Executive Summary / Key Takeaways

• Super App Ecosystem Driving Growth and Profitability: Inter & Co (INTR) has successfully transformed into a comprehensive financial Super App, leveraging its seven integrated verticals (banking, credit, investments, insurance, shopping, global, and loyalty) to create a powerful "network effect" that consistently drives client engagement, cross-selling, and compounding profitability.
• Technological Differentiation Fuels Market Share Gains: Through hyper-personalization, AI-powered tools, and a superior user experience, INTR is rapidly gaining market share across its diverse product offerings, including a significant presence in PIX transactions (8.2% market share) and strong growth in high-ROE credit products like private payroll loans and real estate lending.
• Strong Financial Performance and Operational Leverage: The company has demonstrated a remarkable track record of profitability, achieving a record 13.9% Return on Equity (ROE) and BRL 315 million in net income in Q2 2025. Its efficiency ratio continues to improve, reaching a record low of 47.1% (excluding JCP tax expense), underscoring effective cost management and scalability.
• Diversified and Collateralized Loan Book Mitigates Risk: INTR's credit strategy emphasizes a highly diversified and approximately 70% collateralized loan portfolio, which, combined with disciplined underwriting and an industry-leading cost of funding (64.8% of CDI), positions it for sustainable loan growth (projected 25-30% for 2025) while maintaining a controlled cost of risk (5.0-5.25% base case).
• Strategic Expansion and Innovation Pipeline: With successful new product launches like "My Credit" and "My Piggy Bank By Savings Goals," and an asset-light global expansion strategy, INTR is poised for continued innovation and growth, targeting a BRL 1 billion portfolio for its Consumer Finance 2.0 products and exploring new international markets via bank-as-a-service partnerships.

The Super App Revolution: Inter & Co's Digital Dominance

Inter & Co, Inc. (NASDAQ:INTR) has evolved from its founding in 1994 into a formidable force in the Brazilian financial landscape, pioneering the nation's first digital bank in 2016. This strategic pivot marked the genesis of its "Super App" vision, a comprehensive ecosystem designed to seamlessly integrate banking, credit, investments, insurance, shopping, global services, and a loyalty program (Loop) within a single platform. This integrated approach fosters a powerful "network effect," where client growth and engagement drive scale and efficiency, which in turn fuels profitability and allows for reinvestment into further innovation. The company's ambitious "60-30-30 plan," launched in January 2023, targets 60 million clients, a 30% ROE, and a 30% efficiency ratio by 2027, underscoring its commitment to both aggressive expansion and robust financial performance.

The broader financial services industry is undergoing a profound digital transformation, with traditional incumbents often struggling to adapt to evolving customer expectations and the agility of digital-native challengers. While many incumbent banks are adopting a cautious outlook for 2025, projecting modest loan growth of 6% to 8%, INTR's differentiated model and relatively small market share across various credit segments position it for continued robust expansion. The underserved small and medium-sized enterprise (SME) market in Brazil, for instance, represents a "blue ocean" opportunity that INTR is actively pursuing, leveraging its digital-first approach to attract clients often overcharged by larger institutions.

Technological Edge: Hyper-Personalization and Data-Driven Innovation

At the heart of Inter & Co's competitive strategy lies its core technological differentiation: a relentless focus on hyper-personalization, best-in-class user experience (UX/UI), and data-driven innovation. This technological prowess translates into tangible benefits that enhance customer loyalty and operational efficiency. The company's app boasts high ratings (4.9 in the Apple Store, 4.8 in the Play Store), reflecting its intuitive design and seamless functionality. This user-centric approach has enabled INTR to consistently add 1 million to 1.1 million active clients each quarter, reaching 40 million clients by Q2 2025, with an activation rate of 57.7% and a clear upward trend towards 60%. The early activation ratio, a key indicator of successful onboarding, increased by 12 percentage points from 40% to 52% between Q3 2022 and Q3 2024.

INTR's R&D initiatives are directly aimed at deepening client relationships and expanding monetization opportunities. The "My Credit" feature, launched in Q2 2025, provides clients with an in-app journey to track and improve their credit scores, fostering financial education and unlocking higher credit limits in a transparent manner. This feature is designed to expand credit penetration sustainably. Similarly, "My Piggy Bank By Savings Goals," introduced in Q2 2025, allows clients to organize savings for specific purposes, driving exceptional engagement with over 425,000 clients creating more than 529,000 savings goals in less than a month. This feature is a powerful tool for cross-selling, enabling INTR to offer tailored promotions from Inter Shop or present mortgage solutions based on client savings goals.

Further technological advancements include the upcoming launch of an AI-powered Inter Shop Concierge for Black Friday, expected to drive traffic and monetization within its e-commerce platform. The "Forum," a content platform launched in Q3 2024, has already garnered over 5 million users, fostering a community around personal finance and investments, thereby promoting cross-selling. These innovations, coupled with active investment in process automation and a strategic focus on optimizing vendor contracts, contribute significantly to INTR's competitive moat, driving higher average revenue per active client (ARPAC) and improving margins. The company's ability to clear international transactions within seconds further highlights its technological edge in global services.

Competitive Positioning: Outpacing the Field

Inter & Co's integrated Super App model and technological agility enable it to consistently outpace market growth in key segments, differentiating it from both traditional incumbents and other digital players. In the highly competitive Brazilian market, INTR's PIX market share reached 8.2% in Q2 2025, a benchmark for its ambition in other product categories. The company has demonstrated impressive market share gains across its credit and fee-based businesses, growing FX transactions 3.8 times faster and credit 3.5 times faster than the market in Q3 2024.

Comparing INTR to its direct competitors reveals distinct advantages. Against digital banks like Nu Holdings (NU), INTR offers a more comprehensive, integrated ecosystem that combines banking with insurance and marketplace services, providing a broader one-stop solution. While NU might excel in operational efficiency due to its streamlined model, INTR's emphasis on hyper-personalization and bundled offerings can lead to stronger cross-selling capabilities and deeper customer loyalty.

Against traditional giants like Banco Itaú Unibanco (ITUB) and Banco Bradesco (BBD), INTR's digital-native platform translates into materially lower operating costs and greater agility. While incumbents benefit from established brand recognition and scale, INTR's focus on seamless, technology-driven experiences allows it to attract tech-savvy customers more effectively and exploit the higher operational costs associated with legacy physical infrastructure. The acquisition and integration of Granito, now Interpack, further strengthens INTR's competitive stance in the SME acquiring business, allowing it to bundle banking and acquiring services and attract merchants often underserved and overcharged by larger banks.

In the investment space, compared to platforms like XP Inc. (XP), INTR provides a fuller suite of financial services, including core banking and insurance, alongside investment products. This broader ecosystem helps INTR address XP's diversification gaps and offers a more integrated experience for clients, potentially leading to higher customer retention. INTR's strategy of "fishing in our own aquarium" – maximizing business from its existing 40 million clients through hyper-personalization – is a powerful competitive response, optimizing sales efficiency and driving share of wallet.

Financial Performance: A Decade of Compounding Profitability

Inter & Co's strategic execution has translated into a compelling financial trajectory, marked by consistent profitability and robust growth. The company has proudly reported 10 consecutive quarters of profit growth, with its 2024 net income surpassing the combined profits of its entire history. In Q2 2025, INTR achieved a record Return on Equity (ROE) of 13.9% and a record net income of BRL 315 million.

Revenue generation has been strong, with total gross revenues reaching BRL 3.6 billion in Q2 2025, a 48% year-over-year increase, and net revenue hitting BRL 2.0 billion, up 35% year-over-year. Notably, fee income performed "even stronger than NII" in Q2 2025, driven by growth in interchange, investments, and shopping, highlighting the success of its diversified business model. The average gross revenue per active client (ARPAC) reached BRL 54, with a net ARPAC of BRL 32, while the cost to serve was a lean BRL 13, resulting in a gross margin per active client of BRL 19.

The company's Net Interest Margins (NIMs) have shown consistent quarter-after-quarter growth, reaching new record levels for both NIM 1.0 and NIM 2.0 (excluding non-interest receivables of credit cards). This performance is a direct result of an "ROE-driven credit origination model" and optimized capital allocation. The risk-adjusted NIM (NIM minus cost of risk) also demonstrated strong performance, reflecting the compounding effect of INTR's strategy. The all-in loans rate increased from 20.3% to 22.5% in Q2 2025, driven by higher-yielding digital private payroll loans and newer, more accretive mortgage originations.

Operational efficiency is a core pillar of INTR's digital banking model. Expenses grew a modest 5% in Q2 2025 to BRL 873 million, while the efficiency ratio improved by 100 basis points to 47.8%. A new, more accurate efficiency ratio, excluding the non-operational JCP tax expense, reached a record low of 47.1%. This demonstrates significant operational leverage as the company scales.

Liquidity and capital management remain robust. Funding surpassed BRL 62 billion in Q2 2025, growing 30% year-over-year, primarily driven by time deposits and the success of "My Piggy Bank By Savings Goals." Active clients held an average of nearly BRL 2,000 in deposits, the second-highest on record. INTR maintains an "industry-leading cost funding" of 64.8% of CDI, a significant competitive advantage that allows it to price products competitively and cherry-pick clients. The company's Core Tier 1 ratio in Brazil was 15% in 4Q24, with a strategic focus on deploying capital into high-ROE loan products rather than just treasury bonds, while maintaining most equity at the holding level for optimal capital allocation.

Strategic Initiatives and Growth Verticals

INTR's growth is fueled by strategic initiatives across its seven verticals:

• Credit: The total loan portfolio grew 8% quarter-on-quarter in Q2 2025, with a year-on-year run rate slightly over 30%. The portfolio is approximately 70% collateralized, providing resilience.
  • Private Payroll Loans: This digital-first product is a standout, with the portfolio soaring to BRL 728 million, serving 153,000 clients in Q2 2025. Management expects it to surpass BRL 1 billion soon, with early delinquency signs trending towards single digits (better than the 15% forecast) and an anticipated ROE beyond 30%. INTR expects to capture a significant market share, potentially 15-20% excluding portability, in a market estimated to be BRL 100-200 billion.
  • Real Estate Lending: Mortgages and home equity loans grew 37% year-over-year to BRL 13.3 billion in Q2 2025, benefiting from incumbents' struggles in a high-interest rate environment.
  • Credit Cards: The company is actively reshaping its credit card portfolio to increase the share of interest-earning installment products, with transactors slightly decreasing from 78.5% to 78% in Q2 2025. The new "Inter Card" offers a credit limit exclusively for PIX financing, designed to be always interest-earning.
  • Consumer Finance 2.0: This portfolio, including PIX financing, Buy Now Pay Later, and overdraft, reached almost BRL 700 million by year-end 2024, with delinquency lower than traditional credit cards. Buy Now Pay Later accounted for 9.3% of Inter Shop's GMV in Q2 2025.
• Investments: Active clients grew 38% year-over-year to 7.9 million, with Assets Under Custody (AUC) increasing 47% year-over-year in Q2 2025, driven by the success of "My Piggy Bank By Savings Goals."
• Insurance: Active contracts reached 10 million, up 272% year-over-year in Q2 2025, fueled by integrated offerings and low-ticket products like FGTS life insurance.
• Shopping: The in-app e-commerce platform saw its net take rate increase to 7.6% and GMV grew 9% in Q2 2025, demonstrating strong selling power within the ecosystem.
• Loyalty (Loop): The client base grew 64% year-over-year to 13.6 million in Q2 2025, with members transacting three times more than non-members.
• Global Front: Global account clients grew 34% year-over-year to 4.4 million, with deposits surpassing $294 million (90% YoY growth) in Q2 2025. This asset-light approach is becoming increasingly material for the company.

Outlook and Guidance: Sustained Momentum

Inter & Co's management is confident in sustaining its growth and profitability trajectory. The company expects loan growth to be at the high end of its 25% to 30% range for 2025, driven by strong performance in private payroll, mortgages, home equity, and FGTS loans. The base case for cost of risk remains between 5.0% and 5.25%, with management noting that actual performance has often exceeded these predictions. NIM expansion is anticipated to continue, with Santiago Stel indicating a trend of approximately 20 basis points per quarter, fueled by a richer loan mix and higher-yielding new originations.

Efficiency ratio improvements are expected to persist, primarily driven by revenue growth outpacing expense growth, strategic vendor contract optimization, and operational synergies from the Interpack acquisition. The Consumer Finance 2.0 portfolio (PIX financing, Buy Now Pay Later, overdraft) is targeted to reach approximately BRL 1 billion. Globally, INTR plans to explore new international markets in 2025 through an "asset-light approach" via bank-as-a-service partnerships, leveraging its successful Global Account model. While the company pays dividends (1.5-1.8% yield), it maintains a relatively low payout ratio (20-25%) to reinvest earnings into innovation and growth, with the long-term goal of increasing payouts as ROE improves.

Risks and Challenges

Despite its strong performance and strategic positioning, Inter & Co faces several risks. The macroeconomic environment in Brazil, characterized by high interest rates (Selic) and inflation, could impact credit quality and consumer spending. While INTR's diversified and collateralized portfolio offers resilience, a prolonged downturn could still pose challenges. Competition remains intense from both established incumbents and other digital players, necessitating continuous innovation and efficient execution to maintain market share.

Operational risks associated with new product launches, such as the private payroll loan, require vigilant monitoring, although early delinquency trends have been favorable. The integration of acquisitions like Interpack, while offering significant synergy potential, also carries execution risks. Furthermore, regulatory changes, such as Resolution 4966, could impact NPL and Stage 3 formation metrics, though management anticipates no material impact on cost of risk or capital.

Conclusion

Inter & Co stands as a compelling investment thesis, embodying the successful transformation into a digitally-native financial Super App. Its unique ecosystem, powered by hyper-personalization and continuous technological innovation, has enabled it to consistently attract and engage a massive client base, driving robust market share gains across its diverse verticals. The company's disciplined approach to credit, characterized by a highly collateralized loan book and an industry-leading cost of funding, underpins its compounding profitability and strong financial performance, as evidenced by record ROE and net income.

Looking ahead, INTR is well-positioned for sustained growth, with clear guidance for loan expansion, NIM improvement, and enhanced operational efficiency. Its strategic focus on high-ROE products like private payroll loans and the burgeoning Consumer Finance 2.0 portfolio, coupled with an asset-light global expansion strategy, promises continued value creation. While macroeconomic headwinds and competitive pressures persist, Inter & Co's proven ability to innovate, execute, and adapt positions it as a formidable player in the evolving landscape of digital finance, offering a compelling long-term growth story for discerning investors.