XP Inc. Q1 2026 Earnings Call Summary

XP Inc. Q1 2026 Earnings Call Summary - Moby

Operational Context and Performance Drivers

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Performance in Q1 was significantly impacted by external technical factors, specifically a widening of domestic credit spreads in March that pressured mark-to-market positions. Management attributes the 8% year-over-year revenue growth to strong execution in retail verticals and the wholesale bank, which helped offset the temporary slowdown in debt capital markets. The company is transitioning to a more diversified revenue base, with 'new verticals' and floating income gaining representativeness to reduce reliance on pure investment banking cycles. Retail strategy has been refined through client segmentation, focusing on goal-based investing for retail tiers and full-service wealth management for private banking to capture market share from larger incumbents. A strategic leadership transition is underway with the appointment of Gustavo Vallejo as CFO, bringing 30 years of banking and credit expertise to support XP's evolution into a broader financial ecosystem. Despite short-term volatility, management maintains that the underlying business momentum remains solid, supported by an early-stage interest rate easing cycle that typically boosts investor risk appetite.

Strategic Outlook and Guidance Assumptions

Management reaffirms confidence in delivering double-digit growth for the full year 2026, assuming credit spreads stabilize following the volatility seen in Q1 and April. The efficiency ratio is expected to normalize throughout the year, with a target of remaining flattish compared to 2025 levels as revenue growth resumes. Capital allocation remains a priority, with a commitment to reach a BIS ratio between 16% and 19% by year-end through continued buybacks and dividend payments. The transition to fee-based advisory models is expected to accelerate, with management projecting these models will represent approximately 50% of individual AUC within the next 3 to 5 years. While Q2 may still reflect some spread pressure, management anticipates a better balance between buyers and sellers will lead to a more stable phase in the coming months.

Structural Changes and Risk Factors

Introduced a new managerial P&L structure, organizing business lines into Retail and Wholesale segments to better reflect operational reality and improve comparability with peers. NPS was temporarily impacted by one-off credit events related to Banco Master; however, recent indicators show a recovery to 70, with a return to historical levels expected by year-end. Announced a new BRL 1 billion share buyback program and BRL 500 million in dividends, totaling BRL 2.5 billion in capital distribution announced year-to-date. Proprietary funds were transferred into the bank structure, eliminating 'holdco' tax adjustments in favor of market-standard tax-equivalent reclassifications.

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Q&A Highlights

Rationale for CFO transition and potential strategy shifts

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Management clarified the transition was a well-planned move to bring in a CFO with deep banking and credit background as the company scales its banking products. Confirmed there is no change to the long-term strategy; the move is intended to support the existing roadmap rather than pivot the business model.

Impact and recovery timeline of credit spread widening

The Q1 impact was primarily mark-to-market on tradable fixed income rather than realized credit losses. While spreads widened further in April, May has shown signs of stabilization; however, management does not expect significant spread compression until Q3 or Q4.

Sustainability of efficiency ratios amid revenue softness

Management is committed to maintaining a flattish efficiency ratio for the year even if the macro environment deteriorates. If revenues remain soft, the company will adjust its investment pace to protect margins while maintaining core strategic initiatives.

Evolution of the fee-based advisory model

Currently, about 25% of individual AUC is under flat-fee or fee-based models. Management views this as a key driver for revenue stability and expects it to reach 50% of the mix over the next few years as client adoption grows.

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