Inter (INTR) vs. Nubank (NU): which will do better in 4Q22? This bank has the answer
THE USB BB released, on January 14, its opinion on the corporate performance of Brazilian banks in the fourth quarter of 2022, including fintechs Nubank (NU) and Banco Inter (INTR;INTR34).
In general terms, the investment bank diagnoses a trend that should affect not only fintechs, but also large banks such as Santander, Itau and Bradesco. According to the bank, a deterioration in the quality of assets under custody of banks is expected.
There is, however, a positive highlight for the corporate credit segment, also common to the group of financial institutions.
THE USB BB points out that for both SMEs (small and medium-sized companies), and for the group of large corporations, there may be a decline in ‘non-performing credit’ (NPL) — a metric that measures bank loans not returned by borrowers.
But, in addition to corporate credit, what are the criteria that will differentiate the roxinho from the orange in this upcoming balance sheet season? See below.
Nubank: increase in the customer base will be a highlight
UBS BB estimates that the Nubank achieve quarterly revenue of US$ 100 million in 4Q22, against US$ 63 million in the immediately previous quarter. The estimate for the company’s revenue reflects a seasonal increase in the total volume of payments (TPV) and a restructuring of the cost of financing credit operations.
Roxinho can also benefit from an expansion of its customer base at a strong pace, boosting the average revenue per active customer (ARPAC, its acronym in English).
The institution projects that the Nubank reach a total customer base of around 74 million, against 70 million recorded in the last quarter.
There was also a much lower growth in the line of loans (5% increase in the quarterly comparison and 45% in the year-on-year comparison).
The big negative highlight for the roxinho is due to the termination of a share reward program, with a cost of US$ 356 million, which demonstrates a worsening of the quality of assets for the bank.
Such an outflow, however, should be neutralized by a symmetrical gain in assets.
Inter: return to the break-even point, after a loss in 3Q22
After losing BRL 30 million in the last quarter, the Minas Gerais bank should return to the break-even point in the last quarter of the year (when expenses and costs equal revenue).
In the analysis of USB BB, “the deflation that negatively impacted Inter’s results in 3Q22 will not reappear in 4Q22”. On the negative side, Banco Inter may suffer more from the rising cost of risk than its peers.
Banco Inter’s credit line is expected to expand less (32% year-on-year) than it did in the immediately previous quarter (41%). As the institution puts it, “Banco Inter continues its repricing process which could contribute to credit margins”.
In addition, Banco Inter could benefit from the expansion of rates (related to credit products) caused by seasonality: “we expect a strong expansion of rates driven by a reasonable TPV and sequential expansions of Inter Shop.”
The outlook for the GMV (total goods traded) of the marketplace from the bank are not as favorable as they were in previous quarters, citing effects of the macroeconomic scenario in Brazil.
As with Bradesco, Inter should show an expansion in the number of customers, benefiting from a weak comparison base in 2022.
Verdict: estimate favors Nubank
UBS BB remains constructive for both fintechs, with a long-term buy recommendation for both.
However, regarding profit estimates for the period 2022-2023, the institution slightly favors Nubank over Banco Inter, citing the higher cost of risk for the Minas Gerais bank.
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