StoneCo halted its bad-credit lending in 2021 and quadrupled profit by 2023

StoneCo, the Nasdaq-listed Brazilian payments company, had bolted an SMB lending product onto its merchant acquiring business. In 2021 it blew up: Brazil's transition of receivables-registry systems collided with deteriorating collateral quality, forcing StoneCo to mark down the fair value of its credit portfolio while a mark-to-market loss on its Banco Inter stake compounded the damage.

The result was a net loss of R$1,377.3 million for 2021, against net income of R$837.5 million in 2020. The market reaction was brutal, wiping out most of the stock's value.

The decision was surgical: in July 2021 StoneCo temporarily paused credit disbursements, liquidated the FIDC fund structures (SOMA III and SOMA IV) that financed the loan book, and stopped adjusting reported results for bond expenses. It refocused investment on the franchise that worked — payments, digital banking (491,500 active banking clients by end-2021), and its Linx software arm.

The refocus compounded quickly. Adjusted net income climbed from R$40.0 million in 2021 to R$410.5 million in 2022 and R$1,557.5 million in 2023, when IFRS net income reached R$1,600.4 million against a R$526.4 million loss the year before. Total payment volume hit R$408.3 billion across 3.52 million active clients in 2023 — all documented in its SEC filings.

From a R$1,377.3M net loss in 2021 to R$1,600.4M net income in 2023; adjusted net income rose from R$40M to R$1,557.5M; TPV hit R$408.3B with 3.52M active clients.

Pausing disbursements in July 2021 stopped new risk from entering the book while the portfolio ran off.

Liquidating the FIDC funding structures removed the leverage behind the lending product.

The payments and banking core was still growing, so refocusing had a profitable base to build on.

Software acquisitions like Linx gave merchants reasons to stay beyond card acceptance.

When a bolt-on product threatens the core franchise, kill it fast and run it down — the market forgives a stopped loss sooner than a slowly bleeding one.

StoneCo rebuilt profitability through 2023 and later relaunched a redesigned credit solution for merchants, this time inside a more tightly controlled risk framework. The 2021 credit shock became its defining governance lesson, and the company continued growing adjusted profit into 2024.