLs, we had -15 basis points in cost of risk, and about 15 basis points increase in Stage 3 formation. Why Stage 3 formation? Given two factors.

[Alexandre Riccio, Brazil CEO at Inter & Co]

The first one is, as we renegotiate, we're also renegotiating credits that are past due beyond 360 days, or they're written off. We bring them back into the balance sheet and place them into Stage 3. Sometimes, we renegotiate in Desenrola credits that are, say, between 90 and 360. When we do that, we move them to Stage 3 and increase that proportion. The good news is that this Stage 3 is highly recoverable given that it has the FGO backing it. João will give some additional comments.

[João Vitor Menin, Global CEO at Inter & Co]

Mario, just going back to the first question about addressable market and how Inter will grow ahead. One thing that's important to mention, to give you some color on how big the opportunity is. Again, connecting to the page eight, where we have the BRL 1.3 trillion plus BRL 2.7 trillion plus BRL 2.6 trillion addressable market. We are today pretty much only on the central column, and we are widening. As I said in my first speech, we're widening to the left and to the right side of the addressable market. One thing to factor, we have the public information, the Central Bank of Brazil, on the credit exposure that our clients have on the system. It's interesting that clients that have a primary relationship with us, pays and salary and everything, and we have less than 5% of the credit exposure of those clients.

[João Vitor Menin, Global CEO at Inter & Co]

Within our own clients, the clients that are already using our platform, that are already investing with us, doing things with us, using our products, we can penetrate a lot. That's how I try to put some numbers and some color on this big opportunity, this big addressable market, and the fact that we're still, from a credit perspective, a small platform. We're a big platform from a transactional perspective, but from a credit perspective, we're still a small platform in Brazil. I see that as a very good news for us.

[Analyst]

Very clear. Thank you. Thank you, Santi and João. Thank you.

[Rafa Vitória, Investor Relations Officer at Inter & Co]

Our next question is from Tito Labarta. Tito, please go ahead.

[Analyst]

Hi. Good morning. Thanks for the call, and thank you for my question. A couple questions, actually, just a couple of follow-ups, both on NII and provisioning. On the NII, Santi, you kind of explained a little bit, the inflation impact, but just looking at the financials. The big jump came in the income from securities derivatives and FX, which is almost BRL 200 million quarter-over-quarter. If you look at just interest income, it was less than BRL 100 million increase. Just going forward, can you still do the 10-20 basis points NIM expansion per quarter? Should we consider this sort of the higher income from securities as the right level? I know there's adjustments from quarter-to-quarter, but just think about that incremental NIM expansion, given that this quarter NIM was higher, probably than expected.

[Analyst]

How do you think about that quarterly NIM expansion, just given this movement in the income from securities? Just following up also on provisions. Your coverage ratio did come down. I know part of the NPL increase was more mix. Just given the current sort of macro environment, how are you thinking about that coverage ratio? Why is it coming down? Should you be increasing it in the current environment given some of the macro concerns? Just want to think about sort of provision levels and coverage given the credit cycle that the market's somewhat concerned about. Thank you.

[Santiago Stel, CFO at Inter & Co]

Tito, I'll take that question. Thank you. Starting with the first one on NII, we do provide in the investor relations a detailed Excel where we open up the interest income. That's tab number six, called NII. There, what you can see is that the income from securities has two things inside it. One is the proper income from securities from the securities themselves, as well as the income from the derivatives. The income from the derivatives that comes from the portfolio needs to be added to the interest income from the loan portfolio. We do that in that tab, and we reconcile the implied interest rate from the interest income from each of the products with the associated loan portfolio, so that you can see the interest income of each of the portfolios after the hedge and before the hedge, both.

[Santiago Stel, CFO at Inter & Co]

From that delta of this quarter of BRL 186 million in income from securities, approximately BRL 130 million of those were from the portfolios themselves. You need to add that back to interest income. Again, that's in the Excel that we provide in the investor relations website, tab number six, called NII. Jumping to the second one, on provisions, what you do see in the coverage ratio is an increase that we had throughout the last couple of quarters in anticipation of the seasoning of the private payroll product. We had been running for a long time at around 130%. When we were growing the early quarters of the private payroll product, we took it up to 146%, but the delinquency didn't hit in as the product was very early on.

[Santiago Stel, CFO at Inter & Co]

As the product matures, then that consumption happens, and we are now around a 134% coverage ratio. That answers the past. Going to the future, it will ultimately depend on the loan mix as the growth of this product and the future reshaping takes place. There is some uncertainty there on the pace and speed at which those products will evolve, and also the pace at which real estate, which has the opposite effect, also will evolve. You saw last year, particularly in the second half, we had an amazing growth in real estate that pulls the number up because the coverage ratio of real estate, which has a high guarantee, is lower than the average of the total.

[Santiago Stel, CFO at Inter & Co]

There are a few moving pieces, to answer and give you a sense, we think that the number of around 130%-135%, at least for the coming quarters, is something safe to assume.

[Analyst]

Okay. That is very helpful. Thank you, Santiago.

[Rafa Vitória, Investor Relations Officer at Inter & Co]

Our next question is from Neha Agarwala. Neha, please go ahead.

[Analyst]

Hi. Thank you for taking my question. I have two questions. Can we first talk about the write-off policy change that you made this quarter? What drove that decision? What is the new write-off policy? I understand it's only on the credit card segment or were any other segments impacted? I believe the benefit on the 90-day NPL ratio is 30 basis points, as you called out in your earnings release. If you could just give more color on that.

[Santiago Stel, CFO at Inter & Co]

Good morning, Neha. I'll take that one as well. Yes, we did migrate our write-off for credit cards specifically from 360 days-330 days, in line with Resolution 4966's best practices and our own ongoing commitment to aligning our accounting methodology with the highest industry standards. That's exactly the kind of proactive technical rigosity that we want to have. The rationale behind it is that our data shows that beyond 330 days, the recoverability of credit cards, in fact, is very low and trends to zero. Therefore, it's more accurate to move it to 330. In terms of financial impacts, there is no effect in the cost of risk, as this was fully provisioned by the day 330, 100% provisioned by then.

[Santiago Stel, CFO at Inter & Co]

Yes, on the NPLs, as the product lives shorter now in our balance sheet, it has an impact of around 30 basis points.

[Analyst]

On the overall NPL ratio, right?

[Santiago Stel, CFO at Inter & Co]

Correct. On the overall combined.

[Analyst]

Just credit card? Okay.

[Santiago Stel, CFO at Inter & Co]

On the overall. We report overall.

[Analyst]

Okay, great. The other question is on the private payroll segment. You mentioned that you recently started doing the linkages on your own because the Dataprev linkages is taking longer than anticipated. How should we think about the delinquencies with that new connection being made? What are the early results that you're seeing? I believe it started in last one or two months. Why didn't you start a bit earlier on that, which would have made delinquencies better in this particular product? If you can shed some light on that.

[Alexandre Riccio, Brazil CEO at Inter & Co]

Good morning, Neha. This is Xande speaking. I'll take the private payroll loans one. I think it's useful to talk about three dimensions here: growth, credit quality, and profitability. As you asked about credit quality, I will start there. The first point is, we are operating on the higher band of our expectations in terms of cost of risk for the product. Despite that, the profitability is within what we expect. We're solving for a marginal ROE of around 30% in the product, and we're moving all the levers internally to converge to this number as we go. Since the beginning, maybe we were running at a marginal ROE a little bit higher than that. It came down with the delinquency, and we're moving it.

[Alexandre Riccio, Brazil CEO at Inter & Co]

It's important for everybody to understand that we manage the process to deliver this marginal ROE of 30% in the product. We have very good actions in process. You mentioned the relinkage. The relinkage is now being done with discipline and it's helping the NPLs. This is an action that's already in place, but we do have more coming up. To give you a few examples. We have the credit insurance, which is about to be launched in the next few days. We're also implementing some features to do easier renegotiations with clients and to do that in scale. This is specifically good for clients that have a new job, but this job is with a lower salary, so you need to do renegotiations in this case. We're also doing credit policy tune-ups that help this cost of risk.

[Alexandre Riccio, Brazil CEO at Inter & Co]

The idea is to keep bringing and pushing this credit risk down to levels that are closer to low teens. That's kind of the view we have and what we're working towards in terms of credit quality. Coming back now to growth. We're very confident in the market size. We've been vocal about believing in between two and 300 in the relatively short term. We believe it will convert to that. We're confident to keep on growing as the market grows. Today, our market share, in terms of portfolio, is at about 2.5%. There are external factors that make the underwriting volumes adjust. For example, the interest rate caps. Although we do see some positiveness in the interest rate caps. We have super high interest rates coming from some players, and we don't believe that's good for the long-term health of the product in Brazil.

[Alexandre Riccio, Brazil CEO at Inter & Co]

I think this is a good summary on the product. We're positive. We're moving the underwriting levers to keep growing the portfolio, and we believe it's very well connected with what Inter needs in the future.

[Analyst]

Just to clarify, any impact on the rate caps in your origination? I believe you're originating with the higher rate cap and without the FGTS guarantee. Right?

[Alexandre Riccio, Brazil CEO at Inter & Co]

Neha, there were two movements. In the first movement, we had a very small change because it moved from being free to having 4.99, if I'm not wrong, or 4.9 capital. We had a reduction of less than 5%, given that a very small percentage of our loans went beyond the 5%. In the second cap, we had a little bit stronger movement in the volume, but now it's under adjustment. As I mentioned, we're going to keep on adjusting the process to underwrite more. As we put the credit insurance in these next few days, it's going to help on profitability and could allow us to increase underwriting again.

[Analyst]

Okay, thank you so much for the comprehensive answers.

[Rafa Vitória, Investor Relations Officer at Inter & Co]

Thank you all for the questions. In order to be conscious of the time, we're going to move to João's closing remarks. João, please go ahead.

[João Vitor Menin, Global CEO at Inter & Co]

Thank you very much, Rafa. Thanks for the audience. Thanks for everyone that just joined us. I'd like to share with you how happy and confident I am with Inter. Happy because, as you can see, we delivered our best earnings ever. As we can see, 13 consecutive quarters growing our net income. Also confident that we still have a big addressable market to go on, both on secured, unsecured, on fee income across the board. We still can bring a lot of clients to build our relations with them. This is very important. Second, I would like to highlight that you all know that Inter has been mastering the UX, the UI, the technology, the platform since we launched the first-ever digital bank in Brazil back in 2016. Back then, we were still consuming capital.

[João Vitor Menin, Global CEO at Inter & Co]

We were not deepening our credit underwrite portfolio with the clients. Fast-forward 2026, we're able to manage that to improve the credit underwrite, to grow our loan portfolio, to turn from capital consumption to capital origination creation at our balance sheet. This is very important. We have been doing the brilliant basics of a good banking operation. When you combine the good banking operation with the best-in-class UX, UI, and digital platform, it does take us to a very, I'd say, a very good future ahead of us. Thank you all. Also, I'd like to thank our employees for helping us on this journey, and I'm sure that the best is still yet to come. Thank you very much and have all a great day.

Participants

Analysts

• Rafa Vitória, Investor Relations Officer at Inter & Co
• João Vitor Menin, Global CEO at Inter & Co
• Alexandre Riccio, Brazil CEO at Inter & Co
• Santiago Stel, CFO at Inter & Co
• Analyst
• Analyst
• Analyst
• Analyst