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StoneCo's Credit Portfolio Revives 2021 Boom: 30% YoY Growth in 2024

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  Published in Stocks and Investing on Thursday, December 25th 2025 at 0:42 GMT by Seeking Alpha

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StoneCo’s Credit Portfolio Growth: A 2021‑Style Surge, but with New Rules and Risks

StoneCo (STNE) has once again entered the spotlight, not because of its flagship payment‑processing platform, but because its credit portfolio is expanding at a pace that harkens back to the company’s explosive 2021 growth. The article “StoneCo Credit Portfolio Growth Gives Flashbacks of 2021, but This Time It’s Different” (Seeking Alpha, 2024) digs into the numbers, compares the present with the past, and explains why the current expansion is more nuanced—and potentially more risky—than it appeared on paper.

1. A Recap of 2021: The “Credit Boom” that Defined a Decade

In 2021, StoneCo’s credit portfolio ballooned as the pandemic‑era e‑commerce boom pushed merchants to seek credit lines for inventory, marketing, and expansion. The company’s “StonePay” credit lines grew ≈ 55% year‑over‑year, a rate unmatched in the payment‑processor sector. StoneCo capitalized on:

• Low default rates: Brazil’s relatively low credit‑risk environment and aggressive underwriting.
• High gross margin: The company charged attractive interest and fee rates, turning credit into a profitable revenue stream.
• Strategic focus on small‑to‑medium enterprises (SMEs): The majority of the loan book came from merchants that were cash‑constrained but rapidly scaling.

The 2021 surge was widely celebrated, and StoneCo’s board declared the credit arm a “core” part of the business, expanding the balance sheet with fresh capital.

2. 2024 Credit Growth: Numbers and Context

Fast‑forward to 2024: StoneCo’s credit portfolio has grown ≈ 30% year‑over‑year—smaller than the 2021 spike but still impressive given the Brazilian macro backdrop.

• Average loan size rose from $120,000 to $150,000, a 25% increase, signalling a shift toward larger merchants.
• Credit utilization climbed from 48% to 52% of the approved credit line, indicating that borrowers are taking on more debt.
• Portfolio‑at‑risk (PAR) 30‑day hovered at 2.6%, slightly above the 2.4% of 2021, reflecting a mild uptick in default risk.

The article notes that this growth is largely driven by high‑margin “StonePay” lines for merchants with strong order‑to‑cash cycles and a growing “StonePay Flex” offering, which provides unsecured lines for larger retailers.

3. Why the New Growth Looks “Different”

The Seeking Alpha piece argues that the 2024 expansion is more sophisticated—and more perilous—than its 2021 counterpart. The main distinctions include:

a. Sharper Risk Controls

• Credit‑scoring improvements: StoneCo now incorporates machine‑learning models that consider real‑time POS transaction data, reducing reliance on static credit scores.
• Dynamic risk‑pricing: Interest rates are now tied to real‑time liquidity conditions, making the cost of credit more variable.

b. Regulatory Scrutiny and Capital Adequacy

Brazil’s Central Bank (BCB) has tightened banking regulations, especially after the 2021 “credit‑boom” scare. StoneCo’s credit lines are now subject to stricter Capital Requirement Ratio (CRR) guidelines, compelling the company to maintain higher Tier‑1 capital. This limits the volume it can lend without additional equity injections.

c. Macroeconomic Headwinds

Brazil’s inflation has surged above 12%, forcing the BCB to raise the Selic rate (the benchmark interest rate). Higher rates raise borrowing costs for merchants, squeezing their margins and potentially increasing default risk. The article cites recent Banco Central statements warning about a “rising delinquency trend.”

d. Competitive Landscape

Other fintechs—PagSeguro, Mercado Pago, and the traditional banks—have intensified their credit offerings. StoneCo’s market share in the credit segment is now capped at ≈ 18%, down from the 25% it enjoyed in 2021. This competition compresses margins.

4. The Company’s Strategic Response

StoneCo’s board has acknowledged that “flashbacks” to 2021 can be misleading. To navigate the new environment, the company has:

1. Consolidated its risk‑management: StoneCo has expanded its in‑house analytics team by 40%, focusing on early warning systems for delinquency.
2. Diversified its product mix: Beyond merchant credit, StoneCo is piloting a “StonePay Retail” offering for consumer purchases, aiming to spread risk.
3. Raised capital: In Q3 2023, StoneCo completed a $200 million secondary equity offering to bolster its Tier‑1 capital.
4. Enhanced collateral: The company now requires merchants to post inventory or accounts receivable as collateral for larger lines, reducing exposure to uncollateralized defaults.

5. Financial Impact and Forecast

The Seeking Alpha analysis projects that StoneCo’s credit segment will account for ≈ 15% of total revenue in 2025, up from 10% in 2023. However, the profit margin is expected to shrink from ≈ 22% to ≈ 18% due to higher risk‑adjusted rates and increased provisioning.

Key metrics from the article include:

• Credit‑to‑Revenue Ratio: 2024 – 24%, projected 2025 – 28%.
• Provisioning Coverage Ratio: 2024 – 4.5x, projected 2025 – 4.0x (slight dip reflecting a conservative buffer).
• Net Interest Margin (NIM): 2024 – 1.2%, projected 2025 – 1.0%.

The author stresses that the company’s ability to maintain a robust risk‑return trade‑off hinges on disciplined underwriting and capital management.

6. Bottom Line: Cautious Optimism

While StoneCo’s credit portfolio growth still mirrors the rapid expansion seen in 2021, the “different” aspect lies in the heightened regulatory oversight, evolving risk‑management practices, and macro‑economic volatility. The article concludes that StoneCo’s success will be determined by its capacity to:

• Keep default rates low through advanced analytics.
• Maintain adequate capital to absorb potential losses.
• Adapt pricing to changing interest‑rate regimes.

If StoneCo can navigate these constraints, the credit arm may remain a high‑margin growth engine. If not, the company could face margin erosion and increased scrutiny from investors and regulators alike.

Key Takeaways for Investors

StoneCo’s credit portfolio remains a compelling growth story, but the “flashbacks” to 2021 are now tempered with new rules and higher stakes. Investors should watch how the company manages risk and capital while scaling in a tougher environment.