At fintechs continued to suffer from the worsening economy and high interest rates, estimates the Santander in a report sent to customers.
According to analysts, these companies will face:
- slowdown in credit growth as banks adopt more conservative credit policies to weather the tougher economic environment;
- sharp increase in delinquency, arising mainly from unsecured loans, notably SMEs, personal loans and credit cards;
“We believe that neither the Nubank (NAKED), nor the Inter are well positioned to address these trends during the second quarter, which is why we have a weaker earnings outlook for both in the second quarter.”
Here’s what to expect from the banks’ balance sheets, which should be released tomorrow (15):
Nubank, worsening results
For the NubankO Santander expects adjusted net income of R$7 million, down 57% in the year. Without the adjustment, the purple should have a loss of R$ 83 million.
“Despite our expectations of strong revenue growth, we project that the Nubank will report a 100 bps deterioration in asset quality, mainly personal loans, which we believe could lead to 321% higher provisions compared to the previous year, putting pressure on the result”, they say.
In the case of revenues, analysts see growth of 204% in the year, benefited mainly by stronger interest income, favored by higher credit yields, but also by an 89% improvement in fees and commissions.
Total costs (excluding provisions) could grow by 321%, mainly due to funding costs, while operating expenses could grow by 149%, mainly due to Nubank’s expansion strategies and the impact of inflation.
Inter
In case of InterO Santander expects a net income of R$ 31 million, “a solid improvement compared to the R$ 18 million last year”.
However, analysts point out that the result may be pressured by the higher cost of funding, “as we believe that Inter continued to struggle to re-price loans and higher provisions, as a result of the 40 bps (base points) deterioration of the NPL”.
Regarding asset quality, analysts see a deterioration of 40 bps in NPLs, reaching 3.6%, due to increased delinquencies on unsecured loans such as credit cards and SMEs, which we believe could lead to provisioning expenses 158 % higher on an annual basis.
In addition, the Santander expects a slowdown in credit growth in the second quarter, although still strong at 60.8% on the year, mainly driven by payroll, SMEs and credit cards.
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Source: Moneytimes
I am an author at Global happenings and I mostly cover automobile news. In my time working in the automotive industry, I have developed a keen interest in the latest developments and trends. My writing skills have also allowed me to share my knowledge with others through articles and blog posts.
