Neha Agarwala

Neha Agarwala followed up on the private payroll segment, expressing concern about other lenders' aggression and the risk of Nu's customers taking private payroll loans elsewhere, potentially increasing their leverage and impacting Nu's unsecured asset quality through cannibalization or structural subordination.

Answer

Guilherme Lago, Chief Financial Officer, acknowledged the risks of cannibalization and structural subordination but stated that Nu has not yet seen evidence of these materializing within its customer base. He noted that most private payroll loan applicants have higher credit risk and might not qualify for unsecured loans or credit cards. Lago explained that the market's growth includes migration from old to new private consignado products. He highlighted that the market currently operates with low double-digit first losses, which is not yet conducive to the collateral quality this product can offer. Nu's cautious approach is driven by conservatism with credit risk, not fear of cannibalization, and they will lean in heavily once credit performance improves, as risk-adjusted NIMs and ROE could be preserved or even enhanced.

Neha Agarwala from HSBC asked about two deposit trends: the driver for the sequential deposit pickup in Brazil and the early customer reaction to significant rate cuts in Mexico. She also followed up on which customer segments the Hyperplane credit limit expansion targets.

Answer

CFO Guilherme Lago explained Brazil's deposit growth was driven by increased customer engagement and share-of-wallet, not higher rates. For Mexico, he noted that deposit outflows after the rate cuts have not been material. CEO David Vélez added that as the Mexico product becomes more robust with new features, its value proposition is less reliant on high yields. On the follow-up, Vélez stated the Hyperplane expansion has so far focused on the mass market but will be applied to other segments.

Neha Agarwala pointed out the strong 20% quarterly growth in personal loans versus only 6% growth in provisions, questioning why provisions didn't increase more in line with originations and if the cost of risk should have been higher.

Answer

President and COO Youssef Lahrech attributed the dynamic to offsetting forces within the loan book. He highlighted that the fastest-growing component of lending is secured lending, which carries very low risk and requires lower coverage ratios. He also noted that even within unsecured lending, asset quality has been slightly better than expected, contributing to the moderated growth in provisions.

Neha Agarwala asked about the impact of increased competition from incumbent banks on Inter&Co's private payroll originations in January, the mix of client acquisition (cross-selling to active/inactive clients vs. new clients), and the sustainability of this growth. She also inquired about the impact of lower interest rates on different loan segments and margins, and sought more details on the recently approved U.S. branch license, its P&L impact, competitive strategy, and the primary user base focus (Latinos vs. Americans).

Answer

Brazil CEO Alexandre Riccio de Oliveira confirmed a good start to the year for private payroll volumes, with interest remaining strong. He detailed the client acquisition mix: roughly one-third from active clients (cross-selling), one-third from reactivating inactive clients, and one-third from new clients, calling it a 'healthy mix.' CFO Santiago Horacio Stel explained that Inter's ALM strategy aims to decrease P&L volatility, making it neutral to interest rate sensitivity in the long term. A short-term reduction in rates would be positive for 6-9 months due to liability structure, but this would be compensated by loan repricing and new originations at lower rates. Global CEO João Vitor Menin expressed pride in the U.S. branch license (Fed and OFR approved), which allows Inter to offer a full stack of products without relying on BaaS. He expects increased volumes and fees from global expansion, serving international clients (Brazilians, Argentinians, other Latinos) and also Americans, leveraging the super app approach for a U.S. dollar-denominated account.

Neha Agarwala asked about the impact of increased competition from incumbent banks on Inter&Co's January private payroll originations and rates, and the breakdown of client acquisition (cross-selling vs. new clients). She also inquired about the potential impact of lower interest rates on different loan segments and margins, and sought more details on Inter's global expansion, including the new license, P&L impact, competitive strategy, and target user base.

Answer

Brazil CEO Alexandre Riccio de Oliveira confirmed strong private payroll volumes at the start of the year, with appetite evolving with Dataprev improvements. Client acquisition is a healthy mix: one-third active cross-selling, one-third reactivating inactive clients, and one-third new clients. CFO Santiago Horacio Stel explained that Inter manages ALM to minimize P&L volatility from interest rates; a short-term rate reduction would be positive for 6-9 months due to more short-term liabilities, but this would normalize as loans reprice and new loans are originated at lower rates, resulting in overall neutrality. Global CEO João Vitor Menin detailed the new branch license (Fed and OFR approved), enabling Inter to offer a full suite of products (remittance, investments, checking, debit/credit cards, commerce, loyalty, mortgage) without relying on BaaS. This allows growth 'from the inside out' to millions of international clients (Brazilians, Argentinians, other Latinos) and Americans, leveraging the super app model.

Neha Agarwala asked for more details on the effectiveness of the collateral for the private payroll product and inquired about the company's expected loan growth for the full year.

Answer

SVP Alexandre Riccio de Oliveira expressed high confidence in the collateral's effectiveness, citing improving payment processes, FGTS balances, and the portability of the collateral between jobs. He projected that full-year loan portfolio growth would be at the high end of the previously guided 25% to 30% range, driven by strong performance in private payroll, mortgages, and other key products.

Neha Agarwala inquired about the asset quality and 2025 growth expectations for the Consumer Finance 2.0 portfolio and asked about Inter's interest in the emerging private payroll loan market. She also questioned the lack of sequential GMV growth in the marketplace for Q4.

Answer

Executive João Vitor Nazareth Teixeira de Souza expressed optimism for Consumer Finance 2.0, noting its delinquency is currently lower than credit cards, though he did not provide a specific growth target. Executive Santiago Stel confirmed Inter sees private payroll loans as a promising market and will be ready to compete on day one. Regarding GMV, João Vitor clarified that there was a significant spike, with nearly 40% year-over-year growth, and that the company is expanding into services to sustain this momentum.

Neha Agarwala asked for the rationale behind the cautious growth in Pix financing, given the company's large market share in Pix. She also inquired about potential countries for the Global Account rollout and the investment required for such an expansion.

Answer

Executive João Vitor Nazareth Teixeira de Souza explained that the caution with Pix financing stems from the product's newness; the company is still gathering data and maturing cohorts to validate its risk models before accelerating growth. For the Global Account, he stated that while no specific market has been chosen, the strategy is to pursue an asset-light expansion by partnering with a bank-as-a-service provider, avoiding the need to deploy significant capital or acquire a new license.

Neha Agarwala asked for details on the new 'InterCard' product and the rationale for launching a separate card. She also requested more information on the Buy Now, Pay Later (BNPL) offering, including customer selection, rates, and performance.

Answer

Executive João Vitor Nazareth Teixeira de Souza explained that 'InterCard' is a 100% digital, preapproved credit line designed to foster engagement within Inter's ecosystem and disintermediate interchange fees. Regarding BNPL, he noted that the platform allows for real-time, data-driven underwriting, offering credit to clients based on their behavior and the specific item being purchased, creating a 'win-win' situation as part of their 'Consumer Finance 2.0' strategy.

Neha Agarwala asked about the expected evolution of Banco de Chile's cost of risk and asset quality, noting that the 1.1-1.2% guidance is higher than 2025 and inquiring if it's primarily driven by expected loan growth and mix. She also asked for thoughts on whether the 19-21% ROE guidance might have upside risk.

Answer

Pablo Mejia (Head of Investor Relations) explained that the 1.1-1.2% cost of risk guidance aligns with long-term levels, driven by expected growth and a mix shift towards SMEs and consumer loans, leading to normalized profitability in net interest margins. He noted that previous cost of risk levels were unsustainably low given the economic cycle. Regarding ROE, he stated that it is influenced by cost of risk and operating expenses, and while positive surprises in the economy could lead to upside, negative surprises could have the opposite effect, making the current guidance reasonable based on economic forecasts.

Neha Agarwala from HSBC inquired about the expected evolution of Banco de Chile's cost of risk and asset quality, noting the 2026 guidance of 1.1-1.2% was higher than 2025 and asking about the driving factors beyond expected loan growth. She also asked for thoughts on potential upside risk to the 19-21% ROE guidance.

Answer

Pablo Mejia, Head of Investor Relations, explained that the higher cost of risk guidance (1.1-1.2%) aligns with long-term normalized levels, reflecting expected growth, particularly in SME and consumer loans, which will change the loan mix. He noted that previous cost of risk levels were unsustainably low given the economic cycle, high unemployment, and past inflation. He stated that while the guidance is reasonable, positive economic surprises (e.g., lower unemployment, higher real wages) could lead to better outcomes. Similarly, he mentioned that the ROE guidance of 19-21% is influenced by cost of risk and operating expenses, implying that positive surprises in these areas could also lead to an upside in the bottom line.

Neha Agarwala asked about the expected cadence for the remaining two quarters of the year, specifically any factors that could create volatility. She also inquired about potential risks associated with the upcoming presidential election and different candidate outcomes.

Answer

Head of IR Pablo Mejia identified inflation trends as the primary source of potential volatility for Q3 results, particularly after a recent negative print. He reiterated the full-year guidance, including a 21% ROE. Chief Economist Rodrigo Aravena addressed election risk by highlighting the checks and balances in Chile's political system and a broad consensus on fostering economic growth.

Neha Agarwala of HSBC asked about the primary macroeconomic concerns for the year, including any risk of tax hikes. She also inquired about the inflation outlook for 2026 and how the bank is managing its UF-denominated asset gap to protect margins.

Answer

Executive Rodrigo Aravena identified the global economy, particularly trade policy and its impact on China, and the upcoming Chilean presidential elections as the main concerns. He stated that tax hike proposals are currently off the table. He projected inflation to fall to around 3% in 2026, contingent on a stable exchange rate. Executive Pablo Ricci explained that the bank's CLP 9.7 trillion UF gap consists of a structural portion (~CLP 5-6 trillion) and a temporary treasury position, which is actively managed based on inflation expectations to generate returns.

Neha Agarwala asked about the outlook for operating expenses in 2025 following strong cost control in 2024, inquiring about expected growth and key drivers. She also revisited the capital topic, asking why the bank doesn't commit to a consistently higher dividend payout given its capital levels remain well above peers.

Answer

Executive Pablo Ricci stated the bank is targeting a relatively flat cost base for 2025 and a long-term efficiency ratio below 42%, driven by ongoing digitalization and operational improvements. Executive Daniel Ignacio Galarce Toro reiterated the capital strategy, emphasizing the need for buffers to fund future loan growth and to address potential regulatory changes from the final Basel III implementation, such as Pillar 2 charges.

Neha Agarwala from HSBC inquired about discussions regarding removing interest rate caps for consumer lending, asking about the potential opportunity and impact on Santander-Chile. She also asked if the bank's loan growth expectations already incorporate a potential pickup in investments and sentiment improvement under the new Kast administration, or if this could pose an upside risk in the second half.

Answer

Cristián Vicuña, Head of Strategy and Investor Relations, explained that while interest rate caps limit banks' ability to charge interest, discussions on amendments are early, and approval is not expected in 2026. He noted that such changes could benefit bancarization for the mass market. Regarding loan growth, Cristián Vicuña confirmed that the guidance of 5%-6% for the year already considers a low 2% GDP growth and that any pickup from the Kast administration's policies is expected to be skewed towards the latter half of 2026 and into 2027, with this scenario already incorporated into the forecast.

Neha Agarwala from HSBC asked about ongoing discussions regarding the removal of interest rate caps for consumer lending, seeking clarity on the opportunity and potential impact on Santander-Chile, particularly in the mass market segment. She also inquired if the loan growth expectations already incorporated a potential pickup in investments and sentiment from the incoming Kast administration, or if this presented an upside risk.

Answer

Cristián Vicuña, Head of Strategy and Investor Relations, explained that while early discussions exist on interest rate cap amendments, approval is not expected in 2026, as the Kast administration needs to take office and set priorities. He noted that such changes would benefit bancarization. Regarding loan growth, he stated that the forecast of 5-6% for the year already considers a low 2% GDP growth and a pickup in the economy, with structural changes from the Kast administration expected to be more skewed towards the latter half of 2026 and into 2027.

Neha Agarwala from HSBC asked for clarification on the current interchange fee levels and the potential risk and expected impact of a second round of interchange fee caps being implemented next year. She also followed up on the cost of risk guidance, questioning why the projected reduction for 2026 wasn't more significant given expected asset quality improvements and recent NPL write-offs.

Answer

Cristián Vicuña, Head of Strategy and Investor Relations, detailed the current interchange fee levels for credit and debit cards and outlined the proposed second rate cut, which could impact credit card fees by approximately $20 million if implemented. Regarding the cost of risk, Mr. Vicuña stated that the 10 basis point improvement in guidance for 2026 is a conservative starting point, allowing for further upside as collection cycle improvements take full effect.

Neha Agarwala asked for a reminder of current interchange fee levels, the risk and expectation regarding the second rate cap reduction next year, and why the cost of risk is not projected to come down even more in 2026 despite expected asset quality improvement.

Answer

Cristián Vicuña (Head of Strategy and Investor Relations) reminded that the first interchange fee reduction brought credit fees from ~1.4% to 1.14% and debit from ~0.6% to 0.5%. The suspended second cut would decrease credit to ~0.8%, debit to ~0.35%, and prepaid to ~0.8%. He estimated the total reform's impact at $50 million, with the second part potentially impacting fees by ~$20 million if implemented. Regarding the cost of risk, he stated that the 10 basis point improvement guidance is a 'good range to start' and conservative, as the full effects of collection cycle improvements are not yet seen, leaving some room.

Neha Agarwala of HSBC asked about the primary business risks Santander Chile faces from the upcoming elections, beyond muted loan growth, particularly concerning macroeconomic factors and asset quality.

Answer

Andrés Sansone, Chief Economist, identified the main risks as external, stemming from US-China trade dynamics and a potential sharper-than-expected global slowdown. He noted that while current polls suggest a market-friendly election outcome, the primary results have increased the probability of tail-risk scenarios, which the bank continues to monitor closely.

Neha Agarwala from HSBC asked about the primary risks to the business associated with the upcoming elections, beyond the expected impact on loan growth, such as macro or asset quality risks.

Answer

Andrés Sansone, Chief Economist, identified the main risks as external, particularly US-China trade tensions and a potential sharp global slowdown. He noted that while the base case for the election is market-friendly, recent primary results have increased the probability of more extreme 'tail scenarios' that require monitoring.

Neha Agarwala questioned the main risks for the year, the expected evolution of the Net Interest Margin (NIM) for the remainder of 2025 and into 2026, and the bank's view on a normalized Return on Equity (ROE) level.

Answer

Patricia Pallacan, CFO, stated that the bank is confident in its NIM guidance of around 4% for 2025, with expected inflation already factored in. Cristian Vicuna, Head of Strategy and IR, added that the main risks are external, stemming from international trade volatility. Regarding ROE, he reiterated the bank's updated guidance of sustaining levels above 20%, a step up from the pre-pandemic range of 17-19%.

Neha Agarwala from HSBC asked about the financial impact of the standardization of provisioning models for the consumer portfolio and requested a breakdown of loan growth expectations across different segments.

Answer

CFO Emiliano Muratore clarified that the provisioning model change will have an impact of around CLP 100 billion, which will be fully covered by existing voluntary provisions, resulting in no effect on the cost of risk. Regarding loan growth, he expects consumer loans to grow above average, mortgages to grow in line with inflation, and corporate lending to be slightly below average until investment rebounds.

Neha Agarwala asked about the need for additional fulfillment centers beyond the current roadmap due to increased shipments, further investment plans for Brazil, and the competitive landscape, early trends, successful products, and asset quality in Mexico's credit business.

Answer

MercadoLibre Incoming CEO Ariel Szarfsztejn confirmed a 28% Q-o-Q volume increase in Brazil, managed by existing capacity and slow shipping, with no new unplanned fulfillment centers. He stated that mid-to-long-term capacity is continuously reevaluated, and investments in strategic fulfillment will continue. President of FinTech Osvaldo Gimenez highlighted Mexico's credit opportunity, leveraging the ecosystem for low customer acquisition costs, strong traction in consumer and credit cards, and reaccelerated issuance while maintaining underwriting discipline, expressing encouragement for the results.

Neha Agarwala inquired about the need for more fulfillment centers in Brazil given increased shipments, further investment plans in Brazil, and early trends, competition, and asset quality in Mexico's credit business.

Answer

Incoming CEO Ariel Szarfsztejn clarified that existing capacity managed Brazil's 28% QoQ volume increase, partly due to slow shipping, and no unplanned fulfillment centers were opened. Mid-to-long-term capacity is continuously reevaluated. President of FinTech Osvaldo Gimenez stated they are encouraged by Mexico's credit opportunity, leveraging ecosystem strength for low customer acquisition costs. Mercado Pago is a leading financial institution by MAU and downloads, reaccelerating credit card issuance after a cautious start, seeing good results.

Neha Agarwala from HSBC asked how much of the lower seller pricing was passed on to consumers and questioned why the over-90-day NPL ratio increased sequentially while shorter-term NPLs improved.

Answer

Commerce President Ariel Szarfsztejn stated that most of the fee reductions were passed through to consumer prices. On credit, Fintech President Osvaldo Giménez explained the slight rise in >90 day NPLs is not a concern and is in line with the prior year. CFO Martín de los Santos added that the overall profitability of the credit portfolio has improved, justifying the accelerated growth in originations.

Neha Agarwala inquired about asset quality trends in the credit portfolio, the dilutive effect of the growing credit card business, and the specific contribution of the Argentina credit business to the overall asset quality metrics.

Answer

Osvaldo Giménez, EVP of Fintech, noted that while the mix is shifting towards credit cards, which have a lower NIM, the asset quality of the credit card portfolio itself is improving, with recent cohorts showing record-low defaults. He also mentioned a strategic shift upmarket to lower-risk customers. He highlighted that Argentina has the lowest delinquency rates, partly due to low private sector debt and high user engagement with the Mercado Pago account.

Neha Agarwala asked about the progress of warehouse expansion and the company's initiatives for low-average selling price (ASP) items, particularly in the context of competition.

Answer

Ariel Szarfsztejn (Executive) reported that two new warehouses were opened in Q4 and that building capacity remains crucial for long-term growth. Regarding low-ASP items, he noted that this segment is growing at or even faster than the marketplace average, driven by a combination of UI improvements, the Meli Mas subscription program, and cross-border trade supply, rather than a single initiative.

Neha Agarwala asked for a breakdown of credit card usage between on-platform and off-platform transactions in Brazil and Mexico. She also inquired about the strategy for the software business in the acquiring space, asking if it's being built in-house or through partnerships, and what the long-term ambition is.

Answer

Executive Osvaldo Giménez stated that over 60% of credit card volume in both Brazil and Mexico is off-platform, which he sees as a positive sign of gaining 'top of wallet' status. Regarding the software business, Martin de Los Santos and Osvaldo Giménez confirmed the strategy is primarily in-house development. They aim to build a 'neural system' for small and medium businesses with features like cataloging, invoicing, and stock management to drive engagement and higher usage of Mercado Pago's acquiring services.

Neha Agarwala of HSBC asked for the specific reason behind the significant weakness in corporate net new money and inquired about the potential impact on take rates from the growing adoption of the fee-based model.

Answer

CFO Victor Mansur attributed the corporate net new money weakness to competitors demanding investment reciprocity for credit, a trend that could persist. CEO Thiago Maffra addressed the fee-based model, stating that while it may slightly lower the take rate, it typically leads to a higher share of wallet from clients. He expects the net effect on revenue per client to be neutral or positive as clients consolidate more assets with XP under this model.

Neha Agarwala inquired about the future outlook for credit growth, noting that the company's credit book had been flat year-over-year.

Answer

CFO Victor Mansur clarified that XP's strategy is not to accumulate a large credit portfolio but to recycle capital quickly, primarily through collateralized lending. He stated that while the nominal credit book will grow with the wholesale business, it is not expected to grow at the same rate as the overall company.

Neha Agarwala of HSBC asked for elaboration on the risks posed by cross-border tariffs, the strategic shift towards serving offline merchants, and whether the strong cost control in the quarter signals a new trend for the second half of the year.

Answer

CEO Pedro Arnt clarified that tariff risk is a potential macroeconomic headwind to monitor, particularly in markets like Mexico, but has not yet impacted business. He explained the move into offline payments is a tactical response to demand from existing digital clients expanding into physical commerce. Interim CFO Jeffrey Brown added that operating expenses are expected to continue increasing in H2 to support hiring and expansion, as reflected in the guidance.

Neha Agarwala asked about the competitive dynamics behind volume softness in Brazil and Mexico and sought an explanation for the increased processing costs in South Africa and Nigeria.

Answer

CEO Pedro Arnt stated that share of wallet shifts are normal in a competitive market and are often offset by gains elsewhere. He explained that higher processing costs in Africa were a deliberate choice to prioritize performance and conversion rates by using more expensive processors, and were also influenced by shifts in the payment method mix.

Neha Agarwala asked for elaboration on the strategy of prioritizing market share over price, the expansion plans for the payment orchestration model, whether pricing discussions have become more prominent, and the competitive advantage gained from the growing license portfolio.

Answer

Executive Pedro Arnt clarified that gaining scale is a top priority as it drives long-term processing cost advantages, making TPV growth a more critical metric than short-term take rate. He noted the orchestration product is for a small subset of merchants in large markets. While acknowledging increased competition, he asserted that performance and technology remain key differentiators. Finally, he confirmed the expanding license portfolio is a significant competitive advantage, offering regulatory security and trust to global merchants.

Neha Agarwala questioned the disparity in gross profit margins between Latin America (38%) and other regions (56%), asking where they might normalize. She also asked about the future of OpEx, wondering if major investments would conclude in 2024 or continue into 2025.

Answer

Executive Pedro Arnt explained that margins are a function of scale-driven cost negotiations, a higher mix of cross-border business in newer markets, and unpredictable country/payment mixes. On OpEx, he stated that while the company is showing sequential leverage, a few more quarters of disciplined investment are needed before the full operational leverage of the model is realized, though the mid-term targets remain.

Neha Agarwala asked for the outlook on the credit business, whether the 20% cost of risk is a new run-rate, and for color on the performance and features of the loan portfolio.

Answer

CFO & IRO Mateus Scherer Schwening clarified that the 20% cost of risk was a one-off due to a conservative macro provision and that a mid-teens level is more sustainable. Strategy & Marketing Officer Lia Machado de Matos added that the strategy focuses on scaling working capital solutions and developing a 'credit building' process to expand offerings across the client base.

Neha Agarwala questioned the reasoning behind the expected further deceleration in TPV growth, given that repricing was largely completed. She also asked about the competitive impact of players like MercadoPago and the potential threat from Fiserv's entry into Brazil with its Clover offering, and followed up on the role of credit in the competitive landscape.

Answer

VP of Finance Mateus Schwening attributed the TPV deceleration outlook to the lagged full-quarter impact of churn from repricing and the natural growth moderation due to the company's increased scale. Executive Lia de Matos noted that while local competitors are monitored, their impact is not significant, as Stone is moving upmarket. She emphasized that Stone is evolving its own offerings to be more of a software and management solution for its clients.

Neha Agarwala asked about the sustainability of PIX take rates amid potential competition and whether new PIX features could cannibalize credit cards. She also inquired about the reason for the sharp quarter-over-quarter jump in the key account take rate and questioned why the company's expected credit loss target of 10% is significantly lower than peers.

Answer

Executive Lia de Matos stated they see PIX as a value-add service with stable monetization and no signs of it cannibalizing credit. The key account take rate jump was a mix effect from losing a large, low-rate sub-acquirer. Executive Mateus Schwening explained the lower credit loss target is due to a different client mix; Stone targets larger SMBs with an average loan size of BRL 30,000, unlike peers who focus on smaller micro-merchants.

Asked about the implied SELIC interest rate in the new guidance, the comparability of their TPV figures with industry data from ABECS, and the take rate evolution specifically within the core MSMB segment.

Answer

The company's guidance assumes the current 10.5% SELIC rate will not decrease this year. Their TPV is not directly comparable to ABECS as it includes PIX, but even excluding it, growth is much higher than the market. For the MSMB segment, the take rate has decreased slightly but remains very healthy and accretive.