• Client Assets: BRL1.22 trillion, 9% growth year over year.
• Number of Advisers: 18,200, 5% growth year over year.
• Client Base: 4.7 million, 3% growth year over year.
• Gross Revenue: BRL18 billion, 15% growth year over year.
• EBT: BRL5 billion, significant growth year over year.
• Adjusted Net Income: BRL1.2 billion in Q4 2024, BRL4.5 billion for the full year, 17% growth year over year.
• ROTE: 28.7% in 2024, 376 bps expansion versus 2023.
• ROE: 23%, 163 bps expansion.
• Adjusted Diluted EPS: 16% growth during the year.
• Net New Money (Retail): BRL20 billion per quarter, 67% growth year over year.
• Total Net New Money: BRL26 billion, 37% growth year over year.
• Credit Card TPV: BRL13.1 billion in Q4 2024, 11% growth year over year.
• Life Insurance Written Premium: 37% growth year over year in Q4, 44% growth for the full year.
• Retirement Plans Client Assets: 10% growth year over year in Q4, BRL81 billion.
• Retail Credit NII: 79% growth year over year, BRL81 million in revenues this quarter.
• Corporate & Issuer Services Revenue: BRL2,289 million, 45% growth in the year.
• SG&A Expenses: BRL5,927 million, 10% growth during the year.
• Efficiency Ratio: Improved by 157 basis points during the year, achieving 34.7%.
• Adjusted Net Income: BRL4,544 million for the year, 17% growth year over year.
• BIS Ratio: 17.7% at the end of 2024.
• Dividends and Buybacks: Close to BRL10 billion over the past three years.
• Earnings Per Share (EPS): BRL8.28, 16% increase year over year.
• ROTE: 29.2% in the quarter, 78 basis points higher quarter over quarter.
• ROAE: 23.4%, 40 basis points higher quarter over quarter.

• Warning! GuruFocus has detected 6 Warning Signs with XP.

Release Date: February 18, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• XP Inc (NASDAQ:XP) achieved a record-setting year in 2024, with gross revenues reaching BRL18 billion, marking a solid 15% growth year over year.
• The company reported the highest quarterly adjusted net income since its IPO, posting BRL1.2 billion in Q4 2024 and a total of BRL4.5 billion for the full year, representing a 17% expansion year over year.
• XP Inc (NASDAQ:XP) demonstrated strong growth in client assets, reaching BRL1.22 trillion, a 9% increase year over year.
• The company achieved a 28.7% ROTE in 2024, with a 376 basis points expansion versus 2023, indicating strong profitability.
• XP Inc (NASDAQ:XP) successfully expanded its retail fixed income and corporate & issuer services, contributing significantly to the company's revenue growth.

Negative Points

• The company faces challenges in maintaining its take rate due to the increasing share of fixed income products, which typically have lower margins.
• There is a potential risk of lower DCM volumes in 2025, which could impact XP Inc (NASDAQ:XP)'s growth in the corporate and institutional segments.
• The competitive environment with large banks, especially in high-interest rate scenarios, poses challenges for XP Inc (NASDAQ:XP) in terms of market share and pricing.
• The company's risk-weighted assets grew significantly, driven by the expansion of the wholesale banking franchise, which may impact capital efficiency.
• XP Inc (NASDAQ:XP) needs to focus on improving the productivity of its IFA channel to unlock further growth potential, which may require additional resources and strategic adjustments.

Q & A Highlights

Q: Can you explain the significant increase in risk-weighted assets this quarter, particularly in market risk? A: The increase in risk-weighted assets is primarily due to the new Central Bank regulation, which allocates credit spread risk to market risk. This change affected our book, which grew by BRL8 billion in corporate securities and quasi-sovereign government banks, adding risk to the market RWA rather than the credit RWA. - Victor Mansur, CFO

Q: Why are internal advisers significantly more productive than the rest of the sales force? A: Internal advisers benefit from a more standardized sales process, supported by data and technology. We aim to replicate these tools and techniques for our IFA network to unlock further value in 2025. - Thiago Maffra, CEO

Q: How do you view the competition with banks, especially regarding tax-benefited instruments like LCIs and LCAs? A: While high interest rates favor banks, we've developed partnerships and technologies to compete effectively. Changes in regulation are not expected to significantly impact us, and we view our BRL20 billion net new money target as a floor rather than a ceiling. - Thiago Maffra, CEO

Q: Can you elaborate on the mark-to-market impact on the equity side of your balance sheet? A: The mark-to-market impact is due to balance sheet hedges, specifically government bonds hedging assets and liabilities booked at amortized cost. This creates a distortion as one component is marked to market while the other is not. We plan to harmonize these booking models in 2025 to eliminate this effect. - Victor Mansur, CFO

Q: What are your expectations for the take rate in 2025, given the increasing share of fixed income? A: We anticipate a flat take rate for 2025, around 1.28% to 1.29%, similar to the past three years. While we believe we are nearing the end of the cycle of shifting from higher ROTE products to fixed income, we are not projecting higher take rates in our internal budget. - Thiago Maffra, CEO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.