Inter Q1 2026: Growth Intact, But No Catalyst to Change Wait Rating

What happened

Inter & Co's Q1 2026 earnings call showed continued strong loan growth and efficiency gains, consistent with prior quarters. However, the transcript revealed persistent pressure on cost of risk and a slight drop in capital adequacy, underscoring the delicate balance between expansion and credit quality. Net interest margins may have been squeezed by elevated funding costs amid Brazil's high Selic, while non-interest income growth likely remained healthy. Despite management's upbeat tone, the macroeconomic backdrop—stubborn inflation, high household debt—provides little tailwind. The quarter essentially confirmed the existing trajectory without altering the fundamental risk/reward calculus.

Implication

Over 12-18 months, Inter's compounding story remains intact if it can navigate the credit cycle without breaching capital thresholds. However, at ~16x earnings, upside to our base case ($8.50) is limited, while downside to $6.50 is material if credit stress emerges. Wait for a better entry or evidence that ROE can structurally exceed the mid-teens.

Thesis delta

The Q1 2026 earnings call did not meaningfully change the investment thesis. The stock price has converged to our base case fair value, reducing the margin of safety. The balance of risks remains tilted to the downside, particularly given the late-cycle credit environment and dependence on continued rapid loan growth.