On August 13, StoneCo (NASDAQ:STNE) walked investors through a quarter that captures the central tension in its story right now: a credit business scaling faster than almost anyone expected, and a loan book showing real cracks under Brazil's stubbornly high interest rates. Revenue reached BRL 3.6 billion, up 2.5% year over year, but the more telling number sat inside the credit line, where the portfolio more than doubled to BRL 3.8 billion. That growth is exactly what management wants. What it costs is the story underneath.
StoneCo's credit portfolio doubling to BRL 3.8 billion year over year is the headline, but the composition matters just as much. Working capital solutions drove most of that expansion, and credit revenues jumped 153% to BRL 348.5 million as the book scaled and average rates rose. The company also began disbursing government-backed loans this quarter, which already total BRL 334.2 million. These carry lower risk and lower pricing because a government guarantee absorbs part of the loss on default, letting StoneCo price more aggressively for clients it once passed on.
Banking is building alongside credit. Retail deposits climbed 22.3% to BRL 10.8 billion, and that growth pushed funding costs down to roughly 85% of CDI, a direct benefit to margins. PIX QR code volume rose 44.3% to BRL 30.7 billion, outpacing card volumes and signaling where merchant transactions are headed. Meanwhile, the integration of Pagar.me into the core Stone platform folds online and physical sales into a single merchant account, the foundation for the company's new positioning as a bank for entrepreneurs rather than just a payments processor. On the shareholder side, BRL 3.0 billion in buybacks over the past year cut the share count by 40.3 million shares, which is why adjusted basic EPS rose 8.6% to BRL 2.40 even as net income slipped.
The credit expansion is not without cost. Cost of risk climbed to 21.5% from 20.2% a year earlier, and non-performing loans over 90 days nearly doubled to 8.60% from 4.67%, as loan vintages from late 2025 and early 2026 rolled forward into delinquency. Coverage fell to 203.6% from 279.9%, reflecting both a shift toward better-rated and government-backed loans and the mechanical lag between rising NPLs and write-offs.
The pain is concentrated at the high end. On the dedicated desk that serves larger clients, some defaults have come in above BRL 10 million, including an BRL 11 million default from a long-standing client that filed for bankruptcy protection and caught the company off guard. Management also flagged that a liquidated card issuer could require additional provisioning depending on how a pending litigation matter resolves.
#year #million #government #management
StoneCo's credit portfolio doubling to BRL 3.8 billion year over year is the headline, but the composition matters just as much. Working capital solutions drove most of that expansion, and credit revenues jumped 153% to BRL 348.5 million as the book scaled and average rates rose. The company also began disbursing government-backed loans this quarter, which already total BRL 334.2 million. These carry lower risk and lower pricing because a government guarantee absorbs part of the loss on default, letting StoneCo price more aggressively for clients it once passed on.
Banking is building alongside credit. Retail deposits climbed 22.3% to BRL 10.8 billion, and that growth pushed funding costs down to roughly 85% of CDI, a direct benefit to margins. PIX QR code volume rose 44.3% to BRL 30.7 billion, outpacing card volumes and signaling where merchant transactions are headed. Meanwhile, the integration of Pagar.me into the core Stone platform folds online and physical sales into a single merchant account, the foundation for the company's new positioning as a bank for entrepreneurs rather than just a payments processor. On the shareholder side, BRL 3.0 billion in buybacks over the past year cut the share count by 40.3 million shares, which is why adjusted basic EPS rose 8.6% to BRL 2.40 even as net income slipped.
The credit expansion is not without cost. Cost of risk climbed to 21.5% from 20.2% a year earlier, and non-performing loans over 90 days nearly doubled to 8.60% from 4.67%, as loan vintages from late 2025 and early 2026 rolled forward into delinquency. Coverage fell to 203.6% from 279.9%, reflecting both a shift toward better-rated and government-backed loans and the mechanical lag between rising NPLs and write-offs.
The pain is concentrated at the high end. On the dedicated desk that serves larger clients, some defaults have come in above BRL 10 million, including an BRL 11 million default from a long-standing client that filed for bankruptcy protection and caught the company off guard. Management also flagged that a liquidated card issuer could require additional provisioning depending on how a pending litigation matter resolves.
#year #million #government #management
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