EX-99.1 2 a032024_en2.htm EX-99.1 Document

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Unaudited interim condensed consolidated statements
For the three-month period
March 31, 2024
Contents
Management report2
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Unaudited interim condensed consolidated statements
For the three-month period
March 31, 2024
Management report
Inter & Co, Inc.
Inter & Co, Inc (the Company and, together with its consolidated subsidiaries, the Group) is a holding company incorporated in the Cayman Island, with limited liability. In June 2022, the Company began to have its shares listed on Nasdaq, a North American stock exchange, with the ticker INTR, and BDRs listed on B3 a Brazilian stock exchange, with the ticker INBR32. Inter&Co is the controlling company of Grupo Inter and indirectly holds all the shares in Banco Inter.
Inter
Inter provides e-commerce and financial services, these solutions are offered in a single digital ecosystem that includes a complete range of baking services, investments, credit, insurance and cross-border banking, as well as a marketplace that brings together the largest retailers in Brazil and in the United States.
Operating highlights
Customers
As of March 31, 2024, we surpassed the mark of 31.7 million customers and increased the activation rate by 339bps when compared to March 31, 2023, reaching 54.9%.
Loan Portfolio
The balance of loan operations reached R$30.9 billion, representing a positive variation of 3.6% compared to December 31, 2023.
Economic and financial highlights
Profit (loss) for the period
We recorded an accumulated profit of R$195.2 million as of March 31, 2024, compared to a increase of 706.2% in the period ending March 31, 2023.
Revenues
The revenues as of March 31, 2024, reached R$2,197.2 million, recording an increase of R$464.6 million compared to the amount recorded in the same period in 2023.
Administrative expenses
Accumulated administrative and personnel expenses incurred as of March 31, 2024, totaled R$(395.2) million, an increase of R$(9.6) million compared to March 31, 2023.
Equity highlights
Total assets
Total assets reached R$R$62.5 billion as of March 31, 2024, a 3.6% increase compared to December 31, 2023.
Shareholder’s equity
Shareholder’s equity totaled R$8.5 billions billion, a 12.4% growth compared to December 31, 2023.
Relationship with the independent auditors
The Company also has a policy with requirements for contractual risk analysis which defines that the Board of Directors must evaluate the transparency, objectivity, governance aspects and the compromising of the independence of the contract, thus ensuring conformity between the parties involved. Additionally, it has an Audit Committee which, among its responsibilities and competencies, in addition to providing opinions and recommendations on the audit service provider, also evaluates the effectiveness of the independent and internal audits, including with regard to the verification of compliance with legal provisions and regulations applicable to Inter, as well as internal policies and codes.
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Unaudited interim condensed consolidated statements
For the three-month period
March 31, 2024
Furthermore, Inter & Co, Inc. confirms that KPMG Auditores Independentes Ltda. has procedures, policies, and controls in place to ensure its independence, which include an evaluation of the work provided, covering any service other than the independent audit of Company's financial information. This evaluation is based on the applicable regulations and accepted principles that preserve the auditor's independence. The acceptance and performance of non-audit professional services on the financial Information by its independent auditors during the period ended as of March 31, 2024 did not affect the independence and objectivity in the conduct of the audit work performed at Inter & Co, Inc. Information related to independent auditors' fees is made available annually in the reference form.
Acknowledgment
We would like to thank our shareholders, customers and partners for their trust, as well as each of our employees who build our history daily.
Belo Horizonte, May 09, 2024.
The Management
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KPMG Auditores Independentes Ltda
Rua Paraíba, 550 - 12º andar - Bairro Funcionários
30130-141 - Belo Horizonte/MG - Brasil
Caixa Postal 3310 - CEP 30130-970 - Belo Horizonte/MG - Brasil
Telefone +55 (31) 2128-5700
kpmg.com.br
Report on review of interim financial statements
To the Shareholders, Board of Directors and Management of
Inter & Co, Inc.
Cayman Islands
Introduction
We have reviewed the condensed consolidated interim financial information of Inter & Co. Inc. ("Company"), included in the Interim Financial Information Form for the quarter ended March 31, 2024, which comprise the balance sheet as of March 31, 2024, and the income statements, statements of comprehensive income, changes in equity and cash flows for the three-month period then ended, including the explanatory notes.
Management is responsible for the preparation and presentation of this condensed consolidated interim financial information in accordance with IAS 34 Interim Financial Reporting, issued by the International Accounting Standards Board – (IASB). Our responsibility is to express a conclusion on this condensed consolidated interim financial information based on our review.
Scope of review
We conducted our review in accordance with Brazilian and international review standards on interim financial information (NBC TR 2410 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity and ISRE 2410 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity, respectively). A review of interim financial information consists of making inquiries, primarily of people responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with standards on auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion on the condensed consolidated interim financial information
Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated interim financial information referred to above is not prepared, in all material respects, in accordance with IAS 34, applicable to the preparation of interim financial information and presented in accordance with the standards issued by the Brazilian Securities and Exchange Commission.
Belo Horizonte, May 9, 2024
KPMG Auditores Independentes Ltda.
CRC SP 014428/O-6 F-MG
Original report Portuguese signed by
Jonas Moreira Salles
Accountant CRC SP-295315/O-4
KPMG Auditores Independentes Ltda., a Brazilian limited liability company and a member firm of KPMG's global organization of independent member firms licensed by KPMG International Limited, a private English company limited by guarantee.KPMG Auditores Independentes Ltda., a Brazilian limited liability company and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee.
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Unaudited interim condensed consolidated balance sheets
As of March 31, 2024 and December 31, 2023
(Amounts in thousands of Brazilian reais, unless otherwise stated)
Note03/31/202412/31/2023
Assets
Cash and cash equivalents2,830,310 4,259,379 
Amounts due from financial institutions, net of provisions for expected loss4,051,287 3,718,506 
Deposits at Central Bank of Brazil2,925,658 2,664,415 
Securities, net of provisions for expected loss18,167,251 16,868,112 
Derivative financial assets7,392 4,238 
Loans and advances to customers, net of provisions for expected loss28,826,999 27,900,543 
Non-current assets held for sale173,712 174,355 
Equity accounted investees89,569 90,634 
Property and equipment187,076 167,547 
Intangible assets1,596,177 1,345,304 
Deferred tax assets1,082,102 1,033,535 
Other assets2,609,027 2,125,229 
Total assets62,546,562 60,351,797 
Liabilities
Liabilities with financial and similar institutions10,483,087 9,522,469 
Liabilities with customers32,643,444 32,651,620 
Securities issued8,249,142 8,095,042 
Derivative financial liabilities13,893 15,063 
Borrowing and onlending102,020 107,412 
  Income tax and social contribution360,850 287,978 
  Other tax liabilities78,276 75,284 
Tax liabilities439,126 363,262 
Provisions70,003 70,452 
Deferred tax liabilities49,912 32,539 
Other liabilities1,957,483 1,897,248 
Total liabilities54,008,110 52,755,107 
Equity
Share capital13 13 
Reserves9,116,496 8,147,285 
Other comprehensive income(711,252)(675,488)
Treasury shares(12,783)— 
Equity attributable to owners of the Company8,392,474 7,471,810 
Non-controlling interest145,978 124,881 
Total equity8,538,452 7,596,691 
Total liabilities and equity62,546,562 60,351,797 

The notes are an integral part of the Unaudited interim condensed consolidated statements

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Unaudited interim condensed consolidated income statements
For the three-month period ended March 31, 2024 and 2023
(Amounts in thousands of Brazilian reais, except for earnings per share)
Note03/31/202403/31/2023
Interest income1,217,531 1,012,927 
Interest expenses(762,247)(672,771)
Income from securities and derivatives515,381 371,406 
Net interest income and income from securities and derivatives970,665 711,562 
Net revenues from services and commissions374,340 282,353 
Expenses from services and commissions(34,022)(35,678)
Other revenues89,957 65,877 
Revenues1,400,941 1,024,114 
Impairment losses on financial assets(411,048)(350,681)
Administrative expenses(395,244)(385,615)
Personnel expenses(190,463)(172,412)
Tax expenses(86,331)(68,871)
Depreciation and amortization(41,900)(37,577)
Income from equity interests in associates(2,223)(3,061)
Profit before income tax273,732 5,897 
Income tax(78,512)18,319 
Profit for the year 195,220 24,216 
Profit attributable to:
Owners of the Company182,793 11,405 
Non-controlling interest12,427 12,811 
Earnings (loss) per share
Basic earnings (loss) per share 0.43 0.03 
Diluted earnings (loss) per share0.43 0.03 

The notes are an integral part of the Unaudited interim condensed consolidated statements

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Unaudited interim condensed consolidated statements of comprehensive income
For the three-month period ended March 31, 2024 and 2023
(Amounts in thousands of Brazilian reais, unless otherwise stated)
03/31/202403/31/2023
Profit for the year 195,220 24,216 
Other comprehensive income
Item that are or may be reclassified subsequently to the income statement:
Change in fair value - financial assets at FVOCI(94,809)32,221 
Related tax - financial assets FVOCI42,662 (14,500)
Net change in fair value - financial assets at FVOCI(52,147)17,721 
Fair value change - investments in operations abroad(7,620)— 
Tax effect5,931 — 
Hedge of net investments in operations abroad(1,689) 
Foreign exchange differences on the translation of foreign operations18,073 (554)
Others— 24 
Other comprehensive income that may be reclassified subsequently to the income statement(35,763)17,191 
Total comprehensive income for the year159,457 41,407 
Allocation of comprehensive income
To owners of the company147,030 28,596 
To non-controlling interest12,427 12,811 

The notes are an integral part of the Unaudited interim condensed consolidated statements

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Unaudited interim condensed consolidated statements of cash flows
For the three-month period ended March 31, 2024 and 2023
(Amounts in thousands of Brazilian reais, unless otherwise stated)
03/31/202403/31/2023
Operating activities
Profit (loss) for the period195,220 24,216 
Adjustments to profit (loss)
Depreciation and amortization41,900 37,382 
Result of equity interests in associates2,223 3,061 
Impairment losses on financial assets411,048 350,681 
Expenses with provisions9,534 10,226 
Income tax and social contribution78,512 (18,319)
Provisions/ (reversals) for loss of assets(42,343)(11,127)
Other capital gains (losses)(3,255)(2,938)
Provision for performance income(24,264)(28,285)
Result of foreign exchange variation(21,756)131 
(Increase)/ decrease in:
Compulsory deposits at Central Bank of Brazil(261,243)(138,838)
Loans and advances to customers, net of provision for expected loss(1,337,505)(1,341,932)
Amounts due from financial institutions(332,782)488,782 
Securities(373,610)106,514 
Derivative financial assets(3,154)(1,122)
Non-current assets held for sale642 (11,470)
Other assets(454,250)(41,517)
Increase/ (decrease) in:
Liabilities with financial institutions960,618 309,641 
Liabilities with customers(8,176)539,202 
Securities issued154,100 438,392 
Derivative financial liabilities(1,170)(5,154)
Borrowing and onlending(5,392)991 
Tax liabilities52,270 (23,087)
Provisions(9,983)(4,462)
Other liabilities(95,324)58,694 
Income tax paid(64,329)(17,762)
Net cash from operating activities(1,132,469)721,900 
Cash flow from investing activities
Acquisition of subsidiaries, net of cash acquired— (2,378)
Acquisition of property and equipment(21,405)(2,704)
Proceeds from sale of property and equipment— 7,248 
Acquisition of intangible assets(93,572)(70,765)
Acquisition of financial assets at FVOCI(2,071,379)(930,710)
Proceeds from sale of financial assets at FVOCI1,081,628 743,716 
Acquisition of financial assets at FVTPL(30,060)(17,106)
Proceeds from sale of financial assets at FVTPL42,134 27,967 
Net cash used in investing activities(1,092,654)(244,732)
Cash flow from financing activities
Capital increase
782,037 — 
Dividends and interest on shareholders' equity paid(2,271)— 
Repurchase of treasury shares(16,409)(16,409)
Resources from non-controlling interest10,941 (569)
Net cash used in from financing activities774,298 (16,978)
Increase/(Decrease) in cash and cash equivalents(1,450,825)460,190 
Cash and cash equivalents at the beginning of the period4,259,379 1,331,648 
Effect of the exchange rate variation on cash and cash equivalents21,756 (131)
Cash and cash equivalents at March 312,830,310 1,791,707 

The notes are an integral part of the Unaudited interim condensed consolidated statements

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Unaudited interim condensed consolidated statements of changes in equity
For the three-month period ended March 31, 2024 and 2023
(Amounts in thousands of Brazilian reais, unless otherwise stated)
Share capitalReservesOther comprehensive income Retained earnings / accumulated lossesTreasury sharesEquity attributable to owners of the CompanyNon-controlling interest Total equity
Balance as of January 1, 2023 - Inter & Co, Inc.13 7,817,670 (825,301)  6,992,382 96,722 7,089,104 
Profit (loss) for the period— — — 11,405 — 11,405 12,811 24,216 
Proposed allocations:
Constitution/ reversion of reserves— 11,405 — (11,405)—  — — 
Net change in fair value - financial assets at FVOCI— — 17,721 — — 17,721 — 17,721 
Foreign exchange differences on the translation of foreign operations— — (554)— — (554)— (554)
Repurchase of treasury shares— — — — (16,409)(16,409)— (16,409)
Reflex reserve— 26,397 — — — 26,397 — 26,397 
Others— — 24 — — 24 (593)(569)
Balance as of March 31, 2023 - Inter & Co, Inc.13 7,855,472 (808,110) (16,409)7,030,966 108,940 7,139,906 
Balance as of January 1, 2024 - Inter & Co, Inc.13 8,147,285 (675,488)  7,471,810 124,881 7,596,691 
Profit for the period182,793182,79312,427195,220 
Proposed allocations:
Constitution/ reversion of reserves— 182,793 — (182,793)—  — — 
Capital increase— 820,503 — — — 820,503 — 820,503 
Cost associated with issuing equity securities— (38,466)— — — (38,466)— (38,466)
Interest on equity / dividends— — — — —  (2,271)(2,271)
Foreign exchange differences on the translation of foreign operations— — 18,073 — — 18,073 — 18,073 
Gains and losses - Hedge— — (1,689)— — (1,689)— (1,689)
Net change in fair value - financial assets at FVOCI— — (52,147)— — (52,147)— (52,147)
Share-based payment transactions— (3,626)— — 3,626  — — 
Reflex reserve— 8,007 — — — 8,007 — 8,007 
Repurchase of treasury shares— — — — (16,409)(16,409)— (16,409)
Others— — — — —  10,941 10,941 
Balance as of March 31, 2024 - Inter & Co, Inc.13 9,116,496 (711,251) (12,783)8,392,475 145,978 8,538,453 
The notes are an integral part of the Unaudited interim condensed consolidated statements

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Notes to the Unaudited interim condensed consolidated financial statement
As of March 31, 2024
Notes to the Unaudited interim condensed consolidated financial statement
(Amounts in thousands of Brazilian reais, unless otherwise stated)
1.Activity and structure of Inter & Co, Inc. and its subsidiaries
Inter & Co, Inc. (“Inter & Co”), is a company incorporated in the Cayman Islands with limited liability, on January 26, 2021.
Inter & Co, Inc. is registered with the U.S. Securities and Exchange Commission (“SEC”). Common shares are traded on Nasdaq under the symbol “INTR” and Brazilian Depositary Receipts (“BDRs”) are traded on B3 - Brasil, Bolsa, Balcão (“B3”), the Brazilian stock exchange, under the symbol “INBR32” .
2.Basis for preparation
a.Compliance statement
The Group's Unaudited interim condensed consolidated financial statements was prepared in accordance with IAS 34 - interim financial reports issued by the International Accounting Standards Board (IASB).
This Unaudited interim condensed consolidated financial statements was prepared following the preparation basis and accounting policies consistent with those adopted in the preparation of the consolidated financial statements of Inter & Co, Inc., as of December 31, 2023, and is therefore intended only to provide an update of the content of the latest financial statements and must be read together, in accordance with IAS 34.
The information in the explanatory notes that did not undergo significant changes or that did not present new disclosures in relation to December 31, 2023 was not fully repeated in this condensed consolidated interim financial statements. However, information has been included to explain the main events and transactions that have occurred, allowing an understanding of the changes in the financial position and performance of the Group's operations since the publication of the consolidated financial statements as of December 31, 2023.
This Unaudited interim condensed consolidated financial statements was authorized for issuance by the Company's Board of Directors on May 09, 2024.
b.Functional and presentation currency
These Unaudited interim condensed consolidated financial statements are presented in Brazilian reais (BRL or R$). The functional currency of the Group companies is shown in note 4a. All balances were rounded to the nearest thousand, unless otherwise indicated.
c.Use of estimates and judgments
In preparing these Unaudited interim condensed consolidated financial statements, management has made judgments, estimates and assumptions that affect the application of the accounting policies of the Group and the reported amounts of assets, liabilities, revenues and expenses. Actual results may differ from such estimates. Estimates and assumptions are reviewed on an ongoing basis. Adjustments, if any, related to changes in estimates are recognized prospectively. The significant judgments made by management during the application of the Group’s accounting policies and the sources of estimation uncertainty are described below:
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Notes to the Unaudited interim condensed consolidated financial statement
As of March 31, 2024
Judgments
Information about the judgments made in the application of accounting policies that have the most relevant effects on the amounts recognized in financial projections are included in the following notes:
Basis for consolidation (see note 4a): whether Inter has de facto control over an investee;
Equity accounted investees (see note 14): whether Inter has significant influence over an investee.
Estimates
The estimates present a significant risk and may have a material impact on the values of assets and liabilities in the next year, and the actual results may differ from those previously established. They are disclosed below and are related to the following notes:
Classification of financial assets (see notes 6 and 7) - evaluation of the business model in which the assets are held and evaluation if the contractual terms of the financial asset relate only to payments of principal and interest (SPPI test).
Measuring the provision for expected credit losses on financial assets measured at amortized cost and fair value through other comprehensive income (FVOCI) requires the use of complex quantitative models and assumptions about future economic conditions and credit behavior. Several significant judgments are also necessary to apply accounting requirements to measure the expected credit loss, such as: determining the criteria for evaluating the significant increase in credit risk; select quantitative models and appropriate assumptions to measure expected credit loss; and establish different prospective scenarios and their weighting, among others.
Business combination (see note 4b): determination of fair values of assets acquired and liabilities assumed in business combinations.
Impairment test of intangible assets and goodwill (see notes 16 and 4(h)): for the purposes of impairment testing, each invested entity was considered a cash generating unit (“CGU”).
Deferred tax asset (note 34): the expected realization of the deferred tax asset is based on projected future taxable income and other technical studies.
3.Significant changes of accounting policies
New or revised accounting pronouncements adopted in 2024
The following new or revised standards have been issued by IASB, and were effective for the year covered by these Unaudited interim condensed consolidated financial statements, and had no material impact on these condensed consolidated interim financial statements.
Definition of accounting estimates - Amendments to IAS 8: defines accounting estimates as monetary values susceptible to uncertainties in their measurement. Among these estimates we can mention the expected credit loss and the fair value of assets and liabilities.
Disclosure of Accounting Policies – Changes to IAS 1 and IFRS Practice Statement 2: The Group adopted disclosure from January 1, 2023. Although the amendments made to the accounting policies did not result in any changes to the accounting policies themselves, they did have an impact on the disclosure of accounting policy information in the consolidated financial statements. The amendments require 'material' disclosure of policies instead of 'significant' disclosure. Additionally, they provide guidance on the application of materiality to the disclosure of accounting policies, thus assisting entities in providing useful and specific policy information that users require to understand other information in the financial statements. Management made certain updates to the information presented in Note 4, which pertains to Material Accounting Policies (previously referred to as Significant Accounting Policies), in line with the amendments.
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Notes to the Unaudited interim condensed consolidated financial statement
As of March 31, 2024
Deferred tax on leasing transactions – Amendments to IAS 12: clarify that the exemption for accounting for deferred taxes arising from temporary differences generated in the initial recognition of assets or liabilities does not apply to leasing transactions.
Changes to IFRS 16 - Leases: the IASB has issued narrow-scope changes to the requirements for sale and leaseback transactions in IFRS 16, explaining how an entity accounts for a sale and leaseback after the date of the transaction. Sale and leaseback transactions in which some or all of the lease payments are variable lease payments that are not dependent on an index or rate and are more likely to be impacted.
Insurance Contracts - IFRS 17: The standard on Insurance Contracts replaces IFRS 4 - Insurance Contracts, and brings important changes to the measurement, recognition and disclosure of these contracts, through specific methodologies for each type of agreement.
Changes to IAS 7 and IFRS 7 - Supplier financing arrangements: these changes require disclosures to increase the transparency of supplier financing arrangements and their effects on a company's liabilities, cash flows and liquidity risk exposure. The disclosure requirements are the IASB's response to investor concerns that some companies' supplier financing arrangements are not sufficiently visible, making it difficult for investors to review.
Other new standards and interpretations issued but not yet effective
Classification of Liabilities as Current or Non-Current – Amendments to IAS 1: clarifies when to take into account contractual conditions (covenants) that may impact the unconditional right to postpone the settlement of the liability for a minimum period of 12 months after the closure of the report, in addition to establish disclosure requirements for liabilities with covenants classified as non-current. These changes will come into effect from the start of the 2024 financial year, and there is no impact on the consolidated financial statements.
Amendment to IAS 21 - Effects of Changes in Exchange Rates and Conversion of Financial Statements: the changes will require the application of a consistent approach when assessing whether one currency can be exchanged for another and the amendment clarifies how entities should determine the exchange rate to be used, and disclosures to be provided, when a currency is difficult, or cannot, be exchanged. The changes aim to improve the information that an entity provides in its financial statements. The changes to IAS 21 are effective from January 1, 2025, and their adoption may be brought forward. Management does not expect impacts on Grupo Inter’s financial statements.
New IFRS 18 - Presentation and Disclosure in Financial Statements: issued in April 2024, replaces IAS 1 and brings additional requirements to improve the disclosure of companies' financial performance. It defines three categories for income and expenses: operating, investments and financing, in addition to including new subtotals, such as operating profit. The standard also provides guidance on the disclosure of performance indicators defined by management and provides specific requirements for companies in the banking and insurance sector. IFRS 18 will come into force on January 1, 2027, and Management is currently analyzing its impacts on Grupo Inter's financial statements.
4.Material accounting policies
The accounting policies described below were applied in all years presented in the Unaudited interim condensed consolidated financial statements.
a.Basis for consolidation
Companies that Inter & Co controls are classified as subsidiaries. The Company controls an entity when it is exposed to or has the right to variable returns arising from its involvement with the entity and has the ability to use this power to affect the value of such returns.
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Notes to the Unaudited interim condensed consolidated financial statement
As of March 31, 2024
The subsidiaries are consolidated in full as from the date the Company gains control of their activities until the date on which control ceases to exist. With regard to the significant restrictions on the Group’s ability to access or use the assets and settle the Group's liabilities, only the regulatory restrictions, linked to the compulsory reserves maintained in compliance with the requirement of the Central Bank of Brazil, which restrict the ability of subsidiaries of Inter to transfer cash to other entities within the economic group. There are no other legal or contractual restrictions and no guarantees or other requirements that may restrict that dividends and other capital distributions are paid or that loans and advances are made or paid to (or by) other entities within the economic group.
The following table shows the subsidiaries in each year:
EntityBranch of ActivityCommon shares
and/or quotas
Functional currencyCountryShare in the capital (%)
03/31/202412/31/2023
Direct subsidiaries
Inter&Co Participações Ltda. Holding Company288,517,995 BRLBrazil100.00 %100.00 %
INTRGLOBALEU Serviços Administrativos, LDAHolding CompanyEURPortugal100.00 %100.00 %
Inter US Holding, Inc Holding Company100 US$USA100.00 %100.00 %
Inter Holding Financeira S.A.Holding401,207,704 BRLBrazil100.00 %100.00 %
Indirect subsidiaries
Banco Inter S.A.Multiple Bank1,297,308,713 BRLBrazil100.00 %100.00 %
Inter Distribuidora de Títulos e Valores Mobiliários Ltda. Securities195,000,000 BRLBrazil100.00 %100.00 %
Inter Digital Corretora e Consultoria de Seguros Ltda.Insurance broker59,750 BRLBrazil60.00 %60.00 %
Inter Marketplace Ltda.Marketplace1,984,271,386 BRLBrazil100.00 %100.00 %
Inter Titulos Fundo de InvestimentoInvestment Fund499,388,000 BRLBrazil98.30 %98.30 %
BMA Inter Fundo De Investimento Em Direitos Creditórios MultissetorialInvestment Fund194,333,000 BRLBrazil72.68 %86.46 %
TBI Fundo De Investimento Renda Fixa Credito PrivadoInvestment Fund230,278,086 BRLBrazil100.00 %100.00 %
TBI Fundo De Investimento Crédito Privado Investimento ExteriorInvestment Fund15,000,000 BRLBrazil100.00 %100.00 %
IG Fundo de Investimento Renda Fixa Crédito Privado Investment Fund144,796,772 BRLBrazil100.00 %100.00 %
Inter Simples Fundo de Investimento em Direitos Creditórios Multissetorial Investment Fund17,738 BRLBrazil91.86 %99.11 %
IM Designs Desenvolvimento de Software Ltda.Provision of services50,000,000 BRLBrazil50.00 %50.00 %
Acerto Cobrança e Informações Cadastrais S.A.Provision of services60,000,000,000 BRLBrazil60.00 %60.00 %
Inter & Co Payments, IncProvision of services1,000 US$USA100.00 %100.00 %
Inter Asset Gestão de Recursos Ltda Asset management750,814 BRLBrazil70.87 %70.87 %
Inter Café Ltda.Provision of services3,010,000 BRLBrazil100.00 %100.00 %
Inter Boutiques Ltda.Provision of services2,510,008 BRLBrazil100.00 %100.00 %
Inter Food Ltda.Provision of services7,000,000 BRLBrazil70.00 %70.00 %
Inter Viagens e Entretenimento Ltda. Provision of services94,515,000 BRLBrazil100.00 %100.00 %
Inter Conectividade Ltda. (d)Provision of services33,533,805 BRLBrazil100.00 %100.00 %
Inter US Management, LLCProvision of services100,000 US$USA100.00 %100.00 %
Inter US Finance, LLC Provision of services100,000 US$USA100.00 %100.00 %
Inter&Co Securities, LLC (a)Securities— US$USA100.00 %100.00 %
a.The reorganization of Inter&Co Securities, LLC ("Securities") was completed on February 22, 2024. Inter&Co, Inc. ("Inter&Co"), which was the sole owner of Securities, transferred Securities' shares to its direct subsidiary, Inter US Holding, Inc. ("US Holding"). With the completion of this reorganization, Securities is now a direct subsidiary of US Holding and, consequently, an indirect subsidiary of Inter&Co.
b.On March 27, 2024, the corporate reorganization of Inter Marketplace Intermediação De Negócios e Serviços Ltda. Banco Inter, which was the sole partner of Inter Marketplace Intermediação de Negócios e Serviços Ltda, transferred its shares to Inter&Co Participações Ltda, becoming the direct controller of Inter Marketplace, consequently, an indirect subsidiary of Inter&Co.
Non-controlling interest
The Group recognizes the portion related to non-controlling interests in shareholders’ equity in the consolidated balance sheet. In transactions involving purchase of interests with non-controlling shareholders, the difference between the amount paid and the interest acquired is recorded in shareholders’ equity. Gains or losses on sales to non-controlling shareholders are also recorded in shareholders’ equity. The company owns 50% or more of the voting capital of all indirect subsidiaries.
Balances and transactions eliminated on consolidation
Intra-group balances and transactions, including any unrealized gains or losses arising from intra-group transactions, are eliminated in the consolidation process. Unrealized losses are eliminated only to the extent that there is no evidence of impairment.
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Notes to the Unaudited interim condensed consolidated financial statement
As of March 31, 2024
5.Operational segments
Operating segments are disclosed based on internal information that is used by the chief operating decision maker to allocate resources and to assess performance. The chief operating decision-maker, responsible for allocating resources, evaluating the performance of the operating segments and responsible for making strategic decisions for the Group, is the CEO, together with the Board of Directors.
Profit by operating segment
Each operating segment is composed of one or more legal entities. The measurement of profit by operating segment takes into account all revenues and expenses recognized by the companies that make up each segment.
Transactions between segments are carried out under terms and rates compatible with those practiced with third parties, where applicable. The Group does not have any single customer accounting for more than 10% of its total net revenue.
a.Banking & Spending
This segment comprises a wide range of banking products and services, such as checking accounts, debit and credit cards, deposits, loans, advances to customers, debt collection services and other services, which are available to the customers primarily by means of Inter’s mobile application. The segment also comprises foreign exchange services and money remittances between countries, including the Global Account digital solution, including investment funds consolidated by the Group.
b.Investments
This segment is responsible for operations related to the acquisition, sale and custody of securities, the structuring and distribution of securities in the capital market and operations related to the management of fund portfolios and other assets (purchase, sale, risk management). Revenues consist primarily of administration fees and commissions charged to investors for the rendering of such services.
c.Insurance Brokerage
This segment offers insurance products underwritten by insurance companies with which Inter has an agreement (‘partner insurance companies’), including warranties, life, property and automobile insurance and pension products, as well as consortium products provided by a third party with whom Inter has a commercial agreement. The income from brokerage commissions is recognized in the income statement when services are provided, that is, when the performance obligation is fulfilled upon sale to the customer.
d.Inter Shop
This segment includes sales of goods and/or services with partner companies through our digital platform. The segment income basically comprises commissions received for sales and/or for the rendering of these services.
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Notes to the Unaudited interim condensed consolidated financial statement
As of March 31, 2024
Segment information
As of and for March 31, 2024
Banking & SpendingInvestmentsInsurance BrokerageInter Shop Total of reportable segmentsOthersEliminationsConsolidated
Interest income1,190,849 2,925 — 14,175 1,207,949 13,933 (4,351)1,217,531 
Interest expenses(776,296)(1,992)— — (778,288)(2,121)18,162 (762,247)
Income from securities and derivatives492,446 18,817 974 7,214 519,451 9,741 (13,811)515,381 
Net interest income and income from securities and derivatives906,999 19,750 974 21,389 949,112 21,553  970,665 
Net revenues from services and commissions272,341 31,125 36,446 33,654 373,566 774 — 374,340 
Expenses from services and commissions(33,925)(95)— — (34,020)(2)— (34,022)
Other revenues103,616 3,141 14,930 6,412 128,099 13,347 (51,489)89,957 
Revenues1,249,031 53,921 52,350 61,455 1,416,757 35,672 (51,489)1,400,940 
Impairment losses on financial assets(410,592)— — — (410,592)(456)(411,048)
Revenues net of impairment losses on financial assets838,439 53,921 52,350 61,455 1,006,165 35,216 (51,489)989,892 
Administrative expenses(341,277)(18,221)(13,657)(14,304)(387,459)(7,785)— (395,244)
Personnel expenses(141,976)(22,537)(5,827)(10,772)(181,112)(9,351)— (190,463)
Tax expenses(68,128)(3,687)(4,338)(10,110)(86,263)(68)— (86,331)
Depreciation and amortization(37,751)(1,408)(339)(2,349)(41,847)(53)— (41,900)
Income from equity interests in associates(2,223)— — — (2,223)— — (2,223)
Profit / (loss) before income tax247,084 8,068 28,189 23,920 307,261 17,959 (51,489)273,731 
Income tax(51,214)(2,608)(7,768)(17,412)(79,002)490 — (78,512)
Profit / (loss) for the year 195,870 5,460 20,421 6,508 228,259 18,449 (51,489)195,220 
Total assets61,528,193 627,440 273,804 635,047 63,064,484 1,178,881 (1,696,803)62,546,562 
Total liabilities54,191,437 381,574 138,321 596,482 55,307,814 262,224 (1,561,928)54,008,110 
Total equity7,336,756 245,866 135,483 38,565 7,756,670 916,657 (134,875)8,538,452 
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Notes to the Unaudited interim condensed consolidated financial statement
As of March 31, 2024
As of and for March 31, 2023
Banking & SpendingInvestmentsInsurance BrokerageInter Shop Total of reportable segmentsOthersEliminationsConsolidated
Interest income992,033 6,655 — — 998,688 23,252 (9,013)1,012,927 
Interest expenses(665,800)(11,438)— (515)(677,753)(3,438)8,420 (672,771)
Income from securities and derivatives371,476 9,541 589 4,870 386,476 6,794 (21,864)371,406 
Net interest income and income from securities and derivatives697,709 4,758 589 4,355 707,411 26,608 (22,457)711,562 
Net revenues from services and commissions166,352 20,250 27,261 66,959 280,822 1,531 — 282,353 
Expenses from services and commissions(33,110)— — — (33,110)(2,568)— (35,678)
Other revenues93,965 8,543 12,712 19,531 134,751 51,928 (120,802)65,877 
Revenues924,916 33,551 40,562 90,845 1,089,874 77,499 (143,259)1,024,114 
Impairment losses on financial assets(345,921)317 — (4,827)(350,431)(250)— (350,681)
Revenues net of impairment losses on financial assets578,995 33,868 40,562 86,018 739,443 77,249 (143,259)673,433 
Administrative expenses(352,251)(11,379)(10,791)(7,765)(382,186)(3,250)(179)(385,615)
Personnel expenses(159,998)(4,302)(1,796)(4,514)(170,610)(1,802)— (172,412)
Tax expenses(54,768)(2,177)(3,823)(7,918)(68,686)(185)— (68,871)
Depreciation and amortization(34,578)(711)(238)(2,007)(37,534)(43)— (37,577)
Income from equity interests in associates(3,061)— — — (3,061)— — (3,061)
Profit / (loss) before income tax(25,661)15,299 23,914 63,814 77,366 71,969 (143,438)5,897 
Income tax41,566 (4,460)(8,125)(11,699)17,282 1,037 — 18,319 
Profit / (loss) for the year 15,905 10,839 15,789 52,115 94,648 73,006 (143,438)24,216 
Total assets60,102,556 570,182 211,213 337,810 61,221,761 96,447 (966,411)60,351,797 
Total liabilities52,501,608 326,926 96,198 141,600 53,066,332 (19,167)(292,059)52,755,106 
Total equity7,600,948 243,256 115,015 196,210 8,155,429 115,614 (674,352)7,596,691 

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Notes to the Unaudited interim condensed consolidated financial statement
As of March 31, 2024
6.Financial risk management
Risk management at Inter includes credit, market, liquidity and operational risks. Risk management activities are carried out by independent and specialized structures, in accordance with previously defined policies and strategies. In general, the activities and processes seek to identify, measure, and control the financial and non-financial risks to which Inter is subject.
The model adopted by Inter & Co, Inc., involves a structure of areas and committees that seek to ensure:
Segregation of function;
Specific unit for risk management;
Defined management process;
Clear norms and competence structure;
Defined limits and margins; and
Reference to best management practices.
a.Credit risk
Credit risk is defined as the possibility of losses associated with the failure of the borrower or counterparty to meet their respective financial obligations in the agreed-upon terms or the devaluation of a credit agreement arising from the increased risk of default by the borrower, among others.
The financial instruments subject to credit risk are submitted to careful credit evaluation prior to contracting, as well as throughout the term of the respective operations. The credit analyses are based on the borrower's (or counterparty's) economic and financial capacity behavior, including payment history and credit reputation, in addition to the terms and conditions of the respective credit operation, including terms, rates and guarantees.
Loans and advances to customers, as shown in Note 12, are mainly represented by the following operations:
Credit card: credit operations related to credit card limits, mostly without attached guarantees;
Business loans: working capital operations, receivables, discounts and loans in general, with or without attached guarantees;
Real estate loans: loans and financing operations secured by real estate, with attached guarantees;
Personal loans: loan and payroll card operations, personal loans with and without transfer guarantees; and
Agribusiness loans: financing operations for costing, investment, commercialization and/or industrialization granted to rural producers, with or without attached guarantees.
Mitigation of Exposure
In order to maintain the exposures within the risk levels established by senior management, Inter adopts measures to mitigate credit risk. Exposure to credit risk is mitigated through the structuring of guarantees, adapting the risk level to be incurred to the characteristics of the collateral taken at the time of granting. Risk indicators are monitored on an on-going basis and proposal for alternatives forms of mitigation are assessed, whenever the exposure behavior to credit risk of any unit, region, product or segment requires it. Additionally, credit risk mitigation takes place through product repositioning and adjusting operational processes or operation approval levels.
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Notes to the Unaudited interim condensed consolidated financial statement
As of March 31, 2024
In addition to the activities described above, goods pledged in guarantee are subject to a technical assessment / valuation at least once every twelve months. In the case of personal guarantees, an analysis of the financial and economic circumstances of the guarantor is made considering their other debts with third parties, including tax, social security and labor debt.
Credit standards guide operational units and cover, among other aspects, the classification, requirement, selection, assessment, formalization, control and reinforcement of guarantees, aiming to ensure the adequacy and sufficiency of mitigating instruments throughout the cycle of the loan.
In 2024 there were no material changes to the nature of the credit risk exposures, how they arise or the Group’s objectives, policies and processes for managing them, although Inter continues to refine its internal risk management processes.
Measurement
The measurement of credit risk by Inter is carried out considering the following:
At the time that credit is granted, an assessment of a customer’s financial condition is undertaken through the application of qualitative and quantitative methods and using information collected from the market, in order to support the adequacy of the risk exposure being proposed;
The assessment is carried out at the counterparty level, considering information on guarantors where applicable. The exposure to the credit risk is also measured in extreme scenarios, using stress techniques and scenario analysis. The models applied to determine the rating of customers and loans are reviewed periodically in order to ensure they reflect the macroeconomic scenario and actual loss experience, as per information in note 12;
The aging of late payments in portfolios is monitored in order to identify trends or changes in the behavior of non-performing loans and allow the adoption of mitigating measures when required;
Expected credit loss reflects the risk level of loans and allows monitoring and control of the portfolio’s exposure level and the adoption of risk mitigation measures;
The expected credit loss is a forecast of the risk levels of the credit portfolio. Its calculation is based on the historical payment behavior and the distribution of the portfolio by product and risk level. This is a key input to the process of pricing loans and advances to customers; and
In addition to the monitoring and measurement of indicators under normal conditions, simulations of changes in business environment and economic scenario are also performed in order to predict the impact of such changes in levels of exposure to risks, provisions and balance of such portfolios and to support the process of reviewing the exposure limits and the credit risk policy.
b.Description of guarantees
The financial instruments subject to credit risk are subject to careful assessment of credit prior to being contracted and disbursed and risk assessment is ongoing throughout the term of the instruments. Credit assessments are based on an understanding of the customers’ operational characteristics, their indebtedness capacity, considering cash flow, payment history and credit reputation, and any guarantees given.
Loans and advances to customers, as shown in Note 10, are mainly represented by the following operations:
Working capital operations: are guaranteed by receivables, promissory notes, sureties provided by their owners and occasionally by property or other tangible assets, when applicable;
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Notes to the Unaudited interim condensed consolidated financial statement
As of March 31, 2024
Payroll loans repayments: are mainly represented by payroll loan cards and personal loans. These are deducted directly from the borrowers’ pensions, income or salaries and settled directly by the entity responsible for making those payments (e.g. company or government body); The operations concerning FGTS (Guarantee Fund for Time of Service) , such as the anniversary withdrawal are guaranteed through transfer;
Personal loans and credit cards: generally, do not have guarantees; and
Real estate financing: is collateralized by the real estate financed.
Guarantees of real estate loans and financing
The tables below present the amount of loans and financing secured by property, broken down by loan-to-value. The loan-to-value is calculated by the ratio between the gross value of the exposure and the value of the guarantee at the origination date. Gross amounts exclude any provision for impairment:
03/31/202412/31/2023
Lower than 30%1,181,987 1,210,884 
31 - 50%2,318,511 2,157,130 
51 - 70%3,417,831 3,227,703 
71 - 90%1,844,618 1,664,885 
Higher than 90%361,428 322,966 
9,124,375 8,583,568 
c.Liquidity risk
Liquidity risk is the possibility that the Group is not able to efficiently meet its expected or unexpected obligations, including those resulting from binding guarantees, without incurring significant losses. This also includes the possibility of the Group not being able to negotiate a sale of an asset at market price due to its volume in relation to the volume normally transacted or due to any discontinuity in the market.
The liquidity risk management structure is segregated and works proactively with the aim of monitoring and preventing any breach of limits on liquidity ratios. The monitoring of liquidity risk encompasses the entire flow of receipts and payments for the Group so that risk mitigating actions may be implemented. This monitoring is carried out primarily by the Assets and Liabilities Committee and the Risk and Capital Management Committee. These committees evaluate liquidity risk information that is available in the Group’s systems, such as:
Top 10 investors;
Mismatch between assets and liabilities;
Net Funding;Liquidity limits;Maturity forecast;
Stress tests based on internally defined scenarios;
Liquidity contingency plans;
Monitoring of asset and liability concentrations;
Monitoring of Liquidity Ratio and funding renewal rates; and
Reports with information on positions held by Inter and its subsidiaries.
In 2024 there were no material changes to the nature of the liquidity risk exposures, how they arise or the Group’s objectives, policies and processes for managing them, although the Group continues to refine its internal risk management processes.
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Notes to the Unaudited interim condensed consolidated financial statement
As of March 31, 2024
The responsibilities of the Liquidity Risk Management Framework are distributed between different committees and hierarchical levels, including: Board of Directors, Asset and Liability Committee (ALC), Officer in charge of Risk Management, Superintendent of Compliance, Risk Management and Internal Controls and Risk Coordination. These consider the internal and external factors affecting the liquidity of the Group, and a detailed daily monitoring of incoming and outgoing movements of loans and advances to customers, time deposits, savings, Agribusiness Credit Bills (LCA), Real Estate Secured Bonds (LCI), Guaranteed Real Estate Letters (LIG) and demand deposits is performed. Time deposits are analyzed according to the concentration, maturities, renewals, repurchases and new funding.
d.Analyses of financial instruments by remaining contractual term
The table below presents the projected future realizable value of Inter’s financial assets and liabilities by contractual term:
03/31/2024
NoteUp to 3 months3 months Up to 1 yearAbove 1 yearTotal
Financial assets
Cash and cash equivalents2,830,310 — — 2,830,310 
Amounts due from financial institutions4,051,287 — — 4,051,287 
Compulsory deposits at Central Bank of Brazil2,925,658 — — 2,925,658 
Securities712,517 189,805 17,264,929 18,167,251 
Derivative financial assets7,392 — — 7,392 
Loans and advances to customers6,411,484 9,160,961 15,286,182 30,858,627 
Other assets— — 112,410 112,410 
Total16,938,648 9,350,766 32,663,521 58,952,935 
Financial liabilities
Liabilities with financial and similar institutions8,801,945 1,681,142 — 10,483,087 
Liabilities with customers15,256,399 3,102,886 14,284,159 32,643,444 
Securities issued636,192 5,014,480 2,598,470 8,249,142 
Derivative financial liabilities15 9,195 4,683 13,893 
Borrowing and onlending6,222 75,974 19,824 102,020 
Total24,700,773 9,883,677 16,907,136 51,491,586 
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Notes to the Unaudited interim condensed consolidated financial statement
As of March 31, 2024
12/31/2023
NoteUp to 3 months3 months Up to 1 yearAbove 1 yearTotal
Financial assets
Cash and cash equivalents4,259,379 — — 4,259,379 
Amounts due from financial institutions3,718,506 — — 3,718,506 
Compulsory deposits at Central Bank of Brazil2,664,415 — — 2,664,415 
Securities412,674 290,149 16,165,289 16,868,112 
Derivative financial assets4,238 — — 4,238 
Loans and advances to customers7,509,850 8,366,848 13,907,603 29,784,301 
Other assets— — 109,682 109,682 
Total18,569,062 8,656,997 30,182,574 57,408,633 
Financial liabilities
Liabilities with financial and similar institutions187,913,830 1,608,639 — 9,522,469 
Liabilities with customers1916,873,560 2,335,763 13,442,297 32,651,620 
Securities issued20970,976 4,068,815 3,055,251 8,095,042 
Derivative financial liabilities11295 9,686 5,082 15,063 
Borrowing and onlending215,283 81,839 20,290 107,412 
Total25,763,944 8,104,742 16,522,920 50,391,606 
e.Financial assets and liabilities using a current/non-current classification
The table below represents Group’s current financial assets (realized within 12 months of the reporting date), non-current financial assets (realized more than 12 months after the reporting date) and current financial liabilities (it is due to be settled within 12 months of the reporting date) and non-current financial liabilities (is due to be settled more than 12 months after the reporting date):
03/31/2024
NoteCurrentNon-current Total
Assets
Cash and cash equivalents2,830,310 — 2,830,310 
Amounts due from financial institutions4,051,287 — 4,051,287 
Compulsory deposits at Central Bank of Brazil2,925,658 — 2,925,658 
Securities902,322 17,264,929 18,167,251 
Derivative financial assets7,392 — 7,392 
Loans and advances to customers, net of provisions for expected loss13,706,014 15,120,985 28,826,999 
Other assets— 112,410 112,410 
Total24,422,983 32,498,324 56,921,307 
Liabilities
Liabilities with financial institutions10,483,087 — 10,483,087 
Liabilities with customers18,359,285 14,284,159 32,643,444 
Securities issued5,650,672 2,598,470 8,249,142 
Derivative financial liabilities9,210 4,683 13,893 
Borrowing and onlending82,196 19,824 102,020 
Total34,584,450 16,907,136 51,491,586 
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Notes to the Unaudited interim condensed consolidated financial statement
As of March 31, 2024
12/31/2023
NoteCurrentNon-current Total
Assets
Cash and cash equivalents4,259,379 — 4,259,379 
Amounts due from financial institutions3,718,506 — 3,718,506 
Compulsory deposits at Central Bank of Brazil2,664,415 — 2,664,415 
Securities702,823 16,165,289 16,868,112 
Derivative financial assets4,238 — 4,238 
Loans and advances to customers, net of provisions for expected loss14,117,647 13,751,812 27,869,459 
Other assets— 109,682 109,682 
Total25,467,008 30,026,783 55,493,791 
Liabilities
Liabilities with financial institutions9,522,469 — 9,522,469 
Liabilities with customers19,209,323 13,442,297 32,651,620 
Securities issued5,039,791 3,055,251 8,095,042 
Derivative financial liabilities9,981 5,082 15,063 
Borrowing and onlending87,122 20,290 107,412 
Total33,868,686 16,522,920 50,391,606 
f.Market risk
Market risk is the possibility of losses resulting from fluctuations in the fair value of financial instruments held by the Institution and its subsidiaries, including the risks of transactions subject to changes in foreign exchange rates, interest rates, stock prices and commodity prices.
At Inter&Co, market risk management has, among others, the objective of supporting the business areas, establishing processes and implementing tools necessary for the assessment and control of related risks, allowing the measurement and monitoring of risk levels, as defined by Senior Management.
The market risk policy is monitored by the Asset and Liability Committee. Market risk controls allow the analytical assessment of information and are in a constant process of improvements. The Institution and its subsidiaries have improved the internal aspects of risk management and mitigation.
Measurement
Within the risk management process, Inter&Co classifies its operations, including derivative financial instruments, as follows:
Trading book: considers all operations intended to be traded before their contractual maturity or intended to hedge the trading portfolio and which are not subject to limitations on their negotiability.
Banking book: considers operations not classified in the trading portfolio, the main characteristic of which is the intention to hold the respective operations until maturity
In line with market practices, Inter&Co manages its risks dynamically, seeking to identify, measure, evaluate, monitor, report, control and mitigate the exposures to market risks of its own positions. One of the methods of assessing the positions subject to market risk is the Value at Risk (VaR) model. The methodology used to calculate the VaR is the parametric model with a confidence level (CL) of 99% and a time horizon (TH) of twenty one days.
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Notes to the Unaudited interim condensed consolidated financial statement
As of March 31, 2024
We present below the 21-day VaR of the trading book:
R$ thousand03/31/202412/31/2023
Risk factor
Price index coupons5,831 2,730 
Pre fixed interest rate464 1,074 
Foreign currency coupons665 
Foreign currencies1,407 2,346 
Subtotal7,711 6,815 
Diversification effects (correlation)2,144 3,794 
Value-at-Risk5,567 3,021 
We present below the VaR of the banking book:
R$ thousand03/31/202412/31/2023
Risk factor
Price index coupons597,021 425,156 
Interest rate coupons112,259 108,716 
Pre fixed interest rate21,342 49,019 
Foreign currency coupon27,053 — 
Others535 22,538 
Subtotal758,210 605,429 
Diversification effects (correlation)125,201 164,555 
Value-at-Risk633,009 440,874 
g.Sensitivity analysis
To determine the sensitivity of the positions to market movements, a sensitivity analysis was carried out in different scenarios, considering the relevant risk factors in the period analyzed, and using scenarios that would negatively affect our positions, as follows:
Scenario I: based on market information, shocks were applied and 1 basis point for interest rates and 1% variation for prices (foreign currencies and shares);
Scenario II: shocks of 25% variation in market curves and prices were determined;
Scenario III: shocks of 50% variation in market curves and prices were determined.
It should be noted that the impacts reflect a static view of the portfolio and that the dynamism of the market and the composition of the portfolio means that these positions change continuously and do not necessarily reflect the position demonstrated here. The group has a process of continuous monitoring of market risk and, in the event of position/portfolio deterioration, mitigating actions are taken to minimize possible negative effects.
Exposures - R$ thousand
Banking and Trading bookScenarios03/31/2024
Risk factorRate variation in scenario 1Scenario IRate variation in scenario 2Scenario IIRate variation in scenario 3Scenario III
IPCA couponincrease(4,922)increase(632,825)increase(1,172,942)
IGP-M couponincrease(19)(2,618)increase(5,079)
Pre-fixed rateincrease(1,783)increase(438,939)increase(833,884)
TR couponincrease(749)increase(160,770)increase(283,702)
USD couponincrease(577)increase(66,577)increase(120,540)
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Notes to the Unaudited interim condensed consolidated financial statement
As of March 31, 2024
Exposures - R$ thousand
Banking and Trading bookScenarios12/31/2023
Risk factorRate variation in scenario 1Scenario IRate variation in scenario 2Scenario IIRate variation in scenario 3Scenario III
IPCA couponincrease(4,737)increase(561,583)increase(1,046,456)
IGP-M couponincrease(16)0— increase(549)
Pre-fixed rateincrease(1,533)increase(367,626)increase(707,232)
TR couponincrease(800)increase(163,354)increase(289,028)
USD coupondecrease(5)decrease(718)decrease(1,447)
h.Operational risk
Policy
Operational Risk Management aims to identify, evaluate and monitor risks, being defined as the risk of losses resulting from inadequate or failed internal processes, people and systems or external events. This definition includes legal risk, but excludes strategic and reputational risk.
The operational risk events can be classified:
Internal fraud;
External fraud;
Employment practices and workplace safety;
Clients, products and business practices;
Damage of physical assets;
Business disruption and system failures, execution; and
Delivery and process management.
We adopt the three lines of defense model, the structure and activities of the three lines often varies, depending on the bank’s portfolio of products, activities, processes and systems; the bank’s size; and its risk management approach. A strong risk culture and good communication among the three lines of defense are important characteristics of good operational risk governance.
Phases of the Management Process
Qualitative Evaluation
The qualitative assessment uses a scale which considers measures for probability and impact, taking into account the vulnerabilities and threats that, combined, determine the level of risk exposure to each event. Identification and verification is performed by in-person monitoring, interviews and workshops with the managers and employees from all operational areas, business partners and business units.
The identified risks are categorized and organized by risk factors.
Quantitative Evaluation
In the quantitative assessment of operational risk, the Group maintains an internal database fed by various sources of information. This contains descriptions and details of operational losses. In the quantitative assessment, information from external sources deemed reliable and relevant to the businesses of the Group may also be used.
Monitoring
An effective risk management process requires a communication and review structure that ensures the correct, effective and timely identification and assessment of the risks. In addition, it also seeks to assure that controls and responses to these risks are implemented.
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Notes to the Unaudited interim condensed consolidated financial statement
As of March 31, 2024
Control tests and regular audits intended to verify compliance with applicable policies and standards are performed. The monitoring and review process seeks to verify whether:
The adopted measures have achieved the intended results;
The procedures adopted and the information gathered to perform the assessment were appropriate;
Higher levels of knowledge may have contributed to make better decisions; and
There is an effective possibility of obtaining information for future assessments.
7.Fair values of financial instruments
a.Financial instruments – Classification and fair values
Financial Instruments are classified into the following categories:
Amortized cost;
Fair value through other comprehensive income (FVOCI); and
Fair value through profit or loss (FVTPL).
The fair value of a financial asset or liability is measured using one of three approaches below, weighting the levels of the fair value hierarchy as follows:
Level I – instruments with prices traded in the active market;
Level II – using financial valuation techniques, weighing data and market variables; and
Level III – uses meaningful variables that are not based on market data.
The following table sets forth the breakdown of financial assets and liabilities according to the accounting classification. It also shows the carrying amounts and fair values of financial assets and liabilities, including their levels in the fair value hierarchy. It does not include information on the fair value of financial assets and liabilities, when the carrying amount is a reasonable approximation of the fair value.
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Notes to the Unaudited interim condensed consolidated financial statement
As of March 31, 2024
As of March 31, 2024
Financial assetsLevel 1Level 2Level 3 (*)Fair valueCarrying amount
Amortized cost  112,410 112,410 39,892,081 
Loans and advances to customers, net of provisions for expected loss— — — — 28,826,999 
Amounts due from financial institutions— — — — 4,051,287 
Deposits at Central Bank of Brazil— — — — 2,925,658 
Cash and cash equivalents— — — — 2,830,310 
Brazilian government securities— — — — 669,063 
Rural product bill— — — — 439,425 
Other assets112,410 112,410 112,410 
Debentures— — — — 36,929 
Fair value through profit or loss499,018 1,301,044  1,800,062 1,800,062 
Bonds and shares issued by non-financial companies— 768,441 — 768,441 768,441 
Brazilian government securities499,018 — — 499,018 499,018 
Investment funds quotas— 499,343 — 499,343 499,343 
Securities issued by financial institutions— 33,260 — 33,260 33,260 
Derivative financial assets 7,392  7,392 7,392 
Derivative financial assets— 7,392 — 7,392 7,392 
Fair value through other comprehensive income14,571,711 650,061  15,221,772 15,221,772 
Brazilian government securities14,571,711 — — 14,571,711 14,571,711 
Bonds and shares issued by non-financial companies— 650,061 — 650,061 650,061 
Total15,070,729 1,958,497 112,410 17,141,636 56,921,307 
Financial liabilities Level 1Level 2Level 3 (*)Fair valueCarrying amount
Amortized cost    51,477,693 
Liabilities with customers— — — — 32,643,444 
Liabilities with financial institutions— — — — 10,483,087 
Securities issued— — — — 8,249,142 
Borrowing and onlending— — — — 102,020 
Derivative financial liabilities 13,893  13,893 13,893 
Derivative financial liabilities— 13,893 — 13,893 13,893 
Total 13,893  13,893 51,491,586 
(*)    The financial assets classified as “Level 3” consists substantially of amounts relating to the variable portion of the sale of 40% of the subsidiary Inter Digital Corretora e Consultoria de Seguros Ltda. (“Inter Seguros”) to Wiz Soluções e Corretagem de Seguros S.A. (“Wiz”) on May 8, 2019. The purchase and sale contract included cash consideration of R$45,000 and contingent consideration will be based on the results of Inter Seguros’ EBITDA in 2021, 2022, 2023 and 2024.
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Notes to the Unaudited interim condensed consolidated financial statement
As of March 31, 2024
As of December 31, 2023
Financial assetsLevel 1Level 2Level 3 (*)Fair valueCarrying amount
Amortized cost  109,682 109,682 39,810,016 
Loans and advances to customers, net of provisions for expected loss— — — — 27,900,543 
Cash and cash equivalents— — — — 4,259,379 
Amounts due from financial institutions— — — — 3,718,506 
Deposits at Central Bank of Brazil— — — — 2,664,415 
Brazilian government securities— — — — 665,413 
Rural product bill— — — — 459,298 
Other assets— — 109,682 109,682 109,682 
Debentures— — — — 32,780 
Fair value through profit or loss451,946 1,026,654  1,478,600 1,478,600 
Bonds and shares issued by non-financial companies60 629,237 —