Q4 2023 Inter & Co Inc Earnings Call
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Speaker Change: Throughout this conference call, we will be presenting non <unk> financial information. These are important financial measures for the company, but are not financial measures as defined by FRS reconciliations of the company's non <unk> financial information to the <unk> financial information are available in interim co earnings release.
Speaker Change: Earnings presentation appendix.
Speaker Change: 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. Zhu our Victor minute, Sir the floor is yours.
Speaker Change: Thank you operator, good morning, everyone.
Mr. Zhu: I will start with a quick overview of our strategy to be honest there is good synergy.
Speaker Change: Two cohort of operating and financial performance of Pizza.
Speaker Change: Anthony protocols.
Speaker Change: Some final remarks, and then there will be it's part of the Q&A session.
Speaker Change: Yes, Oh Investor day held in Belo.
Speaker Change: A year ago, we introduced our five year business plan.
Speaker Change: 32.
Speaker Change: These northstar <unk> goal for 2020 is to achieve 60 million clients.
Speaker Change: 30% efficiency ratio.
Speaker Change: 30% Roe.
Speaker Change: When we announced that <unk> received is a heightened ambitious plan.
Speaker Change: And you're going to see that the first year for RPM was a resounding success much better had been made yet.
Speaker Change: Aside from new important directions to markets.
Speaker Change: The point of the plan was to engage and drive our organization toward that goal.
Speaker Change: And some have Armstrong bandwidth.
Speaker Change: Most that Permian one for many times.
Speaker Change: We are both humbled and proud of our progress.
Speaker Change: As a first step toward broke Dubuque.
Speaker Change: But more importantly, it's validates how sustainable our business model.
Speaker Change: To illustrate there the progress in year one.
Speaker Change: As you can see.
Speaker Change: We achieved 30, new clients writing threat.
Speaker Change: Efficiency ratio of 51%.
Speaker Change: You need to complete ahead of schedule.
Speaker Change: And the ROE of 9%.
Speaker Change: So.
Speaker Change: Okay.
Speaker Change: As you can see our methods are stronger than expected.
Speaker Change: Demonstrating our strong execution blocks the brand.
We have been able to find growth.
Speaker Change: The operational leverage and profitability.
Speaker Change: While staying true to our core Facebook.
Speaker Change: Putting the clients first.
Speaker Change: By innovating and bringing new solutions in our financials.
Speaker Change: It is only possible thanks to Ara metric set of products.
Speaker Change: Desktop urbanized across seven verticals.
Speaker Change: These are banks.
Speaker Change: Thank you.
Speaker Change: Grabbing <unk>.
Speaker Change: Insurance investments <unk> Global Inc.
Speaker Change: Right.
Speaker Change: It's powerful engine that is powered by matrix with Brown is continuously evolving and improving day by day.
Speaker Change: Our wide set of products and services complement each other creating a flywheel that brings together a complete ecosystem of financial solution.
Speaker Change: When I say clients connect to our solutions I really mean.
Speaker Change: For instance.
Speaker Change: We see strong acceleration in the adoption of new products.
Speaker Change: Today, we have more than 12 products with more than 1 million active clients.
Speaker Change: Aetna space, which is highly likely that by the end of this year, we will have a new product.
Speaker Change: Yes, we've given.
Speaker Change: Even with the launch yet.
Speaker Change: And with more than 1 million active clients by year end.
This is what's happened this year for example, with <unk> and <unk>.
Speaker Change: This is the consequence of having what we believe is the best Super App and they are met.
Speaker Change: With over 30, new clients.
Speaker Change: More than 4 million individuals below teens per day.
Speaker Change: And our run rate PPV of over one 3 million patents.
Speaker Change: With that said I have no reason to adults, that's the only possible direct sweeping our profitability and growth trends.
Speaker Change: Yes.
Speaker Change: We have Richard and surpass it many inflection points.
Speaker Change: And in 2023, we presented four consecutive quarters of consistent growth in net income.
Speaker Change: <unk>.
Speaker Change: Roy.
Speaker Change: And many other mint.
Speaker Change: We are on the right track towards our long term plans and are thrilled to announce that we are on track to deliver even better year two of our 630 30 plan.
Speaker Change: Now surely will walk you through our business update thank you very much <unk> and explore.
Speaker Change: Thank you Nicole good afternoon, everyone and thank you for joining us today.
Nicole: I would like to discuss four topics as we go along the presentation first flights and engagement segments. The performance of the different business verticals third our utilization capabilities and fourth quarter.
Nicole: Potential for further growth.
Speaker Change: Before going through the numbers I'd like to briefly.
Speaker Change: Reflect most of what we said a little over a year ago in our $6 billion of Investor day.
Speaker Change: At the event, we said our mission to de lever is <unk> 33 was relatively simple, but not easy.
Speaker Change: The most grew 16 barcode building aether was already of users from <unk> through 2022.
Speaker Change: While we have a lot of focus and discipline is the team and the results were also shared demonstrates our team's commitment to getting there.
Speaker Change: Moving to the results when we look at clients besides surpassing the breath of Mark of 30 million.
Speaker Change: I'm happy to announce a 135 bps improvement in our activation rates, which now stands at 54% the highest level in eight quarters.
Speaker Change: Efforts to boost observation.
Speaker Change: Includes both of them are not limited to improving onboarding.
Speaker Change: On lightning, the Subaru streamlining customer lifecycle strategy and offering.
Speaker Change: Engaging new products such as loop.
<unk> overall UX fine tuned.
Speaker Change: This combined with the lowest cap seeds.
Speaker Change: <unk> 2023 gives us confidence in the future and in our ability to keep the flywheel moving with low CAC and by engagement building stronger and stronger relationships for a seamless and complete experience.
Speaker Change: To page 13, we start talking about business looking at the data they base. It makes us proud to see the robustness of our transactional business and that despite the materiality achieved.
Speaker Change: We see accelerated growth.
Speaker Change: The fourth quarter, while the strong acceleration in our CBD, surpassing 200 <unk>.
Speaker Change: We see a consistent growth in <unk>, which grew 45% in 2023.
It is important to a 6% growth in the credit card volume.
Speaker Change: <unk>, our focus on gaining credit sure atheist debits in cars.
Speaker Change: When we look at the full year, we achieved a making 851 billion <unk> BV.
With over one treatment PPD at the fourth quarter run rate.
Speaker Change: On a cohort basis as it related to be the right chart, we see a lot of their quarter of improvements on both new and old cohorts, New cohorts performance shows that most <unk> of our client growth strategy that starts with higher levels of engagement and broadcasters.
Speaker Change: I'd like to finish saying that the new cohort performance on top of the overburden cohorts that keep accelerating engagement wholesales and that both of them positioned for future revenue growth and margin expansion.
Speaker Change: The current clients alone and keep us growing for many years to come.
Speaker Change: Moving to page 14.
Speaker Change: Three verticals that are a great representation of the powerful numbers the financial suite brand <unk> stake will see something generates.
Speaker Change: On E Commerce.
Speaker Change: We reached 3% EBIT glides and surpassed 10 million transactions in the quarter Another records.
Speaker Change: We also surpassed 1 billion reais of GNP.
Speaker Change: <unk> by our Orange Friday and deposit base.
Speaker Change: Launched recently.
Speaker Change: Scaling our buying albeit later partnerships with all of that.
Speaker Change: Now we have nearly completed.
Speaker Change: Repeat emergence.
Speaker Change: Which we offer these new payment methods.
Speaker Change: This is likely the agents that flew Philo <unk> personal loans in there.
Speaker Change: On insurance, we also had another great quarter, reaching more than 388000 sales and $1 7 million active products.
Speaker Change: Combining this we reached a record breaking net revenue use vertical of 47 million reais.
Speaker Change: A successful product to highlight each consortium, which grew 21% on a year to date, surpassing 38 out of service.
Speaker Change: Finally on investments.
Speaker Change: <unk> product offering resulted in an impressive 66% year over year client growth.
Speaker Change: The highest adoption amongst all of our verticals beyond HSA bank.
Speaker Change: With increasing price or AUC reached 92 billion reais.
Speaker Change: $5 billion being third by fixed income products, which seem to be within our Super App.
We also innovated by launching mobile or EU or piggyback on incredible products that surpassed 1 billion re IV latency and one of the leading clients in just one quarter.
Speaker Change: All global.
As we move to page 15, we see another quarter of strong success.
Speaker Change: And some early signals that our global vertical is the big driver of value creation.
Speaker Change: We achieved more than 2 million alliance and more than $360 million in AUC and deposits.
Speaker Change: Forex growth compared to 2022.
Speaker Change: The clients.
Speaker Change: Yes.
Speaker Change #100: In our global products have better profiles.
Speaker Change #101: And we're engaged and adopt three times more products than the average button.
Speaker Change #102: To continue having these great success. Our branding strategy included included some investments in the U S. We became in 2023, the official financial institution of Orlando CBD and Orlando.
Speaker Change #103: Soccer teams and now have the naming rights of their stadium.
Speaker Change #104: We believe meaningful Orlando and connecting through soccer will not only bring awareness, but also creating an emotional connection between Easter and the Brazilian and lapping mobility, leaving and traveling to Orlando.
Speaker Change #105: It is worth natrium deaths per year more than 900000 Brazilian visit Florida.
Speaker Change #106: And that more than 400000 Brazilians are in U S residents in the state.
Speaker Change #107: Jeremy to SaaS vertical loyalty, we achieved $5 4 million active clients in the fourth quarter and $1 5 million.
Speaker Change #108: In this last three months.
Speaker Change #109: And as we observe.
Jeremy: With our global clients look likes also big better profiles spending on average 60% more.
Based on the average on cards.
Speaker Change #111: Positive engagement trends and BMO observed and gamification initiatives as well.
Speaker Change #112: As we move along we're adding on their lease tour and bird points with one of the lesser lesions.
Speaker Change #113: Allowing our clients to convert their points into U S dollars.
Speaker Change #114: In their global accounts this.
Speaker Change #115: This week, we made available on March into pay with points for promising in our marketplace.
Speaker Change #116: As you can see our <unk> allows us to unlock the value from all the other verticals in our financial silver and are very excited to see the results of it.
Speaker Change #117: Moving to page 17, we see that 2023 demonstrated our unique capability to combine innovation in a year focused on efficiency, we launched many products such as <unk> credits.
Speaker Change #118: The final day later Overdrafts and loop, we also created a brand new version of our financial sobriety.
Speaker Change #119: To deliver an even better UX with personalized home screens to optimize our clients' lights.
Speaker Change #120: Firstly, we are showing the financial performance section, we didn't stop innovating, while continuing on the path to deliver operational leverage for <unk>.
Confidence that our value proposition is best in class.
Speaker Change #121: And our next moves will keep us in the frontier.
Speaker Change #121: We need to keep delivering.
Speaker Change #121: Finally, and before I pass the word to Sunday I'd like to say that the best of all we are still in the early stages.
Speaker Change #122: In every market we operate.
Speaker Change #122: On one hand.
Sunday: We were able to achieve material market share in multiple segments in the other there is a lot of room to grow in that we one of these markets.
Speaker Change #124: We remain confident that we're well positioned to reach our long term notes and.
Speaker Change #125: <unk> continued to drive growth and profitability in the years to come.
Speaker Change #127: As we increasingly deepen our relationships with our brands.
Speaker Change #126: He is ready and our financial Super App is adaptable and scalable to navigate into those challenges now our benefit were to set a date to present our financial performance.
Speaker Change #126: Thank you Shannon that Hello, everyone.
Speaker Change #128: Through our prediction performance section.
Speaker Change #129: Jumping into page 22, we can see strong acceleration from the credit side.
Speaker Change #130: We're growing our portfolio in two consecutive quarters at 5% with.
Shannon: Seven and 10% in the third and fourth quarter, respectively. Therefore, entering jointly four with strong momentum.
Speaker Change #132: Gross loan portfolio reached an impressive 31 billion at Geismar, which is a result of growing four times more than the resilient market average therefore, gaining significant market share historically assumed the mentioned before.
Speaker Change #133: Moving to interest rates from the double of the page you can see president <unk> and real estate rates growing sequentially, while SME. The ODT regularly portfolio remains stable.
We go deeper into their fleet, but the rates on the new basis.
Speaker Change #134: Going to page 21 cumulative deeper on growth by loan front as.
Speaker Change #135: You can see in the chart, we remained disciplined on growing the most profitable lines.
HTS Cooper: Best liquidity products HTS Cooper linked with the extended the highest growth rate in significant scale within our loan portfolio.
Speaker Change #137: Great guys.
Speaker Change #138: Central approach.
Speaker Change #139: Vaccine grade leading to existing <unk> plants.
Speaker Change #140: As to increase by nearly 40% of the portfolio, while improving asset quality trends.
Speaker Change #141: Finally in real estate and payroll with balanced growth, we were pricing to ensure that profitability continues to improve.
Speaker Change #142: Basically do you have a great quarter for asset quality with both dimensions and growing this quarter.
Speaker Change #143: And if you've been to 90 day NPL ratio.
Speaker Change #143: So an improvement of 30 basis points quarter over quarter.
Speaker Change #143: We also improved the 90 day NPL metric.
Speaker Change #144: The Mpls phase III formation metrics each event by 10 basis points.
Speaker Change #144: Finally.
Speaker Change #145: Delinquency of <unk> currently.
Speaker Change #146: <unk> continues its strong performance created by the recent quarter cohorts.
Speaker Change #147: Now moving on to page jointly with EMC significant decrease of cost of risk.
Speaker Change #147: About 70 basis points. This dynamic was driven by underwriting and collection processes.
Speaker Change #147: In cohorts with stronger performance.
Speaker Change #147: Coverage ratio remained stable at 132%.
Speaker Change #148: It's always one of them.
Speaker Change #148: <unk>.
Speaker Change #149: 70% of our portfolio is without them.
Speaker Change #150: The lower average score.
Speaker Change #150: Overall asset quality.
Speaker Change #151: In France, we see as a strong one bedroom vaden declining.
Speaker Change #152: <unk> got the name of the nasty standpoints before positive trends.
Speaker Change #153: On page four we can see one thing is our elite franchise, which has almost $15 million guidance trusting us with added losses.
Speaker Change #154: Moreover, <unk> second on deposits whenever that 33% of our total funding, which is one of the best Demetrius on funding.
Speaker Change #154: Got it.
Speaker Change #155: Funding after nearly 10% this quarter, reaching almost 44 million of cash.
Speaker Change #156: The product 11 is what the dynamic is 15% growth in successful new buses, which reached $14 40 defects.
But the expense growth in the average deposit balance per active guidance, reaching 2000 <unk>.
Speaker Change #157: 6% growth versus the volume of water.
Speaker Change #158: Basically by we've been seeing on our cost of funding continues to each one of our.
Speaker Change #159: Key competitive advantages.
Speaker Change #159: This quarter.
Speaker Change #160: 69, 2% of CDN costs, once again with over 60% and we aspire to have.
Speaker Change #161: Congrats on the all in cost improvements of 100 bps going down from eight 2% to seven 2%.
Speaker Change #162: Felipe further decreases.
Speaker Change #163: Should continue to benefit from new dynamic.
Speaker Change #164: The structure of our balance sheet that makes in the least sensitive.
Speaker Change #165: In terms of revenue, we had a great year, reaching a record breaking numbers in all of the projects.
Speaker Change #165: We achieved $2 2 billion.
Speaker Change #166: In the fourth quarter and $8 1 billion.
Speaker Change #166: Our net revenues.
Speaker Change #166: NII.
Speaker Change #167: <unk> growth of 31% in the year.
Speaker Change #168: In terms of being done we're able to keep roughly the same level as the prior book.
The healthy growth lending fees interchange.
Speaker Change #169: Interchange banking for investors.
Speaker Change #170: Moving to a unit economic space on page 27.
Speaker Change #171: Gross monthly <unk> reached for CCI Greenbrier as we can.
Speaker Change #172: Good afternoon.
Speaker Change #172: Every quarter.
Speaker Change #173: This isn't a.
Speaker Change #174: Our stable cost et cetera.
Speaker Change #175: <unk> deep enhancing our gross margin decline with rich and deep selling ice cream at Macy's, which is our second best quarter ever.
Speaker Change #176: We have some active tenant per employee.
Speaker Change #177: Good management worth of activity, where a POC.
Speaker Change #178: <unk> 9000 branded boutique.
Speaker Change #179: It doesn't have the clients that are $1 billion.
Speaker Change #180: On page 28, we present, our NIM evolution net of cost of risk.
Speaker Change #181: With this because patients downstream.
Speaker Change #182: From a repricing in our risk management practices.
Speaker Change #183: In the fourth quarter risk adjusted NIM, which may higher than the same.
Speaker Change #183: Second assignment since 2020.
Speaker Change #184: Mr. <unk> function is a consequence of one improvement on repricing of legacy real estate in payroll loans.
Speaker Change #185: Two changing the loan mix towards the most profitable.
Speaker Change #186: The lower cost of funding.
Speaker Change #187: Toward efficiencies in the reserve requirements without.
Speaker Change #188: That could grow.
Speaker Change #189: For 2024 Bcf of duration of these data.
Speaker Change #190: And then the scaling of new balance sheet, such as fixed graded on buy now pay later.
Speaker Change #191: Go ahead owned based on everything we see.
Speaker Change #192: <unk> expenses that have a Brexit here.
Speaker Change #193: With most of the rate of items remaining in language peers can achieve a 1% reduction in Europe.
Speaker Change #193: Yes.
Speaker Change #194: This is a consequence of disciplined focus on expense management.
Speaker Change #195: P&C is tomo Denton senior.
Speaker Change #195: Senior.
Speaker Change #195: Excellent.
Speaker Change #195: Going on to page 30.
Speaker Change #196: Are we going to see our efforts on the operational areas in more detail.
And the Nextgen each gear in the fourth quarter.
Speaker Change #197: We were able to further increase the gap between the growth net revenues growth of expenses.
On the center, we had another impressive quarter of improvement in our efficiency ratio to.
Speaker Change #198: To Enphase remains near record lows at 61%.
Speaker Change #198: <unk> also seen an efficiency ratio of net outflows in place with similar as in the risk adjusted NIM also placebo because the risk element with as mentioned we.
Speaker Change #198: On a percentage point in both of.
Speaker Change #198: This quarter.
Speaker Change #199: On page 31, and we have seen in Chad our niche piece continues to grow.
Speaker Change #200: Percentage of our Nvme based currently at 70%.
Speaker Change #201: What do we like being in the mid season in EMEA.
Yes.
Speaker Change #202: Fortunately this year.
Speaker Change #203: The Saint Mary.
Speaker Change #204: Turning to banking, especially at night.
We track this metric closely as a key component of <unk>.
Speaker Change #205: You are currently.
Speaker Change #205: Yeah.
Speaker Change #206: The nest when setting and not least we couldnt be prouder of achieved in terms of profitability.
Speaker Change #207: We delivered a record.
Speaker Change #208: In the 5%, bringing our best and we're getting 100 CPU has.
Speaker Change #209: From an annual basis translates to a $640 million.
Speaker Change #210: Any color there.
Speaker Change #211: I think that Macy's will reach 208, new house, reflecting over 50% increase over the third quarter.
Speaker Change #212: These results and we are working full steam.
Speaker Change #212: Okay.
Speaker Change #213: This momentum going forward.
Speaker Change #214: Now I'll pass it back to you all for his closing remarks. Thank you.
Speaker Change #214: Thank you Sachin Thank you Sharon.
Speaker Change #214: So.
Speaker Change #215: Since the allowance or additional bank back in 2016, who have been focused on creating unique platform that attracted tens of millions of clients.
Speaker Change #216: Who engages with everyday and transact over one trillion guidance last EBIT.
For the past two years will be answered what we call the compounding Stakes.
This is mark Nelson and pumped June continuing to innovate and deliver the best to our clients.
Mark Nelson: Why youre starting to see the benefits of our digital banking model is.
Speaker Change #218: These benefits far.
Speaker Change #218: Scalability.
Speaker Change #219: Strong weight on fee income.
Speaker Change #219: The strong NIM risk adjusted margins.
Speaker Change #220: Best in class funding mix.
Speaker Change #220: And also highly diversified revenue base.
Speaker Change #221: We think that this year this competitive advantage because of the data.
Speaker Change #221: Pedro visible and allows us to deliver even more than what we expected for our.
Year, one 630 <unk>.
Speaker Change #221: We had a pilot of what we achieved this year.
Pedro: Both from a business and financial performance and could not be more excited for what's coming in 2024 and beyond.
Speaker Change #223: Thank you for joining our call today now we will start the Q&A session.
Speaker Change #224: We will now begin the question and answer session.
Speaker Change #225: Please note that in the interest of time, we will allow each participant to ask one question with one follow up each.
Speaker Change #226: Again for this Q&A session. We ask you to write down your questions via the Q&A icon at the bottom of your screen. Your name will then be announced and you will be able to ask your question live.
Speaker Change #227: At this point a request to activate your microphone will appear on your screen.
Speaker Change #227: Yeah.
Speaker Change #228: If you prefer not to open your microphone live please write down no microphone at the end of your question and our operator will read your question out loud.
Speaker Change #228: Our first question comes from Mr. Thiago Batista from UBS.
Speaker Change #229: Sir we are now opening the audio so you can ask your question live please.
Operator: Please go ahead Sir.
Operator: Okay.
Speaker Change #231: Hello, a hammer.
Loud and clear Sir Okay.
Speaker Change #232: Okay. Okay. Thank.
Speaker Change #233: Thank you guys. Thanks for the opportunity.
Speaker Change #234: I have one question about the picks finance.
Know that this is a this product is instituting a kind of early stage on inter but can you comment on your initial impression and how relevant are these product can can can achieve.
Scavo Aggregators speaking thank you for the question.
Speaker Change #235: Actually we are very excited with described.
Speaker Change #236: Just to put things on a complex, we have 8% of the market sharing picks in Brazil, everyone knows about but most importantly.
Speaker Change #237: <unk> credit is amazing so most likely we believe that we can outpace these market share our partners product in Brazil going forward, 100% of our credit of our clients.
Speaker Change #238: Use our app to transact is a good advantage for us.
Speaker Change #239: And last but not least the economics for fixed credits are amazing.
Speaker Change #239: Better than the current credit cards team in Brazil. So.
Speaker Change #239: So we don't have the interchange we don't have the MBR for the merchants. So it's a win win situation.
Speaker Change #240: We believe <unk> is going to be a very profitable product for us going forward, we're very excited.
Speaker Change #240: First reasons on delinquency are good similar to the credit card bill rates are better.
Speaker Change #241: Way more efficient product.
Speaker Change #242: So I really think it's going to be a game changer arm.
Speaker Change #243: Payment industry in Brazil, mostly part of regional mix.
Speaker Change #243: Very clear Joel Thanks, and congrats for the results.
Chuck: Thank you Chuck.
Speaker Change #245: Our next question comes from Mr. Tito Labar task from Goldman Sachs.
Mr. Roberto we are now opening the audio so you can ask your questions live.
Speaker Change #246: Please go ahead Sir.
Speaker Change #247: Hi, Good morning, Thank you for the call and taking my question.
Speaker Change #248: My question is that there was some margin pressure in the quarter or anything related to renegotiations and discounts that you did that it also help the cost of risk should we expect more of this going forward. How should we think about both I guess, both the margin and the cost of risk going forward from here. Thank you.
Speaker Change #249: Thank you deeply sendero digging their question and so what we continue doing this fourth quarter was.
Speaker Change #250: Where are we in the third quarter, which was to be a bit more proactive towards a renegotiating them non delinquent delinquent loans.
Speaker Change #251: Did that additional $30 million or we have an impact on Monday showed a $30 million.
Speaker Change #252: From the NII in the cost of risk and remember that we had a similar impact in the third quarter not related to our second quarter. So it was 30 million in the third quarter and now <unk> 60 versus the second quarter now in the fourth quarter that impact.
Speaker Change #253: Drove cost of risk is lower and you also impacted NIM, which is the reason why we incorporated these new metro would we or the risk adjusted NIM that captures both variables together and we think is the appropriate way to seed that we recorded a 510% risks.
Speaker Change #254: Risk adjusted NIM, the highest them in a year and the second highest in the last four years going forward, we expect the level of our reach now to continue.
Speaker Change #255: We don't think we have more incremental.
Speaker Change #256: Changes in the levels, but we would expect to keep it as a percentage of presented over the portfolio roughly at the size. We also incorporated news closer regarding the stocks of the renegotiated portfolio, which is a feedback that we got from investors research analysts and that's M.
Speaker Change #257: <unk> provided in the press release for people to do while we deepen or how they compare say ready for the market.
Cabo: Great. Thanks on Cabo, maybe just one follow up we did see some improvement on the funding cost in the quarter is there room to improve that more from here.
Speaker Change #259: So in the fourth quarter the seasonality.
Speaker Change #260: We a honest so even to the level below 60%, but around 60% is a layer that we want to operate that as we always say the structure of our funding base or funding franchise is a key competitive advantage, we will try to defend as much as we can we do think that the worst moment of stress with the league.
Speaker Change #261: <unk> at almost 14% which could have.
Speaker Change #262: Our shift towards the higher yielding deposits didn't happen now we continue hiring.
Speaker Change #262: Strong funding mix and a 60%.
Speaker Change #263: Cost of funding with <unk> going down we think we'll be in a in a in an hour kilroy now with tailwind in the <unk>.
Speaker Change #264: Front of cost of funding.
Great. Thanks, Hi, Debra.
Linda: Thank you Linda.
Speaker Change #266: Our next question comes from Mr. Mario <unk> from Bank of America.
Mr. Perry we are now opening the audio so you can ask your questions live.
Mr. Perry: Please go ahead Sir.
Speaker Change #268: Hey, guys congrats.
Speaker Change #268: Congratulations on the quarter a quick question on efficiency and as you showed Brian you have made significant improvements to your efficiency ratio.
Speaker Change #269: A lot of that because you were able to keep your costs flat, especially personnel expenses. So going forward how should we see clearly your target is for efficiency to continue to improve but I wanted to understand from your perspective is this improvement coming from.
Speaker Change #270: Revenue generation or can you do more to reduce your cost structure and do you have any initiatives that may should reduce cost or are we just talking about maintaining cost relatively growing in line of inflation, but revenue generation coming through thank you.
Speaker Change #271: Hi, Mario M. I'll start taking that one so while we saw throughout 2023 was a baby at the beginning we had certain low hanging fruit so to speak.
Speaker Change #272: We wound very aggressive towards capitalizing them. If we look at the the graph of the index no of expenses and revenues in the second half both grew but the growth on the radio side was materially steeper Linley group's growth on the expense side that is why we expect to see in 2024, we will invest more.
Speaker Change #272: More to continue growing but the growth will be at a much lower rate than half or less than half the growth in revenues and for that we have a fixed side on the variable side. The fixed side is mainly the president expenses that is a number that will also grow at inflation glass, a few percentage points, but not too far from that and then.
Speaker Change #273: On the wireless side and those are expenses that are more tied to our volume growth and dosing to grow at a higher level, but the growth the improvement in efficiency will mainly be driven by revenues and really.
Speaker Change #273: Significantly higher than the expense growth.
Speaker Change #273: Okay.
Speaker Change #273: Clear.
Just so you know like Mike you showed the slide that you are almost halfway.
To your target for efficiency in our own in this does look like a five year target.
Mike: Do you think you are ahead of schedule on one efficiency or was that the expected trajectory.
Speaker Change #275: When you gave the guidance.
Speaker Change #276: We're definitely am ahead is the oil and load we had the most.
Speaker Change #277: We went a lot more aggressive on on expenses and and to be more specific we have a project would you say project, although Perugia in Portuguese we launched this product at the end of April and that was a garage a 1.0, meaning every Friday morning, and the senior leadership of vendor attacking all of this means.
Speaker Change #278: Line items that we had our first meeting of Perugia 2.0, clearly for the first first Friday over a year now. So we are studying a lot earlier, obviously now it will be tougher in onto approved earlier incremental improvements that the focus is there because we want to continue being above the level, we're going to have 20 percentage.
Speaker Change #279: <unk> improvement like we had this year, but we think that the concept of the digital bank.
Speaker Change #279: Like we have a strong competitive advantage on the cost side and that is something that we want to continue and delivering as we go along so this is a fund where we will.
Speaker Change #279: We expect to continue excelling.
Speaker Change #280: Great. Thank you very much.
Speaker Change #281: Thank you.
Speaker Change #281: Our next question comes from Mr. Yuri Fernandes from J P. Morgan.
Speaker Change #282: Mr. Fernandez you have the floor now we're opening the audience or you can ask your question lives.
Yuri Fernandes: Thank you hi, Cynthia as well as surety I had one regarding recoveries loan loss recoveries. It was a good quarter.
Speaker Change #284: <unk> isn't it was 80 million reais it used to be breaking our own audits. So just had just asking what happened there like you can deliver sustainable if there was any kind of one time recoveries because it was a was a good quarter for <unk>. Thank you very much.
Speaker Change #285: Coyote DSO recovery typically a fourth quarter has better performance out of assays more more money knowing in People's pockets and we see that on the funding side as well as we mentioned earlier. So there is a bit of am of seasonality, but we are a lot more effective.
Speaker Change #286: The word being led by by them underwriting Gamer regarding Motorola has been spectacular.
Speaker Change #286: Spectacular we expect to continue improving that.
Speaker Change #286: That metric, but the growth in the fourth quarter did have some.
Speaker Change #286: Some seasonality so we have to compare the orders versus the prior quarter. The prior year in order to make it apples to apples and but we think this is a front where there's a lot to continue holding.
Speaker Change #286: Thank you Sanjay if I may different topic, but quickly one on the marketplace on inter shop. The net take rate was slightly down. So do you see this recovery I had this dislike promotions a little black Friday breached.
Sanjay: <unk> and should we see that the net take rate moving up back again or what is the message or deadline. Thank you.
Speaker Change #288: Youre right were speaking here just to.
Speaker Change #289: To complement factor on the previous question and then I'm going to answer about the marketplace.
Speaker Change #290: I think that most of the analysts remember that's a half hour is talking about pre key elements for the credit card. So good underwriting good products Slash will do X will be Y and good collection and the renegotiations are very important part of a good collection, we're doing depth cement less for the clients.
Speaker Change #291: Our app and a very wise way and therefore, we have been prudent.
Speaker Change #292: The floor the type that would make the collection. It's a win win situations is grown partner going to the marketplace.
Speaker Change #293: Now also I mentioned in the past that we're always trying to do the best.
Speaker Change #294: Balancing trying to find the sweet spot between growth and profitability and the good news or who have been able to shift from one to the AGA quite easily every single week I have a meeting with <unk>.
Speaker Change #295: All of you know <unk> of the marketplace and then we can decide do we have a strong a time of the year coming in so should we put the take rate the cashback sorry.
Speaker Change #295: Last competitive should it be more competitive because it's a low season. So we use that quite often to adjust growth versus profitability.
Speaker Change #298: Having said that I believe that I do.
Speaker Change #296: Don't see a major change on the trends going forward for 2024, but if you have a good record on the retail in Brazil, we can't improve the growth there I mean, the gym, but also then that take rate going forward, so pretty much stable for 2024, that's what we foresee for the night.
Speaker Change #297: But again, we cannot just depth very easily and very often.
That's super clear. Thank you congrats for the results.
Speaker Change #299: Our next question comes from MS <unk> Agarwalla from HSBC.
Speaker Change #300: Music I'm allowed we're now opening the audio so you can ask your questions live. Please go ahead.
MS Agarwalla: Hi, congratulations on the results and thank you for taking my question.
Mike: Mike one on the revenue side, you mentioned the cost to income and government will be driven more by that one.
Speaker Change #302: Is it mainly was in your view that is going to drive revenue growth.
But right when April what kind of loan growth or do we expect for this year.
Speaker Change #303: But it does get into stronger.
Interest income and fee income growth.
Speaker Change #303: And as Rodney you can touch upon the BSP I thought about that you mentioned I have that for maybe that could be one of those that new leveraged for that on the revenue side.
Speaker Change #303: Second question very quickly what what kind of Iot you should we expect what great 'twenty four.
Speaker Change #303: 12, 13, 14% seems reasonable.
Speaker Change #303: Maybe any color on that if not all.
Speaker Change #304: A number that would be very helpful. Thank you so much.
Alexander: Thanks Mitra. This is Alexander speaking I'll start with the <unk> and then I'll go to the gross barked. So the BNP I always a new payment methods that we incorporated into our marketplace. We see it is that the consumer finance 2.0, so bringing more of the of the pool of revenues.
Alexander: The system into winter and we see that that's a super positive we're fine tuning the model as we grow and believe this could be in the ballpark of <unk> 250 million.
By the end of the year the context of the partnerships is is a is a driver to reduce risk. So in the end of the day, we get take rates that range from 32 to prompt Duane to 30% from our partners and that helps our financing the delinquency that we may get in there.
Speaker Change #306: In the model and with our clients the nice thing about the BMT L.
Speaker Change #307: Is that given the take rates from the partnerships. We can open it for a wider range of customers. So several cups several million customers that don't have a credit cards can buy with the buy now pay later within the App. We're excited and it is one of the drivers of our margin expansion as.
Speaker Change #309: We drive through our through 'twenty 'twenty four.
Speaker Change #308: When do you think about gross.
Speaker Change #310: Can I pause over there and just ask something very shortly.
Speaker Change #311: I mean, it seems like for the BNP product yield a part on your own balance sheet and bought with the partners, which allows you to get a fee income from the partners could you talk a little bit about what kind of proportion of that you can expect 10% Atlanta, 90% with partners or more like 50 50.
Speaker Change #312: And what kind of partners are we talking about if you can name some.
Speaker Change #313: That would be helpful. Yes, so Sony Hot in terms of balance sheets. It all goes through our balance sheet. So in practice. What happens is for example, let's say somebody is buying a phone from Samsung for 1000 highs.
Speaker Change #314: Standoff Disbursing, a 1000 has to pay for this phone and making deals alone in interest balance sheet disbursement, maybe of only 780 Ti <unk>.
Speaker Change #315: Because Samsung is providing this take rate of less than that.
Speaker Change #316: 25 to 150 <unk>. So we have a collection balance of a 1000, but in disbursement of only 750, that's the mechanics of how it works.
Speaker Change #316:
Speaker Change #317: And we will keep on expanding the partnerships so that the products Kim Ken growth. Okay are they saying about today is the take rate youre not.
No one will still be everything will be in your balance sheet everything in our balance sheet correct.
Speaker Change #318: Moving yes, and on the growth aspects, we expect to grow beyond 30%. This year. We're excited like the last for the fourth quarter was positive at around the 10% growth. So we're excited about 2024.
Speaker Change #319: D. Four portfolios will keep on growing so home equity F. GTS, we're excited about those and a good start of the year. So far and it's also nice to mention the exploration on the non collateralized right Ron talked a bit about the pigs credit.
And we launched them last year, so overdraft buy now pay later, which we've discussed takes credit as Ron discussed. We also have bill pay using their credit card limits and we're also allowing customers to put cash in their accounts using their credit card limits.
Speaker Change #320: We have a potential of a billion portfolio by the end of the year in these lines.
Speaker Change #321: And they are definitely going to be a margin expansion.
Margin expansion product for us. So we're excited about it thank you and yet.
Speaker Change #322: Super helpful. Thank you anything on the auto is flat.
Speaker Change #322: I can take that one Neil hi.
Speaker Change #323: So one early on net income, we don't provide guidance, but and what we said last year on the Investor day. It was that we agreed with the sell side consensus of.
Neil: <unk>, 5% for 2023, and and we lever that we can say now like Saturday after is that the flow or the curve of build that both net income and ROE that we source that allowed the air should continue into 'twenty. Therefore, we cant get too much specific on medical center.
Speaker Change #325: They will become diodes, and we don't intend to provide but we see a continuation of the trend and that we've had last year coming into what is year two of the 633.
Speaker Change #326: Perfect. Thank you so much.
Speaker Change #327: Thinking again.
Speaker Change #328: Our next question comes from Mr. Pedro Leduc from <unk> BBA.
Speaker Change #329: We're now opening the audio so you can ask your questions live. Please go ahead.
Speaker Change #330: We have apparently lost connection with Mr. <unk>, Mr. Pedro <unk>.
Okay.
Speaker Change #331: Apparently is no longer in the round. So we're moving on to the next question coming from Mr. Brian Flores from Citi.
Speaker Change #332: Mr. Flores were opening the audio now so you can ask your question live.
Speaker Change #333: Please go ahead Sir.
Brian Flores: Hi, Thank you. Thank you for the opportunity just a couple of follow ups on the answers that you provided.
Speaker Change #335: You mentioned you were excited about S. E T. S loans. So the contribution to gross loans is around 6%. This has been increasing steadily.
Speaker Change #336: So just wanted to get a sense on how are you thinking about this segment.
Speaker Change #336: Any insights on the dynamics of the segment and how should we think about the contribution going forward.
Speaker Change #337: So I think this is my first question the second one.
Speaker Change #338: So I'd tell you mentioned that in terms of the strategic plans you do intend to defend your deposit base could you share with us like a.
Speaker Change #339: What are you know any any ideas on how to do this would be really helpful. Thank you.
Speaker Change #339: Brian. This is Alex speaking May I ask you to repeat the question. Please we have a technical problem couldn't hear you.
Speaker Change #339: Sure no problem.
Speaker Change #339:
Speaker Change #340: First of all it wasn't on FGT as loans.
Speaker Change #341: The contribution is around 6% has been steadily helping in terms of the total portfolio. So just wanted to sing to get a sense on how are you thinking about this segment.
Speaker Change #342: Any insights on the dynamics would be really helpful. And then the second one was on how are you planning to defend your deposit base.
Speaker Change #341: Yeah.
Speaker Change #343: Great. Thank you so starting with <unk>, it's a product that we like a lot 100% leased underwriting.
Speaker Change #344: Good margin high engaging product and we've been able to do continuous improvement also operationally to make it easier for customers to to obtain their loans are we have a lot of returning customers, having said that we.
Speaker Change #345: We expect to keep on growing at 6% of the portfolio as you mentioned and we believe it could get to around 10% by the end of 2024.
Speaker Change #345: As we move forward. So we are excited about it.
Speaker Change #346: From a deposit.
Speaker Change #347: In terms of defending the deposits. It's all about defending their transactional business right. So we've been consistent on keeping peaks at around the 8% market share.
Speaker Change #348: We were going to work heavily to increase this market share as we move towards 2024.
Speaker Change #348: And with the transactional business, we're gonna be indirectly defending the deposit franchise right that that is one of the strengths of inter the massive transactional platform, we've been able to bring game.
Speaker Change #348: Along with also the investment platform, it's overnight, but that's the defense the defense is to keep growing on the transactional business. Thanks, Brian.
Brian Flores: Perfect. Thank you.
Speaker Change #349: This concludes our question and answer session.
Speaker Change #350: The conference has now concluded.
Speaker Change #350: Our IR area is at your disposal to answer any additional questions, but first I'd like to yield the floor to Mr. Zhu all in theatre minute for his closing remarks, Sir the floor is yours.
Speaker Change #351: Thank you very much so first of all.
Mr. Zhu: I would like to thank our employees for the great year Rehabs on 'twenty to 'twenty three.
Mr. Zhu: We work a lot we work hard and we work with the right strategy with the right focus with the right Morph Star, which is our sixth territory plan and I really feel that it's no longer different on 'twenty 'twenty four ICR ran for the first mile.
Speaker Change #352: Our team engaged motivated to also deliver another positive year on our 630 per the plan.
Speaker Change #352: We were chatting as Martin about the priorities for the year and I would like to say that the half two priorities for 2024.
Speaker Change #354: First one to make sure that we also deliver another year ahead of the budgets of the 633 P M and <unk> got to make sure that I'm going to stick with the first.
Speaker Change #353: One so that's about that's the focus engaged motivated and I'm sure that we can keep delivering good results both on a profitability basis, but also very important on a growth perspective.
Speaker Change #355: As well we are still a growth company, but combining these two elements we could deliver it on 2023, and we will deliver it on 2024 again I'm sure about that.
Speaker Change #356: Thank you all of the employees. Thank you all the shareholders that support us for a while that will keep supporting us. So you'll soon thank you very much have a good day.
Speaker Change #357: The conference has now concluded.
Speaker Change #358: Enter IR area is at your disposal to answer any additional questions. Thank you for attending today's presentation have a nice day.