Q2 2026 Agi Inc Earnings Call
Speaker #1: That is a small part of the free visions.
Speaker #2: Got it. Thanks.
Speaker #3: The next question comes from Renato Meloni with Autonomous Research.
Speaker #4: Hi everyone, thanks for the space here to ask questions. First, a bit on the name and loan mix. You mentioned earlier—well, actually, even before that—last quarter you said the expectation was that unsecured loans would again gain more share.
Speaker #4: And that didn't happen. This quarter, in the reason for that, you explained it's pretty seasonal, so I wonder what went differently given that, like, the advanced payments for 13 salaries should have been embedded in your expectations.
Speaker #4: And then I’d like to know, when do you see that mix shifting again towards unsecured lending? The second part here is on the NIM.
Speaker #4: You're mentioning the NIM compression that happened versus for SKU—you would treat that in the mix. But I'm looking here at your interest expenses also, like, growing 6.6% quarter on quarter.
Speaker #4: Your cost of funding seems to be going up, so I wonder if that was also part of the effect, and if you had some change in your funding structure here.
Speaker #4: Thank you.
Speaker #2: Hi Renato, thank you for the question. Yes, so, starting with the last part of your question—yes, of course. The high interest rates in Brazil continue to weigh on spreads overall across the industry.
Speaker #2: So we still have high interest rates. In terms of funding, we don't have a different structure of funding. It's actually getting better, improving every quarter. As you know, this quarter, a few weeks ago, we were upgraded by two different credit rating agencies.
Speaker #2: Moody's and Fitch—from double A minus to double A—and our average cost of funding, on average over the portfolio, continues to go down every month a few basis points.
Speaker #2: What happens is, at some point in the calendar, we issued that in different sizes, and specifically this quarter we issued another FIDIC, which is a very sizable check of 2 billion, 2.5 billion reais.
Speaker #2: And that also weighs on the margins because it's funding ahead of the origination. Before we deploy the capital, we carry a little bit of time with this cash on the balance sheet when we do that.
Speaker #2: But it's a very good way to have financial planning into deploy capital over the years, so we continue to do this type of funding in our structure.
Speaker #2: In terms of the overall NIM, well, we advanced it to you in the last quarter that the unsecured part of the credit portfolio was reducing because of the short-term duration and what we needed to do is to increase origination.
Speaker #2: It's exactly what we did in this quarter. We increased origination by 80%. The net origination of unsecured loans increased by 80% in the quarter.
Speaker #2: And what happened is that, on top of the natural amortization, we also had the 13th salary. So what we are set to do is continue to originate in the unsecured part, together with the private payroll loans as well.
Speaker #2: To bring back this NIM to an upward movement instead of being flat as it is in this quarter. So we believe we have all the conditions and the operational part of the business demonstrated to us that we can do this in the second half of the year.
Speaker #4: And do you have any expectations of when the NIM will inflect and start going up?
Speaker #2: Well, this is a matter of, you know, a few months having more origination of the it's a technical calculation, right? So although we don't have still don't have the number, absolute number of our portfolio balances in unsecured growing more than the secured part, the NIM won't bounce back.
Speaker #2: So it's a matter of time but we won't set here a specific quarter to provide you with the, you know, improving number. Also, we are in an environment that.
Speaker #2: Rates are above the expectation from everyone a few weeks ago, six months ago. We were expecting Select to be, you know, at least 100 basis points lower than it is now.
Speaker #2: So it depends on what will happen with the base rates as well.
Speaker #4: Thank you.
Speaker #3: The next question comes from Marcelo with Bradesco BBI.
Speaker #5: Hello guys. The question is regarding the expenses again. So just to understand, so first, looking forward, so you guys believe that the level of expenses on the GNA expenses are enough to sustain the growth of the bank looking forward?
Speaker #5: So you don't expect any more growth looking forward? And also, can you give us, like, a breakdown of this growth? What drives this growth?
Speaker #5: On this quarter, thank you.
Speaker #2: Hi Mizahi, Marcelo here. What growth were you talking about at the end of the question regarding the expense?
Speaker #5: The GNA expenses, yes.
Speaker #2: So yes, so in terms of the I think your microphone is open, Mizahi. Thank you. So in terms of the overall size of expenses, we believe is very well in line with the size of number of clients that we have and the portfolio, so we don't see, you know, big movements going forward.
Speaker #2: Instead, you know, exactly what happened in this quarter part that is variable. You know, the number of clients that we have principality where we see, you know, have to have the cost to serve per client per month as we increase the number of clients.
Speaker #2: And the transactional and technology part that we invest a lot of AI and usage of AI and tokens so when we improve you know and increase the usage of technology of course we use more expenses but you know it is a relative smaller part of the total expenses that is variable.
Speaker #3: Thank you. With this, we conclude today's presentation. We thank you all for your participation, and have a nice evening.
