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XP Inc. Reports Fourth Quarter 2023 Results

XP Inc. (NASDAQ: XP) (“XP” or the “Company”), a leading tech-enabled platform and a trusted pioneer in providing low-fee financial products and services in Brazil, reported today its financial results for the fourth quarter of 2023.

To our shareholders

As we reflect on the journey of 2023, it's evident that the year was both challenging and transformative for XP Inc. In an environment marked by ongoing macroeconomic uncertainties and the evolving needs of our clients, we kept our commitment to innovation, quality, and growth. This year was a demonstration of our resilience, agility, and the enduring strength of our business model.

Business Model Resilience

Despite the still challenging macroeconomic environment mentioned beforehand, 2023 was a year of significant achievements that continued to prove the resilience of our business model. On the second quarter of 2023, we were happy to celebrate the monumental milestone of surpassing R$1 trillion in Client Assets, a clear indicator of our growing market presence and the trust our clients place on us. This achievement underscores our position as a leader in the Brazilian financial services industry and highlights our potential for further growth, given our market share of less than 12% in investments for individuals.

Our resilience was further demonstrated through our financial performance. Despite the macroeconomic headwinds, we reported record quarterly revenues and profitability, showcasing our ability to capitalize on market opportunities and maintain cost discipline. Our Earnings Before Tax (EBT) and Net Income saw year-over-year growth, reflecting our operational efficiency and the successful execution of our strategic initiatives.

Execution of Strategic Initiatives

Throughout the year, we continued to focus on our three key strategic pillars: 1. Leadership in investments, 2. Enhancement of our ability to cross-sell superior products and 3. Wholesale synergies. Central to these pillars is our commitment to a culture of quality – our third wave of differentiation. Also, during the year, we had the acquisition and subsequent integration of Banco Modal, which marked a significant step in our journey, expanding our capabilities and enhancing our product suite. This integration is almost complete by now, delivering revenue synergies and cost efficiencies.

Our New Verticals and Corporate & SMB initiatives continued to thrive, contributing significantly to our revenue diversification efforts, already contributing to more than 17% of our total gross revenue for the year, if we consider all the New Verticals, as we did on our Investor Day – including Retirement Plans, Cards, Credit, Insurance, FX, Global Investments and Digital Account. The recognition of our credit card as the Best in Brazil, recognized by Melhores Cartões, is evidence of our commitment to offer superior products and services.

Also, 2023 was marked by a strong focus on efficiency and cost discipline throughout the whole company, as we achieved an Efficiency Ratio of 36.3%, the lowest level since our IPO.

Distribution Channels Evolution

In our efforts to expand and diversify, we have positioned ourselves as a hub for entrepreneurs, consistently pioneering in our distribution channel efforts. Our strategy encompasses a broad spectrum of distribution channels, including B2B, B2C, wealth managers, broker as a service, and consultants, enabling us to reach a diverse client base and cater to their unique needs. This diversification allows us to be at the forefront of the financial services industry, adapting to changes and seizing opportunities with agility and foresight.

Democratizing Access to Premium Quality Services

A cornerstone of our mission this year has been to focus more on the quality of what we offer to our clients. We are dedicated to democratizing access to premium services which were previously available only to private clients. By extending these high-quality offerings to affluent clients, we are breaking down barriers and creating a more inclusive financial ecosystem with scalability. This initiative mirrors our past successes in making top-tier investment products accessible to a broader audience, underscoring our commitment to excellence in financial services.

Investing in Our People and Culture

Our success is linked to the dedication and talent of our team. In 2023, we focused on nurturing our culture of excellence and innovation. We made significant strides in expanding and empowering our network of Financial Advisors. Our commitment to providing our advisors with the best tools and technology has not only enhanced our service quality but also reinforced XP Inc. as the premier platform for financial advisors in Brazil.

While we are proud of our accomplishments, we acknowledge that there is still much to be done. Our efforts to increase penetration and provide the best banking experience to our clients and advisors continue to be a top priority. We are committed to enhancing our offerings and services to meet and exceed the expectations of those we serve.

Looking Forward

As we look to the future, we remain optimistic about our growth trajectory and the opportunities that lie ahead. While we recognize that there may be a delay for retail investors to shift their behavior in a more favorable market environment, we are confident that this positive cycle will come eventually. In the meantime, we will maintain our cost discipline and stay focused on delivering the quality and service excellence that our clients expect from us.

The initiation of the monetary easing cycle by the Central Bank and the improving market conditions are positive signals for our core investments business. We remain committed to driving our Return on Equity (ROE) growth through strategic earnings expansion and capital distributions to our shareholders.

In closing, I extend my deepest gratitude to our clients, executive partners, team members, and you, our shareholders, for your continued trust and support. Together, we are not only navigating the complexities of the present but also shaping a promising future for XP Inc. and the financial services industry in Brazil.

Thiago Maffra

CEO, XP Inc.

Summary

Operating Metrics (unaudited)

4Q23

4Q22

YoY

3Q23

QoQ

 

2023

2022

YoY

Total Client Assets (in R$ bn)

1,122

946

19%

1,080

4%

 

1,122

946

19%

Total Net Inflow (in R$ bn)

19

31

-40%

48

-61%

 

104

155

-33%

Annualized Retail Take Rate

1.27%

1.22%

5 bps

1.34%

-7 bps

 

1.28%

1.29%

-1 bps

Active Clients (in '000s)

4,531

3,877

17%

4,413

3%

 

4,531

3,877

17%

Headcount (EoP)

6,669

6,928

-4%

6,699

0%

 

6,669

6,928

-4%

IFAs (in '000s)

14.3

12.3

16%

14.3

0%

 

14.3

12.3

16%

Retail DATs (in mn)

2.2

2.7

-19%

2.1

3%

 

2.4

2.4

0%

Retirement Plans Client Assets (in R$ bn)

73

61

21%

68

8%

 

73

61

21%

Cards TPV (in R$ bn)

11.8

8.2

44%

10.7

10%

 

40.9

24.9

64%

Credit Portfolio (in R$ bn)

21.0

17.1

23%

19.9

6%

 

21.0

17.1

23%

 

Financial Metrics (in R$ mn)

4Q23

4Q22

YoY

3Q23

QoQ

 

2023

2022

YoY

Gross revenue

4,309

3,337

29%

4,364

-1%

 

15,726

14,036

12%

Retail

3,152

2,549

24%

3,179

-1%

 

11,791

10,157

16%

Institutional

413

357

16%

386

7%

 

1,516

1,919

-21%

Corporate & Issuer Services

508

275

85%

519

-2%

 

1,576

1,295

22%

Other

236

156

52%

281

-16%

 

842

666

27%

Net Revenue

4,046

3,177

27%

4,132

-2%

 

14,860

13,348

11%

Gross Profit

2,753

2,067

33%

2,896

-5%

 

10,100

9,382

8%

Gross Margin

68.1%

65.1%

299 bps

70.1%

-202 bps

 

68.0%

70.3%

-232 bps

EBT

995

738

35%

1,157

-14%

 

3,936

3,445

14%

EBT Margin

24.6%

23.2%

136 bps

28.0%

-341 bps

 

26.5%

25.8%

68 bps

Net Income

1,040

783

33%

1,087

-4%

 

3,899

3,580

9%

Net Margin

25.7%

24.6%

107 bps

26.3%

-59 bps

 

26.2%

26.8%

-58 bps

Basic EPS (in R$)

1.90

1.43

33%

1.99

-4%

 

7.22

6.44

12%

Diluted EPS (in R$)

1.88

1.39

36%

1.96

-4%

 

7.16

6.25

15%

ROAE¹

21.1%

18.1%

293 bps

22.6%

-152 bps

 

21.4%

22.8%

-139 bps

ROAA²

2.4%

2.4%

5 bps

2.6%

-19 bps

 

2.5%

3.2%

-66 bps

________________________

1

– Annualized Return on Average Equity. 

2

– Annualized Return on Average Adjusted Assets. Adjusted Assets excludes Retirement Plans Liabilities and Float Balance. 

 
 
 

Discussion of Results

Total Gross Revenue

Gross Revenue was R$4.3 billion in 4Q23, down 1% QoQ and up 29% YoY, primarily driven by growth in our Retail revenue year-over-year. In 2023, Gross Revenue totaled R$15.7 billion, up 12% YoY, also led by Retail.

Retail Revenue

(in R$ mn)

4Q23

4Q22

YoY

3Q23

QoQ

 

2023

2022

YoY

Retail Revenue

3,152

2,549

24%

3,179

-1%

 

11,791

10,157

16%

Equities

1,180

995

19%

1,131

4%

 

4,444

4,276

4%

Fixed Income

690

393

76%

718

-4%

 

2,318

1,886

23%

Funds Platform

334

311

7%

323

3%

 

1,311

1,259

4%

Retirement Plans

94

93

1%

98

-4%

 

365

333

10%

Cards

306

234

30%

259

18%

 

1,001

593

69%

Credit

46

47

-4%

49

-8%

 

180

160

12%

Insurance

46

31

46%

36

28%

 

149

97

53%

Other Retail

457

443

3%

565

-19%

 

2,023

1,553

30%

Annualized Retail Take Rate

1.27%

1.22%

5 bps

1.34%

-7 bps

 

1.28%

1.29%

-1 bps

Retail revenue was R$3.2 billion in 4Q23, down 1% QoQ and up 29% YoY. Sequential Retail revenue was impacted by a positive seasonality in Cards revenue, which increased 18% QoQ, partially offset by sequential decline in the quarter in Fixed Income revenue, and lack of Expert event related revenue in the quarter.

In 2023, Retail revenue totaled R$11.8 billion, up 16% YoY. Annual growth was mainly led by:

1) Other Retail Revenue, especially due to Float and Digital Account revenue;

2) Fixed Income, after a strong recovery in DCM activity in the second semester; and

3) Cards, with a 69% revenue growth YoY.

Retail-related revenue in 4Q23 represented 76% of consolidated Net Income from Financial Instruments, as per the Accounting Income Statement. For 2023, Retail-related revenue represented 76% of consolidated Net Income from Financial Instruments, as per the Accounting Income Statement.

Take Rate

Annualized Retail Take Rate was 1.27% in 4Q23, down 7bps QoQ. Retail Take Rate for 2023 was 1.28%, down 1bps YoY.

Institutional Revenue

Institutional revenue was R$413 million in 4Q23, up 7% QoQ and 16% YoY. For 2023, Institutional revenue decreased 21% to R$1.5 billion, mainly driven by lower trading volumes in B3.

Institutional revenue in 4Q23 accounted for 6% of consolidated Net Income from Financial Instruments, as per the Accounting Income Statement. For 2023, Institutional revenue accounted for 8% of consolidated Net Income from Financial Instruments, as per the Accounting Income Statement.

Corporate & Issuer Services Revenue

Corporate & Issuer Services revenue totaled R$508 million in 4Q23, down 2% QoQ and up 85% YoY, supported by another strong quarter of DCM activity and also a strong contribution of M&A.

In 2023, Corporate and Issuer Services revenue increased 22% YoY to R$1.6 billion. Year-over-year growth was led by a strong pick-up in DCM activity in the second half of the year, and the continuous expansion of our Corporate franchise.

Corporate and Issuer Services related revenues in 4Q23 represented 7% of consolidated Net Income from Financial Instruments, as per the Accounting Income Statement. In 2023, Corporate and Issuer Services related revenues represented 7% of consolidated Net Income from Financial Instruments, as per the Accounting Income Statement.

Other Revenue

Other revenue was R$236 million in 4Q23, down 16% QoQ and up 52% YoY.

Other revenue in 4Q23 accounted for 11% of consolidated Net Income from Financial Instruments, as per the Accounting Income Statement. In 2023, Other revenue accounted for 10% of consolidated Net Income from Financial Instruments, as per the Accounting Income Statement.

Costs of Goods Sold and Gross Margin

Gross Margin was 68.1% in 4Q23 versus 70.1% in 3Q23 and 65.1% in 4Q22. Sequential decrease in gross margin was mainly related to revenue mix between products and channels in the quarter. In 2023, Gross Margin was 68.0%, a 232bps decrease YoY mainly related to change in revenue mix between products and channels and relative increase in expected credit losses due to ongoing growth of our Cards business.

SG&A Expenses2

(in R$ mn)

4Q23

4Q22

YoY

3Q23

QoQ

 

2023

2022

YoY

Total SG&A

(1,553)

(1,377)

13%

(1,547)

0%

 

(5,391)

(5,602)

-4%

People

(1,022)

(892)

15%

(1,048)

-2%

 

(3,728)

(3,943)

-5%

Salary and Taxes

(393)

(337)

17%

(396)

-1%

 

(1,510)

(1,432)

5%

Bonuses

(462)

(379)

22%

(486)

-5%

 

(1,705)

(1,764)

-3%

Share Based Compensation

(166)

(176)

-6%

(166)

0%

 

(513)

(747)

-31%

Non-people

(532)

(485)

10%

(499)

7%

 

(1,663)

(1,659)

0%

LTM Compensation Ratio

25.1%

29.5%

-446 bps

25.7%

-63 bps

 

25.1%

29.5%

-446 bps

LTM Efficiency Ratio

36.3%

42.0%

-569 bps

37.3%

-99 bps

 

36.3%

42.0%

-569 bps

Headcount (EoP)

6,669

6,928

-4%

6,699

0%

 

6,669

6,928

-4%

________________________

3

– Total SG&A and non-people SG&A exclude revenue from incentives from Tesouro Direto, B3.

4

– Compensation ratio is calculated as People SG&A (Salary and Taxes, Bonuses and Share Based Compensation) divided by Net Revenue. 

5

– Efficiency ratio is calculated as SG&A ex-revenue from incentives from Tesouro Direto, B3, and others divided by Net Revenue. 

 
 

SG&A3 expenses totaled R$1.6 billion in 4Q23, relatively flat QoQ and up 13% YoY. Total SG&A³ for 2023 stood at R$5.4 billion, within our annual guidance from R$5.0 to 5.5 billion, even after Modal’s inclusion in the second half of the year.

Our last twelve months (LTM) compensation ratio4 in 4Q23 was 25.1%, an improvement from 29.5% and 25.7% in 4Q22 and 3Q23, respectively. Also, our LTM efficiency ratio5 reached 36.3% in 4Q23, the lowest level since IPO, reinforcing once again our focus on cost discipline.

Earnings Before Taxes

EBT, a good proxy for earnings power, was R$995 million in 4Q23, down 14% QoQ and up 35% YoY. EBT Margin was 24.6%, down 341bps QoQ and up 136 bps YoY. In 2023, EBT stood at R$3.9 billion, up 14% YoY, and annual EBT Margin stood at 26.5%, in line with our medium-term annual guidance of 26% to 32% between 2023 and 2025.

Net Income and EPS

In 4Q23, Net Income was R$1.0 billion, down 4% QoQ and up 33% YoY. Basic EPS was R$1.90, down 4% QoQ and up 33% YoY. Fully diluted EPS was R$1.88 for the quarter, down 4% QoQ and up 36% YoY.

In 2023, Net Income totaled R$3.9 billion, up 9% YoY. Basic EPS was R$7.22, up 12% YoY, while fully diluted EPS was R$7.16, up 15% YoY.

ROTE6 and ROAE7

Starting this quarter, we now present Return on Tangible Equity, which excludes Intangibles and Goodwill. We believe this is a more accurate reflection of our company’s true operations, allowing investors more meaningful comparisons with our peers.

In 4Q23, ROTE6 was 25.5%, down 19bps QoQ and up 570bps YoY. Our ROTE6 for 2023 stood at 25.0%, down 23bps YoY. Our ROAE7 in 4Q23 was 21.1%, down 152bps QoQ and up 293bps YoY. Our ROAE7 for 2023 stood at 21.4%, down 139bps YoY.

________________________

6

– Annualized Return on Tangible Common Equity, calculated as Annualized Net Income over Tangible Common Equity, which excludes Intangibles and Goodwill, net of deferred taxes.

7

– Annualized Return on Average Equity. 

 
 

Other Information

Webcast and Conference Call Information

The Company will host a webcast to discuss its fourth quarter financial results on Tuesday, February 27th, 2024, at 5:00 pm ET (7:00 pm BRT). To participate in the earnings webcast please subscribe at 4Q23 Earnings Web Meeting. The replay will be available on XP’s investor relations website at https://investors.xpinc.com/.

Important Disclosure

In reviewing the information contained in this release, you are agreeing to abide by the terms of this disclaimer. This information is being made available to each recipient solely for its information and is subject to amendment. This release is prepared by XP Inc. (the “Company,” “we” or “our”), is solely for informational purposes. This release does not constitute a prospectus and does not constitute an offer to sell or the solicitation of an offer to buy any securities. In addition, this document and any materials distributed in connection with this release are not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would require any registration or licensing within such jurisdiction.

This release was prepared by the Company. Neither the Company nor any of its affiliates, officers, employees or agents, make any representation or warranty, express or implied, in relation to the fairness, reasonableness, adequacy, accuracy or completeness of the information, statements or opinions, whichever their source, contained in this release or any oral information provided in connection herewith, or any data it generates and accept no responsibility, obligation or liability (whether direct or indirect, in contract, tort or otherwise) in relation to any of such information. The information and opinions contained in this release are provided as at the date of this release, are subject to change without notice and do not purport to contain all information that may be required to evaluate the Company. The information in this release is in draft form and has not been independently verified. The Company and its affiliates, officers, employees and agents expressly disclaim any and all liability which may be based on this release and any errors therein or omissions therefrom. Neither the Company nor any of its affiliates, officers, employees or agents makes any representation or warranty, express or implied, as to the achievement or reasonableness of future projections, management targets, estimates, prospects or returns, if any.

The information contained in this release does not purport to be comprehensive and has not been subject to any independent audit or review. Certain of the financial information as of and for the periods ended of December 31, 2021 and December 31, 2020, 2019, 2018 and 2017 has been derived from audited financial statements and all other financial information has been derived from unaudited interim financial statements. A significant portion of the information contained in this release is based on estimates or expectations of the Company, and there can be no assurance that these estimates or expectations are or will prove to be accurate. The Company’s internal estimates have not been verified by an external expert, and the Company cannot guarantee that a third party using different methods to assemble, analyze or compute market information and data would obtain or generate the same results.

Statements in the release, including those regarding the possible or assumed future or other performance of the Company or its industry or other trend projections, constitute forward-looking statements. These statements are generally identified by the use of words such as “anticipate,” “believe,” “could,” “expect,” “should,” “plan,” “intend,” “estimate” and “potential,” among others. By their nature, forward-looking statements are necessarily subject to a high degree of uncertainty and involve known and unknown risks, uncertainties, assumptions and other factors because they relate to events and depend on circumstances that will occur in the future whether or not outside the control of the Company. Such factors may cause actual results, performance or developments to differ materially from those expressed or implied by such forward-looking statements and there can be no assurance that such forward-looking statements will prove to be correct. These risks and uncertainties include factors relating to: (1) general economic, financial, political, demographic and business conditions in Brazil, as well as any other countries we may serve in the future and their impact on our business; (2) fluctuations in interest, inflation and exchange rates in Brazil and any other countries we may serve in the future; (3) competition in the financial services industry; (4) our ability to implement our business strategy; (5) our ability to adapt to the rapid pace of technological changes in the financial services industry; (6) the reliability, performance, functionality and quality of our products and services and the investment performance of investment funds managed by third parties or by our asset managers; (7) the availability of government authorizations on terms and conditions and within periods acceptable to us; (8) our ability to continue attracting and retaining new appropriately-skilled employees; (9) our capitalization and level of indebtedness; (10) the interests of our controlling shareholders; (11) changes in government regulations applicable to the financial services industry in Brazil and elsewhere; (12) our ability to compete and conduct our business in the future; (13) the success of operating initiatives, including advertising and promotional efforts and new product, service and concept development by us and our competitors; (14) changes in consumer demands regarding financial products, customer experience related to investments and technological advances, and our ability to innovate to respond to such changes; (15) changes in labor, distribution and other operating costs; (16) our compliance with, and changes to, government laws, regulations and tax matters that currently apply to us; (17) other factors that may affect our financial condition, liquidity and results of operations. Accordingly, you should not place undue reliance on forward-looking statements. The forward-looking statements included herein speak only as at the date of this release and the Company does not undertake any obligation to update these forward-looking statements. Past performance does not guarantee or predict future performance. Moreover, the Company and its affiliates, officers, employees and agents do not undertake any obligation to review, update or confirm expectations or estimates or to release any revisions to any forward-looking statements to reflect events that occur or circumstances that arise in relation to the content of the release. You are cautioned not to unduly rely on such forward-looking statements when evaluating the information presented and we do not intend to update any of these forward-looking statements.

Market data and industry information used throughout this release are based on management’s knowledge of the industry and the good faith estimates of management. The Company also relied, to the extent available, upon management’s review of industry surveys and publications and other publicly available information prepared by a number of third-party sources. All of the market data and industry information used in this release involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. Although the Company believes that these sources are reliable, there can be no assurance as to the accuracy or completeness of this information, and the Company has not independently verified this information.

The contents hereof should not be construed as investment, legal, tax or other advice and you should consult your own advisers as to legal, business, tax and other related matters concerning an investment in the Company. The Company is not acting on your behalf and does not regard you as a customer or a client. It will not be responsible to you for providing protections afforded to clients or for advising you on the relevant transaction.

This release includes our Float, Adjusted Gross Financial Assets, Net Asset Value, and Adjustments to Reported Net Income, which are non-GAAP financial information. We believe that such information is meaningful and useful in understanding the activities and business metrics of the Company’s operations. We also believe that these non-GAAP financial measures reflect an additional way of viewing aspects of the Company’s business that, when viewed with our International Financial Reporting Standards (“IFRS”) results, as issued by the International Accounting Standards Board, provide a more complete understanding of factors and trends affecting the Company’s business. Further, investors regularly rely on non-GAAP financial measures to assess operating performance and such measures may highlight trends in the Company’s business that may not otherwise be apparent when relying on financial measures calculated in accordance with IFRS. We also believe that certain non-GAAP financial measures are frequently used by securities analysts, investors and other interested parties in the evaluation of public companies in the Company’s industry, many of which present these measures when reporting their results. The non-GAAP financial information is presented for informational purposes and to enhance understanding of the IFRS financial statements. The non-GAAP measures should be considered in addition to results prepared in accordance with IFRS, but not as a substitute for, or superior to, IFRS results. As other companies may determine or calculate this non-GAAP financial information differently, the usefulness of these measures for comparative purposes is limited. A reconciliation of such non-GAAP financial measures to the nearest GAAP measure is included in this release.

For purposes of this release:

“Active Clients” means the total number of retail clients served through our XP Investimentos, Rico, Clear, XP Investments and XP Private (Europe) brands, with Client Assets above R$100.00 or that have transacted at least once in the last thirty days. For purposes of calculating this metric, if a client holds an account in more than one of the aforementioned entities, such client will be counted as one “active client” for each such account. For example, if a client holds an account in each of XP Investimentos and Rico, such client will count as two “active clients” for purposes of this metric.

“Client Assets” means the market value of all client assets invested through XP’s platform and that is related to reported Retail Revenue, including equities, fixed income securities, mutual funds (including those managed by XP Gestão de Recursos Ltda., XP Advisory Gestão de Recursos Ltda. and XP Vista Asset Management Ltda., as well as by third-party asset managers), pension funds (including those from XP Vida e Previdência S.A., as well as by third-party insurance companies), exchange traded funds, COEs (Structured Notes), REITs, and uninvested cash balances (Float Balances), among others. Although Client Assets includes custody from Corporate Clients that generate Retail Revenue, it does not include custody from institutional clients (asset managers, pension funds and insurance companies).

Rounding

We have made rounding adjustments to some of the figures included in this release. Accordingly, numerical figures shown as totals in some tables may not be an arithmetic aggregation of the figures that preceded them.

Unaudited Managerial Income Statement (in R$ mn)

Managerial Income Statement

4Q23

4Q22

YoY

3Q23

QoQ

 

2023

2022

YoY

Total Gross Revenue

4,309

3,337

29%

4,364

-1%

 

15,726

14,036

12%

Retail

3,152

2,549

24%

3,179

-1%

 

11,791

10,157

16%

Equities

1,180

995

19%

1,131

4%

 

4,444

4,276

4%

Fixed Income

690

393

76%

718

-4%

 

2,318

1,886

23%

Funds Platform

334

311

7%

323

3%

 

1,311

1,259

4%

Retirement Plans

94

93

1%

98

-4%

 

365

333

10%

Cards

306

234

30%

259

18%

 

1,001

593

69%

Credit

46

47

-4%

49

-8%

 

180

160

12%

Insurance

46

31

46%

36

28%

 

149

97

53%

Other

457

443

3%

565

-19%

 

2,023

1,553

30%

Institutional

413

357

16%

386

7%

 

1,516

1,919

-21%

Corporate & Issuer Services

508

275

85%

519

-2%

 

1,576

1,295

22%

Other

236

156

52%

281

-16%

 

842

666

27%

Net Revenue

4,046

3,177

27%

4,132

-2%

 

14,860

13,348

11%

COGS

(1,292)

(1,110)

16%

(1,236)

5%

 

(4,760)

(3,965)

20%

Gross Profit

2,753

2,067

33%

2,896

-5%

 

10,100

9,382

8%

Gross Margin

68.1%

65.1%

299 bps

70.1%

-202 bps

 

68.0%

70.3%

-232 bps

SG&A

(1,539)

(1,135)

36%

(1,541)

0%

 

(5,368)

(5,317)

1%

People

(1,022)

(892)

15%

(1,048)

-2%

 

(3,728)

(3,943)

-5%

Non-People

(517)

(243)

112%

(493)

5%

 

(1,639)

(1,374)

19%

D&A

(82)

(46)

81%

(71)

16%

 

(252)

(206)

23%

Interest expense on debt

(167)

(150)

12%

(135)

23%

 

(617)

(402)

53%

Share of profit in joint ventures and associates

30

1

n.a.

9

102%

 

74

(12)

-704%

EBT

995

738

35%

1,157

-14%

 

3,936

3,445

14%

EBT Margin

24.6%

23.2%

136 bps

28.0%

-341 bps

 

26.5%

25.8%

68 bps

Tax Expense (Accounting)

45

44

1%

(71)

-163%

 

(37)

136

-127%

Tax expense (Tax Withholding in Funds)6

(175)

(192)

-9%

(169)

4%

 

(659)

(754)

-13%

Effective tax rate (Normalized)

(11.1%)

(15.8%)

470 bps

(18.1%)

693 bps

 

(15.1%)

(14.7%)

-41 bps

Net Income

1,040

783

33%

1,087

-4%

 

3,899

3,580

9%

Net Margin

25.7%

24.6%

107 bps

26.3%

-59 bps

 

26.2%

26.8%

-58 bps

Adjustments

109

110

-2%

92

18%

 

309

494

-37%

Adjusted Net Income7

1,149

893

29%

1,179

-3%

 

4,209

4,075

3%

Adjusted Net Margin

28.4%

28.1%

28 bps

28.5%

-14 bps

 

28.3%

30.5%

-221 bps

________________________

6

– Tax adjustments are related to tax withholding expenses that are recognized net in gross revenue.

7

– See appendix for a reconciliation of Adjusted Net Income.

 
 
 
 

Accounting Income Statement (in R$ mn)

Accounting Income Statement

4Q23

4Q22

YoY

3Q23

QoQ

 

2023

2022

YoY

Net revenue from services rendered

1,881

1,565

20%

1,822

3%

 

6,532

5,940

10%

Brokerage commission

485

544

-11%

525

-8%

 

1,992

2,103

-5%

Securities placement

687

361

90%

637

8%

 

1,979

1,631

21%

Management fees

414

412

0%

414

0%

 

1,628

1,581

3%

Insurance brokerage fee

48

47

2%

43

12%

 

175

153

14%

Commission Fees

220

237

-7%

206

7%

 

790

564

40%

Other services

214

108

98%

169

26%

 

589

476

24%

Sales Tax and contributions on Services

(187)

(145)

29%

(173)

9%

 

(622)

(568)

9%

Net income from financial instruments at amortized cost

311

14

n.a.

142

119%

 

1,573

1,146

37%

Net income from financial instruments at fair value through profit or loss

1,854

1,598

16%

2,168

-14%

 

6,756

6,261

8%

Total revenue and income

4,046

3,177

27%

4,132

-2%

 

14,860

13,347

11%

Operating costs

(1,169)

(1,071)

9%

(1,122)

4%

 

(4,399)

(3,871)

14%

Selling expenses

(59)

(48)

25%

(50)

19%

 

(169)

(139)

22%

Administrative expenses

(1,547)

(1,368)

13%

(1,544)

0%

 

(5,461)

(5,641)

-3%

Other operating revenues (expenses), net

(14)

235

n.a.

(18)

-21%

 

11

257

n.a.

Expected credit losses

(124)

(38)

n.a.

(115)

8%

 

(361)

(94)

n.a.

Interest expense on debt

(167)

(150)

12%

(135)

23%

 

(617)

(402)

53%

Share of profit or (loss) in joint ventures and associates

30

1

n.a.

9

215%

 

74

(12)

n.a.

Income before income tax

995

738

35%

1,157

-14%

 

3,936

3,445

14%

Income tax expense

45

44

1%

(71)

n.a.

 

(37)

136

n.a.

Net income for the period

1,040

783

33%

1,087

-4%

 

3,899

3,580

9%

 
 
 
 

Balance Sheet (in R$ mn)

Assets

 

4Q23

3Q23

Cash

 

3,943

3,822

Financial assets

 

229,197

214,838

Fair value through profit or loss

127,016

120,854

Securities

103,282

101,039

Derivative financial instruments

23,733

19,815

Fair value through other comprehensive income

44,063

38,486

Securities

44,063

38,486

Evaluated at amortized cost

58,119

55,498

Securities

6,855

6,175

Securities purchased under agreements to resell

14,889

12,252

Securities trading and intermediation

2,932

3,569

Accounts receivable

681

620

Loan Operations

28,552

26,645

Other financial assets

 

4,209

6,236

Other assets

 

7,812

7,586

Recoverable taxes

245

302

Rights-of-use assets

282

204

Prepaid expenses

4,418

4,401

Other

 

2,867

2,679

Deferred tax assets

2,104

2,023

Investments in associates and joint ventures

3,109

2,261

Property and equipment

373

348

Goodwill & Intangible assets

 

2,502

2,551

Total Assets

 

249,041

233,427

 
 
 
 

Liabilities

 

4Q23

3Q23

Financial liabilities

 

171,237

158,537

Fair value through profit or loss

45,208

32,888

Securities

20,423

14,342

Derivative financial instruments

24,785

18,546

Evaluated at amortized cost

126,029

125,649

Securities sold under repurchase agreements

33,341

39,517

Securities trading and intermediation

16,944

17,062

Financing instruments payable

60,366

53,094

Accounts payables

948

604

Borrowings

2,199

1,260

Other financial liabilities

 

12,231

14,112

Other liabilities

 

58,266

54,793

Social and statutory obligations

1,146

711

Taxes and social security obligations

560

488

Retirement plans liabilities

56,409

53,280

Provisions and contingent liabilities

98

110

Other

 

54

204

Deferred tax liabilities

86

74

Total Liabilities

 

229,590

213,404

Equity attributable to owners of the Parent company

 

19,449

20,014

Issued capital

0

0

Capital reserve

19,190

18,745

Other comprehensive income

376

107

Treasury

(117)

(117)

Retained earnings

-

1,279

Non-controlling interest

 

1

9

Total equity

 

19,451

20,023

Total liabilities and equity

 

249,041

233,427

 
 
 
 

Float, Adjusted Gross Financial Assets and Net Asset Value (in R$ mn)

We present Adjusted Gross Financial Assets because we believe this metric captures the liquidity that is, in fact, available to us, net of the portion of liquidity that is related to our Float Balance (and therefore attributable to clients). We calculate Adjusted Gross Financial Assets as the sum of (1) Cash and Financial Assets (comprised of Cash plus Securities – Fair value through profit or loss, plus Securities – Fair value through other comprehensive income, plus Securities – Evaluated at amortized cost, plus Derivative financial instruments, plus Securities (purchased under agreements to resell), plus Loans and Foreign exchange portfolio (assets) less (2) Financial Liabilities (comprised of the sum of Securities loaned, Derivative financial instruments, Securities sold under repurchase agreements and Private pension liabilities), Deposits, Structured Operation Certificates (COE), Financial Bills, Foreign exchange portfolio (liabilities), Credit cards operations and (3) less Float Balance.

It is a measure that we track internally daily, and it more intuitively reflects the effect of the operational profits we generate and the variations between working capital assets and liabilities (cash flows from operating activities), investments in fixed and intangible assets and investments in the IFA Network (cash flows from investing activities) and inflows and outflows related to equity and debt securities in our capital structure (cash flows from financing activities). Our management treats all securities and financial instrument assets, net of financial instrument liabilities, as balances that compose our total liquidity, with subline items (such as, for example, “securities at fair value through profit and loss” and “securities at fair value through other comprehensive income”) expected to fluctuate substantially from quarter to quarter as our treasury manages and allocates our total liquidity to the most suitable financial instruments.

In order to explain how we measure our cash position or generation internally, we are introducing the Net Asset Value concept. Since we are a financial institution, we hold several types of financial instruments with different characteristics, hence the definition of net cash that makes more sense from a business perspective is the Net Asset Value. It is basically the adjusted gross financial assets net of debt instruments.

Adjusted Gross Financial Assets

 

4Q23

3Q23

Assets

 

231,903

216,300

(+) Cash

 

3,943

3,822

(+) Securities - Fair value through profit or loss

 

103,282

101,039

(+) Securities - Fair value through OCI

 

44,063

38,486

(+) Securities - Evaluated at amortized cost

 

6,855

6,175

(+) Derivative financial instruments

 

23,733

19,815

(+) Securities purchased under agreements to resell

 

14,889

12,252

(+) Loans and credit card operations

 

28,552

26,645

(+) Foreign exchange portfolio

 

1,022

4,240

(+) Energy

 

2,606

2,105

(+) Central Bank Deposits

 

2,957

1,722

Liabilities

 

(198,386)

(183,729)

(-) Securities

 

(20,423)

(14,342)

(-) Derivative financial instruments

 

(24,785)

(18,546)

(-) Securities sold under repurchase agreements

 

(33,341)

(39,517)

(-) Retirement Plans Liabilities

 

(56,409)

(53,280)

(-) Deposits

 

(27,494)

(22,635)

(-) Structured Operations

 

(18,015)

(16,241)

(-) Financial Bills

 

(9,020)

(7,812)

(-) Foreign exchange portfolio

 

(1,362)

(4,562)

(-) Credit card operations

 

(7,234)

(6,442)

(-) Other Funding

 

(303)

(352)

(-) Float

 

(14,011)

(13,493)

(=) Adjusted Gross Financial Assets

 

19,506

19,078

 
 

Net Asset Value

 

4Q23

3Q23

(=) Adjusted Gross Financial Assets

 

19,506

19,078

Gross Debt

 

(9,575)

(9,428)

(-) Borrowings

 

(2,199)

(1,260)

(-) Debentures

 

(2,212)

(2,656)

(-) Structured financing

 

(1,842)

(2,114)

(-) Bonds

 

(3,322)

(3,398)

(=) Net Asset Value

 

9,931

9,650

 
 

Float (=net uninvested clients' deposits)

 

4Q23

3Q23

Assets

 

(2,932)

(3,569)

(-) Securities trading and intermediation

 

(2,932)

(3,569)

Liabilities

 

16,944

17,062

(+) Securities trading and intermediation

 

16,944

17,062

(=) Float

 

14,011

13,493

 
 
 

Reconciliation of Adjusted Net Income (in R$ mn)

Adjusted Net Income

4Q23

4Q22

YoY

3Q23

QoQ

 

2023

2022

YoY

Net Income

1,040

783

33%

1,087

-4%

 

3,899

3,580

9%

(+) Share Based Compensation

181

181

0%

151

20%

 

541

793

-32%

(+/-) Taxes

(72)

(71)

2%

(59)

23%

 

(232)

(299)

-22%

Adj. Net Income

1,149

893

29%

1,179

-3%

 

4,209

4,075

3%

 
 

 

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