Inter & Co Inc

NASDAQ:INTR

Earnings Call Transcript 2021-Q1

[Operator]

Good afternoon. Thank you for waiting. Welcome to Banco Inter's conference call to discuss 1Q 2021 earnings.

Today, we have the CEO of the Bank, Mr. João Vitor Menin; the Vice President, Mr. Alexandre Riccio de Oliveira; and the Finance and IR Officer, Helena Caldeira.

This conference has been recorded. [Operator Instructions] This conference is also being webcast live, and it can be accessed through ri.bancointer.com.br. A replay of this conference will be available right after it's finished. [Operator Instructions] This call has simultaneous translation into English provided to the foreign investors in this company.

Before we proceed, I'd like to mention that forward-looking statements that may be made during this call regarding the company's business prospects as well as projections, operating and financial targets are based on the management's expectations about the future of the company as well as information that is currently available to Banco Inter. Future considerations are not an assurance of performance, and they involve risks, uncertainty and premises. They refer to future events and, therefore, dependent on circumstances that may or may not occur.

I'd like to give the floor to Mr. João Vitor Menin, CEO, and he will start the presentation. Mr. Menin, please, over to you.

[João Vitor Nazareth Teixeira de Souza, executive]

Thank you. Good afternoon, everyone. It's a great pleasure to be with you again. We have an excellent audience rating in this call. We will continue with our usual script. I'll talk about the qualitative aspects. Then Alexandre will go over the figures of quarter 1, and these figures have been amazing. And then Helena will close, and we move on to the Q&A session.

I'd like to start with a philosophical or qualitative part by stressing an important interesting point. We had our IPO 3 years ago, and the speech or the point of this IPO, for those who remember it, was about combining the best of both worlds: the world of banking, we had all the licenses, we had a credit portfolio; and the world of fintechs of digital companies, a free and interesting smooth experiences. And this led us to growth in these 3 years in terms of market value, current account holders and so on and so forth.

This quarter, for me, to be fair, where the previous quarter, Q4, over the last 2 quarters, they have led to something, I'd like to explain, that's very, very interesting. And it is that throughout these 3 years, we had that sweet spot. In other words, combining these 2 worlds. And in the last 2 quarters, more specifically in quarter 1 2021, we're again in a sweet spot.

And why am I saying this? You will see that when Alexandre gives the numbers, it will be made clear. But this means traditional banking and digital banking, combined to wallet by commerce. So we have been deliberate or strike -- we've struck a balance between our financial services or the NII and the monetization of healthy services. That's not the bad fee, but it's the fee of marketplaces, of insurance and other investment, so we can deliver monetization levels that are very good to our customers. And we're only -- the only ones that have this in Brazil today. When we think about the situation, it's the result of the sweet spot. So the same situation that we had 3 years ago, and I think we're making the most of this situation.

I can give you one example for -- about this combination. It may seem silly and not that easy to notice, but when you go to our web and you go to our shop, we've just launched a button. I may have mentioned this before to some investments and partners of ours. And this is the option of choosing if you want to make a purchase with cash back, which is a greater traction for us, or if you want to increase your credit limit of your card -- of your credit card if you want to buy something that exceeds your credit limit. It may seem silly.

How does this button is related to our sweet spot? Well, this was the result of a lot of investing and innovation in our IT and business teams. It shows how Inter can combine all the banking aspects to the nonbanking elements. So with this feature, which, to me, is the greatest star in the first 4 months of Inter, we have put out this unique feature. So we combined all the monetization of our financial services with our nonfinancial services. And by empowering our clients, this feature is making something that the market had asked us before we make this concrete.

So can Inter do consumer finance or non-collateralized credit? Well, let me show you what we have delivered. When we look our numbers in real estate credit and payroll credit, so the growth in collateralized credit is doing fine. We are aggressive in a good sense. We have portability that works really well. And now as we launch our CDB, and maybe a quarter ago, we had over BRL 1 billion allocated to this product. And now more recently, with this option, this functionality or feature giving -- or providing more credit to credit cards, we'll now be building our history in consumer finance. So we're now reinventing consumer finance in Brazil, and this can only be done if we combine the world of banking and also the world of commerce.

So all these developments combined, and to make it work, it may seem simple as just a button that you can click on, you can tap on, but you need a credit card processor, a shopping catalog and limit engine with 11 million account holders. It's really hard to do this, but we're doing so fine, and I'm really excited about consumer finance. And I believe we will be able to reinvent this business and do great.

Now insisting on the new feature, how can we optimize the use of exceeding the limits of people's cards? And also, when people use the residual limit for a product or a service for air ticket, for instance, and they give out their cash back, we also improve our rate. And this, of course, improves our non-collateralized credit. And this was a question, how could we address this and also to improve our net take rate?

As for innovation, again, this is about the past. We have over 11 million account holders, but now what lies ahead? We have our food -- we have food delivery added. So all our customers living in the metropolitan region of the city of Belo Horizonte can access food delivery services. In other words, we have an iFood put into our app. So our -- the inhabitants of Belo Horizonte can enjoy this feature, and it will be rolled out to other town, cities and states. This is a process of innovation. We never stop innovating. We keep adding new features, and they may have more monetization. This is getting greater and greater. And Alexandre will go over the figures in a minute.

Finally, I would like to thank the employees. This is something I always -- I can't stress enough. And also our investors in these 3 years of -- since our IPO. If we think about how much we have grown, have to [ roll arms ], we always have the support of our long-term investors, and the company could grow and add IT capabilities and keep innovating. So I'd like to thank our employees in these 3 years since the IPO, and also, I'd like to thank our investors who've been with us since the very beginning, without whom we wouldn't have made such great achievements.

Thank you very much. We'll be discussing these things later during the Q&A. Alexandre, over to you.

[Alexandre De Oliveira, executive]

Good afternoon, everyone. Thank you for attending to another earnings call by Inter. Let me go over the figures.

Our first quarter was really exciting. The seasonality of this period has challenges. It's a shorter period, you have holidays, and you compare it to the previous quarter, quarter 4, which is the best in the year. In spite of that, we have historical levels, both operationally and financially. So we have been through a period of not being a lone star. We have good numbers compared to quarter 1 2020 as well as quarter 4 in 2020, too, which is usually the best quarter in a year. And this was achieved with an increasingly stronger and united team focusing on operating excellence, and this means a better experience and a better service provided to our customers.

Now the figures, let's look at the highlights. I'll start with the growth of our customer base and engagement. We have 10.2 million. That was a growth of 106% year-over-year. And I'd like to stress that this -- we also have new accounts in quarter 1, 1.8 million against 1.3 million in quarter 4. So up 40% almost in the opening of accounts this quarter, which was much more than we had expected. We were really happy with these results.

The customer acquisition was under control. We boosted marketing, and we had great results. Our IT cost, we had this trajectory of reduction, and this was our goal to reach BRL 122 a year, although in spite of continuous investment in the business and the platform.

Another 2 highlights. Our CSI, 3.21, a 5% growth in this quarter. And our users, active users, their behavior was even better. The best -- historically speaking, we grew about 2 percentage points in this quarter compared to the more recent and older ones. And we had a great NPS, 82 in April, and our NPS has improved, reaching 84. As for -- we had a great performance, 174% growth in -- as compared to -- well, year-over-year, the average balance BRL 1,300 as compared to BRL 1,000. And the first quarter is a quarter where you have less balance. The transaction volume in cards was very good, BRL 7.6 billion, a 173% growth, and we're still growing on this avenue, which is the result of the improvements we have made over time.

Now Inter Shop and Marketplace. We did something that was very unusual in retail. We have overcome the results in quarter 4, BRL 675 million GMV, exponential growth year-over-year, 1,600%, 1.7 million active clients, that's what we achieved. And only in quarter 1, we had 1.1 million clients. In other words, we have kept the levels, and we keep innovating this. The success of this avenue has, of course, meant ongoing evolution. So we have promising projects end-to-end, which is -- reduced sales into 200,000 SKUs. And finally, we have overcome BRL 40 million in revenue. It was the first time we exceeded BRL 40 million in revenue.

Investment. In quarter 1, we had BRL 52 billion. We reached 1.5 million active customers and 170,000 clients with shares under custody. And this has helped in quarter 1 2021, but it will be even more important when we look ahead. So we launched direct treasury on our app. Before, it was more complicated to deliver this to clients. We launched our content platforms and many other features, including improved investment procedures. So depending on the volume, we get up to 100% in cash back or rebate in -- from emissions issuing.

And the -- we got BRL 15 million as compared to BRL 10.7 million year-over-year. We have hit new records, 377,000 people insured. And we kept generating revenue, not only for the insurance business, of over BRL 9 million in quarter 1, with a revenue base that is extremely resilient, growing out of proportion because we are delivering products that have a greater margin. And although we are reaping the benefits, there's much more to be made. We also have our health care product being launched and also sales efforts that have been all around and explaining our success.

Finally, our credit avenue is maybe the greatest highlight, as growth has been really resilient in this area. And we had a historical basis that was really relevant before, but our strategy seems to be consolidating increasingly, up 51% in origination of real estate credit for account holders. And this was a challenge and something that people demanded from us from market analysts. We wanted this space to be profitable to credit, and this is now taking place. And this is really good. And we keep our competitiveness as a retail bank, too. So a good part of the factor that led to this growth in credit is expense. We had a growth of 97.1%. And finally, we made this credit grow, and this is something we should comment. This credit grew in credit. And what's the good part? It reduces negative surprises over time.

Finally, financial results. We grew 95% in total revenues as compared -- year-over-year, BRL 142 million (sic) [ BRL 542 million ] in this quarter and 113% as compared to quarter 1. And finally, we have been over 40% of the total revenues. Finally, we closed the quarter with BRL 22 million, and the Basel was 24%. The Basel rate or index shows our ability to grow and leverage our balance.

So I would like to close by thanking our customers and our team who's increasing -- who are united with this focus of simplifying people's lives.

I'll now turn it over to Helena. Thank you.

[Helena Caldeira, executive]

Thank you. Good afternoon, everyone. Thank you for attending another earnings all.

As João Vitor said, this is a very special conference call. We -- this is our 3-year anniversary of our IPO. So to add to the celebration, we had -- now have the Bovespa Index. So it's a great landmark for all companies -- public companies in Brazil. We're also part of the IBRX and MSCI, and this is a great landmark as well. We're still celebrating because yesterday, we disclosed our first annual report showing our performance. We followed the best international practices of the Global Reporting Initiative, GRI, which has been adopted by KPMG and also part of the 2030 agenda. This report may be accessed on our IR website and also for those who are following us on the web. And the second slide, we have a QR code with details to provide access to the report.

Now how did we develop or write this report? Transparency and inclusion are very important values to us, and this is how we developed this report. We went deeper into our model interfaces, our financial, environmental, social and governance pillars, and that's how we adapt ESG to our purposes. We try to disclose that information in the most inclusive way possible. And we try to help everyone to learn more about the concept and initiatives, so that things are really clear for everyone. In addition, we wrote a description of how we generate value from these pillars and also added information on risk management and how technology sustains this, our business model and our growth model.

Now for a different topic, we had -- the split of our shares was approved in our last ordinary meeting. So we're waiting for the central bank to give us -- for us to communicate to the market, waiting for the share split to be made official totally and executed. And some of the people really asked is about our restructuring process. We're working both internationally and locally to reach the best format and structure and then communicate to the market, making sure we address all the points. So as soon as we close this model, we'll show that -- share that with the market. So adding more information on this point.

Finally, I'd like to thank our shareholders and this great partnership we've had with the market in these 3 years. It has been really significant growth for the company to have this relationship also with our employees. I'm really happy to be celebrating these 3 years with you today.

So I'll now close, and we will move on to the Q&A session.

[Operator]

[Operator Instructions] Our first question comes from Eduardo Rosman of BTG Pactual.

[Eduardo Rosman, analyst]

Congratulations on your achievements. I have 2 questions. The first is about securitization, removing credit from the balance. I think João talked about this in the last call, so removing some of the risk from balance and distributing it. So how are you doing in this respect? And what can we expect from the first transactions? That's question number one.

Question number two. Can you talk about the app for non-account holders? When will that start? I think João has also given an interview on this a few weeks ago, right? And he mentioned 20 million accounts, in one part, would come from nonbanking or non-account holders. Can you update -- give us an update on this process? What are your expectations?

[João Vitor Nazareth Teixeira de Souza, executive]

Thank you, Rosman. Securitizations, yes, we have the first securitization. It's been structured. We want this with our real estate portfolio. It's easier to do. So we're just making the most of people's appetite for buying a real estate credit.

And we have 2 important deliverables. We will have a lighter balance. We're not thinking about Inter's balance of BRL 11 million in credit. We're talking about greater origination, so we want a balance to have hundreds of million in credit. That does make sense. We want our balance -- we want our good assets to be securitized without not being collateralized. We want them to be securitized.

And we also deliver very good products with very good yield rates, especially now in the current financial situation. And even with this -- with the Selic being lower, they want -- investors want better-structured products that are easier to buy. So securitizing our portfolio is good. We get lighter. And we can use products that are simple to buy on our app. So that's a very good idea. So this project is ready, and it will take place as soon as possible. It's not an isolated project, by the way. We want to be an issuer of securitization, like almost every week or every fortnight. I remember that we had Brazilian securities, and they securitized every fortnight. So this is the first -- for the first part of your question.

Number two, about the app. For non-account holders, well, unfortunately, if this conference call were to take place in 10 days, it would have already been launched. So this is just to give you an idea that maybe in the next 10 days, we will launch it. It will start on Android, and later, it will be locked for iOS, with a time gap of about 2 weeks from Android to iOS. We wanted to do this in mid-April, but we're really careful. This is a major change. We don't want to impact the experience of our users. We want to make sure that their experience remains smooth. But I'm really excited.

For you to understand the maths behind it, we have 90,000 downloads a day that's -- of our app. It's downloaded 90,000 times a day. And about 40,000 full data that we get for at least 30,000 account holders. So I believe that if you have full checking account, we can capture that for our non-account holders on the app. So it's simpler. They can use our insurance platform, our Intercel.

So when we think about our maths, when we think about that dream that we had of 20 million clients, 60 million account holders and 4 million non-account holders, the idea is to capture. We will have about 7, 8 months and -- after launch, and we want to capture 50% or 40% of this surplus that doesn't convert. So we may have significant change with a large number of millions of clients added. So our dream of 20 million customers is on, and we're expecting to have this launched in 10 days for Android users.

So individuals that are already customers, they won't even notice it. But those that are downloading the app for the first time, they will have a different experience. So I'm really excited about this, and it will really change our market. Let's just keep an eye on this. You can follow it up and see how it will evolve in the next few days.

[Operator]

The next question comes from Otávio Tanganelli, Bradesco BBI.

[Otávio Tanganelli, analyst]

Congrats. I also have 2 questions. The first is about cost to service -- cost to serve. I saw there was this decrease quarterly and annually. So what do you think can be done to bring this number down to have more operating leverage as revenue grows?

The second question, and this was part of Rosman's question, too. On the platform, the exposure that you would like to have for non-account holders, does that involve anything related to credit operations, some card -- prepaid card or not? Or will it just be an app without much balance risk for shopping and investment?

[João Vitor Nazareth Teixeira de Souza, executive]

Well, thank you for your -- sorry, Tanganelli, thank you. Thank you, Tanganelli, for your questions. I think that this operating leverage you've mentioned, although there's always a point of inflection and it's been taking place for a few quarters, even if we grew a lot in new customers, we have an ARPU that's stable and strong growth in the cost to serve, which you've mentioned. So operating leverage is a combination of these 2 elements, the 2 acronyms, CTS and ARPU. We did improve ARPU and the cost to serve, CTS.

So the cost to serve, what's the point here? There's something great for us to think when you consider modeling. There are 2 elements. First, the faster we grow, the more expenses we have to make. And CAC or CAC also means more expenses. Even underwriting, when you originate more credit, there are more expenses, operating expenses, provision expenses. It's really heavy.

So let me explain what I think is going on. We have improved our nominal growth in a number of account holders, but we are decreasing our margins. So I would consider -- break it down into direct and indirect. Direct expenses grow less and they drag down the cost to serve. So this dilution of our indirect costs is very positive. And then there's this other point, which is technological/regulatory like with PIX. PIX has been improving our numbers dramatically. When we look -- we will have this public hearing about the customer service PIX and change also to remove money from circulation. I see CTS in very good light in terms of regulatory and technology innovation and the number of customers. And ARPU, what Alexandre mentioned before that -- of over 3.2, it's now 3.5 almost. So we will have more operating leverage even if there's this growth of account holders.

In terms of the app, well, in this case, Tanganelli, the first focus when you use the expression low-hanging fruit, let's use what we have, our shopping, our insurance. And then we may add new features. What other investment can be offered for non-account holders? What can be done? As you said, can I launch a prepaid card? I don't know. This can be done. Or can I offer credit? Like we have our consortium, a sort of a way of providing credit. So we can explore this for all Brazilians, not only for our 11 million account holders.

So one thing is having a [ pool ] of people on your app, and then you use your data intelligence to sell more services. And this may include credit services that are not on our -- in our balance. So it's not one of our first short-term deliveries. It's not there. Let's be on the same page. We're talking about what we already have, like our shopping, our insurance, maybe something on investment. And there's other parts. Intercel and consortium, everything, it won't -- not yet.

[Operator]

Our next question comes from Yuri Fernandes, JPMorgan.

[Yuri Fernandes, analyst]

Congrats on your growth. My question is about credit portfolio. So we see good prospect with the product. SMI (sic) [ SME ] is the only one that is accelerating quarter-over-quarter. So I need to know more about your expectation for the year in terms of portfolio growth. And in terms of capital, as well, I don't know if this is a problem to you, but as we think about volumes, what are your expectations?

My second question is about deposits. We saw some speeding up in some lines, savings and growth year-over-year. And even this 5% growth quarter-over-quarter, it seems to be good, but the market was expecting more. So in terms of deposits, what has taken place? Is -- does this mean an increase in your customer base that led to a drop in your balance to clients, customers? Or is this about the feature, that functionality? Or how could we think about this average balance per client in -- or customer in deposits?

[João Vitor Nazareth Teixeira de Souza, executive]

Okay, Yuri, I'll start with your last question. This is a relatively recent topic we discussed with our Chief Economist, Ms. Vitoria. Not that recent, it was at the beginning of the year, she said you can expect reduction in deposits. This is how the economy works. In quarter 1, it usually takes place, but our scale is so large. So we know how the Brazilian economy works. When you are small, you may have some specific situation, but that's not our case anymore. So we always respond to the general trend. So it is seasonal, indeed. We don't see fewer people using deposits or people -- customers that are less engaged. It's all about the seasonality. So what I'm trying to say is that I believe our quarter 2 will be -- even if quarter 1 was good, the second quarter will be even better in terms of deposits. It's just about seasonality and as our Chief Economist said. That's about deposits.

Now when you compare deposits and the number of customers with some digital portfolios and some apps, you see that our performance is much better. They're more engaged, and they use us as a private account for deposits.

Now credit growth. That's also something that is related to seasonality, and SME has to do with seasonality, too. We're not waiting for this to cool down. Just the opposite. It goes well with our deposits, short-term deposits. So we have helped a lot of people in LM. We've been growing well. And we're also putting up our origination in rural or farming. We have a good product there. So we're not expecting any reduction in SME.

As for credit growth, we, I believe, will still be growing on the levels we have seen in the last quarter, 60%, 80% a year. You can't grow -- Can you grow this much? Yes, you can. Can you grow with quality? Yes, you can. So these are the 2 major portfolios we have in Brazil. Credit portfolios are real estate and payroll. And these are the products we have -- we master. At Inter, we have the most experience in origination. When you consider our current account holders, it's really strong in both real estate and payroll credit. It's like when you go to the zoo, I mean, we have a good brand to explore, and we use data a lot. This is something -- of course, it can always be improved, and we're expecting strong credit growth. And we'll be really aggressive in the best sense of the word. We're making the most of these opportunities, and we have been -- worked -- provided portability. Our account holder, for instance, if they have payroll credit in other banks, they can use portability to bring it to our bank, and the impact of our NII or our financial margins.

[Operator]

Our next question comes from Pedro Leduc, Itaú BBA.

[Pedro Leduc, analyst]

Congratulations on your earnings. Now with regards to ARPU or revenue per customer, it's been growing year-over-year, very good, especially when you have this loss -- fall in OpEx now. If you look at it quarter-over-quarter, there was this decrease in the service, not credit, but there was this decrease in the service. And fee services have decreased quarter-over-quarter. I have some suspicion, some ideas, but I'd like to listen from you. Why do you think this decrease has happened quarter-over-quarter? And what we should expect for the next quarters? This is my first question.

[João Vitor Nazareth Teixeira de Souza, executive]

Well, Pedro, thank you. Again, let's discuss your suspicion or ideas. And we're -- discussed this extensively as we were preparing a report, and there's always this issue of the denominator. This was a quarter in which we probably added the most account holders, historically speaking. And even in Q4 2020, we had a great quarter, but now there was this decrease, and we keep the same level of engagement we had before. So if -- well, will we have the same engagement level? Of course, we need it, and we need to recover it. So when we look at those quarters, as we said, that figure that had like a ladder, we have an increasing engagement levels quarter-over-quarter. So we're expecting this quarter that should be really productive and good.

In terms of new account holders, we're expecting it to -- I mean, the result is that we will keep improving our ARPU from now on. In other words, we don't see things decreasing or getting worse. We have an amazing shopping -- we had amazing shopping results. When we compare e-commerce in Brazil, our [ P2W ] and Magalu, they've been falling, and we have been growing in sales of [ MV ]. Insurance has also been fantastic.

And to be fair, our investment platform didn't do as much as expected. We've been investing in this to achieve what we have achieved, but we didn't do as much as we expected. We were expecting to have a great performance level in 2021. In other words, we're really comfortable with this decrease in the quarterly ARPU. Well, in addition, it was a contraction in credit, although there was a strong origination quarter-over-quarter.

[Pedro Leduc, analyst]

So you keep working on this?

[Helena Caldeira, executive]

Yes, exactly, Pedro. This is -- I mean, in terms of credit, the dynamic is also a market dynamic in that you need to consider opportunities. It's not worrisome and not even relevant.

[Pedro Leduc, analyst]

I agree. We can discuss my suspicions later on. João, can I ask a second question? Inter Shop GMV quarter-to-quarter in spite of its seasonality, can you explain if there was any new partner? Was this a result of more engagement? Your take rate, gross take rate was stable and your net take rate increased almost 10x. So was that a result of the sales profile? Did you negotiate it better to improve this in cash back?

[João Vitor Nazareth Teixeira de Souza, executive]

Well, Pedro, we've been insisting on this, right, with our analysts and investors. The Inter Shop dynamic, one thing we tend to forget about it is that our vertical, it's been there for a year and 4 months. It's like it's in its infancy. So I think there's a combination of factors. We have new -- bringing in new partners and end-to-end, where people check out inside our app that helps take rate, improve the take rate. They don't see the difference. They have much better conversion rate. So they end up paying a greater take rate. We also have a combination of services with greater take rates. So there's no silver bullet. We have been improving. That's it.

And in terms of engagement, the number of shopping users has been growing significantly. People are now learning about this feature. And again, this was the greatest deliverable this quarter. It's not only quantitative -- it's not quantitative. So far, it's qualitative when we consider people that have problems in credit limit. If they can choose and convert some purchase that they couldn't make, if we didn't have this feature, I believe we will improve our GMV because people will be able to buy and improve their net take rate because people won't have their cash back and they just extend their credit limit.

I can give you a number to give you an idea. Considering the GMV we've had so far, only 25% of people spent in GMV is beyond their limit. So the person had BRL 2,000, they had BRL 1,500 -- spent BRL 1,500, and they wanted -- they had just BRL 500, and they wanted to buy something that cost BRL 750, so they spend BRL 500. That's already part that's for them, so only BRL 250 was the part that exceeded the limit. So it was some more -- less. So the net take rate in this purchase was much better. It was 100% of the gross take rate. So this point of the limit will help a lot in the net take rate.

[Operator]

Our next question comes from Jorg Friedemann, Citibank.

[Jorg Friedemann, analyst]

Can you hear me well?

[João Vitor Nazareth Teixeira de Souza, executive]

Yes, you're great, Jorg. I can hear you fine.

[Jorg Friedemann, analyst]

Right. Well, I have some brief questions. The first one is a bit more complicated. It's more strategic. Let me know if I'm interpreting this in the right way. Yesterday, you announced that you were offering insurance for real estate credit. And in terms of products, the partnership with Liberty, it didn't include exclusivity or you had 2 service providers. Now can you -- did you have flexibility in this? I need to understand this better. Has anything changed in your partnership with Liberty? And then I'll have 2 other questions that will concern figures.

[João Vitor Nazareth Teixeira de Souza, executive]

Jorg, it's really straightforward. We have exclusivity with Liberty for some products, products that Liberty wants to explore. So for SFH or other products, Liberty doesn't have it. So we used to work with Sompo. So we really wanted to have a better partnership, [ Sompo ], with a good -- they're our major partner. So it doesn't -- our partnership with Liberty goes on [ dental ] with Liberty. It's the same example. So everything we can explore on our counter, for technical reasons, pricing appetite, if Liberty doesn't want to explore it, we can do it with other insurers. Let's move on to your next questions.

[Jorg Friedemann, analyst]

Perfect. Very good. The other 2 questions are rather straightforward. I need to understand your results. You had significant increases, over BRL 87 million in the quarter. I need to understand why this happened.

And number two, in the last 2 quarters, the percentage of the CDI and cost of the exchange rate, it has stabilized and increased even. Does this have to do with greater payments of compulsory payments or as a percentage of the CDI?

[João Vitor Nazareth Teixeira de Souza, executive]

Okay, Jorg. You've known us for a long time. You know we have a limit, and we won't be decreasing this forever. We need to consider the time frames. We have an LM to address. If it met securitization and that's -- and this is -- as I explained to Rosman, we will have this with LM. And I believe we are really like -- the ceiling of our funding cost -- sorry, the floor of our funding cost, and then we have IPCA. So you have IPCA that pulls our costs. And then it increases the profitability of our cash allocated in our [ PNB ]. So as we have few LC, there was a greater increase in the cost and very good securities results because we have this robust cash. Even if our credit grows, our deposits -- time deposits and direct deposits have grown. So with the inflation rate in Selic, we are -- in spite of that, we have been benefiting, and we have stronger -- more strength than before.

And even if you take that question of yours, Jorg, we have grown really well in terms of products and customers without cash burning with a very tight Selic rate. This was painful to us. Our cash, for instance, the profitability was very low. Now of course, we like the inflation to be under control in Brazil, but this increase in the inflation rate and the Selic rate. This is positive for us. We have some tailwind now that will help, as you said, in our securities. And before, it was not only a tailwind. It was really across -- it was a crosswind that blew against this. So now with the higher inflation rate and the higher Selic rate, things are like this.

[Operator]

In the interest of time, we will now close the conference call. And the Investor Relations department will be at your disposal to answer your questions. We will now close the Q&A session. I'd like now to turn it over to Mr. João Vitor Menin for his final remarks. Mr. João Vitor Menin, over to you.

[João Vitor Nazareth Teixeira de Souza, executive]

Well, I'll be really brief. I'd like to thank everyone for attending the questions from our analysts. And Helena is at your disposal for the questions that were not answered. So have a great day. See you in our next conference. Thank you.

[Operator]

Banco Inter's conference call is now closed. Thank you, everyone, for attending. Have a great afternoon.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]