Q2 2024 Inter & Co Inc Earnings Call
<unk> CEO Alexandra Riccio, Brazil, CEO, Santiago, Stell, senior Vice President of finance and risks and CFO and Rafael are Vitoria, Chief economist and I R O.
Please be advised that today's conference is being recorded and a replay will be available at the company's IR website at.
Speaker Change: At this time all participants are in listen only mode. After the prepared remarks, there will be a question and answer session four.
Speaker Change: For this session. We ask you to write down your questions via the Q&A icon on your screen. Your name will then be announced and you will be able to ask your questions live.
At that point, a request to activate your microphone will appear on your screen.
Speaker Change: If you do not want to open your microphone live please write down no microphone at the end of your question in this case, our operator will read your questions for you.
Speaker Change: Please note that there is an interpretation button on your screen, where you can choose the language you want to hear English or Portuguese.
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 I F. R. S.
Speaker Change: Reconciliations of the company's non <unk> financial information to the <unk> financial information are available and interim co earnings release and earnings presentation Appendix.
Today's discussion might include forward looking statements, which are not guarantees of future performance. Please refer to the forward looking statements disclosure in the company's earnings release and earnings presentation.
Speaker Change: Now I would like to yield the floor to Mr. As you won't Victor minute, Sir the floor is yours.
Mr. Victor: Thank you operator Hello, everyone.
Charlie: As usual I will begin with a brief overview of our strategy before handing over to Charlie.
Charlie: That will cover operational and financial metrics.
Speaker Change: But before we begin I want to express my gratitude to <unk> or new Brit, you'll see you.
Speaker Change: I'm confident that you will continue to do an amazing job in her new role, leading our business in Brazil, each were a bright future.
Speaker Change: Now, let's deep dive into second quarter results.
Speaker Change: I'm very happy with our deliveries in our 630 30 plan this quarter.
Speaker Change: I can affirm that the combination of growth and profitability is propelling us to new heights.
Speaker Change: Once again, we are demonstrating our ability to deliver remarkable results by focusing on execution day after day.
Speaker Change: Why youre constantly pushing for innovation and new ideas. We also delivered strong financial performance, ensuring that our business is.
Speaker Change: The last I.
Speaker Change: I would like to express my gratitude and admiration for our group.
Speaker Change: Three 8000 employees.
Speaker Change: We're very proud to see that our company is producing alpha and the Brazilian banking market.
A clear way to see beef isn't the pace of growth that we have in very important portfolios.
Speaker Change: We are growing multiple times faster than the industry, such as eight times faster in individual accounts and four times faster ask upcs loss.
Speaker Change: This reflects the beauty of our financial App.
And the great ability to attract clients and cross sell our products.
Speaker Change: Being the platform, therefore, maximizing our market share gains.
Speaker Change: To really understand what I am trying to say, let's spend some time on page seven.
Speaker Change: We can see here the opportunity to have to fish in our own acquired.
Speaker Change: We have scaled at the most difficult part.
Getting clients on board in building their product offering.
Speaker Change: Now if we keep growing at the same pace for the following years.
We can reach greater market share just by.
Speaker Change: In our own acquired.
Speaker Change: Meaning getting more business from our existing clients.
Speaker Change: Obviously on top of that we will continue bringing new clients as we have done consistently for many years.
Speaker Change: As you know we have one of the most complete product offerings in the market.
Speaker Change: Serving multiple client profiles in one single App.
Speaker Change: To maximize conversion of our products, we rely on our strategy that are based on.
Speaker Change: Hi, personalization best in class, UI, and UX and a unique digital journey for every moment inside that.
Speaker Change: <unk> will present the details later, but just to give you a little sneak peek.
Speaker Change: Our insurance vertical printed the best quarter ever.
Speaker Change: To the amazing back of integrated data.
Speaker Change: Target campaigns and the strength of our connected platform.
Speaker Change: What I mean with that is we are seeing incredible results by leveraging our data effectively.
Speaker Change: And constantly pushing the boundaries of innovation.
Speaker Change: I am personally passionate about the client experience and driving innovation.
Speaker Change: We will continue to enhance our UX and UI.
Speaker Change: And introduced new features to provide the best possible experience.
Speaker Change: Moving to page nine we can see our seven vertical powerfully working together.
Speaker Change: As an engineer myself I like to say that all cylinders are working in perfect coordination and.
Speaker Change: And these make me confident on the continued success of our platform.
Speaker Change: By providing a complete range of personalized products to each client, we observe amazing outcomes across all verticals, which Sanjay will deep dive in the next page.
Sanjay: Please go ahead.
Sanjay: Thank you Joe Good afternoon, everyone and thanks for joining us today first of all I'm extremely proud to assume the role of CEO, Brazil, and leading our operations.
Sanjay: Having been part or winter for 11 years, I can say that I have a deep passion for everything we have built so far and what lies ahead.
Sanjay: So once again, thank you for your support and trust as well less of your forward looking vision that constantly pushes us shall be innovation pioneers.
Speaker Change: Going into the results I'll start by focusing on the most important topic our clients.
Speaker Change: We're happy to announce that once again, we welcomed 1 million new active clients. This quarter. This figure has led to a sixth consecutive quarter of increasing activation now standing at 55, 3%.
Speaker Change: Throughout the second quarter, we achieved a total of 33 million clients successfully increasing the client base by $1 6 million. This demonstrates our ability not only to increase activation among existing clients, but also to attract a new pool of qualified climb.
Speaker Change: Who are activating faster and engaging more with our platform.
Speaker Change: In addition to the total clients I'd like to introduce everyone to some details of our business clients. We currently have over 2 million business accounts growing at a fast pace of 21% year over year.
Speaker Change: These 2 million clients are highly engaged.
Speaker Change: With an impressive activation rate of 80% in addition to higher deposits PPV, Indeed, there change levels.
Speaker Change: Last month, we announced the closing of the acquisition of getting into renamed to interbank, our acquiring business.
Speaker Change: We're excited about this transaction as.
Speaker Change: As we now will.
Speaker Change: We will be able to fully integrate the business into our ecosystem. The transaction brings a long list of opportunities three examples our first cross selling our banking products to all of <unk> merchant clients.
Speaker Change: Second cross selling acquiring services for existing base of merchants and individuals.
Speaker Change: Hundreds of thousands of which already flew their acquiring receivables into our account.
Speaker Change: And third building powerful bundles.
Speaker Change: Of banking and acquiring services to address retail clients currently underpenetrated in our base.
Speaker Change: In summary, we see opportunity ahead of us and are already moving to capture it.
Speaker Change: Turning our attention to page 12, the total PPV has shown.
Speaker Change: What a remarkable increase of 47% year over year, reaching 290 billion Reais, specifically when we consider transactions made through peaks, we transacted over 266 billion reais in a single quarter.
Speaker Change: Capturing 8% market share of the total number of transactions also important was that for the second consecutive quarter volumes and growth from credit cards have surpassed debit, resulting in higher interchange revenue and further improving the tip.
Speaker Change: <unk> mix.
Speaker Change: Moreover, as.
Speaker Change: As we have consistently seen in the past few quarters, we're continuously increasing PPV levels, among both new and existing cohorts.
Speaker Change: This demonstrates the growing engagement of our customers with our product offerings, ensuring continued success.
Speaker Change: Moving to the credit side I want to provide a brief update on our new credit lines expansion.
Speaker Change: Big financing buy now pay later and our other unsecured lines.
Speaker Change: In the quarterly comparison, we have an inspire increase of almost 90%.
Speaker Change: <unk> combined all 330 million Reais in portfolio.
Speaker Change: This is one more important step in bringing our unsecured products through full potential in the beginning of the third quarter, we expanded our peak financing offering to the entire credit card base, one more element to sustained growth.
Speaker Change: Moving to page 13.
Speaker Change: In the e-commerce vertical.
Speaker Change: We have achieved the best growth level of the post pandemic base.
Speaker Change: In the annual comparison, we increased our <unk> by more than 50%, surpassing $1 1 billion reais in the quarter with more than 3 million clients, making purchases within the period.
Speaker Change: On loyalty or vertical that completed one year in June we achieved impressive eight median clients demonstrating our strength in launching and growing new products that have strategic fit with our platform.
Speaker Change: Those clients are highly engaged.
Speaker Change: Spending two seven times more than non loyalty clients and generating a netback that is one seven times higher.
Speaker Change: Moving to page 14 on the insurance front.
Speaker Change: We are very happy to report one of our best quarters ever our sales have exceeded 1 million for the first time ever.
Speaker Change: Far exceeding what we what we have experienced in the previous quarter and.
Speaker Change: And we have seen.
Speaker Change: 39% quarterly increase in the number of active clients as a result, we now have $2 6 million active insurance clients an amazing number.
Speaker Change: We're also proud to have successfully launched new products in these verticals such as the <unk> GPS loan insurance this product integrated seamlessly into the <unk> GTS loan product user experience and these are great example of our hyper personalization strategy.
Speaker Change: As previously highlighted by law.
Speaker Change: Turning our attention to the investments investments vertical we had a quarter of inquiries and growth within a year. We have increased the number of active clients by around 60%.
Speaker Change: Reaching $5 7 million.
Speaker Change: Furthermore.
Speaker Change: We have surpassed a significant milestone of 100 billion in AUC for the first time and are already close to 110 billion.
Speaker Change: These achievements showcases our cutting edge product offering in this vertical and the evolution of our distribution capacity.
Surpassing $1 1 billion reais in the quarter with more than 3 million clients, making purchases within the period.
Speaker Change: Moving to the next page last but not least on the global front as mentioned by Juan we're continuously advancing in replicating one of our key competitive advantages in the U S. Our robust deposit franchise.
On loyalty or vertical that completed one year in June.
Speaker Change: <unk> impressive eight median clients demonstrating our strength in launching and growing new products that have strategic fit with our platform.
Juan: Excited to report that our assets under custody and deposits in U S. Dollars have reached the milestone of $516 million, reflecting an extraordinary 133% year over year growth.
Speaker Change: Those clients are highly engaged.
Speaker Change: Spending two seven times more than non loyalty clients in generating a knock back that is one seven times higher.
Speaker Change: Moving to page 14 on the insurance front.
Juan: These achievements underscore our strong performance in the U S market within this vertical we have successfully acquired $3 3 million clients comprising of higher income Brazilian clients, who frequently travel.
Speaker Change: We are very happy to report one of our best quarter ever our sales have exceeded 1 million for the first time ever.
Far exceeding what we what we have experienced in the previous quarter and.
Speaker Change: And invest in the U S. These.
Speaker Change: And we have seen.
Speaker Change: This means a higher quality customer profiles in terms of spending engagement and our pack levels.
Speaker Change: 39% quarterly increase in the number of active clients as a result, we now have $2 6 million active insurance clients in EMEA.
Speaker Change: This growth and engagement in our global operations encourages us more and more to dedicate two expanding our reach and delivering valuable financial solutions for our clients regardless of geographical boundaries.
Speaker Change: Using number.
Speaker Change: We're also proud to have successfully launched new products in this vertical such as the <unk> GPS Lone insurance. This broad integrated seamlessly into the <unk> GTS loan product user experience and these are great example of our hyper personalization strategy.
<unk>: With that I'll pass the word to <unk>, who will cover the financial performance section.
Speaker Change: Yeah.
<unk>: Thank you Sam and congratulations once again on your promotion now, let's deep dive in our financial performance of the second quarter.
Speaker Change: As previously highlighted by law.
Speaker Change: Turning our attention to the investments investments vertical we have the order of encouraging growth.
Speaker Change: Starting with our loan book, we delivered 35% growth compared to the same quarter of 2023, resulting in a portfolio of $35 7 billion of <unk>. Once again, <unk> and home equity continued to be key drivers of this great growth with impressive year over year increases of 93% and 50 person.
Speaker Change: Within a year, we have increased the number of active clients by around 60%, reaching $5 7 million.
Speaker Change: Furthermore.
Speaker Change: We have surpassed a significant milestone of 100 beta <unk> for the first time and are already close to 110 billion.
<unk>: <unk> respectively.
Speaker Change: As you all said our focus on hybrid personalization has opened up new opportunities to optimize our distribution capabilities.
Speaker Change: These achievements showcases our cutting edge product offering in this vertical and the evolution of our distribution capacity move.
Speaker Change: Great. Examples of these improvements and distributions through hybrid personalization R. <unk> D S and Biggs financing with a fully digital products with remarkable growth and profitability profiles.
Speaker Change: Moving to the next page last but not least on the global front as mentioned by Juan we're continuously advancing in replicating one of our key competitive advantages in the U S. Our robust deposit franchise, we're excited to report that our assets under custody.
Speaker Change: Now speaking about the implied rates on the double debates the stability that we can see is attributed mainly to two factors.
Speaker Change: The first the overall lower interest rate environment in the entire banking system compared to a year ago. When selic was much higher and two with a lower inflation in the quarter, which affected mainly our real estate loans.
Juan: And deposits in U S dollars have reached the milestone of $516 million.
Reflecting on the extraordinary 133% year over year growth.
Speaker Change: We believe that the performance in terms of events was very strong with an all in lowest rates of 21%, which is twice the rate of CDI and is the highest we had at <unk> in the last four years.
Juan: These achievements underscore our strong performance in the U S market within this vertical we have successfully acquired $3 3 million clients comprising of higher income Brazilian clients, who frequently travel and invest in the U S.
Speaker Change: We go deeper into a full impact of rates in pages.
Speaker Change: Let's go deeper into our loan growth by product, which reflects our continued commitment on deploying capital efficiently.
Juan: This means a higher quality customer profiles in terms of spending engagement and our Pac collaterals.
Speaker Change: Our top performing great products, such as <unk> and home equity experienced remarkable growth and now represent 15% of our loan book.
Juan: This growth and engagement in our global operations encourages us more and more to dedicate two expanding our reach and delivering valuable financial solutions to our clients, regardless often geographical boundaries.
Speaker Change: Regarding credit cards will remain focused on allocating new limits for existing clients with strong risk adjusted profiles.
<unk>: With that I'll pass the word to <unk>, who will cover the financial performance section.
Speaker Change: This strategy has resulted in nearly 40% increase in credit cards in the last year.
Juan: Okay.
Speaker Change: Both SMB and real estate loans grew around the yearly average over a loan growth of 35%, while personal loans, which is mainly comprised on payroll loans and a small negative growth, but when excluding the portfolios acquired nearly two year cycle and looking only at the portfolios that we originated.
<unk>: Thank you Sam and congratulations once again on your promotion now, let's deep dive in our financial performance of the second quarter.
Speaker Change: Starting with our loan book, we delivered 35% growth compared to the same quarter of 2023, resulting in a portfolio of $35 7 billion Reais once again, <unk> and home equity continued to be key drivers of this great growth with impressive year over year increases of 93% and $50.
Speaker Change: Internally, we had a positive growth of 4% with nice acceleration towards the end of the quarter, reflecting the success of the new digital initiatives ongoing in this product.
<unk>: Scent respectively.
<unk>: As you all said our focus on hybrid personalization has opened up new opportunities to optimize our distribution capabilities.
Speaker Change: In terms of asset quality, we saw stable trends across metrics.
Speaker Change: MBS 15 to 90 days and 90 days plus presented slight improvements in the quarter.
Speaker Change: Great. Examples of these improvements and distributions through hybrid personalization R. <unk> D S and big financing with a fully digital products with remarkable growth and profitability profiles.
Speaker Change: Regarding NPL and stage III formation, we experienced a slight increase in the metric as a result of the second quarter of 'twenty, three critical cohort, which presented higher than average delinquency.
Speaker Change: Now speaking about the implied rates on the double of the Bache.
Speaker Change: The ability that we can see is attributed mainly to two factors.
Speaker Change: We think that this effect is specific to his cohort and will reverse in the coming quarters.
Speaker Change: The first the overall lower interest rate environment in the entire banking system compared to a year ago, when selic was much higher.
Speaker Change: Now moving on debate 'twenty, we can observe that our cost of risk metric improved 20 bps to five zero percent or 10 bps to five 3% is excluding anticipation of credit card receivables.
Speaker Change: And two with lower inflation in the quarter.
Speaker Change: Which affected mainly our real estate loans.
Speaker Change: We believe that the performance in terms of <unk> was very strong with an all in lowest rates of 21%, which is twice the rate of CDI and <unk>.
Speaker Change: These levels are the lowest we have seen since 2022 and reflect how we continued to improve quality of the underwriting model and the collection practices.
Speaker Change: The highest we have into in the last four years.
Speaker Change: We go deeper into a full impact of rates in the NIM pages.
Speaker Change: In terms of our coverage ratio remained stable at 130%, indicating that we are provisioning in line with the NPL formation trend.
Speaker Change: Let's go deeper into our loan growth by product would reflect our continued commitment on deploying capital efficiently.
Speaker Change: Passing here to page 21, we're pleased to once again highlight the robustness of our funding franchise, which reached $47 8 billion Reais.
Speaker Change: Our top performing great products, such as <unk> and home equity experienced remarkable growth and now represent 15% of our loan book.
Speaker Change: The highlight is how we think and fragmenting our funding base east with more than 17 million clients trusting us with their savings.
Speaker Change: Regarding credit cards will remain focused on allocating new limits for existing clients with strong risk adjusted.
Speaker Change: <unk>.
Speaker Change: Another key highlight mentioned maintenance before is the mix with.
Speaker Change: This strategy has resulted in nearly 40% increase in credit cards in the last year.
Speaker Change: With transactional deposits accounting for 32% of our total funding base.
Speaker Change: Smb's and real estate loans grew around the yearly average over our loan growth of 35%, while personal loans, which is mainly comprised on payroll loans and a small negative growth, but when excluding the portfolios acquired nearly two year cycle, meaning looking only at the portfolios that we originated in.
Speaker Change: In terms of growth, we have seen a remarkable 9% and 34% increase quarterly and annually respectively.
Speaker Change: In terms of transactional deposits specifically this quarter alone we grew $1 3 billion reais.
Speaker Change: Moving on to page 22, as we mentioned before we firmly believe that our funding mix sets us apart from other financial institutions in Brazil and provides us with a notable competitive advantage in terms of cost of funding.
Speaker Change: <unk>, we had a positive growth of 4% with nice acceleration towards the end of the quarter, reflecting the success of the new digital initiatives ongoing in this product.
Speaker Change: In this particular quarter retail cost of funding of six 8%, which is the lowest since they joined into at the beginning of 2022.
Speaker Change: In terms of asset quality, we saw stable trends at gross metrics. Both MBS 15 to 90 days and 90 days plus presented slight improvements in the quarter.
Speaker Change: Once again, we are thrilled to report another great quarter in terms of revenue breaking previous records for the second consecutive quarter. We achieved gross revenues of $2 4 billion with a net revenue of $1 5 billion.
Speaker Change: Regarding NPL and stage II formation, we experienced a slight increase in the metric as a result of the second quarter of 'twenty, three critical cohort, which presented higher than average delinquency.
Speaker Change: These numbers reflect a substantial 29% year over year growth and a solid 7% quarter over quarter growth in total net revenue.
Speaker Change: We think that this effect is specific to his cohort and will reverse in the coming quarters.
Speaker Change: Now moving on to page 20, we can observe that our cost of risk metric improved 20 bps to five zero percent or 10 bps to five 3%, if excluding anticipation of credit card receivables.
Speaker Change: Both fees and NII experienced robust growth further validating the thickness effectiveness of our hyper personalization and marketing efforts.
Speaker Change: Let's now turn our attention to the unit economic metrics highlighted on page 24.
Speaker Change: These levels are the lowest we have seen since 2022 and reflect how we continued to improve quality of the underwriting model and the collection practices.
Speaker Change: We're pleased to report that our ARPA increased to $30 <unk> per month.
Speaker Change: In terms of our coverage ratio remained stable at 130%, indicating that we are provisioning in line with the NPL formation trends.
Speaker Change: This growth is a result of further engaging and monetizing our clients for our broad suite of high value products.
Speaker Change: On the cost side, we continued to make significant improvements in our cost to serve metric.
Speaker Change: Putting here to page 21, we're pleased to once again highlight the robustness of our funding franchise, which reached $47 8 billion Reais.
Speaker Change: This positive trend has been consistent over the last five quarters, reaching a record low level of 11 <unk>.
Speaker Change: This demonstrates our ability to efficiently monetize our customer base, while capturing economies of scale.
Speaker Change: The highlight is how we think and fragmenting our funding base east with more than 17 million clients trusting us with their savings.
Speaker Change: Let's now deep dive into our interest income specifically focusing on nims as presented on page 25.
Speaker Change: Another key highlight mentioned maintenance before is the mix with.
Speaker Change: With transactional deposits accounting for 32% of our total funding base.
Speaker Change: Starting from the top of debate, both our NIM 1.0 and zero.
Speaker Change: In terms of growth, we have seen a remarkable 9% and 34% increase quarterly and annually respectively.
Speaker Change: And without the non interest accruals of credit cards known as Avista in Portuguese are showing a positive upward trend compared to the prior quarters.
Speaker Change: In terms of transactional deposits specifically this quarter alone we grew $1 3 billion reais.
Speaker Change: Important to note that we face a negative impact from <unk> this quarter inflation, which contributed to a slower growth in the quarter, particularly on the real estate loans.
Speaker Change: Moving on to page 22, as we mentioned before we firmly believe that our funding mix sets us apart from other financial institutions in Brazil and provides us with a notable competitive advantage in terms of cost of funding.
Speaker Change: When we consider the risk adjusted NIM, which is indexed to the cost of risk. The performance is even stronger for the highlighting the consistent positive trends on reaching record levels.
Speaker Change: In this particular quarter retail cost of funding of six 8%, which is the lowest since I joined into at the beginning of 2022.
Speaker Change: Maximizing the value of our capital allocation is it creep priority that will consistently quarter after quarter, we self are visible and with the continued repricing of new consumer finance initiatives ongoing we are optimistic on the continuous improvement in the coming quarters.
Speaker Change: Once again, we are thrilled to report another great quarter in terms of revenue breaking previous records for the second consecutive quarter. We achieved gross revenues of $2 4 billion with a net revenue of $1 5 billion.
Speaker Change: These numbers reflect a substantial 29% year over year growth and a solid 7% quarter over quarter growth in total net revenues.
Speaker Change: As seen on page 26, we had a modest 5%.
Speaker Change: Growth in expenses this quarter floating a zero percent increase in the prior one therefore also increasing 5% in the first half of this year relative to the fourth quarter level of 2023.
Speaker Change: Both fees and NII experienced robust growth further validating the fitness effectiveness of our hyper personalization and marketing efforts.
Speaker Change: But more importantly, the growth levels themselves. We can affirm that our margin is spending is strategically allocated to investing in three main areas people technology and branding.
Speaker Change: Let's now turn our attention to the unit economic metrics highlighted on page 24.
Speaker Change: We're pleased to report that our ARPA increased to $30 <unk> per month.
Speaker Change: This reflects our mindset of creating long term value of our franchise by investing more in these specific areas.
Speaker Change: This growth is a result of further engaging and monetizing our clients for our broad suite of high value products on.
Speaker Change: Noteworthy aspect to highlight is our marketing expenses, we launched a targeted campaign aimed at increasing brand awareness sees this campaign was launched we have seen a notable 25% increase in searches for <unk> and a 20% increase in our app downloads rigor.
Speaker Change: On the cost side, we continued to make significant improvements in our cost to serve metrics.
Speaker Change: This positive trend has been consistent over the last five quarters, reaching a record low level of $11 one <unk>.
Speaker Change: This demonstrates our ability to efficiently monetize our customer base, while capturing economies of scale.
Speaker Change: Regarding personnel expenses, we strategically increased hiring in key areas, such as <unk> and commercial teams.
Speaker Change: Let's now deep dive into our interest income specifically focusing on nims as presented on page 25.
Speaker Change: We continue to see significant opportunities for us to achieve operational leverage as highlighted on page 27.
Speaker Change: Starting from the top of the page, both our NIM, one zero and zero.
Speaker Change: On the left hand side, you can see that we have successfully increased the gap between the growth of our net revenues and the growth of our expenses to time.
Speaker Change: With and without the non interest accruals of credit cards known as Avista in Portuguese.
Speaker Change: As a result, our efficiency ratio on the right side with 40 or 47, 9% firmly ahead of our 60 30 30 plan.
Speaker Change: Showing a positive upward trend compared to the prior quarters.
Speaker Change: It is important to note that we faced and negative impact from EBIT theories quarter inflation, which contributed to a slower growth in the quarter, particularly on the real estate loans.
Speaker Change: These charges reflect the merits of our digital banking model, where we can scale up our business significantly while maintaining a control cost structure that services our clients in a state of the digital manner.
Speaker Change: When we consider the risk adjusted NIM, which deducts the cost of risk. The performance is even stronger further highlighting the consistent positive trends on reaching record levels.
Speaker Change: To conclude I would like to highlight our strong performance in terms of profitability as presented on page 28.
Speaker Change: Maximizing the value of our capital allocation is a key priority.
Speaker Change: This quarter, we achieved another record breaking ROE, surpassing the double digit mark reaching 10, 4% or.
Speaker Change: We have consistently quarter after quarter, we self RBC rules and with the continued re pricing a new consumer finance initiatives ongoing we are optimistic on the continuous improvement in the coming quarters.
Speaker Change: Our pretax income reached nearly 300, EMEA <unk> and our net income reached 223 million Reais.
Speaker Change: This performance shows our commitment and discipline to drive sustainable profitability.
Speaker Change: As seen on page 26, we had a modest 5%.
Speaker Change: Now I will pass the floor to <unk> for his closing remarks. Thank you.
Speaker Change: Both in expenses this quarter following a zero percent increase in the prior one therefore also increasing 5% in the first half of this year relative to the fourth quarter level of 2023.
Speaker Change: Yes.
Sandy: Thank you Sandy.
Speaker Change: For my closing remarks, I would like to inform stream partner topics from the last part.
Speaker Change: One <unk>.
Speaker Change: This accretion of our 630 30 plan.
Speaker Change: But more importantly than the growth levels themselves. We can affirm that our margin is spending is strategically allocated to investing in three main areas people technology and branding is.
Speaker Change: Through the recent additions on our senior managements and treat the launch of our latest products our social platform.
Speaker Change: The 630 is on track with consistent growth in total clients and Ari and stable efficiency ratio.
Speaker Change: Reflects our mindset of creating long term value of our franchise by investing more in these specific areas.
Speaker Change: A noteworthy aspect to highlight is our marketing expenses, we launched a targeted campaign aimed at increasing brand awareness.
Speaker Change: And to help us on our plan, we recently announced some updates to our management team.
Speaker Change: This campaign was launched we have seen a notable 25% increase in searches for <unk> and a 20% increase in our app downloads.
Speaker Change: While our internal sites as we mentioned before.
Speaker Change: <unk> is now our Brazil <unk> and.
Speaker Change: And how far that order.
Speaker Change: Regarding personnel expenses, we strategically increased hiring in key areas, such as <unk> and commercial teams.
Speaker Change: Has taken over as our new Investor relation officer.
Speaker Change: In addition over the past few months, we have welcomed several new members to our team suggests quealy.
We continue to see significant opportunities for us to achieve operational leverage as highlighted on page 27.
Monica: Monica <unk>.
Speaker Change: <unk> and Marcel donors all of them bring extensive market knowledge from top financial institutions in Brazil, and abroad, and we will add strong value with fresh perspectives in their respective fields.
Speaker Change: On the left hand side, you can see that we have successfully increased the gap between the growth of our net revenues and the growth of our expenses to time.
Speaker Change: As a result, our efficiency ratio on the right side reported 47, 9% firmly ahead of our 60 30 30 plan.
Speaker Change: The Board front, we announced June island, as our new Independent Board member, bringing decades of experience into our board guys welcome to the team.
Speaker Change: These charges reflect the merits of our digital banking model, where we can scale up our business significantly while maintaining a control cost structure that services our clients in a state of the art digital manner.
Speaker Change: Last but certainly not least as part of our commitment of staying ahead of the market today, we launched our social platform.
Speaker Change: To conclude I'd like to highlight our strong performance in terms of profitability as presented on page 28.
Speaker Change: Through this platform our clients will have the opportunity to engage in discussions share their experience with our products and invest collectively.
Speaker Change: This quarter, we achieved another record breaking ROE, surpassing the double digit mark reaching 10, 4%.
Speaker Change: All of it in our financial Super App.
Speaker Change: Thank you very much operator, let's move to the Q&A session.
Speaker Change: Our pre tax income, which nearly 300 EMEA <unk> and our net income reached 223 million case.
Speaker Change: Okay.
Speaker Change: We will now begin the question and answer session.
Speaker Change: This performance shows our commitment and discipline to drive sustainable profitability.
Speaker Change: Please note that the in the interest of time, we will allow each participant to ask one question with one follow up for each question.
Now I will pass the floor to <unk> for his closing remarks. Thank you.
Sandy: Thank you Sandy.
Speaker Change: Once again for this Q&A session. We ask you to write down your question 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 questions live at this point a request to activate your microphone will appear on your screen. If you prefer not to open your microphone lives.
Speaker Change: For my closing remarks, I would like to inform stream Barton topics from the last part.
Speaker Change: One <unk>.
Speaker Change: This accretion of our 630 30 plan.
Through the recent additions on our senior managements and treat the launch of our latest products our social platform.
Speaker Change: The 630 is on track with consistent growth in total clients and Ari and.
Speaker Change: Please write down no microphone at the end of your question and our operator will read your question out loud.
Speaker Change: And stable efficiency ratio.
Speaker Change: Our first question comes from Mr. Gustavo shrouded from Bradesco BVI.
Speaker Change: And to help us on our plan, we recently announced some updates to our management team.
Speaker Change: We're opening the audio now Sir please go ahead.
Speaker Change: While internal sites as we mentioned before.
Gustavo shrouded: Hi, good afternoon everybody.
Speaker Change: <unk> is now our Brazil <unk>.
Gustavo Schroden: Thanks for taking my question first of all congrats too to show it to the new role well deserved and I E. All.
Speaker Change: <unk> daughter.
Speaker Change: Has taken over as our new Investor relation officer.
Speaker Change: In addition over the past few months, we have welcomed several new members to RPM suggests quealy.
Speaker Change: The success for you in good news in this new.
Speaker Change: New role. So my question is regarding the D N I M.
Monica: Monica <unk>.
Speaker Change: By risk right, we could see an.
Speaker Change: <unk> <unk> all of them bring extensive market knowledge from top financial institutions in Brazil, and abroad, and we were strong value with fresh perspectives in their respective fields.
Speaker Change: An improvement quarter by quarter quarter over quarter, but they.
Speaker Change: The increase was mainly driven by the lower cost of risk, while there and I am was stable quarter on quarter.
Speaker Change: On the Bart front, we announced Jim <unk> as our new independent Board member, bringing decades of experience into our board guys welcome to the team.
Speaker Change: I'm trying to understand how should we think these are in the coming quarters because in my understand when I see.
Speaker Change: The implied interest rates that you are charging in Ian in the crowded which is up 200% of our CDI why are the securities gains are at top 100% of CDI. So I believe that this potentially queasy N I M. It would come from or it would be.
Last but certainly not least as part of our commitment of staying ahead of the market to date, we launched our social platform.
Speaker Change: Through this platform our clients will have the opportunity to engage in discussions shared their experience with our products and invest collectively.
Speaker Change: Hum driven by U M improve the capital location.
All of it in our financial Super App.
Thank you very much operator, let's move to the Q&A session.
Speaker Change: Increasing the exposure to the credit. So my question here is this right. So my point is just correct. If you think that the as you are.
Speaker Change: Okay.
We will now begin the question and answer session.
Speaker Change: Please note that the in the interest of time, we will allow each participant to ask one question with one follow up for each question.
Speaker Change: Improve the capital location this up and I am sure should improve in the coming quarters.
Speaker Change: And Dan I am adjusted by risk will remain this up in these.
Speaker Change: Once 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 questions live at this point a request to activate your microphone will appear on your screen. If you prefer not to open your microphone lives.
Speaker Change: Improvement.
Speaker Change: Track.
Speaker Change: Considering both sides cost of risk under control and the D. N I M with graduate improving so this is my question. Thank you.
Speaker Change: Hello. Thank you for the question am So I'll break down the question in two parts on the NIM part and then on the cost of risk.
Speaker Change: Please write down no microphone at the end of your question and our operator will read your question out loud.
Speaker Change: Both parts effect not in risk adjusted so.
Speaker Change: Our first question comes from Mr. Gustavo shrouded from Bradesco BVI.
Speaker Change: On the cost of risk side, we think that we should continue to be able to operate in the range of five zero to five 5% cost of risk. We continue to work actively imagine credit card exposures and improving that performance on a cohort by cohort basis, we have some portfolios that tend to improve that ratio.
Speaker Change: We're opening the audio now Sir please go ahead.
Gustavo shrouded: Hi, good afternoon, everybody and.
Gustavo shrouded: Thanks for taking my question.
Gustavo shrouded: First of all congrats to Sean due to the new role well deserved and I E.
Speaker Change: Our <unk> in home equity and real estate, the collateralized ones and then we have others that tend to increase that cost of risk ratio of speaks financing and buy now pay later altogether, we think that they would need each other and we should continue to be operating with this range over the quarter by quarter, we might have some volatility, but it will be.
Speaker Change: All of the success for you and good news.
Speaker Change: New role. So my question is regarding the D N I M.
Speaker Change: Adjusted by risk right, we could see an.
Speaker Change: An improvement quarter by quarter quarter over quarter, but.
Speaker Change: The increase was mainly driven by the lower cost of risk while the N I M was stable quarter on quarter.
Speaker Change: Within that range now moving to an inside not a pure news had before cost of risk. We had a few dynamics playing out we still have on payroll loans, which hasn't grown yet and on real estate loans, which has grown and notable upside in terms of increasing the average range of those portfolios we have.
Speaker Change: I'm trying to understand how should we think these are in the coming quarters because in my understand when I see.
Speaker Change: The implied interest rates that you are charging in Ian in the crowded.
Speaker Change: Mix playing out as we said many many times that <unk> and home equity are gaining China portfolio jointly they represented 15% the two new ones on top of those RPX financing on buy now pay later, we will see how much they they will represent in the future. We will we have high hopes, but it's still uncertain.
Speaker Change: Which is up 200% of CDI why are the securities gains are at top.
Speaker Change: 100% of CDI. So I believe that this potentially queasy N I M. It would come from or it would be driven by U M improve the capital location.
Speaker Change: And how much they will they will grow too and then M.
Speaker Change: Increasing their exposure to the credit. So my question here is just right. So my point is just correct. If you think that the as you are.
Speaker Change: We also have what we call a <unk>.
Speaker Change: Good problem to have is that we had a lot of liquidity flowing into our system. Now we grew 4 billion deposits and the loan book grew a portion of that so when that extra liquidity comes in it is temporarily yielding 100% of CDI. Therefore, it doesn't necessarily increase the NIM. It is.
Speaker Change: <unk> improved the capital location DS N I M should should improve in the coming quarters and D. N I M. Adjusted by risk we will remain this up in these.
Speaker Change: Improvement.
Speaker Change: Track.
Speaker Change: Considering both sides cost of risk under control and the D. N I M with graduate improving so this is my question. Thank you.
Speaker Change: NII accretive by until we deployed in the loan book.
Speaker Change: We take some time so in all.
Speaker Change: All in this together, we do see upsides in the NIM before vehicles of risky will not be everything accord linear, but we mentioned many times that our own 20 bps per quarter is what we see over the coming quarters, and then on cost of risk staying around the level as I mentioned at the beginning.
Speaker Change: Hello, Thank you for the question.
Speaker Change: So I'll break down the question in two parts on the NIM part and then on the cost of risk.
Speaker Change: Both parts effect not in risk adjusted so.
Speaker Change: On the cost of re side, we think that we should continue to be able to operate in the range of five zero to five 5% cost of risk will continue to work actively managing credit card exposures and improving that performance on a cohort by cohort basis, we have some portfolios that tend to improve that ratio.
Speaker Change: Perfect very clear something if I may just a follow up here, especially on the that define us and buy now pay later and the other unsecured the laws of each of the 330 million houses in the quarter, So eight 9% growth quarter on quarter on quarter.
Speaker Change: <unk> and home equity and real estate, the collateralized ones and then we have others that tend to increase that cost of risk ratio of speaks financing and buy now pay later altogether, we think that they would need each other and we should continue to.
Speaker Change: Sure.
Speaker Change: Even if I assume some.
Speaker Change: Deceleration in this in this are in the space of growth I think that's all quite at least at our estimates it is possible to reach something around the 902 1 billion is up.
Speaker Change: Operating with this range over the quarter by quarter, we might have some volatility, but it will be within that range now moving to our NIM side, not appearing inside before cost of risk. We had a few dynamics playing out we still have on payroll loans, which hasn't grown yet and on real estate loans, which has grown.
Speaker Change: Our loan book in this in this segment do you think it is a it is a reasonable choice to work with these with this number.
Shawn: <unk>. This is Shawn speaking thank you for your message in the beginning so when we think about the peak financing portfolio.
Shawn: Solving for growth in all the unsecured lines right, So big financing Bill pay cash.
Speaker Change: Notable upside in terms of increasing the average range of those portfolios, we have a better mix playing out as we said many many times that <unk> and home equity are gaining share in our portfolio jointly they represented 15% the two new ones on top of those RPX financing on buy now pay later, we will see how much they they will.
Speaker Change: Cash financing buy now pay later and the the overdraft.
Speaker Change: We're thinking of in all of those together.
Speaker Change: We are aiming something close to a beat and maybe a little bit under that but thats what were working for but one message I think it's important and I'd like to bring is about is not about just portfolio size, but also revenue formation, especially when we think about the credit card portfolio to be.
Speaker Change: It represents in the future we will.
Speaker Change: High hopes, but still uncertainty on how much they will they will grow too and then.
Speaker Change: We also have is a what we call a <unk>.
Speaker Change: Good problem to have is that we had a lot of liquidity flowing into our system. Now we grew 4 billion deposits and the loan book grew a portion of that so when that extra liquidity comes in it is temporarily yielding 100% of CDI. Therefore, it doesn't necessarily increase the NIM. It is.
Speaker Change: Our mix is about one <unk> interchange fees for every one to pay is in.
Speaker Change: Granted.
Speaker Change: Revenue from credit cards, if we look at the competition there today at about one interchange to three in credit. So the idea is to move closer. So close this gap we want to move from these one to one two to one to one to chew as quickly as possible.
Speaker Change: NII accretive band to be deployed in the loan book.
Speaker Change: We take some time, so am oil and these two area, we do see upsides in the NIM before cost of risk you will not be every single quad linear, but we mentioned many times that our own 20 bps per quarter is what we see over the coming quarters, and then on cost of risk staying around the level as I mentioned.
Speaker Change: Obviously, maintaining our risk appetite under control and delinquency under control. Thank you.
Speaker Change: Thank you very much.
Speaker Change: Bob.
Speaker Change: So as long detour here just to add on.
Speaker Change: At the beginning.
Speaker Change: Perfect very clear something if I may just a follow up here, especially on the the financing buy now pay later and the other.
Speaker Change: <unk> one thing that's very important on this new portfolio is consumer finance is what we have been saying for a while.
Speaker Change: Our secured the laws of your each of the 330 million houses in the quarter, So eight 9% growth quarter on quarter on quarter.
Speaker Change: Improve the risk reward equation, so when we do the pigs findings and when do we do the buy now pay later, we have the same risk that they used to have on the credit cards on the pathologic St Jude but.
Speaker Change: Sure.
Speaker Change: Even if I assume some deceleration in this in this space of growth I think that's all quiet at least our estimates it is possible to reach something around the 902 1 billion is up.
Speaker Change: Now with more yields on the financing and with take rate on the by an operator. So the change on the economics is very important so as you mentioned grow the volume the amount of the portfolio, but grew unlock the profitability ramp that youre going to make on this on this new artwork.
Speaker Change: Our loan book and this in this segment or do you think it is a it is a reasonable choice to work with dish was just number.
Hydro staff: Hydro staff. These Shawn speaking thank you for your message in the beginning so when we think about the big finance portfolio.
Speaker Change: So this is the good the better risk reward.
Speaker Change: Okay, very clear and thank you for the answers.
More solving for growth in all the unsecured lines right, So big financing Bill pay cash.
Hydro staff: Cash financing buy now pay later and the the overdraft.
Speaker Change: Our next question comes from Mr. Eduardo Rosman from BTG.
We're thinking of in all of those together.
Speaker Change: We're now opening the audio so you can ask your questions live. Please go ahead Sir.
Hydro staff: We are aiming something close to a beta may be a little bit under that but thats what were working for but one message I think it's important and I would like to bring is about is not about just portfolio size, but also revenue formation, especially when we think about the credit card portfolio to be.
Eduardo Rosman: Hi, everyone. Congrats on the numbers I think I have a question to resolve here right because Easter has been very successfully improving its roe's. However.
Eduardo Rosman: However.
Speaker Change: This improvement is not necessarily that will come in a straight line write off from time to time, the company will need to invest.
Hydro staff: Our mix is about one <unk>.
Hydro staff: In either change fees.
Speaker Change: How volatile are medium long term.
Hydro staff: For every one point too.
Speaker Change: Projects right so.
Hydro staff: In.
Speaker Change: These include you know the U S expansion for instance, I think as you all did an interview with Brazil, Giorno recently, where he talked about it and how he thinks it's a chip call option right. So so my question is you all how to balance sheet growth and vast months profitability right and how can you help us to understand what's really.
Hydro staff: Granted.
Hydro staff: Revenue from credit cards, if we look at the competition there today at about one interchange to three in credit.
So the idea is to move closer so close this gap, we want to move from one to one two to one to one to chew.
Speaker Change: Kind of a maintenance opex and what is our capex for the future.
Hydro staff: As quickly as possible, obviously, maintaining our risk appetite under control.
Speaker Change: Delinquency under control. Thank you.
Harlan: So harlan.
Harlan: Vito here thanks for the question.
Speaker Change: Thank you very much was powerful.
Speaker Change: So if you listen to the interview I mention that.
So as long intro here just to add on sand.
Speaker Change: I like that when you are really really innovative.
Speaker Change: Sanctioned <unk> one thing that's very important on this new portfolio is consumer finance is what we have been saying for a while.
Harlan: You are generating value without a lot of <unk>.
Speaker Change: Capex in a lot of Opex, so most of the things that the ethylene.
We are improving the risk reward equation. So when we do the pigs findings and when do we do the buy now pay later, we have the same risk that they used to have on the credit cards on the personal auto St Jude but.
Speaker Change: Getting to in the past we didn't spend a lot. So let's think about the into shop. For instance, we just came with that idea out of the blue we're able to use the same components in our app. The same things on our platform and we're able to generate a lot of revenue. So we're always trying to raise the bar how can we.
Speaker Change: Now with more yields on the financing and with take rate on the by an operator so.
The change on the economics is very important so as Tonya mentioned grow the volume.
Speaker Change: <unk>.
Speaker Change: Innovate out of our platform how can we cross sell upsell without the burden of investing a lot.
Tonya: Don't have them off the portfolio, but grew a lot.
Tonya: The profitability the revenue that they are going to make on this on this new portfolio.
Speaker Change: And when I think when you think about the the combination of ROE and growth.
Tonya: The good the better risk reward.
Speaker Change: To highlight that when we launch of this six territory plan back in January 2023, we stated that it wasn't it's still with a plan for both growth and profitability.
Speaker Change: Okay, very clear and thank you for the answers.
Speaker Change: Our next question comes from Mr. Eduardo Rosman from BTG.
Speaker Change: I want to make it crystal clear we are a growth company we're not.
Speaker Change: Sorry, we're now opening the audio so you can ask your question lives. Please go ahead Sir.
rozman: I can comment company, we are here to grow the business to grow there and but the good thing rozman that we can do that both.
Eduardo Rosman: Hi, everyone. Congrats on the numbers because I have a question towards resolved here right because Easter has been very successfully improving its Roe.
Speaker Change: We can get we can both grow and now also improve our profitability and that's what we're proving now on 2024.
Speaker Change: However, this.
Speaker Change: This improvement is not necessarily that will come in a straight line write off from time to time, the company will need to invest.
Speaker Change:
Speaker Change: Of course, its not going to be linear or not that we want to keep improving our ROIC faster and faster quarter over quarter, but long term long term. What we see is also that the operational leverage really kicks in so we're adding more revenue add anymore and dilute our fixed costs.
Speaker Change: How volatile are medium long term.
Speaker Change: Projects right so I.
Speaker Change: I think this includes you know the U.
Joel: <unk> Xa expansion for instance, I think as you all did an interview with Brazil joined recently, where he talked about it and how he thinks it's a chip call option right. So so my question is Joel how tour to balanced growth and vast months profitability right and how can you help us to understand what's really kind of a maintenance opex.
Speaker Change: This is very important this trend is here to continue so.
Speaker Change: We're very comfortable on both growing innovating and bringing more revenue, but also delivering our profitability. So it's a good balanced and actually at the end of the day. This is my role as the CFO I need to balance. These two things on the right way with the right time, we need to set the context of the market and I believe that we do that very well in the past and when.
Speaker Change: And what is the capex for the future.
Harlan: So harlan.
Harlan: Vito here thanks for the question.
Joel: So if you listen to the interview I mention that.
Speaker Change: I like that when you are really really innovative.
Speaker Change: It kept going up.
Speaker Change: Going forward.
Speaker Change: Generating value without a lot of.
Speaker Change: Yeah.
Speaker Change: Great. Thanks, a lot Joel.
Capex in a lot of Opex. So most of the things that we have.
Speaker Change: Ethylene to in the past we didn't spend a lot. So let's think about the into shop for instance.
Speaker Change: Our next question comes from Mr. Yuri for nine days from J P. Morgan Mr. Fernandez, we are now opening the audio so you can ask your question lives. Please go ahead Sir.
Speaker Change: <unk> got an idea out of the Blue we're able to use the same components in our app. The same things on our platform and we're able to generate a lot of revenue. So we're always trying to raise the bar how can we.
Speaker Change: Thanks, everybody and congratulations again for the promotion.
Speaker Change: A follow up on the <unk> on the on the bladder H I know like hedges.
Innovate out of our platform how can we cross sell upsell without the burden of Beth Malone.
Speaker Change: Thanks for being here.
Speaker Change: And some decrease in the numbers, but it will go to the personal loans and credit cards.
Speaker Change: And when I think when you think about the the combination of our OEM growth.
Speaker Change: We know the decrease on the on the acquired delete implied rates rates and I know I get fixes is Athena cards, and maybe correct me if I'm wrong here.
Speaker Change: To highlight.
Speaker Change: When we launched this six territory plan back in January 2023, we stated depth.
Speaker Change: I think like the overdraft and other line as they are we see the personal personal loans. So my question is should we not see in all those lines moving up.
Speaker Change: Often it's still with a plan for both growth and profitability.
Speaker Change: I want to make it crystal clear we are a growth company we're not.
Speaker Change: We will continue to deliver on these unique stores I would say.
Speaker Change: I can comment company, we are here to grow the business to grow there and but the good thing Rothman that we can do that both.
Speaker Change: Our profitable products. It was a surprise to me that you know that we saw the emo is more degrees in what happened for this thank you very much.
Speaker Change: Okay.
Speaker Change: We can both grow and now also improve our profitability that's what we're proving now.
Speaker Change: Hi, Judy it's Andy here. So thank you for your question on personal loans.
Speaker Change: On 2024.
Andy: The improvement will be slow, but steady relative to a year ago. We're now at a 140 basis points higher in the rate that we disclosed today, if we measure that ready to CDI, even more and we do have the majority of that portfolio Isa, causing narrow payroll deductible.
Speaker Change: No.
Speaker Change: Of course, its not going to be leaner.
Speaker Change: Not that we want to keep improving our raw faster and faster required require but long term long term what we see is also there.
Speaker Change: The operational leverage really kicks in so we're adding more revenue add anymore and dilute our fixed costs. So this is very important this trend youll see us to continue so yes.
Speaker Change: Alone and we had a portfolio or a CLO portfolio that we acquired and Avaya and assess retirees that are higher interest rates those are expiring and maturing and that has pushed a bit down them the rate, but overall, we do see a continuation of the improvement in the coming quarters and they can see now that you're done digitally.
Speaker Change: We're very comfortable on both growing innovating, bringing more revenue, but also delivering our profitability. So it's a good balance and actually at the end of the day. This is my role as the CEO.
Speaker Change: I need to balance those two things on the right way with the right time, we need to see the context of the market and I believe that we do that very well in the past when it keep going up.
Speaker Change: Initiatives that are being taken place and together with more portability and a lower rate environment than what we had a year two ago, yeah with some growth on that portfolio that are repricing to them should be faster going forward.
Speaker Change: Going forward.
Okay.
Speaker Change: Great. Thanks, a lot Joel.
Speaker Change: Okay. Thank you and regarding the card the similar similar approach us like what should we continue to see this recovery and whatnot.
Our next question comes from Mr. Yuri Fernandes from Jpmorgan. Mr. Fernandez, we are now opening the audio so you can ask your question lives. Please go ahead Sir.
Speaker Change: Gain traction there.
Speaker Change: As a remainder.
Yuri Fernandes: Hi, everybody and congratulations again for the promotion.
Speaker Change: Driver there in change of guard snow that Novartis picks financing as I mentioned in a prior question. We we have been accelerating from the beginning of the year, but since it's.
Yuri Fernandes: I have a follow up on the minorities on the on the bladder H I know like hedges maintains linea <unk>. Some decrease in the numbers, but it will go to the personal loans and credit cards.
Speaker Change: A new report is difficult to model to which level.
Speaker Change: We grow and we do it's a very short Pulitzer, we're running and trying to extend it through our client base, but.
Speaker Change: We note the decrease on the on the acquired Billie <unk> rates rates and I know I guess thesis is Athena cards, and maybe correct me if I'm wrong here and I think like the overdraft and other line as they are we seeing the personal personal loans. So my question is should we not see in all those lines moving up.
Speaker Change: But we need more time to assess on how much it will grow but as it gained share within credit card interest rates cuts will obviously go up the average interest rate on these loans is 6% per month.
Speaker Change: Okay very clear.
Speaker Change: We will continue to deliver on these unique stores I would say.
Speaker Change: Thank you.
Speaker Change: We're profitable broadens it wasn't a surprise to me that you know.
Speaker Change: We saw the emo is more degrees and what happened.
Speaker Change: Our next question comes from Mr. Tito Laboratory from Goldman Sachs. Mr. Laboratory, we are now opening the audio so you can ask your question live. Please go ahead Sir.
Speaker Change: Thank you very much.
Speaker Change: Hi, it's Andy here. So thank you for your question on personal loans.
Speaker Change: Hi, good afternoon, thanks for the call and taking my question a couple of questions. If I can actually first just on the hirings in the quarter. I mean do you expect it do you think that was more of a one time thing do you expect to do more hirings.
Speaker Change: The improvement will be slow, but steady relative to a year ago. We're now at 140 basis points higher in the rate that we disclosed today, if we measure that ready to CDI, even more and we do have the majority of that portfolio Isa, causing narrow payroll deductible.
Speaker Change: I know you are still on track for the longer term, 30% efficiency, but just didn't know more short to medium term how should we think about efficiency and any other hiring plans that you may have and then a second question just that yeah, and congrats sandy with the promotion.
Alone and we had a portfolio of our CLO portfolio that we acquired and of ion assess retirees that are higher interest rates those are expiring and maturing and that has pushed a bit down them.
Sandy: But with that promotion drove it there now you're more of a global CEO you know in the past you had talked you know.
Speaker Change: But overall, we do see a continuation of.
Speaker Change: About the U S could be 50% of the business I don't think those are necessarily the plans today, but just I mean do you expect to spend more time looking at the U S or other expansion plans, how do you think about other potential geographies and how much they they may contribute to earnings or profitability over the coming years. Thank you.
Speaker Change: The improvement in the coming quarters and the casinos you dial these digital initiatives that are being taken place.
Speaker Change: And together with more portability, and a lower rate environment than what we had a year or two ago and with some growth on that portfolio that are repricing to them should be faster going forward.
Speaker Change: <unk> speaking, let's start from the less rational.
Speaker Change: Okay. Thank you and regarding the cartilage similar similar approach since you'd like what should we continue to see this recovery and moving up.
Speaker Change: Comments on expansion.
Speaker Change: I also mentioned on the interview I gave to Brazil during that pause them I mentioned earlier to date.
Speaker Change: This gain traction there.
Speaker Change: Yeah, So the main draw.
Speaker Change: It's not about only the U S business is about having our global comp initiative available for other countries as I mentioned and as of today. The Brazilians are the only one that using debt.
Speaker Change: Driver there in change of guard Novartis picks financing as I mentioned in the prior question.
Speaker Change: We have been accelerating from the beginning of the year, but since it's.
Speaker Change: We believe that youre going to be able to offer this amazing product, which is a huge success amongst the brazilians to other individuals all over the globe as well also been more in your strategy I'm going to thinking that the future of India.
Speaker Change: And your product is difficult to model to which level.
Speaker Change: We grow and we do it's a very short bullet for we're running and trying to extend it through our client base, but.
But we need more time to assess on how much it will grow but as it gained share within credit cards interest rates cuts will obviously go up the average interest rate on these loans is 6% per month.
Speaker Change: With this new let's say position.
Speaker Change: I have been very focused and.
Speaker Change: And I love that to be honest on the UX UI and the technology behind the scenes. So for us to be ahead of the competition first to be the most innovative company, we need to think about what they're going to launch next.
Brett: Sure Brett.
Brett: Thank you.
Speaker Change: <unk> performing how are you ask and not only depth do you think that youre going to be a bank that's going to a platform that we're going to interactive brokers not only to a nap or do think you are going to use our applications on the back end to integrate directly for our clients through voice throwbacks through Whatsapp So I'm.
Our next question comes from Mr. Tito Laboratory from Goldman Sachs. Mr. Laboratory, we are now opening the audio so you can ask your question live. Please go ahead Sir.
Speaker Change: Hi, good afternoon, thanks for the call and taking my question a couple of questions. If I can actually first just on the hirings in the quarter. I mean do you expect do you think that was more of a onetime thing do you expect to do more hirings.
Gilead: Trying to put this in place together with Gilead in Orissa job and I really love to not only to build the best products, but to facilitate how the clients engage embracing use their products with us.
Speaker Change: I know you are still on track for the longer term, 30% efficiency, but just didn't know more short to medium term how should we think about efficiency and any other hiring plans that you may have and then a second question just that yeah, and congrats sandy with the promotion.
Speaker Change: The other question regarding hiring.
Speaker Change: As also I mentioned to asthma.
Speaker Change: On the previous question.
Speaker Change: We're playing here for the mid long term I'll say more for the long term.
Sandy: But with that promotion drove it there now you're more of a global CEO.
Speaker Change: And I like to say to our team here into our is our head of IR to my Dream is to have millions of employees no problem, but.
Speaker Change: In the past you had talked.
Speaker Change: About the U S could be 50% of the business I don't think those are necessarily the plans today, but just I mean do you expect to spend more time looking at the U S or other expansion plans. How do you think about other potential geographies and how much they may contribute to earnings or profitability over the coming years. Thank you.
Speaker Change: But we need to make sure that they are generating value for our company and mostly on technology on the on the commercial side, that's where we are investing more of these new hires.
Speaker Change: Just for you to have an idea on depth, we add 195.
Speaker Change: Well <unk> speaking, let's start from the last question less a comment on expansion.
Speaker Change: Called Gopac's, Nonetheless, Klara, we did a big broader Europe, and Brazil, we were able to bring we believe very very talented guys to help us all night, they just joined us and Theyre going to help us a lot of building this new products evolving these new products.
Speaker Change: I also mentioned on the interview I gave to Brazil during that pause them I mentioned earlier to date.
Speaker Change: It's not about only the U S business are both having our global coffee initiative available for other contracts as a national and as of today. The Brazilians are the only one that using depth.
Speaker Change:
Speaker Change: And we also bring a lot of people in commercial side, because we believe that these guys are the one generates revenue for our platform.
Speaker Change: We believe that we're going to be able to offer amazing product, which is a huge success amongst the brazilians to other individuals all over the globe as well also been more in your strategy I'm going to thinking that the future of either.
Speaker Change: All that said, we were still committed to our 630 plan, which.
Speaker Change: We want to get to a 30% efficiency ratio and therefore, we don't see our platform.
Speaker Change: With this new let's say position.
Speaker Change: I have been very focused and.
Speaker Change: And I love that to be honest on the UX UI and the technology behind the scene. So for us to be ahead of the competition first to be the most innovative company, we need to think about what theyre going to launch next.
Speaker Change: Getting a lot of new highest without bringing the revenue together. So what we see is that we.
Speaker Change: Invest in technology, we invest in markets and invest in these new hires but we get more I would say the double in terms of routing that work with in terms of the.
Speaker Change: Or are you wipe performing how are <unk> and not only that type thing that we're going to be a bank that's going to a platform that we're going to interact with our customer only to a nap or do think you're going to use our applications on the back end to integrate directly for our clients through voice through backs through whatsapp. So.
Speaker Change: The right equation for us.
Speaker Change: So that's it.
Speaker Change: Yeah.
Ravi: Great. Thanks Ravi.
Speaker Change: Trying to put this in place together with Gilead, and obviously job and I really love to not only to build the best products, but to facilitate how the clients engage embracing use their products with us.
Speaker Change: Our next question comes from Mr. Pedro Leduc from Ito BBA DBA. Mr. Ledoux, we are opening the audio so you can ask your question life. Please go ahead Sir.
Speaker Change: The other question regarding hiring.
Pedro Leduc: Yes. Thank you so much first on the service revenues are nice nice increase here line commissions, capturing things as insurance. If you can talk a little bit more about it.
Speaker Change: As also I mentioned to Osman.
Speaker Change: On the previous question.
Speaker Change: We're playing here for the mid long term out more for the long term.
Speaker Change: Quarter had any specific dose to it so it's really a new run rate level youre, reaching here for services.
Speaker Change: And I'd like to say to our team here into our is our head of IR to my Dream is to have millions of employees no problem.
Speaker Change: And.
Speaker Change: On the loan book side credit portfolio had a significant increase in credit card anticipation. If this is already something that has to do with the integration of granito or not yet. So these two questions. Thank you.
Speaker Change: But we need to make sure that they are generating value for our company and mostly on the tech knowledge on the on the commercial side, that's where we are investing more of just new hires.
Speaker Change: Just for you to have an idea on depth we add.
Speaker Change: 195.
Ravi: Luke it's Andy here. Thank you for the question. So on commission and brokerage fees, which grew from 146 to 189, meaning almost a 30% quarter over quarter no. We did not have any.
Speaker Change: Recall gopac's. Nonetheless, Klara you did a big problem for Europe, and Brazil, we were able to bring we believe very very talented guys to help US 90, they just joined us.
Speaker Change: One offs of any type and this was pure organic growth. The main driver was inter shop in the shop had a 50% GMB growth relative to the prior or the.
Speaker Change: To help with a lot of building this new products evolving these new products.
Speaker Change:
And we also bring a lot of people in commercial side, because we believe that these guys are the one generates revenue for our platform.
Speaker Change: But all that said we were still committed to our 630 plan, which.
Speaker Change: And the same quarter of last year, $1 1 billion Reais very nice acceleration on top of that we're just not in this number buy now pay later attributed to these also scaling up nicely.
Speaker Change: We will we want to get to a 30% efficiency ratio and therefore, we don't see our platform.
Ravi: And then the I Wanna Worser insurance, so we had a nice growth in them.
Speaker Change: Getting a lot of new highest without bringing the revenue together. So what we see is that we invest in technology, we invest market and we invest in these new hires but we get more I would say the double in terms of revenue with in terms of Alex Smith.
Ravi: On that front as well, which has to do with many factored by the one I would stand out is the <unk> insurance that we are we launched at the beginning of the year I've had great adoption throughout our plan based on that has pushed up the airlines also grew a bit but those were the main two drivers and then in terms of EM.
Speaker Change: The right equation for us.
Speaker Change: So thats it.
Speaker Change: Yes.
Speaker Change: And can you remind me the second one.
Ravi: The credit Carnival expectation on the loan book.
Speaker Change: Great. Thanks Ravi.
Speaker Change: Yes, or no what we did here as I mentioned before we were blessed on having a very nice inflow of deposits from our clients. So that's why I say, we mentioned when we were only something that good problem to have we employ as much as we good in our loan portfolio, which is the accretive long term and we do it but temporarily we deploy.
Speaker Change: Our next question comes from Mr. Pedro Leduc from Ito BBA DBA Mr. Luke we are opening the audio so you can ask your question lives. Please go ahead Sir.
Yes. Thank you so much so first on the service revenues a nice nice increase here line commissions, capturing things as insurance.
Ravi: Indifferent cash M options that tried to yield a bit more than just <unk> and this is one of them <unk>.
If you can talk a little bit more about it.
Ravi: Portfolios of the anticipate portfolios of Quaker receivables, and we get a margin or where the cities are short portfolios, but republic as they are with a bit of an extra yield until we're able to apply in the loan portfolio.
Speaker Change: Quarter had any specific boost to it so it's really a new run rate level youre, reaching here for services.
Speaker Change: And.
Speaker Change: On the loan book side credit portfolio had a significant increase in credit card anticipation. If this is already something that has to do with integration of granito or not yet. So these two questions. Thank you.
Speaker Change: Okay, and this has nothing to do with granite to yet.
Speaker Change: If you can comment how it cycles in the second half.
Speaker Change: Solid okay, Ron speaking I'd like to comment on.
Ron: On India.
Ron: Actual grant in Italy, we renamed it <unk>.
Speaker Change: Luke Air Centre here. Thank you for the question So on commission and brokerage fees, which grew them.
Speaker Change: And we don't have a connection with that yet but on the other hand I.
Speaker Change: I would like to express how excited I am about this this integration.
Speaker Change: From 146 to 189, meaning almost 30% quarter over quarter no. We did not have any one offs of any type and this was pure organic growth. The main driver was inter shop in the shop had a 50% GMB growth relative to the prior or the same.
Speaker Change: To be honest it surpassed our expectations and I believe you crushed on Smes and acquiring.
Speaker Change: Just by changing the name, we see a big inflow of clients asking for that for that product.
Speaker Change: Product I think there are some dimension, we have a very good cost of funding short term funding through our demand deposits that will serve very well on this strategy.
Speaker Change: Last year, $1 1 billion Reais very nice acceleration on top of that which is not in these number buy now pay later attributed to these also scaling up nicely.
Speaker Change: We still need to integrate a lot of things. So for instance, there are need to navin bag has its own app now we are integrating the up to two hour pay short term business app.
Speaker Change: And then the I Wanna Worser insurance, So we had a nice growth from them on.
Speaker Change: On that front as well, which has to do with many factors, but the one I would stand out is the <unk> insurance that we are we launched at the beginning of the year I've had great adoption throughout our plan based on that has pushed up the airlines also grew a bit but those were the main two drivers and then in terms of EM.
Speaker Change: And I'm very excited that we will be able to do something amazing with Smes.
Speaker Change: Down the road, but so far what we did was pretty much with other players on the market, we're able to buy the receivables and not a lot.
Speaker Change: And can you remind me the second one.
Speaker Change: You've got back yet, but very excited with what we can do with this platform embedded in our Super App.
Speaker Change: The credit card solicitation on the loan book.
Speaker Change: Amazingly well, thank you I'll focus on global.
Speaker Change: Yes, or no what we did here as I mentioned before we were blessed on having a very nice inflow of deposits from our clients. So that's why I say, we mentioned when we were only something that good problem to have we deployed as much as we could in our loan portfolio, which is they're accretive long term and we do it but temporarily we.
Speaker Change: Our next question comes from MS Niihau Gabriella from HSBC.
Speaker Change: Mr. Gallois Love, we are opening the audio so you're going to ask you. A question lives. Please go ahead ma'am.
Speaker Change: We employed indifferent cash M options that tried to yield a bit more than just <unk> and this is one of them <unk> and portfolios of they anticipate portfolio for credit card receivables and we get a margin or where the cities are short portfolios, but republic as they are with a bit of an extra yield Andrew we're able preplanning Malone.
Niihau Gabriella: Thank you so much for my questions. Thank you. So much my question two questions one follow up on the last point.
Speaker Change: Can you talk a bit more about what the one single bottom walking without going to go out and no matter. If that's more bonds that you have are you talking about without Inc.
Speaker Change: <unk>.
Speaker Change: <unk> failure.
Speaker Change #100: Okay, and this has nothing to do with Granito yet.
Speaker Change: So and and we understand that the opening of the phase, which is not very penetrated than a lot of digital basketball focuses on normal for me what is the opportunity you see there and how would you like to position bank on this slide.
Speaker Change #101: If you can comment how would it cycles in the second half.
Speaker Change #102: Solid look he's wrong speaking.
Speaker Change #103: I'd like to comment on.
Speaker Change #102: On India.
Speaker Change #103: Actual grant in Italy, we renamed between third party and.
Speaker Change: And my second question is on the BNP product could you talk a bit more about the b M. B a blood out of that you have into shop, what present data.
Speaker Change #104: We don't have a connection with that yet but on the other hand.
Speaker Change #105: I would like to express how excited I am about this this integration.
Speaker Change: Financing for your customers what is the takeaway that you get on the BMT and saw that a bit more color on that thank you so much.
Speaker Change #106: To be honest it surpassed our expectations and I believe you crushed on Smes and acquiring.
Speaker Change #106: Just by changing the name we see a big inflow of clients asking for that for that client and product I think there are.
Pioneer: Pioneer <unk> speaking. Thank you for your question I'll start with the with the SME parks. So in terms of positioning. So we have almost two different strategies that are converging. All first is is in SME lending that we have.
Speaker Change #106: As Sandy mentioned, we have a very good cost of funding short term funding through our demand deposits that will serve very well on this strategy and a half.
Speaker Change #107: Of course, we still need to integrate a lot of things. So for instance that are needed to knowing that bag has its own app now we are integrating the app too.
Pioneer: Done for many years and that's a growing yet we have very good momentum in the second one goes back to what we started in 2019, which is the the SME accounts. These accounts have grown a lot they're super popular already. So we are currently at about 2 million clients that have a variety.
Speaker Change #106: Our pay short term business apps.
Speaker Change #107: And I'm very excited that we will be able to do something amazing with SME.
Speaker Change #107: Down the road, but so far what we did was pretty much with other players on the market, we're able to buy the receivables and not a lot.
Speaker Change: Of profiles about one meter in our may which are.
Speaker Change #107: You've got back yet, but very excited with what we can do with this platform embedded in our Super App.
Speaker Change: More entrepreneurs in Brazil, then we have about 600000 microbial says 200000 small businesses businesses and the remaining which is little more than 100000 or larger businesses and these amounts were about 10%.
Speaker Change #109: Amazing well, thank you I'll focus on global.
Speaker Change #110: Our next question comes from MS Nihon Gabriella from HSBC.
Speaker Change: The companies in the country already with us banking with us.
Speaker Change #111: Mr. Gallois Love, we are opening the audio so you can ask a question lives. Please go ahead ma'am.
Speaker Change: The profile of these customers should be leans more towards services.
Speaker Change #112: Well. Thank you so much for my questions. Thank you. So much my question Joe question, plus a follow up on the La Z Boy.
Speaker Change: Given that our or offering up to now was more of a digital bank we didn't have a why.
Speaker Change #113: Can you talk a bit more about what the one missing about them often.
Speaker Change: We did sell the prior product the prior product off the old Grand needle, but not integrated S. Interbank. So we didn't have a robust offering for retail.
Speaker Change #114: Regarding the number of ethanol cars that you have.
Speaker Change #115: You're talking about good uptake.
Speaker Change #116: Yeah, Glenn information.
Speaker Change: On a few things account usage on is very heavy on the transactional business today. So we're super Underpenetrated on everything else. This means a lot of opportunity.
Speaker Change #117: And we understand that the opening of the state's niches.
Speaker Change #118: <unk> already been insulated than a lot of additional batches are focusing for a normal what.
Speaker Change #119: What is the opportunity you see there and how would you like to position.
Speaker Change: Four growing clients, bringing client theme with a more robust offering and also increasing the share of wallet of high value add products. This is when <unk>.
Speaker Change #120: Vangorden beside the ethylene and my second question is on the BNP product could you talk a bit more about the b M. B a bar that you have in the shop.
Speaker Change: <unk> comes in so we believe that we're going to be able to do a lot of nice things within their bag, So cross selling as I mentioned.
Speaker Change #119: <unk>.
Speaker Change #119: Financing.
Speaker Change #121: What are your customers what is the takeaway that you get on the BMT and saw that a bit more color.
Speaker Change #122: Other than that thank you so much.
Speaker Change: And I'll call it like B directional.
Speaker Change: In either <unk> or <unk> in their bag into either do something that we will do.
Speaker Change #122: Pioneer this is Shawn speaking. Thank you for your question I'll start with the with the SME parks. So in terms of positioning so we have almost two different strategies that are converging.
Speaker Change: One of my favorite approaches that we're already putting together is product bundles.
Speaker Change: With banking and acquiring now we can't think of a client as unique and some the revenues for both sides, you'll see where it's interesting to grow and with that in place. We can do a strong go to market in the retail business of all sizes. So again, we have the balance sheet, we have the <unk>.
Speaker Change #122: <unk> is a is an SME lending.
Speaker Change #122: What we've done for many years and that's a growing yet we have very good momentum in the second one goes back to what we started in 2019, which is the the SME accounts. These accounts have grown a lot they're super popular already so we're currently at about 2 million clients that have a very.
Speaker Change: Credit products and now will have the bundles and the music sites us to keep growing on SME.
Speaker Change #122: Variety of profiles about one meter in our may which are <unk>.
Speaker Change: And Ron will take the second part thank you.
Speaker Change #123: More entrepreneurs in Brazil, then we have about 600000 microbial says 200000 small businesses businesses and the remaining which is little more than 100000 or larger businesses and this amounts to about 10%.
Ron: Thank you <unk> and I'm going to comment about monopoly here, but just to add on insurance comment.
Ron: And with all due respect to our on thunderstorm on banners I mean, the digital banks, we have by far the best product in business account and for a lot of risk, but we start by differentiate and Thats, where a bank would be enough to be in for a business account is a very important how we can offer highly conserve our client.
Speaker Change #123: The companies in the country already with us banking with us.
Speaker Change #123: The profile of these customers should be leans more towards services.
Speaker Change: By being a bank.
Speaker Change #124: Given depth or offering up to now was more of a digital bank, we didn't have a quiet well.
Speaker Change: And now the last thing that we didn't have was acquired now we have by far the best product is it still a blue ocean in Brazil. The business accounts. They are still underserved overcharging in Brazil, not only on individual account the competition to speak on the business account.
Speaker Change #124: We did sell the <unk>.
Speaker Change #124: I am proud that the prior product off the old grant needle, but not integrated S. Interbank. So we didn't have a robust offering for retail.
Speaker Change: Most of the markets are still underserved overcharged huge opportunity for us going to buy an operator, we as I have been saying for a while I'm very excited with this product we launched <unk> back in 2019, and we wanted to connect.
Speaker Change #124: On a few things account usage on is very heavy on the transactional business today. So we're super Underpenetrated on everything else. This means a lot of opportunity for.
Speaker Change #124: Four growing clients, bringing client theme with a more robust offering and also increasing the share of wallet of high value add products. This is when <unk>.
Speaker Change: The engagement that to have.
Speaker Change: With the clients with the findings there and that's how we sell our products on the retail <unk>.
Speaker Change #124: <unk>. So we believe that we're going to be able to do a lot of nice things within their box, So cross selling as I mentioned.
Speaker Change: And what we're happy about that.
Speaker Change: With small <unk>.
Speaker Change: Next on the product you can see that the volumes are growing so we were doing like only 100000 eyes per day than 200 501 million now we're getting close to 2 million 3 million per day.
Speaker Change #124: And I'll call it like B directional.
Speaker Change #124: <unk> <unk> or <unk> in their bag into either do something that we will do.
Speaker Change: In by an operator, so it's already.
Speaker Change #124: One of my favorite approaches that we're already putting together is.
Speaker Change: A big percentage of our gym in their shop.
Speaker Change #124: Product bundles.
Speaker Change #124: With banking and acquiring now we can't think of a client as unique and some the revenues for both sides, you'll see where it's interesting to grow and with that in place. We can do a strong go to market in their retail businesses of all sizes. So again, we have the balance sheet, we have there.
Speaker Change: And the good news with very good risk reward as I mentioned.
Speaker Change: So I believe that's the future of consumer finance, Brazil to offer together the product <unk> and a good finance embed. It that's how we foresee consumer finance in Brazil, and not only for goods for service as well. So we have here airline tickets lodging everything tool to sell to their clients.
Speaker Change #124: Credit products and now we will have the bundles and music sites us you'll keep growing on SME.
Speaker Change: And just to connect with.
And Ron will take the second part thank you.
Speaker Change: One question that was made I believe by you would or I don't know I don't recall about the peaks financing these type of things to get a big financing by an operator.
Ron: Thank you <unk> I'm going to comment about monopoly here, but just to add on insurance comment.
Speaker Change: Globally, they are replacing the famous passage of parcel out singles, which is a problem in Brazil. So when we do the picks financing by Nokia leader, we're putting our balance sheet, our risk to work and get.
Speaker Change #126: And with all due respect to our.
Speaker Change #128: On tenders Toro competitors I mean, the additional banks, we have by far the best product in business account and for a lot of risk, but we start by differentiate and Thats, where a bank would be enough to be in for a business account is a very important how we can offer highly conserve our clients by being a bank.
Speaker Change: At the same time for the right clients for the right product, we can differentiate the rates for these plants that clients. If they are buying our service our goods. So we now have all.
Speaker Change #128: And now the last thing that we didn't have was acquired now we have by far the best product is it still a blue ocean in Brazil. The business accounts. They are still underserved overcharging in Brazil, not only on individual account the competition to speak on the business account.
Speaker Change: The hands on deck to improve the risk reward for consumer finance in Brazil, So big financing by Napa layers, together are outpacing us Allison, Jules which which.
Speaker Change #128: Most of the market are still underserved overcharged huge opportunity for us going to buy an operator.
Speaker Change: <unk> is very good which are very good news for ourselves and part of the digital players.
Speaker Change: On the consumer finance.
Speaker Change #128: We as I have been saying for a while I'm very excited with this product we launched <unk> back in 2019, and we wanted to connect.
Speaker Change: The environment in Brazil.
Speaker Change: That's still the case.
Speaker Change: Congress on that that is what I love about it.
Speaker Change: The ones that are not awfully business. So.
Speaker Change #128: The engagement there to have.
Danny: Go ahead, Danny I think me yeah. Thank you on getting things are getting alchemy, <unk> banking product and then cross selling of gliding up instead is they don't need to make more sense for you because you're backing all thing <unk>.
Speaker Change #128: With the clients with the findings there and that's how you sell our products on the retail <unk> and.
Speaker Change #128: And we're happy about that that's with small tweaks on the product to see that the volumes are growing. So we were doing like only 100000 ice per day them 200, 501 million now we're getting close to 2 million 3 million per day.
Danny: Being much more superior to what it can be it is all said and who are you getting these customers from exiting a lot of them use of gliding with either the increments is yeah, no that would be getting that are maybe a little bit more when you all are.
Speaker Change #128: In by an operator, so it's already a big percentage of our gym in.
Speaker Change: So and then pause.
Speaker Change: The main are glad I submit to you it's been a bit easier for you to gain.
Speaker Change #128: In the shop.
Speaker Change #128: And the good news with very good risk rewards as I mentioned.
Viking: Indeed, Viking something thank you.
Speaker Change #129: So I believe that's the future of consumer finance, Brazil to offer together the product <unk> and a good finance embed that that's how we foresee consumer finance in Brazil, and not only for goods for service as well so we have here.
Nina: Thanks Nina.
Speaker Change: So the natural trend for US is to do the cross sale as you mention so we attract customers based on our the quality of our.
Speaker Change: Our business account, which is again very popular super good UX both from <unk>.
Speaker Change #129: Airline tickets lodging everything tool to sell to their clients and just to connect with one.
Speaker Change: Both web and App, we convert we did a large project in the last say two or three years, where we converge the experiences.
Speaker Change #130: One question that was made I believe by you would or I don't know I don't recall about the peaks financing these type of things to get it fixed financing by an operator.
Speaker Change: And these attracts customers seen in high volumes as we're seeing.
Speaker Change: And then the idea is so what happened is.
Speaker Change #131: Slowly we are replacing the famous passenger parcel out singles, which is a problem in Brazil. So when we do the picks financing the buy now pay later, we're putting our balance sheet, our risk to work and get yields.
Speaker Change: Also to what you have said most of the revenue base that we already have from these customers are related to the transactional business, which is the core of the product offering today.
Speaker Change: As we move forward with in their bag.
Speaker Change #131: Yielded at the same time for the right clients are derived product, we can differentiate the rates for these.
Speaker Change: We are deploying arguably the acquiring.
Speaker Change: Products, and we're going to keep on growing and increasing both share of wallet of these customers so bringing acquiring share of wallet for example.
Speaker Change #131: These clients their clients if they are buying our service are good. So we now have all of the.
Speaker Change #131: The hands on deck to improve the risk reward for consumer finance in Brazil, So big financing by Napoli added together are.
Speaker Change: And also exploring new products that we're launching internally not necessarily through M&A, we're seeing new credit products being deployed.
Speaker Change #131: Outpace pathologic singles, which which is very good which are very good news for ourselves and part of the digital players.
Speaker Change: There is for example, one that's partly in Brazil F. G. I, we've been growing there. There is another one which is paramount beat which has more than 100 billion portfolio in Brazil.
Speaker Change #131: On the consumer finance.
Speaker Change #131: The environment in Brazil.
Speaker Change #132: That sounds like a congress on that almost all of it that you want it or not.
Speaker Change: We're going to explore so this is also good and has a very good.
Speaker Change #132: Hopefully business so.
Speaker Change:
Speaker Change: Can have a very good adoption rate with our base. So a lot of good plans should go there and your approach is right, but I wouldn't.
Speaker Change #132: Go ahead, Danny I think me do you think you are getting <unk>.
Jack: I believe that Jack exemplary of banking product and then cross selling our glad and instead if at all that make more sense for you because you're backing opening <unk> been.
Speaker Change: <unk>.
Speaker Change: I wouldn't not explore also.
Speaker Change #134: Being much more superior to what it can be this outfits and who are you getting these customers from adding a lot of them use of gliding with either the increments is yeah, no that'd be getting that are maybe a little bit more of aneel.
Speaker Change: The opportunities to go to market and explore the retail opportunity now that we have the acquiring.
Speaker Change: In at home last before I forget.
Speaker Change: Where the market, where we acquire in these clients from primarily big banks. So that's why it's slowing.
Speaker Change #134: So and then pause.
Gladys Mitch here.
Speaker Change #134: Easier for you to gain.
Speaker Change #136: F&B Viking something thank you.
Speaker Change: Customers are hurt therefore years, mainly Pedro Otis with Super high fees.
Speaker Change #136: Thanks, Neil so the natural trend for US is to do the cross sale as you mention so we attract customers based on our the quality of our our business account, which is again very popular super good UX both from.
Speaker Change: And we came up with the free offering back in 2019, and it was a big source of.
Speaker Change: Our flow of customers from big banks to us to save on banking fees.
Speaker Change: Yeah.
Speaker Change #136: Both web and App, we convert we did a large project in the last say two or three years, where we converge the experiences and this attracts customers seen in high volumes as we're seeing.
Speaker Change: Great. Thank you so much and congratulations.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Mr. Mario Perry from Bank of America, Mr. Perry were opening the audience. So you can ask your question lives. Please go ahead Sir.
Speaker Change #136: And then the idea is so what happened is.
Speaker Change #137: Also to what you have said most of the revenue base that we already have from this customers are related to the transactional business, which is the core of the product offering to date.
Speaker Change: Hi, Good afternoon, everybody. Thank you for taking my question. Let me ask three quick questions on the first one is on page 22, you show your cost of funding a six 8%. This is the lowest level since the second quarter of 'twenty two however, as.
Speaker Change #138: As we move forward with in their bag.
Speaker Change #138: We are deploying arguably the acquiree.
Products, and we're going to keep on growing and increasing both share of wallet Apis customers, so bringing acquiring share of wallet for example, and and also exploring new products that we're launching internally not necessarily through M&A, we're seeing new credit products being deployed.
Speaker Change: Our percentage of market rates, he has gone up to 64%.
Speaker Change: If we look at the first quarter of 2022, and you were like 55%. So I'm wondering are you seeing any pressure on raising deposits and that's why we're seeing like a higher cost of funding.
Speaker Change #139: There is for example, one that's popular in Brazil F. Gi we've been growing there. There is another one which is paramount beat which has more than 100 billion portfolio in Brazil.
Speaker Change: Personal <unk> rates. So that's question number one second question.
Speaker Change #139: We're going to explore so this is also good and has a very good.
Speaker Change: Is related to your marketing expenses ride with some big increase in marketing expenses. So I'm just trying to understand is this a level that we should continue to see and are these marketing expenses target ever increasing client base or increasing engagement.
Speaker Change #139:
Speaker Change #141: Can have a very good adoption rate with our base. So a lot of good plans should go there and your approach is right, but I wouldn't.
Speaker Change #139: <unk>.
Speaker Change #139: I wouldn't not explore also be the opportunities to go to market and explore the retail opportunity now that we have the acquiring.
Speaker Change: And my third.
Speaker Change: Question is related to your sales of your sale of.
Speaker Change: Insurance right you show the number of policies rose two two and a half times roughly quarter on quarter, but revenue only grew 10%. So it doesn't mean that these policies. Then you are growing they have a much lower.
Speaker Change #142: In at home left before I forget.
Speaker Change #143: Where the market, where we acquire in these clients from primarily big banks. So that's why it's slowing.
Speaker Change: Ticket, how should we think about that and why why such a big disconnect in number of policies versus Brent.
Speaker Change #144: Customers are hertz, therefore years, mainly Pedro Otis with Super high fees.
Speaker Change #144: And we came up with the free offering back in 2019.
Speaker Change: Yeah.
Speaker Change: Okay.
Mario: Hi, Mario I'll take that the those three so and on the funding. This is connected nowadays the right hand side of the balance sheet with the left hand soundbites on the liability side, we are fortunate to crowd.
Speaker Change #144: And it was a big source of.
Speaker Change #144: Our flow of customers from big banks to us to save on banking fees.
Speaker Change #144: Yeah.
Speaker Change #145: Great. Thank you so much and congratulations on that does that.
Speaker Change #145: Thank you.
Speaker Change: In the quarter with the highest growth in deposits, excluding the fourth quarter that has positive seasonality and we raised $4 billion of M of deposit this quarter $1 3 billion, where the transactions are whilst which don't have a cost. But then we had $1 9 billion on time deposits and another <unk> billion, where lci's in.
Our next question comes from Mr. Mario <unk> from Bank of America, Mr. Perry were opening the audience. So you can ask your question lives. Please go ahead Sir.
Hi, Good afternoon, everybody. Thank you for taking my question. Let me ask three quick questions on the first one is on page 22, you show your cost of funding at six 8%. This is the lowest level since the second quarter of 'twenty two however, as.
Speaker Change: <unk> and <unk>.
Speaker Change: I can say that in theater is excess funding as I mentioned before is mostly allocated into liquid assets that yield close to 100%.
Speaker Change: CDI and tend to until.
Speaker Change #146: Our percentage of market rates it has gone up to 64%.
Speaker Change: Until we deploy these into a loan portfolio it into a compressed the NIM, but they are accretive and they also tend to M to boost its slightly up the cost of funding, but we feel.
Speaker Change #147: If we look at the first quarter of 2022, and you were like 55%. So I'm wondering are you seeing any pressure on raising deposits and that's why we're seeing like a higher cost of funding.
Speaker Change: That the more we capture the principality over our clients do more with their savings and a transaction of life in the platform. The better it is for US independently of the cost of funding level. We do think that at the close of his ability of Ci is a competitive advantage that we have and we will continue having but we will have some movements.
Speaker Change #148: Persistently rates. So that's question number one second question.
Speaker Change #149: Is related to your marketing expenses right with some big increase in marketing expenses. So I'm just trying to understand is this a level that we should continue to see and are these marketing expenses target ever increasing client base or increasing engagements.
Speaker Change: Depending on the speed at which we get these deposits on the mix that we get them at.
Speaker Change: On branding and we do recognize that we have.
Speaker Change: And investment tool is not on our spending we will see that this is in line with what we mentioned in some questions before we want to build.
Speaker Change #149: And my third.
Speaker Change #149: Question is related to your sales or your sale of <unk>.
Speaker Change #150: Insurance right you showed the number of policies roles.
Speaker Change: A stronger brand within the the breadth is excellent and with that we're branding.
Speaker Change #151: And a half times roughly quarter on quarter, but revenues only grew 10%. So it doesn't mean that this policy has been you are growing and they have a much lower.
Speaker Change: Along with it.
Speaker Change: Able to them to benefit from the product offering that we have in place it's difficult to say how it will evolve through time, but we are testing higher layers of branding spending or investing in we'll see.
Speaker Change #152: How should we think about that why such a big disconnect in number of policies versus revenues. Thank you.
Speaker Change: Pending on the results, how we continue to invest.
Speaker Change #151: Okay.
Speaker Change: Invest or not the upsell cross sells metrics out I mean was that would track to see the performance of that investment and then reinsurance yes.
Speaker Change #151: Hi, Mario I'll take that.
Speaker Change #153: Those three so on the EM funding. This is connected nowadays the right hand side of the balance sheet with a lesson soundbites on the liability side, we are fortunate to crowd.
Speaker Change: We anticipated the answer <unk> is a very small ticket insurance that is that was the main driver in that business line in the policies, where we're a great or not and they are insightful there.
Speaker Change #153: This quarter with the highest growth in deposits, excluding the fourth quarter that has positive seasonality and we raised $4 billion of M of the positive quarter to $1 3 billion, where the transaction are whilst which don't have a cost. But then we had $1 9 billion on time deposits and another <unk> 10 billion and what our Lci's in.
Speaker Change: The average ticket of the of those policies. We used this quarter again and we welcome the growth we have more than 2 million clients with every T. S granted and that sort of an opportunity that we've tried to two <unk> with a fully digital platform. Both on the loan pay them also on the insurance side very happy with.
Speaker Change #153: And <unk>.
Speaker Change #153: You can say that in theater is excess funding as I mentioned before is mostly allocated into liquid assets.
Speaker Change: The results that we have so far.
Speaker Change: That's clear Sunday, let let me just go back then to the deposit question. How are you seeing the competitive environment to raise deposits again, you have a very healthy.
Speaker Change #153: Yield close to 100%.
Speaker Change #153: Of CDI and tend to until.
Speaker Change #153: Until we employ these into our loan portfolio it into a compressed the NIM, but they are accretive and they also tend to M. <unk> is slightly up the cost of funding, but we feel.
Speaker Change: Posit base already.
Speaker Change: In a multi deposit ratio is very low.
Speaker Change: So I'm just wondering then you use.
Speaker Change #153: That the more we capture the principality over clients do more with their savings and their transactional life into platform. The better. It is for us independently of a cost of funding level. We do think that at the cost of funding as ability of Ci is a competitive advantage that we have and we will continue having but we will have some movements.
Speaker Change: Have excess liquidity.
Speaker Change: What is the need here to really be focusing on growing deposits.
Speaker Change: If if you were seeing a more competitive scenario.
Peter: My long Peter speaking.
Speaker Change: At Mcdonalds.
Speaker Change: Love to look on our deposit franchise I started that didn't have internship.
Speaker Change #153: Depending on the speed at which we get these deposits on the mix that we get them at.
Speaker Change: On the commercial side raising deposits far far far Oak bank techint partner firms that have been.
Speaker Change #153: On branding and we do recognize that we have.
Speaker Change: Following that for a while and I'm always with our treasury and our passion when discussing about that.
Speaker Change #154: Investment who is not in our spending we will see that this is in line with what we mentioned in some questions before we want to build.
Speaker Change: S. Santi anticipated we have a good problem.
Speaker Change #154: A stronger brand within the Bronx is excellent and we that we're branding.
Speaker Change: People are choosing our platform to transact, but also to safe <unk>.
Speaker Change #155: Along with it we will be able to them to benefit from the product offering that we have in place it's difficult to say how it will evolve over time, but we are testing higher layers of branding spending or investing in we'll see.
Speaker Change: And we're having the best distributed a lot of third party Cds and other companies the batteries are bonds and everything but at the end of the day, they like our brand and they say Oh I want to see different E mail and what we see that we could start reducing the percentage per se.
Speaker Change #155: On the results, how we continued to invest or not the upsell cross sells metric side I mean, what I would track to see the performance of our investment.
Speaker Change: And lastly, the either to pay but there's not going to move the needle in terms of of profitability, but we could lose declined to put our comparison were keeping them at the 100% authentic but the good news one thing that you should look at is how fast our demand deposits grow and when you compare the loan portfolio growth with the.
Speaker Change #155: And then reinsurance yes.
Speaker Change #156: And disobey the answer <unk> is a very small ticket insurance that is that was the main driver in that business line in the policies, where we're a great or not and they are excited for them.
Speaker Change: Demand deposits growth they are pretty much steady slow down on the same pace. So therefore average deposit average time deposits that come even at 100% authentic and who can deploy depth 12131, 5% authentic in securities in our in our cash position is accretive to NII. So that's what we're doing.
Speaker Change #157: It's ticket of the of those policies, we've used this quarter, but again and we welcome the growth we have more than 2 million clients with every T S credit and urban opportunity that we've tried to persist with their fully digital platform. Both on the loan pay them also on the insurance side, we're happy with the results that we have so.
Speaker Change: I would say the opposite our deposit franchise are getting more and more efficient as we speak so I'm very proud of that and I'm sure that they do get bina.
Speaker Change #156: Far.
Speaker Change #156: That's clear Sanjay let me just go back down to the deposit question. How are you seeing the competitive environment to raise deposits again.
Randy: Have a very healthy deposit base, where Randy.
Speaker Change: I think that to differentiate.
Speaker Change: Our competitors, that's how we manage these things of cost of funds.
Randy: In a multi deposit ratio is very low.
Speaker Change #159: So I'm just wondering then you.
Speaker Change: No that's very clear and I completely agree with you I think you are your deposit franchise is fantastic and it's one of your main.
Speaker Change #160: We have excess liquidity.
Speaker Change #161: What is the need here to really be focusing on growing deposits. If if you are seeing a more competitive scenario.
Speaker Change: Main differentiator from your peers. Thank you.
Peter: My long Peter speaking.
Speaker Change #163: At Mcdonalds.
Speaker Change: This concludes our question and answer session.
Speaker Change #164: Love to look on our deposit franchise I started at Cid have internship.
Speaker Change: I would like to yield the floor back over to Mr. Geelong determinative for his closing remarks.
Speaker Change #165: On the commercial side raising deposits far far far off bank checking deposit front, so I have been.
Speaker Change #166: Following that far for wire and I'm always with our treasury and our passion when discussing about debt.
Speaker Change: So another very good earnings.
Speaker Change: Earnings result call I like to think far our team our employees that are working hard every single day too.
Speaker Change #167: F content dissipated we have a good problem.
Speaker Change #168: People are choosing our platform to transact, but also to safe <unk>.
Speaker Change: To raise the bar at India I also like to thank for all our shareholders.
Speaker Change #169: And we're having the best distributed a lot of third party see these other companies the batteries buy bonds and everything but at the end of the day, they like our brand and they say Oh I want to see different E mail.
Speaker Change: That are supporting our business our franchise and also like to two to thank as well our dinner.
Speaker Change: The analysts on the sell side the industry very good questions a lot of good quality questions for us, we love that to interact with you.
Speaker Change #170: And what we see that we could start reducing the percentage percentages actually either to pay but it's not going to move the needle in terms of of profitability, but we could lose declined to put our comparison.
Speaker Change: We're very happy with the business.
Speaker Change: Hope to see you soon another good quarter.
Speaker Change: In a few months. Thank you very much have a good day bye bye.
Speaker Change: Okay.
Speaker Change #170: NIM at the 100% authentic but the good news one thing that you should look at is how fast our demand deposits grow and.
Speaker Change: This conference has now concluded interest IR Department is at your disposal to answer any additional questions. Thank you for attending today's presentation have a nice day.
Speaker Change #170: And when you compare the loan portfolio growth with the demand deposits growth they are pretty much steady slow down on the same pace. So therefore average deposits average time deposit netcom, even at 100% authentic and who can deploy depth 12131, 5% of fatigue in securities in our in our cash position is.
Speaker Change #171: Accretive to NII, so that's what we're doing.
Speaker Change #172: I would say the opposite our deposit franchise are getting more and more efficient as we speak so I'm very proud of that them I'm sure that they do.
Speaker Change #172: If bema.
Speaker Change #174: Thing that to differentiate amongst our competitors that's how we manage this as things of cost of funds.
Speaker Change #175: No that's very clear and I completely agree with you I think your your deposit franchise is fantastic and it's one of your main.
Speaker Change #176: Main differentiator from your peers. Thank you.
Speaker Change #177: This concludes our question and answer session.
Speaker Change #178: I would like to yield the floor back over to Mr. Jalan Victor minute for his closing remarks.
Jalan Victor: So another very good.
Jalan Victor: Earnings result call I would like to thank far our team our employees that are working hard every single day to.
Jalan Victor: To raise the bar up India also like to thank for all our shareholders.
Jalan Victor: That are supporting our business our franchise and also like to thank as well all the analysts on the sell side the industry very good questions a lot of good quality questions for us we love that interact with you.
Jalan Victor: We're very happy with the business and.
Jalan Victor: Hope to see you soon another good quarter.
Speaker Change #180: In a few months. Thank you very much have a good day bye bye.
Jalan Victor: Okay.
Speaker Change #180: This conference has now concluded.
Speaker Change #181: Enters IR Department is at your disposal to answer any additional questions.
Speaker Change #182: You for attending today's presentation.
Nice day.