Finance & Economics

Brazilian Digital Bank Inter Reports Record Profit

The Brazilian digital bank Inter has published a report on the financial results of this virtual lender in the second quarter of this year.

Brazilian Digital Bank Inter Reports Record Profit

The reporting documentation of the digital bank contains data on record revenue and profit figures. The growth of the financial performance of the lender exceeded the initial expectations of analysts. The positive reporting of the digital financial institution contributed to the growth in the value of the bank’s shares.

According to the information contained in the accounting documentation, in the period from April to June of this year, the revenue of the financial institution showed an increase of 33% year-on-year. In monetary terms, this indicator was fixed at the level of 1.9 billion reais ($386.7 million). The net profit of the digital bank in the second quarter amounted to 64 million reais ($12.8 million). This figure is more than 300% higher than the result of a year ago.

Experts’ expectations about the results of the virtual bank’s activities in the second quarter of 2023 turned out to be more pessimistic than reality. This is not the most frequent case when expectations turned out to be worse than the truth. Analysts predicted that by the end of the last quarter, the bank’s profit would be 32.2 million reais ($6.4 million).

Also, in the period from April to June, the number of clients of the virtual financial institution increased. Currently, the bank serves 27.8 million consumers. In the first quarter, the number of customers of a digital financial institution was 26.3 million people.

Another positive result of the last quarter was an increase in the share of lender’s customers who use a large number of services in the bank’s application to 52.2% of the total.

Director General of the financial institution Joao Vitor Menin told reporters that the second quarter was a record for Inter in terms of key performance indicators and paved the way for new achievements. He also noted that in the period from April to June, business growth was observed with the simultaneous introduction of innovative solutions into the structure of activities.

The financial institution has a loan portfolio expansion strategy, which is designed to be implemented within four years. The lender is also currently following a five-year plan to double the number of its customer base. The head of the bank said that in the near future, the lender will strive to continue organic growth without acquisitions and raising capital in the market.

Currently, the technology team of a financial institution makes up about 33% of the total number of employees equal to 3,400 people. This group of specialists continues to expand the banking services platform by introducing new features, including a loyalty program and providing customers with the opportunity to use the lender’s application worldwide.

Against the background of positive reporting, the value of shares of a financial institution on the New York stock exchange increased by 10%. This figure is the largest since September last year.

The bank’s overdue loans for more than 90 days increased to 4.9% in the second quarter. Joao Vitor Menin says that this is most likely the peak value and a more positive trend will be observed in the second half of the year.

The default rate on loans for a period of 15 to 90 days decreased last quarter to 4.4%. In general, the bank’s loan portfolio grew by 5.4% compared to the first quarter, reaching 26.5 billion reais ($5.3 billion).

The expenses of the financial institution in the period from April to June amounted to 575 million reais ($115.5 million). This indicator has been declining for the second quarter in a row. Another dynamic of the decrease is due to the dismissal of part of the staff.

During the year, Brazil had a key interest rate of 13.755%. In August, the central bank of this country reduced the indicator by 50 basis points. This decision means that there are prospects for monetary policy easing in the future and a reduction in pressure on lenders and consumers.

As we have reported earlier, Citigroup Fixes Personal Banking Revenue Growth in US.

Serhii Mikhailov

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Serhii’s track record of study and work spans six years at the Faculty of Philology and eight years in the media, during which he has developed a deep understanding of various aspects of the industry and honed his writing skills; his areas of expertise include fintech, payments, cryptocurrency, and financial services, and he is constantly keeping a close eye on the latest developments and innovations in these fields, as he believes that they will have a significant impact on the future direction of the economy as a whole.