Release Date: February 20, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Can you clarify what "not expanding peaks in the short term" means? Does it refer to not expanding as a percentage of the portfolio or in absolute terms? A: (CFO) It means not growing peaks financing as a percentage of the overall portfolio, not in absolute terms. Peaks financing should continue to expand in line with the overall expansion of our credit card portfolio in Brazil. We reduced eligibility growth to address some deterioration in second-order impacts related to NPS, churn, and engagement. We are working on improvements and expect to resume growth in percentage terms over the coming quarters, but it may not happen in the next one or two quarters.
Q: Can you help us understand the different moving parts affecting your risk-adjusted net interest margin (NIM)? A: (CFO) Our NIM dropped by about 70 basis points, primarily due to FX translation differences, which accounted for about 44-45% of the contraction. The remaining 55% was due to a drop in yields in our credit portfolio in Brazil and increased funding costs from deposit growth in Mexico and Colombia. For risk-adjusted NIM, we saw a 10 basis point improvement in cost of risk. We believe balance sheet optimization will drive future NIM expansion.
Q: How do you view the growth opportunity for secured lending, especially in a challenging macro environment in Brazil? A: (CFO) We are excited about the growth of our secured lending portfolio, which includes public payroll loans, FGTS, and investment bank loans. We expect acceleration in originations and loan portfolio growth throughout 2025, supported by new collateral agreements and product parity with the market. Secured lending is profitable and resilient, and we see it as a strategic asset class that enhances primary banking relationships and engagement.
Q: With the current macroeconomic environment, are you concerned about potential adverse selection in your credit growth strategy? A: (COO) We are always concerned about macro factors and underwrite loans with the assumption that the future will be worse than the past. Our underwriting framework is designed to withstand negative cycles, and we have a battle-tested portfolio. We remain confident in our ability to grow in both good and bad parts of the cycle, and we adjust provisioning to reflect worsened forecasts.
Q: What are your plans for becoming a global digital bank, and what does this mean for expenses in 2025? A: (CEO) We are building a technology platform to support global expansion, but for 2025, there won't be a significant change in expenses. Our focus remains on Brazil, Mexico, and Colombia, which account for over 90% of our efforts. Internationalization is a multi-year effort, and we are investing a small percentage of our capacity to prepare for future growth opportunities.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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