Inter & Co (INTR) Q3 2025: Private Payroll Portfolio Rockets 1.3B Reais, Propelling 30% Loan Growth
Inter & Co’s Q3 showcased a step-change in credit growth, led by the rapid scaling of its private payroll loan portfolio, which reached 1.3B reais just six months after launch. Strong client acquisition, higher engagement, and disciplined risk management are compounding operating leverage and profitability. Management’s confidence in sustainable margin expansion and further credit penetration positions Inter for continued outperformance, even as macro headwinds linger.
Summary
- Credit Expansion Recalibrates Growth Trajectory: Private payroll loans and secured credit are driving outsized loan book acceleration.
- Operational Leverage Unlocks Margin Gains: Efficiency ratio improvement and cost discipline boost profitability per client.
- Forward Momentum Anchored in Innovation: AI initiatives, new products, and global expansion underpin management’s bullish outlook.
Performance Analysis
Inter & Co delivered a quarter defined by aggressive credit portfolio expansion, with total loans up 30% year-over-year and strong sequential acceleration. Private payroll loans were the standout, scaling to 1.3B reais and over 300,000 clients in just six months, now representing a material engine for both growth and risk-adjusted returns. Mortgage and home equity portfolios also posted robust growth, outpacing market rates and reinforcing Inter’s differentiated digital distribution model.
On the funding side, deposits surged 35% year-over-year, led by time deposits and the MyPiggyBank, fixed income deposit product, supporting a low cost of funding at 68.2% of CDI. Strong client engagement translated into higher monetization, with NetARPAC (average revenue per active client) reaching 33.2 reais and gross margin per active client hitting a record 20.2 reais. Expense growth remained tightly controlled, with total expenses rising just 16% versus 29% revenue growth, compressing the efficiency ratio by 190 basis points to 45.2%. Net income reached a new high, and ROE improved to 14.2%, even as upfront provisioning for new loan products temporarily lifted cost of risk.
- Loan Book Expansion: 30% YoY loan growth, with private payroll and home equity leading segment outperformance.
- Deposit Franchise Strength: Time deposits and transactional deposits both grew, driving average deposits per active client above 2,000 reais for the first time.
- Cost Discipline: Efficiency ratio improved to 45.2%, with expense growth running at half the pace of revenue gains.
Inter’s digital banking model is translating scale into profitability, with operational leverage and new product monetization compounding quarter after quarter.
Executive Commentary
"With these pillars as our foundation, my focus for the next steps is clear. Keep innovation alive within the company by leveraging AI, hyper-personalization, and introducing new features to our app. Today, we already have 380 AI initiatives live at Inter. For perspective, during our 2024 Tech Day, we had just 80."
João Vitor Menin, Global CEO
"Our strong cost control focus allowed us to report a total expense growth of 5% quarter on quarter and 16% year on year. This growth is approximately half of the pace of our annual net revenue growth, showcasing the strong operation levers of our business."
Santiago Estel, Senior Vice President & CFO
Strategic Positioning
1. Private Payroll Loans as a Scalable Profit Engine
The private payroll loan portfolio has emerged as Inter’s highest-ROE product, with returns “significantly higher than 30%” according to management. The portfolio’s rapid build and early break-even highlight Inter’s ability to underwrite, distribute, and scale new secured lending products digitally. Management sees a “significant TAM” (total addressable market) in private payroll, with growth potential multiple times that of the public payroll segment, given the larger private sector employee base.
2. Ecosystem Synergy Across Seven Verticals
Inter’s seven verticals—spanning credit, FX, investments, insurance, loyalty, ecommerce, and global accounts—are increasingly integrated, driving both client engagement and cross-sell. Fee income remains a strategic focus, with five of the seven verticals emphasizing non-interest revenue streams. While recent fee growth lagged NII due to mix and one-off impacts, management expects a return to 20% growth as verticals mature and product adoption deepens.
3. Digital Distribution and Funding Advantage
A strong deposit franchise underpins Inter’s cost advantage, with low funding costs and increasing average deposit balances per client. The MyPiggyBank product and digital-first onboarding have reinforced trust and primacy with clients, enabling Inter to capture market share in core products such as home equity and FX transactions. This funding edge is a key differentiator versus both incumbents and fintech peers.
4. AI and Operational Excellence
AI-driven process improvement and hyper-personalization are central to Inter’s next phase of growth, with over 380 AI initiatives now live. These investments are credited with improving onboarding, underwriting, and collections, as well as driving down cost to serve and supporting the efficiency ratio gains. Management views these as foundational to sustaining margin expansion and client-centric innovation.
Key Considerations
Inter’s Q3 results reflect the compounding effects of digital scale, product innovation, and disciplined risk-taking, but also surface key levers for future performance as market conditions evolve.
Key Considerations:
- Loan Mix Shift: Growth is being driven by secured lending (two-thirds of the book), which supports lower risk and higher returns versus unsecured credit.
- Client Activation and Engagement: Record client adds and a 58% activation rate signal both brand strength and onboarding effectiveness, with new cohorts monetizing faster than legacy clients.
- Cost of Risk Dynamics: Upfront provisioning for new private payroll loans has temporarily raised cost of risk, but management expects stabilization near current levels as the portfolio seasons.
- Fee Income Reacceleration Potential: Fee growth was muted by one-offs, but management expects a return to 20% as verticals mature and cross-sell deepens.
Risks
The primary headwind remains Brazil’s high Selic rate, which constrains broader credit growth and could slow the pace of ROE expansion. While asset quality is stable, rapid loan growth—especially in new products—carries the risk of unforeseen delinquencies as portfolios season. Fee income remains sensitive to product mix and competitive dynamics, and any missteps in underwriting or digital execution could erode recent gains.
Forward Outlook
For Q4 2025, Inter & Co management guided to:
- Continued loan book growth near current 30% run rate, with private payroll and secured lending as primary drivers.
- Efficiency ratio improvement, targeting further margin expansion as digital scale compounds.
For full-year 2025, management maintained focus on the 6-30-30 plan:
- Client base expansion, ROE trajectory toward 30% (timing subject to macro), and efficiency gains.
Management highlighted several factors that will shape results:
- Further monetization from maturing client cohorts and new product adoption.
- Potential acceleration in SME lending as new invoice discounting clearinghouse launches in 2026.
Takeaways
Inter’s Q3 marks a strategic inflection, as the private payroll portfolio delivers both scale and profitability while core digital banking economics strengthen. The company’s platform approach, disciplined risk management, and operational leverage position it well for continued share gains, but macro headwinds and portfolio seasoning remain key watchpoints.
- Credit Growth Engine: Private payroll and home equity are driving above-market growth, validating Inter’s digital-first lending model and TAM expansion thesis.
- Margin and Profitability Gains: Efficiency improvements and higher monetization per client are compounding, supporting record ROE and net income even as investments in innovation continue.
- Execution Watchpoint: Sustained credit quality and fee income reacceleration will be critical to maintaining momentum as the loan book matures and competition intensifies.
Conclusion
Inter & Co’s Q3 2025 results underscore its emergence as a scaled, profitable digital bank with multiple growth levers in play. The rapid buildout of private payroll loans, coupled with operational discipline and innovation, sets a high bar for peers. Macro risks persist, but Inter’s execution and ecosystem breadth provide credible paths to continued outperformance.
Industry Read-Through
Inter’s results highlight a structural shift in Brazil’s banking landscape, where digital-first players are leveraging technology and funding advantages to outgrow and out-earn traditional incumbents. The rapid scaling of private payroll loans and home equity products signals a broader opportunity for secured digital credit, while strong deposit growth and client engagement reinforce the primacy of integrated platforms. For incumbent banks, the competitive bar for innovation, efficiency, and product breadth is rising. For fintechs, Inter’s scale and funding edge underscore the challenges of competing without a robust deposit base or operational leverage. The industry is likely to see further polarization, with platform banks pulling ahead on both growth and profitability.