Q2 2021 Xp Inc Earnings Call
But today, we have with us charter them off of our Seo, you'll also have glucose and genome CFO and the IR team myself and funding and my thanks, and Martina more similar.
We'll be available for the Q&A session right. After the presentation and you can raise your hand on the zoom tool.
The ask questions before being of the presentation. Please refer to our legal disclaimer on the earnings presentation.
And Thats the session, where we clarify forward looking statements and their definition of.
All of the documents that explain why the.
Forward looking statements might differ from the actual results. They can be found on the SEC filing session of our website again. Thank you very much for the interest.
We will show a brief video of the first half of the year.
And then I'll pass the word to market to deliver the opening remarks.
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So with the I mean as you saw very special first half of the year for US with the is very upbeat message right and song and these Olympic mood and.
And that's the word to our CEO gyromitra for the first and years of C. O participating on the call Mumford of for you look for is yours as the.
The project our of our presentation.
Okay, Thank you and that.
Thank you all for participating our earnings call the mic.
For the time here as the dimension as the company's CEO I'm very happy to be here and I expect you being that with you for many years to come.
Okay.
Can you and your mortgage for the the first slide.
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1 more match it.
Well the Jiang's uses line is to show how our business model has evolved during the last few years as you. All know XP has completely Duane years, let me and for the for 18 years, we have been very folks on the investment of business.
However in the last 2 years, we have expanded our products and service far beyond the investments.
On the left the box we show how we started from the most chief growth segment penetrate with high switching costs and great need for a trusted brand.
The current satisfaction level for our clients translated by the 76.
And EPS that were achieved.
Archer tells us that we are going the right direction.
Currently on the center blocks, we are preparing the company to successfully the need for our ambitious goals, reaching Cogs increase new verticals and the expansion north Tan from and Ah ha.
And then even intra day to 350 billion on the next 3 years.
It's worth mentioning that the market will generate almost 800 billion in 2021 of which we have about only 1%.
Additionally, in order to intensify the disruption that we have the easing in Brazil.
1 of the main enablers that will allow us to enter new markets is the Gs total transformation that we have been doing in the last few years. Our goal is to have a scalable platform that will allow us to have lower cost for third and faster time to market.
And that context, new vertical search guess banking insurance and solutions for companies from SMB true corporate are quickly advancing we are Duane substantial investments on these new verticals and we really expect to see huge increase in your final.
And shows the only the room.
Finally on the right box the end game.
By embracing of broader universe of Brazil in the intervals and companies, we take ex b to a new level of for each I always focus on clients and their needs and we.
We'll keep the transforming the financial market and Brazil beyond the investments should become the 1 stop shop for all of the financial sense being the number 1 service provider for millions and millions of clients.
Now all of the Bachelor Bruno who will show all of our financial Kpis.
Thank you Manav for a good evening, everyone, great pleasure to be here and with all of you 1 more time.
And I will start with the main highlights of the border I will try to be brief. So we can go to the Q&A session, which is much more interesting for the highlights and.
You probably could see a very strong quarter again, the strongest ever and I'm going to go through the numbers and the following and slides also as the video and showed the M.
M and H that we announced recently and that we expect to keep doing the partnership model with our main IFA offices as a broker dealer.
Growth for deals also the independent asset manager business and something connected into our ecosystem. It makes sense to.
Leverage those independent asset managers.
The liquidity of the secondary market the development of the Virginia and capital market itself and that's the key to democratize the access to the investments and the growth of the capital markets by itself. So we announced the partnership with the tenure with giant and stabs and will.
Jive and the second quarter. This year and we are always looking for opportunities like that.
We also entered the bowl and the market first time, we did the road show and close the deal and the second water but.
And with Asian, only happened and.
On July 1 so you're not going to see that in our second quarter numbers, only and the third quarter, but I I think it's important to highlight that to have access to the global bond and community as a long term strategy something important considering the size of these market and how the wood.
And left the brand awareness, we are owner of.
Ward that we received by era of money as the best Bank for wealth management. This year, 2020, 1 and Latin America. When we think that these business the segment and the next 5 years ago was almost non existent. So.
And from zero from the ground and received the diesel award this year and something that make us really proud of and as Brad mentioned about the Brazilian Olympic Committee and we establish these long term relationship as an investor in the Brazilian Olympic Committee.
And we all sort of really happy with these partnerships, especially in line with the how sports game transform the whole society and.
Eager to get.
These are relationship growth now moving to the numbers itself. So the Kpis you havent seen already.
The investment and keep your eyes and the banking the eyes.
And new here. He is the only the financial keep guys go into the last of the investments Kpis and we reached the 817 billion.
Assets and their test study as of June and 88% increase year over ear active clients the growth of 33% year over year surpassed the mark of $3.1 million clients and net inflows of very strong quarter 75 billion.
We did have some concentrated and net inflows.
And.
Estimate more around 30 billion of the 75 billion and few clients, especially of the private banking segment.
But as someone asking the here and the chats and the Q&A.
And last 4 quarters, we had these what we call of the extraordinary inflows or outflows in the last 3 so it's coming.
Coming every quarter, it's not extraordinary and more it's more.
Total, but the not extraordinary but a very very strong water in terms of net inflow.
When we go to the middle of the bank. The main banking Api's, 6.8 billion and our credit portfolio. There was not credit card and this number is so low and then and the receivables.
Receivables of the credit cards not included in the $6.8 million.
Strong growth year over year were very small.
The best year, but growing even when we compare quarter over quarter. We ended the first quarter for 7 billion and reached almost 7 billion at the end of the second quarter. When we look at the credit card, we are really happy with the results and and.
Above our expectations and our expectations, usually is very high of $2.1 billion of highs of total TPG and our first quarter with the credit part of tissue eat allowance to be launched in March this year and zero firsthand and NPL ratio basically because the credit is.
Almost everything collateralized and the credit card and the same thing based on your investments in our plants and finally on the right side of the financials.
And we reached the record numbers in all lines raws revenue adjusted EBITDA and adjusted net income surpassed the Mark of 1 billion of highs of adjusted net income and 1 single water just for you.
An example of you know how important the smart east for ourselves when we think about the year of the IPO 2019, the whole year.
We did 1 billion and approximately 1 billion of highs of adjusted net income and now you fast forward, 1 year and a half and 1 single water and we're able to hit the same mark in the second quarter and all of that keeping a high number of and gas as Martha mentioned 76.
So moving to the total revenue growth. We went from 2 billion to $3.2 billion year over a year of 57% increase.
And when we look at the components of the growth, it's very diversified and in my view, it's what it translates and a very resilient model that we have.
The growth and the revenue is represented by equities and features fixed income.
The financial products and much more.
And we look at the.
The.
Net income from financial income I'm going to let <unk>.
Let me talk about and the net income from financial instruments and the retail part before we go there and go back here and just mention the the fixed income and the institutional part of our business. We always talk a lot of bulk retail retailers and he knows the main components of our results and the second quarter represent.
And 7.7% of total revenues, but the institutional business did really well and the second quarter as well and I'm going to talk about it and a couple of slides so moving to the retail.
And revenue.
Went from approximately $1.5 to almost $2.5 billion half of total revenue and retail at 6.6% increase year over year and <unk>.
As I was mentioning.
The net income from financial instrument of parts of our revenue that youre going to see growing a lot and it's.
For related with the flow business that we have and with the development of the Brazilian and kept the market secondary trading.
And 2% and the second quarter of the total net of income from financial and this came from the segment the retail segment, which is.
Recurrence the way we see it.
Also the big rates when we look at the last 12 months take rate, it's pretty much stable, we always get the question about what's going to happen with the big grades the answer.
Pretty much the same it's hard to predict and forecast, but what I can salaries, despite losing part of the take rate because for fading of some part of the revenue as we did last year with the online brokerage and <unk>.
Wrinkle and XP.
We are able to add new products and services that increase the take rate and of course, there is the mass component of the growth of the assets under custody, which by itself reduce the take rate everything else.
Constant so the take rate has been pretty much stable at 1.3% and we expect to stay like that and the near future, especially with the banking business.
Getting traction in our ecosystem.
Moving to the institutional revenue. This is the 1 we decided and this is why we decided to basically talk about 2 topics here number 1.
Despite the breakdown of 12% of total revenue institutional hit the record market in this quarter, the 375 million of half of total revenue.
And the fixed income part played an important role here, especially.
Because we are in an environment of increasing interest rates in Brazil, I think it's worth sharing those numbers with all of you and so when we look at the total revenue growth of extreme of the second quarter quarter over quarter compared to the first quarter of this year our revenue grew.
15% institutional grew more than the average of the pumping Duane and 7% and inside institutional the fixed income component grew 39 for Sam quarter over quarter and it's for related directly correlated with the increase in.
Interest rates and the bottom of this chart, we have the selic rates.
At the end of each quarter and went from 2% to for 25% at the end of second quarter. This year and the expectation of the market about the end of period for 2020.1 each quarter. So the steepening of the curve helps the fixed income business not only for institutional segment, but also for retail segment and.
And I think it's worth sharing.
The numbers with all of you.
Now going to.
The EBITDA.
Adjusted EBITDA and the margin when the.
The last we share the SG&A the SG&A is going to keep growth as it has and basically because we are investing the logs.
In our people and tech knowledge and <unk>.
The words goals and so on and when we look at the second quarter of last year, we had the <unk>.
765 million has the total SG&A ex share based compensation. This year 900 million of high so of growth of 18% and what is important to highlight is the.
Operating leverage that we have and our.
And our business, despite invest and a lot youre very fast coinsurance and pay a lot of attention and understand that we need to control their costs as a competitive advantage going forward. So we can return that and for.
Price and offers to our clients and as you can see its second quarter of last year, our total SG&A as a percentage of net revenues represented 33, 2% second quarter. This year.
Went from 33 to less than 30% of total net revenue and when we look at the headcount evolution and our company at the IPO, We had approximately 2000 people and our company.
Since the IPO and through today, we have 1 board more people than we have built through October and lifetime from Q. The IPO moment, that's the very strong number we are going to keep the hiring.
At least for the falling waters as we see a lot of opportunity has masked the mention about the 800 billion revenue grew and the financial industry and we are just increasing from 70.100 billion to 350 billion and there is a lot more to do in XP. When we look at the mall.
Despite the all of the investments we have done in our people and head count growth. We are able to deliver operating leverage you can see that through our EBITDA margin going from 36, 3% last year to more than 40% from the second quarter of this year.
Growth of 7 and 7% year over year.
And lastly is.
The net income.
And net income margin.
As I said the variety of William.
And from $565 million to more than 1 billion of highs of adjusted net income.
A very.
The important growth year over year based on.
Retail business explain most of it and on the right part of it just shows what I've ever seen that I said.
Revenue growing exponentially 6.7% year over year, then you go to the EBITDA grows even more because of the operating average despite all of the investments 77% year over year and you go to the adjusted net income rose even more than the EBITDA because of the corporate structure.
Faced with the lower effective tax rate so with that I conclude my number of presentation here and we're happy to answer any questions you might have thank you very much.
Great Bruno. Thank you. Thank you and the mantra that's under the next next quarter. The the the V. Do is gonna be responsible to make the whole presentation thats the target right.
The goal we go direct trades for the Q&A.
Yeah, but I mean, we the <unk> that's S.
The size of guests.
So we are we will.
Call you are.
Allow to talk here on a first come for.
For serve basis, we have the Morgan Stanley team here on the first place for I believe it's either equity or.
And yet, but I think excluding.
Yeah.
Hi.
And the Q&A.
I hope everyone is doing great congrats on the extraordinary quarter.
So I'm sorry that was actually my question of the 1 you were reading and the Q&A I didn't know.
And you have been delivering.
Delivering inflows that are much better than unexpected items of call.
All of them, 1 timer, but they keep recurring and so.
Is it possible that you have now inflected for a much higher level of the AUC growth given your larger scale and brand awareness.
The IFA net which is a multiple of what it was for few.
Even a year ago.
Growth over the next 12 to 18 months May continue at these very rapid pace, what would hold you back from from saying you know what they would really 1 timers and you shouldn't think of was growing up the space over the next 12 months.
Yeah, when we think about.
Or to the babies.
It's the investment business as Martha mentioned, it's the hardest to penetrate the market. So the reason inertia there that depends on the Oems some time to get people out of nourish and so I am always conservative.
The answering that type of question and that's why we say between 10 to 15 billion per month, and the reasonable accelerated there, but youre right considering the best quarters.
As I mentioned, we had strong net inflows.
In 3 out of the for best quarters.
And that we we show to the market so.
And I'd, rather be more conservative here and not taking into account.
Are those more concentrated inflows and the private segment or corporate segment.
And we.
Even without that the heat the market of $15 billion more than $15 billion per month in the second of course, so yeah. I think there is a component of more brand awareness.
Momentum that kept getting and and despite the interest rates going up.
As you.
You can see in the graph that I showed in the presentation of the expectation now is what 758% is still below double digits. When we look at a longer period of the tree in Brazil.
It's not going to stop the financial deepening the way of seed, Brazil, It's really underpenetrated in terms of.
Different asset classes, we can see that in our ecosystem in terms of cross selling for international funds for alternative investments. We mentioned in the video of the private equity and venture capital exits democratizing access to clients that never invested in that type of.
Of products and they do have the the <unk>.
To invest in those and those type of products. So I think there is this momentum that will probably keep going but.
It's hard to say that.
I don't know what the inflection point, what do you mean by the inflection point.
Alright, Thanks, Bruno and congrats again on the great quarter.
And congrats on the appointment of of best of luck and the mineral and.
Gotcha.
Okay.
Thank you clearly we hope to speak to you soon.
Next in line, we have pockets of value from this.
It would be.
Hi, and kick in.
Okay.
Yes, we can.
Okay.
Thanks.
Thanks for taking my question and congratulations on the very strong quarter and I wanted to understand a little better and the revenue trends and so 1 thing that was particularly impressive to me was the margin expansion, especially in search of competitive scenario that we see a pressure on their own the.
And our cost base ROI of phase and so on and so in terms of the mix of revenues and I understand that there was a higher share of mountain and commission of all revenue was 1 of them when it could get your views on that how should that evolve going forward and whether is this a sustainable or not because and the.
The gross margin level that we're seeing here and really positive and such competitive scenario.
Look there is the the drives revenue.
<unk>.
Was the strong year correct and we had these are margin gross margin expansion year over year from.
Almost 70% of like tier 2 of little bit more than 70% of gross margin and this water, but the compression in terms of the investments we have been making in our IFA and Thats, where it is there. So all of the you know.
The investments that we have made and the expenses related to those investments and seen our commission.
Line in the box.
And you can see there so it's.
It's more of a mix of.
The products and the operating on average that we have and in our business.
And I don't know I mean the eye.
I wouldn't say that.
Non commission based as you as you said the <unk> view the.
The Commission line it grew a lot of the revenue.
Grew even more engaging us and operating leverage there, but it's marginal operating the average I would say gross margins pretty much flat year over year right.
Where we had good operating leverage as more of them.
The SG&A and the EBITDA marks because there you have all of the structure of the company of the platform to.
Serve all the clients and then of course when revenues keep growing the reach and.
And the operating leverage.
Much of stronger than and the gross margin.
And thank you I don't know 1.1 additional question just if I may here and yes.
All of that Joe you recently announced the position of live bunchy.
Why don't you get a little bit of your views and the in terms of the beaches in market and how do you see the opportunities going down we comment a lot of about the beach of beats out of the IFA network, but and what.
Why don't you get from the.
How hard you see this market and whether it is a good opportunity going forward.
And you know you want me to take the first part Yeah go.
Go ahead go ahead and months yeah, Okay, Yeah, how do the seed that we see the fine nature of deepening.
In Brazil happening and that's and their aging and the next.
A few years and.
And when we look today I would say we have about like 1100 I have stayed in the market. We believe this number can go up to the third seats.
<unk> hundred in third.
<unk> 6000.
The of phasing in the next 3 years. So we see just find interesting financing the raging and when you look the the beach of sea and the be true the market. We believe there is room to grow both of them.
Because as I mentioned, we see the assay net worth growing.
The 3 times and the next few years. So there's a lot of Bloom Lake <unk> and about the the live fun.
A condition.
For us it's very important XP was born as an education company. That's what the force product that we sold the land and was the first the chair teaching people how to invest in.
The ex using Brazil, so education.
And our DNA and we will keep investing indication.
And when you think about acquisition. It is very important like true she'll have content and to have.
Solid like.
Investment information and content should mature clients. So basically the strategy is true should have very strong content.
And she is the content true true, helping the execution part of the business.
But again, we see both of them growing our <unk> and <unk>.
Just just to to say 1 more thing about our strategy and the name of advisors.
Think of.
And as an ecosystem for and Triple net REIT. So we're like magazine AD that the.
Our ecosystem attracts a lot of interpreters and we can leverage all of those interpret nurse and their own business using our distribution capability and using ourselves as and put the news as well. So it's a win win situation when we make those at the.
<unk> minority Stakes so the volume is going to.
And still be independent as the asset managers that we acquired the minority Stakes theyre going to be independent.
But we can help them through our ecosystem and also dropped from the equity stake that we have and as I said and so win win situation because on their side. They can become more successful entrepreneurs. So it makes sense, we have done that and the best of the strategy it needs to come.
And our ecosystem and we're going to keep doing in the future considering we have the right price.
And just to give 2 hours looking at the commission.
Number of the.
Commission aren't the only the commission inside the gods.
Went up more than 50% year over year, So as I said, it's related to the growth of the.
The total revenue that grew 6.7% commissions grew like 52%. So it is really related and then the difference is basically mix.
And of product.
So for a clear and bring on market of thank you guys.
Think of breakout of the time.
Yes.
So our next question is from Mr to draw of monitor from Goldman Sachs.
Thanks, Sanjay and good evening, everyone Buena mine for a congratulations also on the on the strong results and and Yoplait and Mitra.
And Mike My question on the take rate kind of.
And you get this question, often and and you talked to every day, but more specifically on and the credit portfolio and the impact of that could have on the take rate. I mean, you mentioned the positive impact, but any color you can give I mean like what type of interest rates are you, earning on this I know npls of zero, but I assume there's some provision is involved.
What type of Npls would you expect over time and and how big do you expect the credit portfolio to get so just trying to estimate of how much will that credit portfolio benefit your take rate and similarly on the credit card PPV any color you can give and of potential take rate there.
Yes sure Peter.
Firstly.
We do not.
We disclosed segregate the numbers of the banking, but what I can tell in the low base, but for.
Water over quarter the banking.
Relevance of the banking related revenues and my bank and related I mean, the crowded the.
The credit card and the effects.
The they grew more than 100% quarter over quarter. So it's a strong growth in terms of.
The whole thing is growing but the banking is supposed to grow even more than the rest of the products and in our ecosystem for obvious reasons.
And new business that we have started.
So the relevance as.
The breakdown of the total revenue it should keep growing as we move further down the road. So that's that's 1.1 thing and that thing by itself increase the take rates everything else.
Constant and basically because of.
There is not necessarily a custody associated with the revenue. So we increased some basis points there.
Bank and services and products and we do not have the at the full digital bank accounts that we're gonna have you already have for.
And already employees and few clients, but youre going to rollout as we did with the credit card business and <unk> of this year.
Hey.
And so that's that's about the.
The bank and adding services and products, but of course, the <unk> is expected to keep growing and as I mentioned the math of the custody. We have not reached yet the 1 thing and Ah Hey, ice of assets under custody and our costs and that's another.
Fortunate thing to mention northwest and we do not consider institutional cash from <unk>.
Pension funds are <unk>.
And some institutional clients that we do have the custody inside of XP, it's not in that number because they do not talk to the retail revenue and also.
We do not consider.
Assets under administration and that despite.
Having a business of administration and our broker dealer as well, but we expect to grow and the custody and that it's going to rigs and so the take rate.
All of us and serve the same way, it's hard to forecast I would expect it flat.
Flats and why is that because there is some compression in terms of prices do not affect us directly as I said before I believe this price compression is much more SKU and each of the fixed income funds from the.
The asset managers of the incumbent banks, that's to charge to high <unk>.
Management fees, we do not charge those high management season of our platform and the mix.
And 2 more alternatives and multimarket or equity funds and our platform.
She still Underpenetrated and Brazil generally speaking, we believe as we said the financial apron and she's going to be there. So this movement of assets of location is positive for the fifth grade steel.
Interest rates going up fixed income.
Should present, a more relevant growth in our and our growth in our average equity.
It's stable, it's not going to have the tailwind that it had in the past but.
And I've said and it's very resilient business model no matter, what the macro environment is because of the underpenetrated and in the market because of our.
The low relevance in terms of total revenue when we think about the total revenue we expect to keep growing independent of the macro environment.
And just to add Cheetah, Alaska and bought the credit card PPV.
Uh huh.
Where we are not opening the target but.
Just to give you a color to date the.
The only clients that are out loud Shaw.
They are a credit card, we force XP clients above 50000 Reais.
So imagine that's less than I would say 20, 30% off of our clients when you look.
The core when you look the clients and we flagged and the <unk> XP. So.
There's a lot of room, like Youll see and growth and the TPG and the next quarters.
And I expect the tip of vehicle up really fast.
And as always at.
The XP with Randy and we want to be 1 of the main players of credit cards, and Brazil, and the next few years and the way we did things here everything the ski.
<unk> in terms of the.
The technology.
True behind it so we can use it for all of the 3 brands. If we want to so that's the way we've built things of course, we need to test execute and folks the lever get batter and listen to the clients and Thats exactly what we have been the but when we think about the law.
Long term strategy everything needs to be scalable for many millions of clients and the future.
Great. Thanks, Bruno and modify that necessarily helpful. Maybe if I could just ask 1 follow up and.
You mentioned, the addressable market of 800 billion, which fully servicing assets and you have $3.1 million clients today, and how do you think about the addressable market for.
For the clients I mean, I think your clients 1 of the higher end, but just thinking about the addressable market for clients.
Yes, yes, that's a good point.
And when you look.
Ex feedback 2 years back.
As I mentioned E and my my force.
Bulk.
Have been very fulsome owning <unk> profit and when you'll have owned the investment products you need.
People that are minus favors. So once you start like true moving forward true credit you would start to move forward like payments G style Count and then you can go down the prior and meet and increase your U R.
Target of clients. So for share you can expect XP true should increase the target of clients when compared to a few years ago.
Okay. Thank you.
Congratulations again.
And the tier 2 into deal.
Great to hear from you again.
So.
And now Stephan and Blue Scott I Hope I didn't.
Just 1 second let me be simple.
And that's the English call.
<unk>.
And really hope I'm not used.
She's pronouncing your name.
Welcome.
Thank you can you hear me.
Yes definitely.
And the first of all of the as did the great job with my name is perfect and so.
Polish name and the gym.
And it's extremely well.
Thank you very much and also congratulations and congratulations to the great set of numbers and with a few smaller questions for you and the <unk>.
First 1 being and.
And assets under custody, how would the split them and which part of it.
Equities was front and if it is fixed income funds can.
Can you give us in the corner.
And.
Stefan and we do not the.
That's great down.
What I can tell of the equity.
And the most relevant part of the total.
But the fixed.
The income.
And the fund platform and general.
Those 3 together would be the ballpark of the total cash and it's not it depends on because of the equity as you know it depends on the market prices as well.
But so it will vary from quarter to quarter, but I would say in the.
The order of relevance equities.
The funds and <unk>.
Okay.
And the inside funds you have moved market equity funds fixed income funds of the breakdowns and diverse.
Understood. Thank you very much the <unk>.
And the question is of the number of <unk> CTO Misspoken and human to say you have 11, thousands and all right and do you expect to become the standard and.
And the 3 years is the correct, yes, yes.
The 11000 and the market.
And third the seats to the.
<unk> 6000 in.
In the next few years with the 11000 would you still have a market share like 80% of <unk>.
The switch to kind of.
Yeah, roughly roughly the point of the IFA the.
Most important at least in my opinion is what Martha said the.
And these profession and.
ROE and a loss of has wrong a lot.
Past years, and we expect to keep like that or everything that we have discussed here, especially when we think about the <unk>.
And with banks.
Moving to cut costs, and Kohl's branch, so and the financial deepening and going on and our IFA network high.
Our hiring and seeking for the new I of Phase and also other players in the market looking for a higher face. So I think that's the trend that we'll keep growing the the next year's this math for me now.
And we completely agree with you and that's why I'm, asking a new way and I liked the slides.
And that you had around the the IPO, where you had the challenge of how many units you discontinued can use of it so with Vince and who was asking about the number.
And I have 1 more question about the profitability of the segment I think if I if I understood you correctly to 82% of profits come from the retail segment was 77% of revenues and.
Can you just say and little bit about the profitability of.
Of the first institution.
And of the.
Issuance.
Issuer services, which of the 2 other kind of relevant for clients.
No. Unfortunately.
We do not disclose for.
And the ability by the segment, especially because when we think about the SG&A.
And the infrastructure of our ecosystem is there to serve all.
All of the segments, so either the retail and institutional.
<unk>.
Of our served by the same infrastructure and most of the cases, so we look at the profitability as a whole and.
And is reported in our numbers.
Okay understood. Thank you. Thank you very much.
Thank you very much for answering this question. So we are in Germany.
Wages for the until midnight and it was really a little bit of it and I have to say.
Thank you for participating in our call.
Thank you thank.
Thank you so much Stephan.
Always good to hear from different countries and please let us know through our IR contact us if you need a follow up call. We can we will be thrilled to walk you through some of the dynamics of the company more detail. Thank you.
I would love the thank you very much and.
For goodwill.
And last but not least we have nihon <unk> from HSBC.
<unk>.
Great.
Good evening and can you hear me.
Yes, I can.
And they have.
Hi, Hi, and congratulations to Thiago of I didn't hear the right and we wish to.
Hassan Thank you for attending the call today.
And congratulations on the blockbuster launch and I think they thought it earnings from it and most of my questions and answer but.
I wanted to dig a bit upon the financial income as you said, 82% of the financing income related to the retail segment.
And if you look at the big none of the revenue.
The big part of the net new growth for this quarter has been driven by different asking for them and that has that is becoming more and more none of them.
And then finally ex breath over that for us.
If you think about the getting that 1 of the factors and we should continue and how should we think about projecting that line.
And part of that and get into revenue, but for us and it's just a day has to understand how do we projected and my second question of and Langley XP.
And then just kind of that you think the right but.
For the loan portfolio has been doing that event.
And if you can give us some sense of 1 of the kind of nave study of charge for some of the cash and non cash loans.
And what are the day that he charged for brocade kudlow, and it's still small but.
1 of the needs and 1 of the class of 1 of the cost of the study C for the taste of kind of bonds that would also be that he has for us.
Thank you.
Okay. So yes, the net income from financial instruments and fine.
Understood the correct what what your question was.
It is growing and the way.
I believe you should think about looking forward is.
Related to the growth of the secondary market because that's related to the secondary market and the growth of new products and business that comes to the market. So for example, I will give you some examples.
Like re the.
And it's firm funds and the industry that was and the best nonexistent in Brazil, as well that XP helps to develop not only the primary markets, but especially the liquidity of the funds being traded in the secondary market and by doing that we reinforce also the primary market.
And that's the beauty of the ecosystem is 1 thing pushes on the other you have more offers you have more products to trade and then <unk>.
The development of the capital markets itself as I said.
Which is 1 example, and we have the Bvr's you have the fixed income corporate bonds being traded all of that.
It is the business of flow so these business of flow.
We are active in this business in order to have products too.
To offer for new clients and existing clients that keep bringing more money into our ecosystem and our assets under custody demonstrate and.
And also it's important to enhance the experience of the clients in terms of liquidity and the secondary chain and.
And 1 thing brings the other 1 so the way I like to think about it it's related to the custody it's related to the growth of the volume of trading and it's related to this business of for having said that there is 1 additional component that goes into the net income.
From a financial instrument that is directly related to interest rates, which is basically of the floating revenue that goes in there and then if interest rates go up if the floating balance goes up.
Because it's also related to the custody.
Net by itself should increase the net income from financial instruments.
Regarding the credit card and the rates.
Right now.
Our profile of clients they do not use the revolver and part of the credit card.
So it's not something that we have considered in our business plan aiming for the clients that now as Martha mentioned above only of XP brand above fifth gain invested Brazilian high.
And the revolt and parts not for outcomes.
And of course for the future.
And when and if we decide to.
Except the broader public Naga brands.
And this equation, depending on the profile of of the clients can change going forward.
And that's it.
Could you give us share.
My line on your vision.
Vision of spot for bankruptcy, what I just thought I'd ask do we have and the pipeline for the next year or 2 I know you mentioned that you will launch the <unk>.
2 of bank accounts by the end of this year, but any of the products that you have in mind that we should expect for the next year or 2.
There is a huge pipeline.
When we proved the model.
When we think about Brad it's the there are different segments and and specifics.
When we think about individuals is 1 thing and when we think about comp investing needs. Another thing. So the pipeline is huge.
We are planning to have the strategy day with the <unk>.
Investors sell side analysts so we can give a little bit more more color.
We'll get the high level. The moffitt can complement if you want but the thing is that we're going to have full day dot com.
By the end of this year.
And that's important to complement the <unk>.
Experience and with the credit the credit card and of the store counts.
And then.
As I mentioned before the architecture. The foundation of what we have been doing is the scalable we can adopt and different brands. If we want to so it's more about the business decision.
And then anything else, but the market 2 for you too.
Yeah.
I would and sort of liking in a different way like we have 3 main main pilots that we are going to explore in the next quarters. The first 1 is banking sales and general and you can include payments <unk> of accounts credit cards et cetera and credit.
And renovation, we are going to have different credit the credit lines.
In the next quarters, we are already working on that.
We have been more and from that for a few quarters and.
And we are going to allow the soon some of them.
We have insurance they just true true increase the range of.
<unk> insurance that we have today and.
And the third 1 is thinking of on companies for.
And on Smbs true corporate companies, we are going to share.
<unk> developed a lot of like projects focus on.
And just company so.
It's a lot of being for the for the next Clark renovation, we are going to give a better color on the day of each key product that we are going to allowance.
On the Investor day, but for sure and it's.
The upbeat roadmaps for for the next quarter, we have a lot of work attributes of.
Yeah.
Well I'd say our strategy data and.
Yeah.
And thank you thank.
Thank you for them and thank you Catherine.
Thank you.
And can you hustle and we don't have any other raised hands here so with that we.
Concludes our second quarter of 2021 earnings call. Thank you everyone for the participation again, the IR team is always available and alerts.
Scheduled calls with you Scott would you whenever it's convenient.
And so.
Bruno of would you like to deliver any any closing the messages and then and then mantra.
Yeah, No just just before market growth the call.
Like to mention that before our next meeting the next the following earnings call.
<unk>.
We're gonna have already of our PBR is being traded and Brazil, it's something important for us because.
Retail investors and Brazil.
And we'll be able to buy directly and to be 3 of our shares if they want to and that's a consequence of the.
The deal that <unk> already announced to the market of X Park Central.
The Central Bank has approved and.
And now it's a matter of time to have the general meetings Stewpan the approval by both general meetings X genes and ex parte, but.
Assuming that fabrics, and he's going to be and smooth and approved.
And the third quarter at the end of the third quarter. This year, we expect to have.
The transaction completed and.
<unk> is being traded and Brazil.
Martha.
Yeah, well for the I just would like true.
Yeah.
Alright.
Just would like true. Thank you all again for being here with us and.
And say that despite the great result that we are delivering this quarter.
We only have 1%.
About 1% of that addressable market that we believe we should pursue and the next years. So as we always say we are only at the beginning here and I'm very excited to be weeks all of your guidance for the next years. So thank you very much.
Thank you.
The Medicare.
Yeah.