Earnings Call Transcript - XP Q3 2025

Andre Parize, Investor Relations Officer

Good evening, everyone. I'm Andre Parize, Investor Relations Officer at XP. And it's a pleasure to be here with you today. On behalf of the company, I would like to thank you all for your interest and welcome you to our third quarter 2025 earnings call. Today's presentation will be led by our CEO, Thiago Maffra, and our CFO, Victor Mansur, who will both be available for the Q&A session right after the presentation. If you would like to ask a question, please use the raise hand feature on Zoom, and we will address them in the order we received. Before we begin, please refer to our legal disclaimers on Page 2, where we provide additional information regarding forward-looking statements. You can also find more information in the SEC filings section on our IR website. Now I'll turn it over to Thiago Maffra. Good evening, Maffra.

Thiago Maffra, CEO

Thank you, Andre. Good evening, everyone. I appreciate you all joining us today for the third quarter 2025 earnings call. 2025 has been a very important year for XP as we have achieved significant progress on our agenda of excellence from the launch of the new way to attend and serve clients, implementing a culture to better understand clients' financial cycles as part of the main KPIs, new and more intelligent segmentation through a brand-new app with much more features and easier data access, and a new credit card offering. These few examples demonstrate our focus to become the leader in investments in the country while bringing a completely new approach to how Brazilians invest. Despite this advance we have made in different areas, the year has still proven to be challenging. But even with this challenge, our team is fully committed to keep evolving our business to deliver growth and profitability under different circumstances. Now going to the main KPIs. The first one is client assets, AUM, and AUA for which we posted BRL 1.9 trillion, a 16% growth year-over-year. Total advisers accounted for 18,200, representing a small decrease year-over-year on the back of many of them becoming employees and our more restrictive policy, which requests higher standards of commercial behavior and productivity. And on active clients, we posted 4.8 million clients with a 2% growth year-over-year. It's important to mention that we have been growing on core client segments, high income and private banking. For some quarters, we were not investing to capture and maintain low retail clients since it was too expensive to serve them in our old model. But now after some tests, we are almost ready to resume growth in this segment. We already see early stages of development on how to better serve the segment with profitability. Let's wait some quarters to be sure about the way we design to attend retail clients, and maybe we'll see the overall number of clients growing again as this dynamic evolves. In the quarter, gross revenues marked BRL 4.9 billion, representing 9% growth year-over-year. EBT is 10% higher year-over-year, making BRL 1.3 billion. These results were positively impacted by the more constructive dynamics in Corporate & Issuer Services segments. Following this positive trend, our bottom line also posted an impressive growth year-over-year, reaching BRL 1.330 billion and representing a 12% growth when compared to the same period last year, which represents a new record. On profitability, we achieved 23% ROE during the quarter, a flat performance year-over-year. This represents our commitment to deliver profitability even in more challenging market scenarios. On capital ratio, we maintain a very comfortable level of 21.2%, which represented an increase of 180 basis points quarter-over-quarter. Regarding diluted EPS, we posted 13% growth year-over-year, another quarter in which it grew faster than net income, driven by our share buyback program execution. Now let's see more details on the next slides. Our total client assets combined with the assets under management from our asset management business and with the AUA from our fund administration business totaled over BRL 1.9 trillion, which represented a 16% growth year-over-year. On the right hand of the slide, we show how net new money related to client assets developed in the period. This quarter, we achieved BRL 20 billion in retail net new money and BRL 9 billion in corporate and institutional, which combined represented BRL 5 billion lower than last year, but 3 times higher than last quarter. On the retail side, we started to see the early signs of progress on our agenda of excellence we mentioned before, lower noise from some events we had during the first half of the year, and better GCM activity towards the end of the quarter. All this combined positively impacted the inflows coming from individuals. Additionally, despite the maintenance of the same market dynamics during the third quarter of the year, we saw better net new money figures, both from SMEs, which are incorporated in retail figures, and large corporates. Recent developments in our product range offering and more positive capital markets activities translated into higher net new money for both segments. We are constantly improving our investment platform and enhancing clients' experience through adviser initiatives. This combination reinforced our confidence to achieve our target of around BRL 20 billion in retail net new money per quarter. On the next slide, we will explore our retail strategy. As I mentioned earlier, 2025 has been a year of significant progress in our agenda of excellence. We are constantly enhancing our way of serving clients with the aim of once again disrupting the market with our value proposition focused on service level. Going back to our foundation, XP disrupted the investment industry in Brazil by democratizing access to investments through an open and comprehensive platform of products and services. In a second stage, we scaled this innovative business model by building the largest and most qualified base of financial advisers in the market. We have come this far by offering best-in-class investment products built by top market specialists. Now we are once again disrupting how Brazilians invest by democratizing access to high-quality wealth planning, a service that until now has been reserved for high net worth clients of multifamily offices. We delivered personalized and premium planning for clients with more than BRL 3 million, scaling financial planning for those with over BRL 1 million and offering goal-based investment planning for clients with less than BRL 1 million. Our approach is holistic, encompassing the complete financial lives of our clients, assets, liabilities, expenses, and savings. Tax and estate planning solutions are also considered. In the end, we are serving our clients with top-tier solutions for both their personal and business finances. We are doing this at scale, powered by proprietary technology we have developed over the past years. This technology enables process standardization, scalability, and consistent quality in our servicing model. Examples include our CRM system, proprietary allocation platform, and sales activity management, among others, all of them powered by AI. Some of these process KPIs are shown here, proving that this journey towards excellence is gaining traction day by day. Additionally, combined with all this progress I have just mentioned, we are leading another change in the industry by having an agnostic business model. We are able to serve clients in the way that best fits their needs and preferences. The fee-based model already accounts for 21% of total retail AUC. It started in the wealth service segment, which still has more representativeness in the model, but we are accelerating in the other segments from this year on. We will still capture considerable growth coming from this new way to serve. It will happen in the medium term as we are transforming our business model and our value proposition. Nevertheless, we strongly believe that it will give us a sustained competitive advantage in the long run. Finally, XP once again is a pioneer. We are not only leading this redefinition of how clients are served, but we are also uniquely positioned to capture future growth coming from this change in client behavior and new market trends. Retail cross-sell has been one of our focuses to diversify revenue streams during the last years. During Q3, we achieved important milestones in this business segment. Starting with our credit card, TPV grew 9% year-over-year, marking BRL 13.1 billion during Q3. As we anticipated last quarter, at the end of Q2, we launched new products targeting affluent and private banking clients. We estimate that with this new segmentation, each one of them with a unique value proposition, we should grow faster in the coming quarters. Life insurance written premium posted 25% growth year-over-year in Q3. As we have mentioned in the past, our insurance business is still in its early stage. Given its significant expansion potential, we expect it to continue growing. On retirement plans, our client assets posted 15% growth year-over-year in Q3 and reached BRL 90 billion. We keep expanding our sales force and our product offering to increase our relevance in this industry. As mentioned before, we see a lot of potential in the life insurance business segment with a significant addressable market to penetrate in the coming years. Credit posted 11% growth year-over-year in Q3, achieving BRL 83 million in NII. In new products, we consider FX, global investments, digital accounts, and consortium. Altogether, they presented 24% growth year-over-year with revenues reaching BRL 250 million this quarter. Beyond the consortium, we also saw FX and digital accounts posting relevant growth this quarter. Moving to the next slide, we will address our wholesale bank evolution. Taking GCM into consideration, this quarter, we saw a sequential increase in industry volumes compared to the previous quarter. This growth was pretty much concentrated in the last half of the period, backed by the progress in the tax discussion regarding tax-exempt and incentivized instruments. In the third quarter of 2025, we secured a 10% market share in debt capital markets distribution. We still have a robust pipeline of fixed income offerings, and depending on market conditions, we might see these mandates materializing into real deals still in 2025. Regarding XP broker-dealer, it was another positive quarter, and we kept leadership in the local industry with a 17% market share. On corporate securities, this quarter, we maintained about the same size of our corporate securities book with BRL 33 billion. The quarter started with a possible change in taxation of tax-exempt fixed income instruments and finished with many companies taking advantage of low credit spreads to issue new debt. Next year, we can possibly see increasing volatility, and therefore, a reduction in corporate clients' appetite for new offerings. So our strategy, given the case, is to increase this warehouse book in the last quarter of 2025 to sell it to our retail clients during the next year. As a final message, I would like to once again emphasize our ability to disrupt the market. We are the pioneers of this transformation trend, bringing clients unique value propositions or innovative offerings combined with an agnostic business model and strong capital discipline position us as a distinctive player that successfully combines growth potential, profitability, and risk management. I would also like to reinforce that our ecosystem today is far more complete than it was just a few years ago, and there are multiple opportunities to be explored across all our businesses. We are confident that by executing this strategy, we will achieve our goals of market leadership in investments and deliver sustainable long-term growth. Now I will hand it over to Victor, who will provide a deeper look into our financial performance this quarter, and I will be back for the Q&A session.

Victor Mansur, CFO

Thanks, Maffra. Thank you all for being here today. Now we'll discuss our financial performance for the third quarter. Starting with gross revenues, we posted gross revenue of BRL 4.9 billion, a 9% growth year-over-year, and a 6% growth quarter-over-quarter. In retail, revenues reached BRL 3.7 billion, representing 6% growth year-over-year and 4% growth quarter-over-quarter. Institutional revenues were stable at BRL 304 million, flat year-over-year, and slightly decreased quarter-over-quarter. Corporate & Issuer Services delivered outstanding performance, reaching a historic record of BRL 729 million, a 32% growth year-over-year, and 33% growth quarter-over-quarter. This was driven by strong capital markets activity, followed by our leading position in corporate client solutions, which we will discuss in more detail in the next slides. Now starting in retail revenue. The performance was mainly driven by floating from both check and investment accounts, which benefited from higher average volumes and higher interest rates during the period. Additionally, new verticals included in other retail, such as international investments and global accounts, delivered strong results. Lastly, it's important to mention that this quarter also includes the revenue of the expert event, totaling BRL 757 million, marking 24% growth year-over-year and 19% growth quarter-over-quarter, offsetting a weaker performance from other product lines due to lower ADTV and shorter duration. Now let's move to the next slide in Corporate & Issuer Services. This was the best quarter in our history. The outstanding performance was driven by a pickup in DCM activity compared to the previous quarter, and the continued development of our corporate client franchise. Issuer Services posted BRL 323 million, stable year-over-year and 21% growth quarter-over-quarter. Corporate revenues reached BRL 406 million, representing 77% growth year-over-year and 46% growth quarter-over-quarter. The strong growth reflects our increasing capability to deliver solutions to large corporate clients, particularly in hedging solutions. Moving on to the next slide, we explore SG&A and efficiency ratios. SG&A expenses totaled BRL 1.7 billion in the quarter, representing 10% growth year-over-year and 7% growth quarter-over-quarter. We remain committed to invest in the areas we consider critical for long-term growth including sales force expansion, marketing, and technology, as highlighted by Maffra earlier. These initiatives are designed to enhance the client journey and elevate our overall service level. While this strategy may lead to stable or slight softer efficiency ratios in the short term, we see these investments as fundamental to sustain our competitive edge over time. Our last 12 months' efficiency ratio was 34.7%. Compared to last year, the ratio improved by 79 basis points. As usual, in the third quarter, results also reflect the impact of the expert event which once again proved to be an outstanding opportunity to connect with our stakeholders. From another angle, the impact of it on the current efficiency ratio was approximately 70 basis points. Moving on to the next slide, let's see our EBT. As a result, our EBT was BRL 1.3 billion, representing 10% growth year-over-year and remaining sequentially stable. The EBT margin expanded 47 basis points on the annual comparison, while compressing 103 basis points quarter-over-quarter. Now looking at the net income, we reached BRL 1.3 billion, a 12% growth year-over-year and 1% increase quarter-over-quarter. The net margin expanded 106 basis points on annual comparison and compressed 112 basis points sequentially, closing the third quarter of 2025 at 28.5%. Now let's focus on capital management. This year, we have been highly active in returning capital to our shareholders. In 2025, we repurchased BRL 2 billion, of which BRL 850 million occurred after the end of the third quarter, and therefore, are not reflected in the accounting metrics we are presenting today, such as ROE and EPS. Today, we are announcing the retirement of our outstanding treasury shares bought back during the year and the new BRL 1 billion share buyback program to be executed over the next 12 months. On top of that, we are also announcing a dividend of BRL 500 million to be paid in 2025. This represents BRL 2.4 billion in capital return to shareholders in 2025, approximately a 50% payout if you analyze our net income. If you consider the new buyback program, the payout ratio would be around 7% for the year. So let's focus on earnings per share and ROAE details over the next slides. In the third quarter, our diluted EPS once again outpaced net income growth, reaching BRL 2.47 per share, supported by our activity capital distribution strategy through share buybacks. In this quarter, EPS grew 13% year-over-year and remained stable quarter-over-quarter. On the right-hand side of the slide, ROTE stands at 28% and ROAE at 23%, slightly lower than last quarter since we had the capital generation without the corresponding distribution. Assuming the execution of the new BRL 1 billion buyback program and BRL 500 million dividend payment, ROTE and ROAE would have been 30% and 24%, respectively. Now moving to the next slide. To conclude my presentation, our capital ratio ended the third quarter at 21.2%, and the CET1 at 18.5% well above the peers' average and the regulatory requirements. This comfortable capital position gives us a strong edge to navigate different scenarios and be ready for the upcoming volatility. Also, during 2026, we expect to have the opportunity to deploy capital in a more efficient manner. It's important to remember that we maintain our guidance for a BIS ratio between 16% and 19% for the end of 2026. Now talking about risk on the right-hand side of the slide, you can see that our RWA totaled BRL 108 billion, representing a 13% growth year-over-year and a 6% increase quarter-over-quarter. Finally, our VaR stood at BRL 29 million or 12 basis points of equity. Even in a quarter of outstanding performance from our wholesale business, we maintain a very conservative risk profile. In this quarter, it's worth mentioning that our balance sheet grew 6%, but adjusting for retirement plans and secured funding, its growth would have been lower than CDI for the period. This increase in retirement plans is associated with a one-off bulk migration we did from other insurance companies to our own, and we don't expect to see it in other quarters. Besides that, as you can see, we kept our market RWA stable and decreased our VaR sequentially, reinforcing our position as a robust ecosystem with strong risk recycling capabilities. And now we can go on to the Q&A.

Andre Parize, Investor Relations Officer

The first question is from Eduardo.

Eduardo Rosman, Analyst

I have a couple of questions regarding the wholesale business; the results were very strong this quarter. Should we anticipate similar performance in the fourth quarter, or do you think a slowdown is likely? My second question is about what Maffra mentioned during the call regarding the strategy to increase the warehousing book in the fourth quarter. Could you provide a bit more detail on that? You also mentioned that corporate spreads are very low, so wouldn't this strategy pose a risk in an election year? Thank you.

Thiago Maffra, CEO

Hello, Rosman. Thanks for your question, and good evening, everyone. So we are seeing the wholesale banking with good performance for Q4. So as we mentioned earlier in the last call, we have seen that the second half of the year is stronger than the first half of the year, especially for the wholesale bank.

Victor Mansur, CFO

Victor here. Regarding credit spreads, we believe they have tightened significantly. There is a possibility that they may widen slightly by the end of the year and into next year. However, the substantial net inflows into fixed income funds continue to exert pressure on the spreads. It's crucial to highlight that our strategy focuses on high-quality assets, and our portfolio turnover rate exceeds the industry average. This means we are less vulnerable to fluctuations in credit spreads compared to our competitors. Concerning risk-weighted assets, we plan to sell some of what we acquired in the third quarter and potentially retain more depending on their performance as we move into the first quarter of 2026. Historically, the first quarter tends to have lower activity in the debt capital markets, making it important for us to have sellable assets at the start of the year.

Andre Parize, Investor Relations Officer

Okay. Next question is from Yuri Fernandes, JPMorgan.

Yuri Fernandes, Analyst

Just to follow up on Rosman on corporate. Can you remind what was the 46? I think you mentioned hedging strategy, but I'm not sure what was it? So just trying to understand a little bit again the corporate, inside Corporate & Issuers, the 46% quarter-over-quarter increase. And on bonus, this line was a little bit heavier this quarter, but coming from, I would say, a softer base, right, when we go to the 9 months. I think the total bonus is up 80%, to 90% year-over-year, so not a big increase. But if you can comment a little bit on what to expect on people's expenses, like salaries, like just to get some idea on SG&A. I would appreciate. And if you want to comment on bonuses also, I think it's also a good point, given it was a little bit higher this quarter.

Victor Mansur, CFO

Thank you for your question. This is Victor. First, talking about the corporate performance. It's important to remember that corporate business is tied to DCM activity. One of the main drivers of P&L in corporate is hedging solutions for companies issuing debt. For example, when a company issues a debt tax-exempt corporate bond, inflation-linked bond, and it doesn't want the exposure to inflation, it hedges against us in CDI plus. That's one of the business segments and it's highly correlated with the same activity. Another important business is the originator of credit operations that will be securitized and sold to clients in the next quarters. If you go to our credit portfolio, you will see that it's flat. We basically sold quasi-sovereign bank notes, and we originated corporate operations, but those operations will be securitized and then sold to clients like we did in other quarters. Moving to bonuses, it's normal to see the bonus going higher after the performance of investment banking going higher the way it did over the quarter. So part of that is explained by performance in Wholesale Banking. Another part is explained by the new hires over the year. We hired almost 500 new employees, mostly on sales force expansion over the year, and this is one part of the drivers of salary growth and bonus provisions.

Yuri Fernandes, Analyst

Super clear, Victor, and congrats on the net new money improvement for the quarter.

Andre Parize, Investor Relations Officer

Next question is from Mario Pierry, Bank of America.

Mario Pierry, Analyst

Let me ask 2 questions as well. First one, when we look at your retail revenues growing 6% year-over-year. But if we double-click on that, we see that our fixed income revenues actually contracted year-over-year. They have been contracting 2% even as the AUC grew 22%. So it means there was like significant pressure on take rate. Can you explain why that happens? Because when we look at fixed income, revenues were growing like 40%, I think, on average for the past 6 quarters. So just trying to understand if there was a one-off event that impacted fixed income revenue? The second question is related a little bit to what Yuri asked, but when we look at your EBT margin, it had been expanding for the past 3 quarters, I think. In this quarter, it contracted because of the pickup in expenses and you're running below your guidance, right, your medium-term guidance of about, I think, it's 30% to 29% to 32%. So just trying to get a sense here, like should we expect the trend to start to improve in the next quarters? Or do you think the EBT guidance is something more like for the end of 2026? Thank you.

Thiago Maffra, CEO

This is Thiago. I will take the first question. I can answer the second one, and Victor will complement me. About the fixed income revenue, the main problem here is if you look at the take rate for investments, if you compare Q4 last year to Q3 this year, it's down 10 basis points overall. It's a huge draw down. When you look only at fixed income, it's 20 basis points. It's a big decrease in take rate. This is mainly explained by the mix. If you look at CGs with daily liquidity, they used to represent 25% of the new allocations. Today, it's 45%. Because of the high SELIC rate, we are selling almost half of everything that we sell for fixed income, it's CGs with daily liquidity. When you compare the revenue we make here, it's basically a daily spread on CGs with daily liquidity against duration times spread. It's a completely different revenue stream. The second one is shorter duration. Right now, everyone is only buying very short-term durations. So when you combine the mix of more CGs with daily liquidity and shortened duration, we are selling a lot more volume in fixed income, but with a lower take rate. About your second question, we are investing in sales force expansion, technology, and SMB. We are doing a lot of investments this year and are planning to do more next year. I would say that it's still possible to reach the guidance we gave at the end of the next year, but you see because in the past 2 years or even more, we have been gaining a lot of efficiency quarter after quarter. Right now, we should be more flat when you look at the next quarters because we are investing more.

Andre Parize, Investor Relations Officer

Okay. Next question is from Gustavo Schroden from Citi.

Gustavo Schroden, Analyst

Hello, everyone. Thank you for the opportunity. I have two questions as well. The first one is regarding the sales force you mentioned. If I recall correctly, you talked about adding around 500 new employees, most of whom are related to the sales force. However, when we look at the total number of advisers, it seems to be decreasing year-over-year and remains stable quarter-over-quarter at 18,200 advisers, which includes both IFAs and XP's employees. I would like to understand what type of sales force you are hiring and how this aligns with the total number of advisers. My second question concerns financial expenses. We noticed a significant decrease both quarter-over-quarter and year-over-year, with a 28% drop compared to the previous quarter and a 45% decrease year-over-year, despite the higher SELIC rate. There was also a reduction of BRL 1.5 billion in borrowings. Is this reduction related to the lower borrowings, or are there other reasons contributing to the decrease in financial expenses?

Thiago Maffra, CEO

Okay. I'll take the first one. About the total number of IFAs, as Victor mentioned, we are hiring more internal advisers. When you look at the IFA, the B2B network, many of them have been converting into employees due to regulatory changes that have been happening over a year. The second part is that we have been part of the third wave that we mentioned a lot here on quality, the way we serve clients. We have been focused a lot more on quality. So more skewed towards better-qualified IFAs. So we have been forcing some of the low-quality IFAs to leave the network. We have been increasing what we call AAA advisers and decreasing the C and D curve of IFAs. These are the main reasons why you don't see the number of IFAs growing. However, we don't open the number of what we call AAA IFAs here, but this number has been increasing. We have been focusing more on more qualified advisers.

Victor Mansur, CFO

This is Victor taking the second part about the financial expenses. Just remembering that we went through a reorganization of our conglomerate over the last year, changing the bank to the top of the business. That has an important effect on financial expenses and also other revenues. When debt that was corporate debt inside the holding matures and is rolled over for debt inside of the bank, it gets out of the financial expense lines and goes inside of net interest margin. So it's just a geographic effect. It goes from the debt to being a reducer of revenues. That's also why other revenues are lower quarter-over-quarter. You will see that the change between lines is closer to each other. That's the effect of the geographic movement between lines. It's also important to note that the bank debt is much cheaper than corporate debt. So you do have this geographic movement, but the overall cost of debt for the company is considerably lower when you compare 2024 to 2025.

Andre Parize, Investor Relations Officer

Next question is from Daniel Vaz from Safra.

Daniel Vaz, Analyst

I wanted to follow up on Mario's question on fixed income. Instead of looking at the 2% drop, I wanted to talk about the 7% drop quarter-over-quarter. I mean, DCM activity improved, right? So we saw that on your insurance services, net new money improved, warehouse of securities did increase, and we had higher business days, right? So it's probable that you distribute a higher volume to the clients. I heard you on the mix change, but was this a quarter-over-quarter change? The CGs with daily liquidity went up from 25% to 45% in one quarter. Just wanted to touch base on that again, if you could explore a little more of what the change quarter-over-quarter means. If I may follow up on the guidance, I wanted to check on your comment, Maffra. If you're able to get on the fourth quarter of next year on your EBT margin instead of the full year. Is that correct? Did I understand well?

Victor Mansur, CFO

Daniel, this is Victor. Taking the first part here in fixed income. If you remember a few questions ago, I said that we sold quasi-sovereign banking notes from our warehouse book, and we warehoused corporate bonds. Basically, that is what's happened in real life when Maffra says that clients are buying short-term floating rates, that is what's happening. The products originated by the DCM markets over the quarter are still in our books, and we are going to sell them over the fourth quarter and the first quarter of next year, and what we saw were short-duration banking notes. That’s why we see this behavior in the revenue quarter-over-quarter.

Thiago Maffra, CEO

Yes, sorry for that. Yes, we feel that it's possible to target that next year. We don't give guidance quarter-over-quarter. So it's hard to say what's going to be Q1 or Q2 or Q4 next year, but we feel that the 30% is still doable.

Andre Parize, Investor Relations Officer

Okay. Next question is from Thiago Batista, UBS.

Thiago Bovolenta Batista, Analyst

So I have 2 questions. The first one on the buyback. The intention of the BRL 1 billion buyback is to be concluded this year. I know that depends on the price of the shares, etc., but the initial intention is to conclude it this year? And the second one about the IOC in the equity business. We saw that this quarter or the third Q, the IOC was basically flattish Q-over-Q. We have the BOVESPA in the all-time high now. I've already seen, not exactly in the third Q, but more recently, clients trying to move the money towards more risk investments like equities or not yet? Or maybe we need to see the SELIC rate, let's say, single digits or something like this. So my question is, are you already seeing this migration from fixed income to high-risk investments?

Victor Mansur, CFO

Thiago, this is Victor. First on the share buyback. The buyback program is open, and we are going to buy over the next 12 months. Just like before, we will wait for the best opportunity to deploy the capital and maximize the return to our shareholders. So we cannot give you an idea of when it will be complete or if it will be at the beginning of next year or the end of this year. What I can guarantee you is that we will be buying everything just like we did in all the other programs we're opening.

Thiago Maffra, CEO

Yes, to add to what Victor mentioned about the payout strategy, we currently have a high BIS ratio and plan to reduce it to between 16 and 19 by the end of next year. While that remains the goal, we are holding back on returning more capital to the market because we anticipate good opportunities next year. Given the volatility expected, we believe we will have chances for increased buybacks then. Regarding the second part of your question, we haven't noticed a significant change in client behavior yet. Retail clients tend to lag behind, and although it's our job to encourage better habits, we still need to see rate cuts and other factors leading to shifts in asset allocation. Currently, there’s a strong demand for funds, particularly for primary offerings in closed or open-end funds and REITs, but not yet for equities or other products. We haven’t observed substantial changes in the portfolio. In fixed income, the trend is the opposite, as people are shifting more money into daily liquidity broad CGs, attracted by returns of 15%. So, we still have some way to go.

Andre Parize, Investor Relations Officer

Okay. Next question is from Tito Labarta, Goldman Sachs.

Daer Labarta, Analyst

A couple of questions also. First, a follow-up on the corporate revenues. You mentioned it's related to hedging solutions for companies issuing the tax-exempt bonds. Is this a function of, I guess, companies just anticipating tax reform so that remains strong in the second half of the year, but potentially subsides next year? Or do you think that there's more sustainability to that? And then the second question, you saw a jump in retail inflows, right? I mean BRL 20 billion, which is more or less what you've been saying, but it was up significantly from last quarter. So was there anything significant, should we read into this, is just normal volatility? Or should that begin to accelerate from here? Just any color you can give on how that continues to evolve.

Victor Mansur, CFO

Tito, the first one about corporate revenues. Hedging is related to issuance, but I think the issuances are a function of the risk of the new tax regulation, but also the level of credit spreads. It's really cheap to raise debt here right now. Next year, there will be extreme volatility. So I think components are moving around and doing whatever they need to do regarding ION this year. Also, there are not only hedging solutions. We have power trading, cash management, and FX operations as well as the credit originator-solutions that we commented before. I think hedging solutions were the main highlight for the quarter, but there are still many revenue lines inside the corporate franchise.

Thiago Maffra, CEO

I will take the second one about net new money. Of course, we have been doing many things here, especially on what we call the third wave on increasing the level of service, the value proposition that we deliver to our clients. We mentioned a lot today in the presentation about that. We have been democratizing the wealth service business to all our retail clients for the past, I would say, a year or 1.5 years. So we have been developing a lot of technology CRM AI capabilities. I would say that the level of service that we are delivering to our clients right now is much better than it was a year or 2 years ago and much better than most of our competitors, especially for retail clients. We are delivering a level of service that nobody provides in the industry in Brazil. That's why we are calling it the third wave. But it's still early to say that, that is moving a lot the needle here. I would say that it's more like a medium-term impact, so we are around BRL 20 billion. We have been saying that the level for the past quarters. I don't see any reason right now to change that up or down here. We are seeing BRL 20 billion as the level for the next quarters. But again, 16, 18, 22, or 23 for us is the same as BRL 20 billion. You could see one quarter higher than that and one quarter lower than that.

Daer Labarta, Analyst

That's helpful, Maffra. I have a follow-up regarding the revenue guidance. You mentioned a 10% increase for this year, but it seems expectations are that you might fall short of that. Also, looking ahead to your 2026 guidance, the lower end of BRL 22.8 billion would represent a 20% increase. What needs to happen to achieve that, or does that suggest some downside risk considering the challenging macro environment since you first provided guidance?

Thiago Maffra, CEO

Yes. Yes. As we mentioned in the last earnings call, the second half of this year is going to be stronger than the first half in terms of growth, top line growth. But as the first half was soft, it's going to be hard for us to get to the 10%, but we can get close to that. For 2026, I would say it's almost the same rationale here because 2025 was a little bit soft. Next year, we have to grow. Not to give a specific number here, but we need to grow about 17% to 20%, still doable, but we might be a little bit short, just a bit, not by much.

Andre Parize, Investor Relations Officer

Okay. Next question is from Marcelo Mizrahi, Bradesco BBI. Marcelo, you may proceed.

Marcelo Mizrahi, Analyst

My first question is about the work days and how they have affected revenues in comparison to other retail revenues. What does this mean for us? Looking ahead, will there be a decrease in these lines? My second question is about investments. You mentioned investments in technologies. We have seen many platforms investing in AI tools and digital solutions, including a fully automated digital channel. Are you already utilizing AI to provide guidance to clients, particularly those with lower incomes or smaller investments, to enhance their service and boost engagement and revenue?

Victor Mansur, CFO

This is Victor. Thank you for your question. First year on business days. As expected, business days gave us a positive impact in terms of floating and trading days. But this was compensating the negative way in terms of lower ADTV for fixed income and the shortening duration that Maffra explained in the fixed income platform. Those effects go in positive directions. The mix overcomes the fixed income, EBITDA, and other retail revenues, which have the floating component showing a bit up over the quarter.

Thiago Maffra, CEO

In response to your second question, we have been heavily engaged in AI across various areas. One key focus has been internal productivity, supporting both engineers and management. We are also enhancing operations and customer experience, with multiple use cases live, particularly regarding productivity. Additionally, we aim not to replace advisers but to augment their capabilities with various AI agents, including relationship and transactional agents. This approach enhances productivity and improves the service level we provide to customers. Furthermore, we have made significant investments in customer portfolio allocation by creating more rules and centralized strategies, employing technology to facilitate this. Some use cases are already scaled while others are still in early development. We also monitor all communications from our internal advisers, allowing us to classify interactions with customers. This provides a high level of information and sales management, and we will keep investing in this area. Our goal remains to enhance advisers, rather than replace them. For very small or self-directed clients, we are deploying fully automated AI solutions, though this currently represents a minor segment of our business. However, as we look ahead, our primary focus is to empower advisers, allowing them to dedicate their time to relationship-building rather than operational tasks that do not add value to customers.

Andre Parize, Investor Relations Officer

Okay. We're up the hour. So I would like to thank you once again for participating in our earnings call. The IR team will be more than happy to attend to any further questions you may have. Have a good night, and we're going to keep in touch. Thank you.