Inter & Co Inc

NASDAQ:INTR

Earnings Call Transcript 2022-Q3

[Operator]

Good morning, and thank you for standing by. Welcome to Inter & Co 3Q 2022 Earnings Conference Call. Today's speakers are João Vitor Menin, CEO; Alexandre Riccio, VP of 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]

Now I would like to welcome one of your speakers for today, Mr. João Vitor Menin, CEO. Sir, the floor is yours.

[João Vitor Nazareth Teixeira de Souza, executive]

Hello. Good morning, everyone. Thank you for joining our third quarter earnings call.

First, I will do a quick introduction, and then I'll pass it to the team, who will provide an update on the business and on our financial performance. We completed what I think was an excellent quarter. The numbers that we present today reflect our consistence and dedication, but more importantly, the passion that we have towards our mission.

Jumping to the Page #2, I would like to share with you the highlights of this quarter. From a client perspective, we added 2.1 million net new clients, reaching almost 23 million clients so far. This puts us ahead of our goal of ending 2022 with 24 million total clients. We were able to decrease our CAC to BRL 28, the lowest level in over 1 year. We believe that the combination of lower CAC and also acceleration in new clients is only made possible, given the growing strength of our brand.

In terms of volumes, which is a reflection of engagement, we reached a record BRL 155 billion in TPV. This consolidated TPV plus PIX grew an impressive 69% year-over-year. On the loan side, we grew 47% year-over-year and we are on track to deliver [ 50% ] growth on the calendar year. We call these growth levels [ disruptive ]. It allows us to keep gaining significant market share across products and dilute our cost base.

A point which makes me, in particular, pleased is that our NPL ratio was flat for the quarter. This is the result of a strong effort and dedication to master the combination of high growth and good quality underwriting and also good collection process.

Going now to funding, growth was also remarkable, reaching 41% year-over-year. We reached BRL 28.4 billion at the end of the quarter and another BRL 5 billion in third-party fixed income distribution. On monetization, we can see that our gross revenue surpassed BRL 1.5 billion mark for the quarter, which would take us above BRL 6 billion in the year, twice the level we had on 2021. One important highlight is our marketplace, which we call Inter Shop, which reported a record net take rate of 5.1% in the quarter.

Having covered the operational and the financial highlights, I'd like to share my top priorities for 2022 and beyond. First thing, growth. We are a growth company. We need to keep growing, both in clients and loan/deposits. We consider ourselves a [ disruptor ] and have big aspirations where we want to get to. Second thing is about engagement with volumes, which continues to grow significantly, with market shares that are becoming truly meaningful. Third thing, innovation. We are a very innovative company. To name a few very interesting examples of the year's we have, the global account, the first of its kind, the Inter Shop on the web version and first-ever Invest Now Pay Later product on our investment platform. And finally, [ fourth point ] calibrating the right risk reward for our credit business. We are working on repricing as we will comment later. We are highly focused on having strong asset quality.

Now I'd like to comment that I'm pleased that we just received the excellent news that iBest recognized Inter with 3 awards last -- 2 days ago, which are the [ Best Digital Broker of Brazil ], the [ Best Super App ] and last, the [ Best Digital Bank ]. We take this recognition with humility, but it does make us proud and give us energy to work hard every day to fulfill our ambition to simplify people lives through our Super App.

Now I'll hand over to Alexandre to provide some update on the business verticals.

[Alexandre De Oliveira, executive]

Thank you, João, and good morning, everyone.

I'll go through some highlights of our 6 business verticals, all of which had an exciting quarter. Starting on Page 5, I'll talk about day-to-day banking. We reached an impressive BRL 155 billion TPV, as mentioned by João. This quarter, we started disclosing TPV including PIX as we believe it better explains client engagement and the activity of day-to-day banking that's happening at Inter. On the debit and credit card front, TPV reached BRL 17.2 billion, with the mix trending towards credit, which now accounts for 46% of the mix. The evolution of the TPV towards credit cards brings an increase in blended interchange fee. On PIX, we saw another quarter of strong growth, with Inter finishing with a market share of 80% of the transactions in Brazil. Finally, our overall TPV grew by [ 15% ], significantly outpacing the growth in the number of clients, an important factor to understand client engagement with the platform.

Moving to Page 6. On the credit front, our gross loan portfolio surpassed BRL 22 billion, delivering 47% year-over-year growth. The focus on loans has been to balance growth and profitability. With respect to profitability, we have been consistently repricing our portfolio as a result of the new rate environment and spread expansion strategy. For reference, our underwritten volume in the quarter reached BRL 6.5 billion, which is all at the prevailing rate environment. In terms of growth, we're on track to deliver 50% year-on-year -- year-over-year, aligned with our market share and cost dilution objectives. We'll bring more color on this point in the financial section.

Going to Page 7, we highlight our insurance and protection distribution business. We continue to improve our product offering, sustaining our position as the leading digital insurance distribution platform in Brazil with more than 20 products sold through the app. Our net revenues reached BRL 31 million, driven by very strong digital savings. We currently have more than 1.1 million active insurance policies at Inter. And we continue to actively work to further penetrate Inter's client base.

Going to Page 8, a brief update on Inter Invest. As a reminder, this is our direct-to-consumer business with BRL 62 billion in AUC. This quarter, we had record net inflows of BRL 3.8 billion, accelerated by the high interest rate environment, attracting fixed income investments. We reached BRL 40 million in revenues, also a record for us. Recently, we launched the first-ever Invest Now Pay Later product. This is just another example of bringing innovation for our clients with the goal of simplifying their lives through our Super App.

Going to Page 9, I'll talk about Inter Shop, which is our e-commerce platform. We delivered a record BRL 48 million in net revenues, driven by an aggressive net take rate that reached 5.1% in the quarter. I would like to highlight that 75% of the sales in the quarter came from recurring customers. And we're still able to attract 565,000 new customers to Inter Shop.

Three final highlights are [ thus ]: one, we surpassed the 900th seller mark; two, we surpassed 800,000 SKUs offers; and third, for some the most exciting, we launched our end-to-end e-commerce offering to the web, where clients can do their product selection online and get a QR code to wrap up the transaction through the app. Visit intershop.bancointer.com.br to test it.

Finally, on Page 10, I'd like to spend a moment on our cross-border services unit. We continue to grow our global accounts, having added 360,000 accounts in the quarter to reach a total of over 500,000 global accounts. The level of engagement in this product is inspiring and motivates us to keep evolving the offering. We think the monetization potential here is very big through a combination of FX, interchange, float and take rates.

Now Helena and Santiago will provide an update on our financial performance. Thank you.

[Helena Caldeira, executive]

Thank you, Alex, and good morning, everyone.

I'll move straight into Page 12. I would like to highlight one of our main achievements in the quarter, the growth and the repricing of our loan portfolio. As you can see, our gross loans reached BRL 22 billion in the quarter. This is an 11% increase quarter-over-quarter or 47% growth year-over-year. Growth was driven by multiple products with payroll, FGTS and anticipation of credit card receivables as the most notable ones.

As Alexandre mentioned, we have been highly focused on balancing growth and profitability of our loan book. We have now fully repriced 5 out of our 7 major loan portfolios. So as you can see in the chart, anticipation of credit card receivables, credit card, agribusiness, SMB loans and FGTS fully repriced. The 2 that are still ongoing are payroll and real estate. These portfolios have a long duration, so repricing process takes longer and -- but I would like to emphasize that we are actively in the process of doing so.

Moving to Page 13, I will comment on asset quality. As João mentioned at the beginning, our 90-day NPL remained flat this quarter at 3.8%. This marks what I believe is an inflection point and is a result of an active risk management approach, which included improving our risk management processes, our credit algorithms and our collection process. An additional strong point to highlight is that we have increased our coverage ratio from 129% to 141%.

Going to Page 14, we've reached BRL 28.4 billion in total funding, an increase of 10% quarter-over-quarter or 41% year-over-year, which is a strong growth that would make us very proud. In terms of mix, even though we see an increasing demand of our customers on higher-yielding savings products such as time and saving deposits, we have also grown the free demand deposits base this quarter by 6% despite the very high level of interest rates prevailing in Brazil.

In addition to the on-balance sheet funding, we also have BRL 5.2 billion in third-party distribution of fixed income products, which grew 18% or BRL 780 million in the quarter. What we see is that we continue growing the share of wallet of our customers and that we benefit from earning a fee on the third-party distribution products when we have overfunding. But we could drive this flow to our balance sheet, if needed. The direct-to-consumer investment platform is a key strategy to sustain this possibility.

Moving now to Page 15. This is another positive highlight for the quarter, our cost of funding. As you can see on the page, our cost of funding was 63.5% of Selic in the quarter, in line with the prior quarters. But with funding expenses included of -- with BRL 52 million included in this funding expenses, that relates to a debt in our holding company, which was canceled in October. Therefore, it will not repeat itself, lowering cost of funding going forward. As seen on this page and on the prior one, our funding structure and costs remain at a competitive advantage for Inter, particularly in today's world with very high interest rates.

Moving to Page 16 on revenues. We surpassed BRL 1.5 billion in gross revenues during the year -- the quarter, I'm sorry, which positions us to surpass BRL 6 billion mark in the calendar year. It is worth noting that during the quarter, we had a nonrecurring deflation. For reference, we estimated that if we had a normalized inflation, our revenues would have been BRL 1.68 billion, which would have implied a 12% and a 10% growth in gross and net revenues, respectively. Santiago will walk you through the detailed calculation on Page 18.

But before that, I just wanted to highlight the breakdown of our fee revenues on Page 17. You can see that we continue having highly diversified revenues on both fee income and on the interest side. We are convinced that having the diversification of revenue streams strengthens our financial profile by making us more resilient and less dependent on any given product as opposed to what happens to a mono or a dual line [indiscernible].

I'll pass it on to you, Santi.

[Santiago Stel, executive]

Thank you, Helena. Good morning, everyone.

Moving to Page 18. For easiness of understanding, we included in the presentation a little table that has the walk-through of our deflation adjustments. We made these adjustments because for the first time in several decades, Brazil experienced 3 consecutive months of deflation totaling 1.32%. We believe this is an extraordinary event as Brazil structurally has positive inflation.

Going into the table of the page, you can see 3 exposures. Two are on the asset side and one on the liability side, which gives us a net long exposure of BRL 4 billion. With a deflation rate of 1.32%, the revenue of this net loan exposure was minus BRL 53 million in the quarter. Assuming a quarterly inflation of 1.24%, which is the one disclosed by the Central Bank of Brazil in its focus report for 2023, the revenue of this net loan exposure would have been for BRL 50 million. This gives us a net difference in revenues of BRL 103 million. In terms of net income, when we adjust by taxes, the positive impact on the bottom line would have been of BRL 53 million.

Now moving on Page 19. We show a remarkable evolution of our client base. You can see how clients keep choosing Inter at an accelerated pace. On average, we added 2.2 million net new clients each quarter this year, which is 10% more than the average of last year. And we added an average of 2.0 million clients each quarter. Additionally, you can see that 61% of our 22.8 million clients have been clients of Inter for more than a year. This allows us to show increasing monetization as our client base matures.

Moving to Page 20. We present here our monthly revenue per active client or also known as ARPAC. This quarter, we reported a monthly ARPAC of BRL 46, or BRL 29 net of funding costs. Based on our estimates described on Page 18, in the absence of deflation, our ARPAC would have been a record of BRL 50 per active client, or BRL 33 net of cost of funding.

Jumping on to Page 21, we present here our progress on the expenses front. On a per client basis, our monthly cost-to-serve was [ BRL 17 ], which was flat quarter-over-quarter. When we look at the cost-to-income ratio on a reported basis, it reached [ 78% ] though when we adjust for the deflation impact mentioned earlier, we see a continuation of the improvement trend by 2 additional [indiscernible] percentage points, which would imply a 70% cost-to-income ratio. Note that both cost-to-serve and cost-to-income ratio are 2 critical variables that we'll track closely to assess our performance through time.

Jumping into Page 22, we describe here the evolution of our NIM. You can see that we reported 6.3% in the quarter. Again, adjusted by the estimated deflation impact, the NIM was 7.5%, which represents a significant improvement relative to the prior quarters and a reflection of the thorough repricing we're doing across portfolios. Another way to see this repricing is through the yield on the average earning assets, which is the black line on top of the page, which grew an impressive 140 bps on an adjusted basis.

Finally on Page 23, net income on the quarter was [ minus BRL 30 million ]. So adjusted by deflation, we had the best quarter in the year with a net positive of BRL 23 million.

Before passing it to João for some final remarks, I would like to remind the audience that we will have our Investor Day on January 18 in [ Belo Horizonte ] with hybrid format and live stream [indiscernible].

Back to you, João.

[João Vitor Nazareth Teixeira de Souza, executive]

Okay, Santi. Thank you.

So final remarks on Page 24. As I mentioned initially, I'm truly happy with the performance of this third quarter. We have [indiscernible] pushing with strength on a coordinated manner. Clients continue to choose us because we have the best and most complete Super App in the market, not only because of our fair pricing offer. We innovate day in, day out, trying to simplify the lives of our clients, particularly the global account [indiscernible] the #1 innovation of the year. Equivalent to the e-commerce platform back in '19, Inter Shop, which end up being a big success as of today.

Our financial performance is proving strong. As you saw, we improved meaningfully on the asset quality front as anticipated last quarter when I said that the worst was behind us. And fully committed to reprice our loan portfolio and deliver proper NIM expansion. This is now our top priorities from a financial perspective. Finally, we continue growing our balance sheet at a strong pace, gaining significant market share, which will help us achieve operational leverage and organic capital creation.

With that said, operator, please, we can now open for the questions of the audience.

[Operator]

[Operator Instructions] Our first question comes from [indiscernible] sell-side analyst at UBS.

I have one related to the GMV of the marketplace. The volumes recorded a drop of 1% Y-o-Y and 5% Q-o-Q after strong growth rates in the previous quarters. So what could briefly explain this dynamic? And what should we expect for the upcoming quarters?

No. Sir, we're now opening the audio so that you can ask your question live.

[Unknown Analyst]

Sorry for this. So it's basically this. I wanted to jump my question on the marketplace of the bank. And I just wanted to understand a little bit more what happened in this dynamic to show this slowdown year-on-year in comparison to the last year. So basically, I just wanted to understand briefly, what could explain this slowdown when compared to the third quarter of the last year and also related to the last quarter, the second Q.

[João Vitor Nazareth Teixeira de Souza, executive]

Okay. João Vitor speaking. Thank you for your question. So given the market this year, the consumer confidence, the consumer purchase power in Brazil was very [indiscernible] and this reflects the e-commerce volumes. This is one thing. The second thing is about balance. We also wanted to improve our margins, which is the net take rate in order to just focus on growth. Going forward, we do expect this balance evolution between take rates and volumes going forward. So this is pretty much the 2 reasons for the trend on the GMV volume 3Q compared to 2Q.

[Unknown Analyst]

Okay. And if I may, I just wanted to jump to another topic, which is very, very quick, related to the asset quality of the bank because we welcome the [ manner ] of the cost of risk this quarter and also the effect on the reserves that they reached a very safe level of more than 140%. But my focus here continues on the NPL ratio because it increased 10 bps quarter-on-quarter, but Stage 3 loans increased almost 1 percentage point in the quarter with this increase basically seeing from the credit cards. So Vitor, I just wanted to understand what are the intentions of the bank regarding this trend going forward?

[João Vitor Nazareth Teixeira de Souza, executive]

Thank you for the question. I'll forward to Helena, [ which should ] cover that.

[Helena Caldeira, executive]

So regarding asset quality, as we mentioned, we are very happy with our performance. We believe that over the last months, we have really focused in increasing and improving our risk management, collection and our processes in general for us to see that trend -- so the NPLs going down. What we see is that our NPL levels stayed flat. I think like when we see this 3.9% going to 4% is we are not taking into consideration the loan book. That is an actual loan book of credit card receivables. That is not in the same line in the balance sheet because the counterparty are financial institutions, but they are actually part of the loan book. As it becomes more relevant, it's important to look at that number. So 3.8% compared to 3.8%.

When we look at the stages and as you mentioned and specifically the evolution of Stage 3, what we see there is that they are not a direct reflection of the NPL formation. What we see is that we conservatively -- we also consider at Stage 3, other type of loans, such as the ones that we have some type of renegotiation that we can classify as Stage 3 as well but not the same reflects that we have on NPLs.

So there can be a good proxy but not necessarily the same number to be looked at, okay? So when we see trends, the trend is for us to continue seeing an evolution on NPL ratio. We are confident that we have improved, as I mentioned, our credit risk assessment, the processes, the new underwriting. And it's -- so the trend is really for us to see an improvement in NPL going forward in all the different loan books.

[Operator]

The next question comes from Flavio Yoshida, sell-side analyst with Bank of America.

[Flavio Yoshida, analyst]

I was wondering, given that you mentioned that NPL probably reached its peak, what should be the speed that we can expect an improvement going forward? And how this could impact also the loan growth acceleration, given the better asset quality trends? And then I have a follow-up question on this.

[Santiago Stel, executive]

Thank you. Santiago here, taking that question. So in terms of NPL going forward, we expect it to remain roughly stable around the level that we had. The increase that we had in the past few quarters had to do with the [indiscernible] in the market but also with the fact that we were increasing the share of credit cards as a percentage of the total portfolio. Going forward, we expect that credit cards will go in line with the total portfolio, so we will have a little change in terms of mix. And therefore, all in factors in, we expect a stable NPL trend for the coming quarters.

[Operator]

The next question comes from Mario Pierry, sell-side analyst with Bank of America.

[Mario Pierry, analyst]

Congratulations on the results. I have 2 questions. The first one is, you showed longevity of your clients has been increasing. So like 61% of your clients now have been within there for more than 1 year, and this was 48%, 1 year ago. This is a clear positive. However, when we look at your net ARPAC, it has not changed. So this, first, seems counterintuitive because we thought where the longer clients are, the more products you're able to sell. So I was just wondering, how do you see this disconnect between clients using the platform, but you're not being able to monetize on them?

And then my second question is related to all the repricing of your loan portfolio that Helena had talked about. When should we expect to see the full benefits of this repricing? I would imagine some of this took place late in the quarter. So when should we see the full benefit of the repricing?

[Santiago Stel, executive]

Thanks, Mario. I'll take the first part on ARPAC. So the way we look at it in this quarter is on an adjusted basis by deflation, [indiscernible] we're going to see it to be a one-off factor. And when we do adjust it, we see that the ARPAC before deducting interest expense did be a record of BRL 50 per month per active client and that is having a significant number of clients in the quarter still. But the deflation impact changes the number when you look at it on an unadjusted basis. That's the reason why we brought this adjustment to [indiscernible]. If you look at it on a net of cost-of-funding basis, the number was BRL 33, which is a positive trend, considering the number of clients that we brought in the base. We will do a very deep dive on unit economics in the Investor Day, where we will break down the ARPAC to cohorts and what we have inside the cohort, how that changes across cohorts to provide more color on how that has been evolving through time.

[Helena Caldeira, executive]

And following up into the repricing question. As we mentioned, we have been repricing the loan portfolio. So having already repriced SMEs, cards, prepayments of cards and agribusiness. And -- but those loans, they represent over 50% of the total credit exposure, right?

And on payroll, we are increasing origination rates to new loans to above 1.5%. And we are also in the process of refinancing older loans that were underwritten at lower rates now with higher rates. With these 2 effects combined, we expect the -- most of the portfolio to be repriced by the second half of '23.

Now on real estate, we are in the process also of repricing it. But given the nature of these loans, it will take longer. What we think will likely happen is that Selic will eventually go down, so we will see this trend of increasing NIMs and this loan book will be fully repriced as the macro scenario evolves as well. So that's basically what we believe in terms of repricing and how fast we will see it.

[Operator]

Our next question comes from Rafael Frade, sell-side analyst with Citi.

[Rafael Berger Frade, analyst]

So I have 2 questions here. One is going back to the Stage 3 loans. So Helena explained that it's not necessarily NPL but it would be related to renegotiation. I would like just to understand that in this quarter, there were a more intense process of renegotiation or anything that you can share about it.

And a second question would be related to, I saw that there were some fees related to -- some performance fees related to Mastercard [indiscernible] that had some reduction in the quarter. Just to understand here where this reduction comes from and what we can expect going forward.

[Alexandre De Oliveira, executive]

So Frade, this is Alex. I'll take this question. So the first point on the Stage 3, the point is that sometimes you may have a mismatch between the base that the loan is delinquent and the stage where it is, meaning that you may have loans that are on [indiscernible] but are on Stage 3. This is the mismatch that Helena was explaining.

Moving to your second question on the performance fee. So performance fees are something that we work on to negotiate constantly. Sometimes they depend on partners programs that incentivize certain behaviors from us with our base. So [ B3 ] does that all the time for Inter and other sort of contracts that are more consistent, such as Mastercard. Our objective is to keep optimizing the revenue that we get from those performance fees, but fluctuations are likely to happen as the program comes and goes. Thank you.

[Operator]

We now have a question from Pedro Leduc, sell-side analyst with Itaú BBA.

[Pedro Leduc, analyst]

Two questions, please. First, on the operating costs this quarter still rising a little bit, how you guys are thinking about maximizing the efforts as we look into 2023? I'm sure we think about this [ line ].

And then on the second, more broader thought, also as I would look into the year ahead, what the key priority are in terms of the main lines, how should we think about book revenues and costs? That's just rather thinking.

[Helena Caldeira, executive]

Thanks, Leduc. So I'll answer the first one. So on expenses, so we are really committed to maintaining our total expenses under control. When we look at the evolution of the -- our personnel expenses, it grew 2% quarter-on-quarter and the other expenses grew close to 8% in the quarter. Our commitment is really to grow it less than growth in total revenues, which we would have had with the adjusted revenues, decreasing cost-to-income ratio. So that's the trend.

Of course, the evolution of our expenses, there are many levers for us to go, but there is also the growth of some of these expenses with the growth of the engagement of our customers with the evolution of our business and that they are very correlated. So the key goal here is for us to maintain sustainable decrease in cost-to-income ratio, and this is what we are working on.

[Santiago Stel, executive]

Thank you. I'll take the second part on interest income, so that's the combination of rates and volumes. So I'll separate in 2 pieces. On the rates front, I think Helena touched on the repricing front. But basically, I'd like to highlight that this is the first full quarter where we have credit cards operating at the repriced level. That's a difference versus the prior 2 quarters. And then SMEs, anticipation of receivables have also been repricing as the amount when they're going through the year.

On the volume side, we did have more growth on payroll and anticipation of receivables lately with SME and real estate growing a bit below the average but still at good levels. So we are balancing, as Alexandre was mentioning on his remarks, both rates and volumes to keep a balanced mix. And we think that as we continue doing that, we will start showing a [ NIM trending ] towards a little that we're more comfortable with, which is in the high single digits.

[Operator]

[Operator Instructions] We have a question from Tito Labarta, sell-side analyst with Goldman Sachs.

[Daer Labarta, analyst]

Just a follow-up in terms of asset quality. We saw your NPL only got 10 bps, so overall seeing some of the incumbent banks have much more deterioration. And some of the comments we've heard there is more lower income clients, digital clients that seem to be suffering more. So I think it relatively looks like much better results on your end. So I just wanted to try to understand that, are you seeing a similar thing either by income segment where [ lowering ] compliance are performing worse? Why do you think your NPLs seem to be holding up? Also, your provision is relatively steady, and some of the comments you made that things can improve sooner rather than later. Just kind of curious why you think we're seeing this kind of difference where some of the incumbent banks are suffering a bit more than expected, and you had some deterioration but it looks like maybe the worst could be behind you? Just to try to get some context there.

[Santiago Stel, executive]

Thank you, Tito. So 3 points on your question. First, the way we see it, NPLs remained flat because the 3.8% ratio that we added here includes anticipation of receivables. This is financing with credit risk and interest rate risk. So for us, this is a loan. And that this versus the prior quarter, it was flat, so 0% deterioration. And this was the point of [ joy ] in last quarter, the worst is behind us, meaning no longer deterioration.

Second, this happened by the fact that we have a lower [ beta ] portfolio or a highly collateralized portfolio by design. This is the nature of Inter to be resilient in times of increasing interest rates, and this is precisely when we can show this improvement.

And third, we have been working very actively on the risk management and collection processes. We got a lot of data from our clients that interact in the different parts of our platform that has been increasingly more [ incorporated underwriting models ]. And all those efforts together have resulted on an early reaction that allowed us to print a flat NPL.

[Daer Labarta, analyst]

Great. Santiago, that's helpful. Maybe just 1 follow-up then. Does that give you confidence to increase loan growth from here? Can you get more aggressive, particularly in unsecured lines?

[Santiago Stel, executive]

So we see loan growth next year higher than this year. We don't see it going back to a 3-digit percentage levels because our size has become increasingly more material. But we do see an acceleration of loan growth in a more balanced manner across products more into 2023.

[Operator]

We now have a question from Geoffrey Elliott, Autonomous sell-side analyst. He's asking, he would like to ask about divergence on Stage 3 loans and NPLs.

[Geoffrey Elliott, analyst]

Hello. I think 2 people have already asked about divergence in Stage 3 loans and NPLs, so maybe I could ask a different 1 instead, please. Just in terms of the net interest margin progression from here, so I think your 7.5% on an adjusted basis in 3Q, once we take out the CPI impact, how should we think about the main drivers of the NIM going forward, thinking about mix, repricing and then sensitivity to interest rates and potentially interest rate cuts at some point over the next year?

[Santiago Stel, executive]

Thanks, Geoff. Santiago here. So we are now at the point of more pressure on the NIM. But as we commented on the repricing remarks, we have close to 50% of it repriced right now. We're working very actively on the payroll and the real estate to bring it to the market level. We think as we increase quarter-by-quarter the replenishment of new loans and we get the repayments of the older loans, that expansion of NIM will continue playing out. We see a material improvement or we expect a material improvement following the next year as that repricing approaches 100% of the loan portfolio.

[Operator]

Okay. Well, I guess this concludes our Q&A session. I would like to turn the conference back over to Mr. João Vitor Menin for his closing remarks. Please, Mr. Menin, you have the floor.

[João Vitor Nazareth Teixeira de Souza, executive]

Okay. So thank you, everyone, for joining us for this earnings call. And in my final remark, I would like to share with our shareholders, our employees that we're here for the long term. We are running a marathon, not a sprint. Sometimes, we want everything to be in place on the next [ quarter ]. That's not what's going to happen, but be sure that we're working hard, doing our best. It's a big group, talent group of 4,000 employees who are [ intent ] to improve quarter-over-quarter, again, quarter-over-quarter improvement as we see from Q3 to Q2, and as you see from 2022 from -- to 2021. So again, improving and improving. It's about commitment, it's about resilience and that's the spirit that we have here in Inter. So very excited with the coming years for Inter in Brazil, all over the world. And thank you, everyone, for supporting us so far. Thank you very much. See you soon.

[Operator]

The conference has now been concluded. Inter IR area is at your disposal to answer any additional questions that you might have. Thank you so much for attending today's presentation. Have a nice day, everyone. Thank you.