XP Inc. delivered financial results that exceeded consensus expectations, with managerial net revenue totaling R$4.884 billion, representing a 9% increase year-over-year. Adjusted net income rose 5% to R$1.384 billion, while adjusted diluted earnings per share climbed 9% to R$2.67. Despite the earnings beat, shares retreated approximately 1% in after-hours trading on August 17.
CEO Thiago Maffra highlighted a significant strategic initiative under consideration: the potential establishment of a U.S. banking operation. The company is evaluating whether to pursue a new banking charter or acquire an existing institution as a means of expanding its service offerings. However, no final decision has been reached. This expansion raises questions about whether a U.S. banking platform would function as a standalone growth driver or introduce complexity that could distract from ongoing improvements to XP’s Brazilian operations.
The Brazilian domestic platform demonstrated mixed performance. Client assets reached R$1.535 trillion, up 12% from the prior year, while net inflows totaled R$28 billion. The managerial earnings-before-tax margin expanded 172 basis points to 32%. Retail revenue increased 8%, while wholesale revenue surged 32%, though this comparison was affected by a reclassification of institutional business. Fixed-income revenue declined 16% annually but recovered 10% sequentially. The active client base decreased approximately 0.4% from the previous quarter to 4.772 million.
Beyond traditional investments, XP’s domestic business continued diversifying. Card payment volume grew 8%, while the loan portfolio expanded to R$77.9 billion, representing 16% growth. Gross written insurance premiums increased 10%. The company maintained a 20.3% groupwide BIS capital ratio and reported adjusted annualized return on tangible equity of 22.5%.
The earnings beat did not fully address underlying challenges. Adjusted net income growth lagged managerial net revenue expansion, and annualized return on average equity declined 189 basis points. Headcount increased 13% year-over-year, while the retail take rate fell five basis points. Any U.S. banking venture would introduce additional regulatory, compliance, and capital requirements while the company continues addressing fixed-income headwinds and constrained active-client expansion in Brazil.
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