Inter & Co Inc

NASDAQ:INTR

Earnings Call Transcript 2023-Q1

[Operator]

Good afternoon, and thank you for standing by. Welcome to the Inter & Co First Quarter of 2023 Earnings Conference Call. Today's speakers are Joao Vitor Menin, CEO; Alexandre Riccio, VP of Tech Operations and Finance; Helena Caldeira, CFO; and Santiago Stel, Strategy and IR Officer.

Please be advised that today's conference is being recorded, and a replay will be available at the company's IR website. [Operator Instructions]

Throughout this conference call, we will be presenting non-IFRS financial information. These are important financial measures for the company but are not financial measures as defined by IFRS. Reconciliations of the company's non-IFRS information to the IFRS financial information are available in Inter's earnings release and earnings presentation appendix.

Today's discussion might include forward-looking statements, which are not guarantees of future performance. Please refer to the forward-looking statements disclosure in the company's earnings release and earnings presentation.

Now I yield the floor to Mr. Santiago Stel. Sir, the floor is yours.

[Santiago Stel, executive]

Thank you, operator. Good afternoon, everyone. Thank you for attending our first quarter 2023 earnings call. Before [Audio Gap] the agenda, let me present the phrase that summarizes the results and the moment in which we are at Inter, harvesting profitable results from solid foundations. This phrase captures the essence of who we are and where we stand today. Joao Vitor will elaborate on this in his opening remarks.

Jumping into Page 4, let me introduce the agenda for the day. Joao Vitor will start the presentation, sharing with you an overview of our vision and the main achievements of the quarter, then Alexandre will cover the credit engine section. I will present funding capabilities together with the transactional platform. And finally, Helena will cover the financial performance section with then Joao closing with his final remarks. Joao, I'll pass the mic to you.

[João Vitor Nazareth Teixeira de Souza, executive]

Thank you, Santiago. Good afternoon, everyone. Before going to the details of the quarter, let me share my vision for Inter on Page 6. I was reflected on this, given that we just had the fifth year anniversary of our IPO. Since then, we have been able to attract the top-level management team. This gave us the ability to build the best Super App in the Americas. The best Super App in the Americas allowed us to build a unique deposit franchise that quickly achieved critical mass in the Brazilian banking system. The result is a fortress balance sheet, with massive capital and liquidity. All of this was made possible by our more than 26 million clients. This was done through an amazing journey of innovation, creating strong foundations over which we stand today. But like everything in life, we are always evolving and need to adapt to the context in which we operate.

On the next slide, I want to share with you the way we're running the business for the next 5 years. Client-wise, we are adapting from a massive growth to a growth and engagement approach. On loans, instead of being just market share driven, we're moving to a more price sensitive. On capital, we moved from the deployment phase to a tactical use of this important pillar. Last but not least, on efficiency. We have this concept as an outcome, and now it became one of the most important guidelines for our business.

With that said, on Page 8, I will present you a glimpse of the value that can be produced with this strong harvesting approach. In demand deposits, we increased our market share by additional 21 bps and reached 3.6% share and probably ranked 6 among our Brazilian banks. On activation, we increased 50 bps and added the record number of new active clients in our history, 1 million new active clients in the quarter. On operational leverage, our efficiency ratio reached an impressive 62% in this quarter. The disciplined repricing of our loan portfolio allowed us to increase our NIM by 30 bps on this quarter. We produced bottom line profitability, which sets the base for the remaining of the year. And finally, we concluded the quarter with 23% Tier 1, which, according to our estimates, is twice the level of the top 5 incumbent banks in Brazil.

With that said, I'll now pass the mic to Alexandre, who will walk you through our credit engine.

[Alexandre De Oliveira, executive]

Thank you, Joao, and good afternoon, everyone. I will start talking about the growth of our loan portfolio on Page 10. So we were able to start the year running at a 20% annualized loan growth, growing 5% quarter-on-quarter with a portfolio reaching BRL 24 billion. As you can see, the growth has been mostly focused on the lower-risk segments such as the FGTS loans, which grew 58% in just 1 quarter. In credit cards, we grew 6%, still reflecting the more conservative stance to unsecured credit that we have in place since the beginning of last year.

Regarding payroll and real estate loans, we continue evolving with the repricing initiative, which is driving much higher profitability levels in these portfolios. Additionally, this quarter, our financials include the interest income breakdown by portfolio, which we will allow investors to see the evolution of our loan yield by product. As you can see, the rates are increasing across products as our portfolio is increasingly repriced. Please note that the implied rate in SMBs has an impact of lower outstanding balances in January and February. Finally, the all-in annualized yield of the portfolio increased from 20.3% to 22% this quarter, an impressive evolution.

Now on Page 11, we highlight our asset quality metrics, which performed well this quarter. Starting with the 15- to 90-day NPLs, which isolates the impact of loan growth, we were roughly flat during the quarter. On the 90 days past due metric, which does have an impact of our loan deceleration relative to a year ago, the ratio increased by 30 bps, in line with the general market trend. The main driver of this NPL increase is delinquency in the old cohorts of credit cards. To illustrate this point, we included a graph that shows the NPL of cards by cohort.

As we can see, there is a consistent improvement across cohorts, which is a result of both our choice to be more conservative in our credit underwriting improvements. Finally, we reported 1.5% NPL formation again, in line with the market trends and our past performance.

To finish, on Page 12, we show that our cost of risk reached 6% in the quarter. The increase, as mentioned in the prior page, is mainly associated to older cohorts of credit cards. To give better color of this effect, we included in this slide the breakdown of the provision expense of each quarter, showing in orange, how much was due to the originations of that same quarter versus how much was from portfolio built in prior quarters. This intends to show that the increase in provisioning is explained by the other cohorts. Once these delinquent credits from older cohorts past the 360-day mark, their written off and the ratio of NPLs and cost of risk should improve.

And finally, on coverage ratio, we kept the ratio constant at 130% by provisioning in line with the NPL formation trend.

Now I will pass the word to Santiago, who will cover the funding and transactional platform sections.

[Santiago Stel, executive]

Thank you, Alexandre. On Page 13, you can see the evolution of our funding base, one of the key competitive advantages of our platform. Our deposits grew 33% year-over-year, reaching BRL 30.8 billion. When we compare this [ 2 ] year to our loan balance described by Alexandre, you can see that our loan-to-deposit ratio remains very healthy, significantly below 100%. Interesting to note that this quarter, we materially increased our market share in demand deposits growing to 3.58% and now ranked as the sixth largest Brazilian bank by this metric. Another point to highlight again is our deposit base is highly fragmented with more than 12 million clients trusting us with our deposits.

Moving to Page 15, where I'd like to say that on funding costs, we continue delivering strong performance with the cost of funding among the very best in the industry. We recorded a 65% funding cost as a percentage of CDI even with seasonality of demand deposits being adverse in the quarter. As we continue gaining share of demand deposits in improve our activation further, we believe we will be able to maintain this strong competitive advantage.

Now let me walk you through the main topics of our transactional platform on Page 17. As Joao mentioned, we reported our highest level of net new active players on record by adding 1 million this quarter. This came combined with a low level of total new clients at 1.6 million, which shows that our conversion ratio to active clients improved significantly to 59% from 38% a year ago.

You can see also on the left side graph, their activation rate showed attractive to the prior quarter and reversing the prior trend. This dynamic is the result of our effort to get new activation opportunities as the clients navigate in our Super App. To name an example, we deployed our personalized version of our Super App where with other material improvements in our onboarding and UX/UI processes.

As we are fully focused on adding high-quality client base, we continue to optimize our CAC, which decreased to below BRL 30 this quarter. All this together shows the profitability profile of our CAC investment increased meaningfully as a result of better use of data with a stronger understanding of our customers' behavior and customer preferences.

On Page 18, in terms of volume transacted in debit and credit cards as well as PIX, we reached BRL 181 billion, which demonstrates our strong position in banking. Looking at transaction volume by cohort because in U.S. cohorts reaching higher levels at a faster pace than the older ones, as a result of better quality clients acquisition and improvement of activation and engagement campaigns.

Moving to Page 19. With our clients transacting more than 180 billion per quarter in their daily banking activities, we see a higher propensity to adopt our broader transactional platform. On Inter Shop, we reached 2.5 million clients transacting during the quarter. Our momentum in our e-commerce allowed us to continue growing our net take rate, which now stands at 6.5%, our highest level ever.

For Inter Insurance, a similar pattern is seen as we improved our upselling and cross-selling initiatives and reached 1.3 million insured clients.

And finally, on Inter Invest, we also had strong adoption, reaching 3.3 million clients and a record level of AuC of BRL 68 billion. As mentioned in the past, all these products are higher OE given that they consume no capital.

On Page 20, you can see our newest initiative, Inter Global, which has been performing at a much higher pace than we anticipated. Starting by the number of clients, we're nearly at 1.5 million, having just started a year ago. These are clients with an account routing number in the U.S. in a real banking clients. When we compare this to other new ones in the U.S., we ranked 12th in this category. These clients trust and transact in our global platform. And as a consequence, we have more than USD 140 million in deposits plus investments.

And to conclude here, the best of this is we're increasingly replicating our Brazil offering into the U.S. with minimal investments by leveraging on our existing platform and learning curve.

Now I'll pass the mic to Helena who will cover the financial performance section.

[Helena Caldeira, executive]

Thank you, Santiago. Hello, everyone. Starting with our financial performance on Page 22, I'd like to highlight our revenue growth. We recorded BRL 1.8 billion of gross revenues in the quarter, which is a run rate level of BRL 7.2 billion. Percentage-wise, it means a 40% growth year-on-year or 23% growth on a net of funding cost basis. This dynamic has been led mainly by the ongoing repricing of our portfolio, as mentioned earlier by Alexandre.

On Page 23, we can see that the ARPAC on a cohort basis continues to increase over time with newer cohorts outperforming older cohorts. This reflects our improvements in engagement and cross-sell initiatives, leading to higher monetization.

Jumping to Page 24, we discussed the evolution of our interest margins and CD effect of our repricing strategy moving forward. Starting on the left side, we see our NIM 1.0. It considers all portfolio, including cash receivables that do not accrue interest, also known as [indiscernible] balance in Brazil.

On a quarter-on-quarter basis, our NIM 1.0, improved 20 bps. On the left side, we show our NIM 2.0, which considers only the interest-earning portfolio. In this metric, we saw a 30 bps increase compared to the prior quarter and a 70% -- a 70 bps increase compared to a year ago. It is worth noting that the growth in funding was skewed towards most expensive deposits this quarter. So delivering this NIM increase in such context is a testament of the strong ongoing repricing exercise that we are thoroughly executing.

Flipping to Page 25, in the expense side, we report what we believe is a very strong progress. Our expenses decreased 13% compared to the prior quarter, showing a nominal decrease in most significant lines. In particular, personnel expenses decreased by 17% despite having the impact of the annual increase in the fourth quarter, known as [Foreign Language] in Portuguese. The other lines remained under control, reflecting the strong focus on expense management to deliver the best to our customers in a cost-efficient manner.

Going to Page 26, the improvements can be seen in our operational leverage. The evolution of our ratio of active clients per employee is in a positive trend and has even accelerated further this year. We went from a ratio of 2,600 active clients per employee a year ago to 3,500 active clients per employee in the first quarter. As a result, we have lowered the cost to serve, which now stands at 13.8.

Finally, I would like to highlight the impressive improvement in our efficiency ratio. This is a result of our repricing strategy and cost control initiatives. We reached 62% in this metric, an improvement of 9 percentage points. This is a strong sign of our commitment towards our 5-year business plan presented in the last Investor Day and also as highlighted by Joao.

Moving to Page 27. We recorded a 23% CET1 ratio in the quarter with the lowest level of capital consumption since our IPO. Additionally, if we consider the impact that we expect from the new BACEN rules, taking effect in July of this year, our CET1 ratio on a pro forma basis would increase by an additional 150 bps.

Finally, if we put in context our capital, which is fully comprised of top quality core equity without any hybrid capital instruments. We see that it is, price is higher as the medium of the 5 incumbent banks in Brazil.

On Page 28, I will walk you through our profitability profile. Net income continues trending positively, reaching BRL 24 million. On a pretax basis, we ended the quarter with BRL 6 million income. Our ROE drilling underwriting are efficient funding at scale and our obsession on operational excellence are the foundations to these improvements, which is just getting started.

I'll pass the word back to Joao for his closing remarks.

[João Vitor Nazareth Teixeira de Souza, executive]

Thank you, Helena. Closing on Page 30, I would like, I would just conclude by saying that, as we mentioned previously, we are harvesting the results of our solid foundations. Across metrics, I see very encouraging improvements on market share, client activation, operational leverage, NIMs and bottom line with the best yet to come.

And last but not least, I would like to thank our amazing team that is motivated, engaged and excited to continue with us on this journey. Many thanks to all for hearing our earnings call.

Operator, we can open it up for questions. Thank you very much.

[Operator]

[Operator Instructions] Our first question comes from Mr. Thiago Batista from UBS.

[Thiago Bovolenta Batista, analyst]

I have two questions. The first one on the FGTS loans. Your loan book already achieved about BRL 1 billion in this segment or 4% of the bank's loans in just a couple of quarters. So can you share with us the strategy of Inter in terms of distribution and pricing to achieve this level of loan portfolio with the FGTS?

And the second one about the gross ARPAC. Gross ARPAC has been relatively stable in the last quarters around BRL 45 to BRL 47 per month. Do you believe that Inter has achieved already the cap of these ARPAC or we can see an expansion going forward?

[João Vitor Nazareth Teixeira de Souza, executive]

Joao Vitor speaking. Thank you for the question. I'm going to cover the section related to the FGTS and then Santiago will cover the remaining of the question, the remaining -- the other part of the question, sorry.

So FGTS, just to highlight that, I really love this product. So it has a very good ROE for our business. It also has a very good debt service for our clients. But why were we able to achieve that impressive number in just a couple of quarters? I would say that, first of all, we have a very good fit among our clients for this product. So we have many young clients here, people that really have a job. They do have outstanding balance FGTS. So this is the first reason why we're able to attract and underwrite a lot of that.

But also, we spent some time to have the best design, the best UX/UI for our clients to throw our app, engage hired product and get the funds released immediately in our checking account. So we took a while to get into the market, but we did that in a very good way. So as I mentioned, the results are great, and we expect gaining momentum on that product going forward. Santi will cover the other part of the question.

[Santiago Stel, executive]

Thank you, Joao. On ARPAC, we do think that it still has significant room to grow further. What happened in this quarter is that we recorded a record growth in number of active clients, which grew 8% relative to the December levels. As Joao mentioned before, this is a consequence of the targeted marketing approach where we are trying to increase the monetization and the investment in the ARPU that we get, specifically targeting the clients that turn active. This, combined with a quarter that had lower revenue growth due to seasonality on the fee side, led to this ARPAC trend, keeping it relatively stable. But I would highlight that the growth in the active client is probably the #1 highlight that we see in the quarter. And the combination of this with a flat revenue gave [ their backlog ]. We think we're seeing in the second quarter, this normalizing trend upwards coming back.

[Operator]

The next question comes from Mr. Yuri Fernandes from JPMorgan.

[Yuri Fernandes, analyst]

I have a question regarding the cost of risk. If you can provide an outlook for the year I think cost of risk was 6% this quarter. So where should we be like where is the peak asset quality? And if I may, I guess, congrats on the improved disclosure. We saw like some improvements on your excel, on your release. So congrats on that. But if you may, I would like to know more information about renegotiated loans and portfolio sales. So if you can provide us some color how you are, I don't know, seeing renegotiated inside of the company? Or if you did or did not sell any portfolio this quarter, that would be great.

[Alexandre De Oliveira, executive]

Thank you for your question. I'll start talking about the cost of risk portion and what we see going forward. And to start, I'll talk about what's been building our cost of risk. So the main impact on the NPL formation has been due to the credit card portfolio and with the main pressure coming from the 2021 cohort. So you've probably seen that you make this visible. We added 2 pieces of information in our disclosure. One was the NPL of cards by cohort where we see a sequential improvement on the newer cohorts and two, is the breakdown of the cost of risk from provisions that come from the new versus the old cohorts. The conclusion there is that most of what we're seeing going through the P&L now is coming from old cohorts. And it's not about first payment default, it's really about just some macro deterioration.

What we saw in macro in the macro perspective is that -- and what we see actually is a high correlation between the [indiscernible] and monetary tightening with overall delinquency of the unsecured credit, given the pressure that these high rates putting the capacity of families to serve their debt.

Although we do not provide guidance in general terms, our forecast for 2Q '23 is still showing some continuation of the current trend in NPLs and cost of risk. We believe that this trend will be in line with the general market. And from the second half of 2023 on, we're expecting better figures for several factors. So first, the improvement of our underwriting collections model, the aging of the poor older cohorts and also better mix in the new originations skewed towards existing clients over new ones. So as we know the behavior, the models tend to behave better.

Moving to the second part of the question, both renegotiation and asset sales are as business as usual. We did not have any sale of portfolio during the quarter. Thanks, Yuri.

[Yuri Fernandes, analyst]

No, that's great, Alexandre. Just a follow-up in the first part of your answer. You mentioned 2021 cohorts, right? And credit card is a very kind of short term. So just checking like these are like old clients. You originate those guys used to be good, but for any, I don't know, like, media or risk appetite was higher back in 2021. You added some clients that maybe they were good for part of the history, but now they are showing some weakness, right, that's the mindset. We should continue to see worsening from those old clients. Because -- what, my question is, credit card is a very short-term product, right? So your portfolio should -- should be clean very quickly, if that's the case. But if you originate like for some clients that are somewhat riskier, we may continue to see this worsening trend. Does it make sense?

[Alexandre De Oliveira, executive]

Yuri, it does make sense, but there are a few things here that I'd like to highlight. First, when the best -- in the past, we've talked about FPD, which is first name in the fall. And what that tells us is that what's the quality of the recent underwriting. So we're improving that metric by 50% or more last year on this first payment before. And what that tells us is a prediction that we're going to see better NPLs as we move forward, and we've seen that in the -- as shown in the cohorts that we showed in the presentation.

What we're seeing in the 2021 cohort is really about another dynamic. We typically will see the maturity of a credit card cohort in 36 months. This means that not every client that's going to become delinquent is going to be full in the first payment or second payment or third payment. Given deteriorations in the credit scenario, you may see this happening further down the road, and that's what we're seeing. The tendency is that the more the time goes by, the better the remaining clients of the cohort and things should come to a more stable performance in the long term. Let me know if that was clear.

[Yuri Fernandes, analyst]

No, that was super clear.

[Operator]

The next question comes from Mr. Tito Labarta from Goldman Sachs.

[Daer Labarta, analyst]

The question was already answered, but another question on expenses. Good job there, particularly on the cost-to-serve. Is there room to improve this further from here? Or do you think this is a new recurring level? Just to think about how that should evolve. And then just a second question in terms of your profitability and your capital, right? I mean we saw capital not falling less than in prior quarters, but still coming down a bit. I mean when do you think you'll be able to start generating capital? Or in other words, are you still confident you'll get -- I mean, you have the long-term ROE target of 30%. But do you think you'll be able to generate capital by the end of the year? Or in other words, have a level of profitability that will allow you to generate capital? Or when do you think you start to see that inflection where you can generate your own capital?

[João Vitor Nazareth Teixeira de Souza, executive]

So Tito, Joao Vitor speaking here. Regarding expenses, which by the end of the day, drives our cost-to-serve, on the personal front, which you asked us, we are improving a lot in 2 angles, actually. The first one, we've now signed the company. So we started the year with 4,100 employees. And currently, we are slightly below 3,700. This evolution happened through CAC adjustments and through not replacing people that decide to leave. We are working to keep our expense level in this line flat throughout the year.

Second, as important as this one, we want to have the proper management structure. We are working with advice of BCG on this front and expect to have it in place. This new structure will also help drive our personnel expenses down. So I'm very excited with what we have achieved so far, but we believe that more to come in the coming quarter. And Alexandre to cover the rest of the question.

[Alexandre De Oliveira, executive]

On the capital side, Tito, we are excited of the trend we are seeing. We see still a very strong buffer of 2x relative to the large incumbent banks comprised 100% of top-quality CET1. In terms of organic capital creation, as we see the ROE building up. We see that we start creating organic capital to fund grow further. As we mentioned in January, in our Investor Day, we expect to have a fully funded business plan from a capital perspective. And as the ROE builds up, combined with a consumption of the loan growth, we see that this will match each other and as we continue building this organic capital. So we are comfortable in this front and the sequential improvement on net income is the one that will help us fund this business plan.

[Daer Labarta, analyst]

Okay. Maybe one follow-up there. I mean just in terms of when you can begin to see that inflection point. I mean do you think you reach it at all this year? I think you had mentioned the capital around 20% by year-end. Is that still what you're thinking? So is it maybe you start to get organic capital sometime next year? Is that a fair assumption?

[Santiago Stel, executive]

We don't give guidance on profitability, which is the indirect question here. So what I can say is that we expect to continue having a sequential improvement of net income in terms of loan growth, which is the other big variable that plays out in capital. We're running, or we started running in 20% loan growth a year, which is the 5% of the quarter annualized. We'll monitor macro conditions to see if this goes up a bit. We would like it to be a bit higher than 20%, but we'll be around that zip code. So expansion of net income to with this level of [ rate ] growth, we see a capital level that used to sustain about 20% throughout the end of the year.

[Operator]

Our next question comes from Mr. Flavio Yoshida from Bank of America.

[Flavio Yoshida, analyst]

So my question is on NII trends going forward. So on this quarter, we saw the loan portfolio growth decelerating, but at the same time, the low spread lines such as real estate and payroll loans were more resilient. This suggests weaker NII going forward. But on the other hand, you guys showed strong repricing efforts, which is actually driving NII up, right? So my question is, what should we expect going forward, taking all this into consideration?

[Santiago Stel, executive]

Thanks Flavio for the question. So on NIM, we're truly excited with the dynamic that we're seeing. You notice we printed the highest NIM in third quarter. We declined the size of the portfolio of the lower-yielding part, which [Audio Gap] the supply chain finance and the prepayment card receivables. We had a real estate. The mix is much richer in the new originations shifting towards home equity and [ EPC ] inflation-adjusted loans. On payroll, we are originating diligently at rates at 1.75% or more. On SMBs, we increased the rates 100 to 200 basis points on the new originations. And as you saw at GTS, we had a monthly rate of 2.15% per month, is gaining critical mass in the overall portfolio. So all this together is playing positively. We have been recording NIM expansions of 20 to 30 bps. We don't give guidance of what's going on -- what should happen in the next quarters. But we think the past is a prior indication of the trend going forward.

[Operator]

Our next question comes from Ms. Neha Agarwala from HSBC.

[Neha Agarwala, analyst]

I think the question was already asked, but I have a clarification on the loan growth and the cost of risk guidance for the year. So for logo, should we expect -- you mentioned about 20% loan growth for the year. Is that a level that we should expect for the full year? Or could it be a bit higher? Also, what would be the focus segments for this year in terms of loan growth?

And my second question is on cost of risk. How much improvement can we expect during the year in terms of cost of risk? And would it be -- I understand from your comments, it will be more in the second half of this year versus in the first half.

[Alexandre De Oliveira, executive]

Thank you for your question. This is Alexandre speaking. So I'll start from the second piece. We -- as you mentioned, yes, we expect to see more stability during the year. And given expectation that we have from the macro scenario and also due to improved underwriting collections and the aging of the older cohorts, we might see improvements in the cost of risk front in the second half of the year.

Moving to the first part of the question with regards to the growth of the loan portfolio. As Santiago said, we ran the first quarter at about 5% growth, that's 20% annualized. He also said that it's a little bit below what we expected, but it's a good position to be in, in the tough macro that we saw in the first quarter. So we saw very busy movements happening with Americanas and other corporate events happening that made the market tense.

As we observed this pension fading away, we may see a more aggressive growth towards the volumes that we discussed during our Investor Day earlier this year towards the 40% level or something like that.

[Neha Agarwala, analyst]

Can I ask one more question in terms of your costs? You've shown good performance in terms of increasing efficiency, reducing your cost-to-income. What other levers do you have -- I mean, are there any other low-hanging fruits that can help you further drive down the cost-to-income ratio? And what is the plan for the cost of income to be by the end of this year?

[João Vitor Nazareth Teixeira de Souza, executive]

Neha, Joao Vitor speaking. Yes, we do have also another initiatives on that front. And you're right, I would call them low-hanging fruits. So we have some big contracts that we're trying to renegotiate, which will help us drive our cost to serve down, mainly Mastercard, AWS, Salesforce, call centers and so on. So we are working hard on that front.

And also on personnel, we still have more room to improve, as I mentioned before, and all of that combined with improving on the NIMs and the pricing should help us on profitability. So I'm convinced that we can reduce the cost-to-serve even further.

We do have an objective of having more active clients per employee. So we're really looking for this metric. Having said that, I believe that we will improve a lot on that math, but we don't give a guidance for that, okay. So thank you for your question.

[Operator]

The next question comes from Mr. Eduardo Rosman from BTG. Mr. Rosman.

[Eduardo Rosman, analyst]

Congrats on the quarter. We like to see the improvement in efficiency and also the performance coming from capital. I have a quick follow-up on Tito's question, right? Given the repricing efforts, the better cost control and the fact that interest rates probably have peaked, do you think or do you think it's fair to say that from now on we should expect growing results on a profit before taxes basis? I understand that visibility on recent results was still a little below, but do you think it's fair to say that the visibility on what to expect for the coming quarters improved.

I'm just trying to -- I understand here the 5-year view, and I think we all agree here that profitability will improve. But I think investors have been kind of -- have been -- having a hard time to forecast the next 12 months. So if we are able to understand -- if the trends are now, let's say, on a clear way, if the trends are improvement in results, I think it would be great if you can share that with us.

[João Vitor Nazareth Teixeira de Souza, executive]

Joao Vitor here. Yes, you are right. As I mentioned on the beginning of the presentation, I would say that the previous 5-year of Inter were building our foundation with a lot of costs upfront, building the team, building the platform, putting all the features. We're doing our IPOs, follow-ons and everything. And from now on, as I highlighted, we're taking a more cautious approach on pricing, on using the capital in a good way, growing in a -- I would say, in a better manner, looking for engagement, trying to optimize the fixed cost for the business, G&A, personnel and everything.

So the point I'm trying to make here is that we're really focus on this new, I would say -- not the new environment, but the new momentum for the company. We call this the next 5 years.

So with that said, I'm sure that we will keep improving our profitability, taking a more cost approach on our equity, having a better pricing, a better cost control. When you combine all of this, pretty much we will keep improving quarter-over-quarter, our ROE, our profitability.

We're very focused, very committed to that metric. We have the team. And when I say the team, I'm talking about almost everyone here at Inter looking for that. And when you have everyone pursuing the same goal, your chance to get there is way higher. So I'm very excited and very confident that we'll get there. So improving ROE quarter-over-quarter and get to a very good number on that metric. So thank you.

[Operator]

This concludes our question-and-answer session. Now I turn the floor back over to Mr. Joao Vitor Menin for his closing remarks.

[João Vitor Nazareth Teixeira de Souza, executive]

Thank you, operator. And I'd like to thank everyone for participating in our earnings call. Again, I'd like to thank all the team here at the Inter that's working hard every day to keep improving the business. Hope to see you soon in another 3 months. Thank you very much. Bye-bye.

[Operator]

The conference has now concluded. Inter IR area is at your disposal to answer any additional questions. Thank you for attending today's presentation. Have a nice day.