Earnings Call: Q2 2021

Aug 3, 2021

Sorry, had a minor issue. Good evening, everyone. Welcome to XP Inc. Earnings call for the Q2 of 2021. I am Andrea Martins, Head of Investor Relations. And on behalf of the company, I would like to thank you for your interest in our webinar. We hope everyone's safe, everyone's healthy. It's always good connecting with you, I mean, not necessarily on a quarterly basis. But Today, we have with us Thiago Maffra, our CEO we also have Bru Constantino, CFO and the IR team myself, Antonio de Marens and Marina Montemur. We will be available for the Q and A session right after the presentation, and you can raise your hand on the Zoom tool to ask questions. Before beginning the presentation, please refer to our legal disclaimer on the earnings presentation. That's the session where we clarify forward looking statements and their definition. 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 Mahfra to deliver the opening remarks. So with the I mean, as you saw, a very special first half of the year for us with this very upbeat message, right, in song and this Olympic mood. I'll pass the word to our CEO, Charu Mafra for the first time here as a CEO participating on the call. Manfred, the floor is yours as we project our presentation. Okay. Thank you, Andre. First, thank you all for participating in our earnings call. This is my first time here, as Andrea mentioned, as the company's CEO. I'm very happy to be here, and I expect to be in touch with you for many years to come. Can you move to the first slide? Well, the idea on this slide is to show how our business model has evolved during the last years. As you all know, XP has completed 20 years last May. And for the 1st 18 years, We have been very focused on the investment business. However, in the last two years, we have expanded our products and service Far Beyond Investments. On the left box, we show how we started from the most difficult segment to penetrate With high switching costs and great need for a trusted brand, the current satisfaction level of our clients translated by the MXN seventy six EPS that we achieved this quarter tells us that we are in the right direction. Currently, on the center box, we are preparing the company to successfully deliver our ambitious goals, which involves Entering new verticals and expanding our TAM from EUR 110,000,000 today to EUR 350,000,000,000 on the next 3 years. It's worth mentioning that the market will generate almost EUR800 1,000,000,000 in 2021, of which we have about only 1%. Additionally, in order to intensify the disruption that we have been leading in Brazil, One of the main enablers that will allow us to enter new markets is the digital transformation that we have been doing in the last few years. Our goal is to have a scalable tech platform that will allow us to have lower cost to serve and faster time to market. On that context, New verticals such as banking, insurance and solutions for companies from SMBs to corporate are quickly advancing. We are doing substantial investments on these new verticals, and we expect to see By embracing a broader universe of Brazilian individuals and companies, we will take XP to a new level of reach, always focus on clients and their needs. We will keep transforming the financial market in Brazil beyond investments to become the one stop shop for all the financial service, being the number one service provider to millions and millions of clients. Now I will pass to Bruno. He will show our financial KPIs. Thank you, Mahfra. Good evening, everyone. Great pleasure to be here with all of you one more time. And I will start with the main highlights of the quarter. I will try to be brief, so we can go to the Q and A session, which is much more interesting. So the highlights, as you probably could see, a very strong quarter, again, the strongest ever, and I'm going to go through the numbers in the following slides. Also, as the video showed, The M and As that we announced recently and that we expect to keep doing the partnership model with our main IFA offices As a broker dealer, we closed 4 deals. Also, the independent asset manager business, it's something connected into our ecosystem. It makes sense to leverage those independent asset managers. It helps the liquidity of the secondary market, the development of the Brazilian capital market itself, and that's key to democratize the access to investments and the growth of the capital markets by itself. So we announced the partnership with Catania, with GiantSteps and with Jive in the Q2 this year, and we are always looking for opportunities like that. We also entered the bond market first time. We did the roadshow and closed the deal in the Q2, but the liquidation only happened in July 1. So you're not going to see that in our 2nd quarter numbers, only in the Q3. But I think it's important to highlight that to have access to the global bond community as a long term strategy is something important considering the size of this market and how liquid it is. And last, the brand awareness, we are honored with the award that we received by Euromani as the best bank for wealth management this year, 2021, in Latin America, when we think that this business, this segment in XP 5 years ago was almost non existent. So we went from 0 from the ground and received this award This year is something that make us really proud. And as Andrea mentioned about the Brazilian Olympic Committee, We established this long term relationship as an investor in the Brazilian Olympic Committee, and we also are really Happy with this partnership, especially when we think how sports can transform the whole society and we are eager to keep this relationship close. Now moving to the numbers itself. So the KPIs you have seen already, the investment KPIs and the banking KPIs and new year is only the financial KPIs. Going to the left, the investment KPIs, we reached the EUR 817,000,000,000 assets under custody as of June, 88% increase year over year. Active clients, a growth of 33% year over year, surpassing the mark of 3,100,000 clients. In net inflows, a very strong quarter, BRL 75,000,000,000. We did have Some concentrated net inflows. We estimate more around EUR 30,000,000,000 of this EUR 75,000,000,000 in few clients, especially the Private Banking segment. But as someone asked here in the chat, in the Q and A, in the last 4th quarters, we had these what we call the extraordinary inflows or outflows in the last 3. So if it's coming every quarter, it's not extraordinary anymore. It's more volatile, but not extraordinary, but a very strong quarter in terms of net inflow. When we go to the middle, the bank the main banking KPIs, BRL 6,800,000,000 our credit portfolio. There is not credit card in this number, so loans and Receivables of the credit card is not included in this EUR 6,800,000,000, a strong growth year over year. We're very small last year, but growing even when we compare quarter over quarter. We ended the Q1 with BRL 4,700,000,000 and reached almost BRL 7,000,000,000 at the end of the second quarter. When we look at the credit card, we are really, I mean happy with the results and it's above our expectations and our expectations usually is very high. BRL 2,100,000,000 of total TPV in our Q1 with the credit card officially launched, to be launched in March this year and 0% NPL ratio basically because the credit is almost everything collateralized and the credit card is the same thing. It's based on your investments in our platform. And finally, on the right side, the financials, We reached record numbers in all lines, gross revenue, adjusted EBITDA and adjusted net income, surpassing the mark of BRL1 1,000,000,000 of adjusted net income in 1 single quarter. Just to give an example of How important this mark is for ourselves when we think about the year of the IPO 2019, The whole year, we did BRL 1,000,000,000 approximately BRL 1,000,000,000 of adjusted net income. And now you fast forward 1.5 years and in one single quarter, we were able to hit the same mark in the Q2. And all of that keeping a high number of NPS, as Mahfar mentioned, 76. So going to the total revenue growth, we went from BRL 2,000,000,000 to BRL 3,200,000,000 year over year, 57% increase. And when we look at the components of the growth, it's very diversified. And in my view, it's what translates in a very resilient model that we have. So the growth in the revenue is represented equities and features, fixed income, financial products and much more. When we look at The net income from Financial Income, I'm going to let me talk about the net income in from Financial Instruments in the retail part. Before we go there, let me go back here and just mention the fixed income and the institutional part of our business. We always talk a lot about retail. Retail, as you know, is the main component of our results in the second quarter represented 77% of total revenues, but the institutional business did really well in the second quarter as well, and I'm going to talk about it in a couple of slides. So moving to the retail revenue, We went from approximately BRL 1,500,000,000 to almost BRL 2,500,000,000 of total revenue in retail, a 66% increase year over year. And as I was mentioning, The net income from Financial Instruments, a part of our revenues that you're going to see growing a lot and it's correlated with the flow business that we have and with the development of the Brazilian capital market secondary trading, 82% in the 2nd quarter of the total net income from financial instruments came from this segment, the retail segment, which is very recurrent the way we see it. Also, the take rate, When we look at the last 12 months take rates, it's pretty much stable. We always get this question about what's going to happen with the take rates. The answer is pretty much the same. It's hard to predict, to forecast. But what I can tell is despite Losing parts of the take rate because for fading some parts of the revenue as we did last year with the online brokerage in Ricoh and at XP. We are able to add new products and services that increase the take rate. And of course, there is a math 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 in the near future, especially with the banking business getting traction in our ecosystem. Going to the institutional revenue, this is the one we've started in this slide, we've started 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 BRL 375,000,000 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. So when we look at the total revenue growth of XP in the 2nd quarter, quarter over quarter compared to the Q1 this year, our revenue grew 15%. Institutional grew more than the average of the company, 27%. And inside Institutional, the fixed income component grew 39% quarter over quarter And it's correlated directly correlated with the increase in interest rates. In the bottom of this chart, We have a steady rate at the end of each quarter. It went from 2% to 4.25% at the end of second quarter this year and the expectation of the market about the end of period for 2021 in each quarter. So the steepening of the curve helps the fixed income business, not only for institutional segment, but also for retail segment, and I think it's worth sharing those numbers with all of you. Now going to the EBITDA, adjusted EBITDA and the margin. On the left, we share the SG and A. The SG and A is going to keep growing as it has and basically because we are investing a lot in our people, in technology, in new verticals and so on. When we look at the Q2 last year, We had BRL 765,000,000 of total SG and A ex share based compensation, this year BRL 900,000,000, So a growth of 18%. And what is important to highlight is the operating leverage that we have in our business. Despite investing a lot, we are very cost conscious. We pay a lot of attention and we understand that we need to control the costs as a competitive advantage going forward. So we can return that in prices and offers to our clients. And as you can see, Q2 last year, our total SG and A as a percentage of net revenues represented 33.2%. Q2 this year, it went from 33% to less than 30% of total net revenue. And when we look at the headcount evolution in our company. At the IPO, we had approximately 2,000 people in our company. Since the IPO until today, we have onboard more people than we have built throughout our lifetime until the IPO moment. That's a very strong number. We are going to keep hiring at least for the following quarters. As we see a lot of opportunity, as Mahfa mentioned, about the EUR 800,000,000,000 revenue pool in the financial industry, and we are just increasing from SEK 7,000,000,000 to SEK 350,000,000,000 to SEK 350,000,000,000. There is a lot more to do in XP. When we look at the margins, despite all the investments we have done in our people and headcount 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% in the Q2 of this year, growth of 77 percent year over year. And lastly is the net income and net income margin. As I said already, we met from BRL565 1,000,000,000 to more than BRL 1,000,000,000 of adjusted net income, a very important growth year over year based on retail business, explaining most of it. And on the right part, it just shows what I everything that I said. Revenue growing exponentially, 57% year over year. Then you go to the EBITDA, it grows even more because of the operating leverage despite all the investments, 77% year over year. And you go to the adjusted net income, it grows even more than EBITDA because of the corporate structure in place with the lower effective tax rate. So with that, I conclude my number presentation here, and we are happy to answer any questions you might have. Thank you very much. Great Bruno, thank you. Thank you and Marfra. Andrea, next quarter, the video He's going to be responsible to make the whole presentation. That's the target, right? Yes. That's the goal. We go directly We go straight to the Q and A. Yes, but I mean, we that was concise. That's as concise as it gets. So we will Call you, I've been allowed to talk here on a 1st come, 1st served basis. We have the Morgan Stanley team here on the 1st place. So I believe it's either Jorge Curi or Eugenia, but I think it's Curi. Yes, he stays here. Hi, hi. On the Q and A. I hope everyone is Doing great. Congrats on the extraordinary quarter. So Bruno, sorry, that was actually my question, the one you were reading in the Q and A. I didn't know what happened. You have been delivering inflows that are much better than expected and I've called them one timer, but they keep recurring. And so is it possible that you have now inflected to a much higher level of AUC growth, given your larger scale brand awareness, the IFA network, which is a multiple of what it was a few even a year ago. And that growth over the next 12 to 18 months may continue at this very rapid pace. What would hold you back from saying, You know what, they were really one timers and you shouldn't think of us growing at this pace over the next 12 months. Yes. When we think about quarterly basis, it's the investment business, as Mahfa mentioned, is the hardest to penetrate market. So there is an inertia there that depends on tailwinds sometimes to get people out of inertia. So I am always conservative answering that type of question. That's why we say between SEK 10,000,000,000 to SEK 15,000,000,000 per month and there is volatility there. But you're right, considering the past quarters, as I mentioned, we had strong net inflows in 3 out of the 4 best quarters that we showed to the market. So I'd rather be more conservative here and not taking into account those more concentrated inflows in the private segment or corporate segment. We've even without that, we hit the market of SEK 15,000,000,000 more than SEK 15,000,000,000 per month in the second quarter. So yes, I think there is a component of more brand awareness, Momentum that you keep getting and despite the interest rates going up, As you could see in the graph that I showed in the presentation, the expectation now is what 7.5%, 8% is still below double digit. When we look at a longer period of history in Brazil, it's not going to stop the financial deepening. The way I see 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 the private equity and venture capital access, democratizing access to clients that never invested in that type of products and they do have the profile to invest those type of products. So I think there is this momentum that will probably keep going. It's hard to say that I don't know what the inflection point what do you mean by the inflection point, Jorge? All right. Thanks, Bruno, and congrats again on the great quarter. And Thiago, congrats on the appointment and best of luck Thank you, Georgios. Thank you, Kuri. We hope to speak to you soon. Next in line, we have Otavio Togarelli from Bradesco BB. Congratulations on the very strong quarter. I wanted to understand a little better the revenue trends. So one thing that was particularly impressive to me was the margin expansion, especially in such a competitive scenario that we see pressure on the cost base, YFAs and so on. So in terms of the mix of revenues. I understand that there was a higher share of non commissionable revenues. When did you get your views on that? How should that evolve going forward and whether is this sustainable or not because the gross margin levels that we're seeing here are really in such competitive scenario. Thank you. Look, there is the gross revenue It was strong, you're correct. And we had this margin gross margin expansion year over year from almost 70% last year to a little bit more than 70% of gross margin in this quarter. But the compression in terms of the investments we have been making in our IFA network is there. So all the investments that we have made and the expenses related to those investments, it's in our commission line in the COGS that you can see there. So it's more a mix of products and the operating leverage that we have in our business. I don't know, I mean, I wouldn't say that So it's non commission based, as you said, Otavio, the commission line, it grew a lot, but the revenue grew even more and giving us an operating leverage there. But it's marginal operating leverage. I would say gross margin is pretty much flat year over year, right? Where we have the operating leverage is more in the SG and A and the EBITDA market because there you have all the structure of the company, the platform to serve all the clients. And then, of course, when revenues keep growing, there is an operating leverage much stronger than in the gross margin. Thank you, Bruno. One additional question just if I may here. Yes, I saw that you recently announced the acquisition of Lebanchi. Why don't you get a little bit of your views in terms of the B2C market? How do you see the opportunities going there? We comment a lot about the to beat out the IFA network. But why don't you get your views on the how do you see this market and whether is this a good opportunity going forward or not? Do you want me to take the first part, Bruno? Here? Go ahead, go ahead, Marc. Okay. Yes, How do we see that? We see the financial deepening in Brazil happening and accelerating the next few years. And when we look today, I would say we have about like 1100 IFAs in the market. We believe this number can go up to 36,000 IFAs in the next 3 years. So we see this financial journey accelerating. And when you look the B2C and the B2B market. We believe there is room to grow both of them because, As I mentioned, we see the IFA network growing 3 times in the next few years. So there is a lot of room we'd like to grow. And about the Levant acquisition, for us, it's very important. XP was born as an education company. That was the first product that we sold. Delermo was the 1st teacher teaching people how to invest in equities in Brazil. So education, it's our DNA, and we'll keep investing in education. And when you think about acquisition, it's very important like to have content and to have solid like investment information and content to give to our clients. So basically, the strategy is to have very strong content digital content to helping the acquisition part of the business. But again, we see both of them growing to our B2C and B2B. Yes. And just To say one more thing about our strategy and M and A, Otavio, think of XP as an ecosystem for entrepreneurs, Right. So we are like Magna that our ecosystem attracts a lot of entrepreneurs. And we can leverage all those entrepreneurs in their own business using our distribution capability and using ourselves as entrepreneurs as well. So it's a win win situation when we make those acquisitions. Minor stakes. So the venture is going to be still be independent as the asset managers that we acquired the minority stakes, they are going to be independent. But we can help them through our ecosystem and also prop from the equity stake that we have. And as I said, it's a win win situation because on their side, they can become more successful entrepreneurs. So it makes sense. We have done that in the past as a strategy. It needs to complement our ecosystem, and we're going to keep doing in the future considering we have the right price. And just To give to I was looking at the commission numbers. The commission part only the commission inside COGS went up more than 50% year over year. So as I said, it's related to the growth of the total revenue that grew 57%, commissions grew like 52%. So it's really related and then the difference is basically a mix of product. Super clear Bruno and Mafra. Thank you guys. Thank you. So our next question is from Mr. Tito Abata from Goldman Sachs. Thanks, Andre. Good evening, everyone. Bruno, Mahfra, Congratulations also on the strong results and on your appointment, Mahfra. My question is on the take rates. I know Bruno, you get this question often It's hard to predict. But more specifically on the credit portfolio and the impact that, that could have on the take rate. I mean, you mentioned a positive impact, but Any color you can give, I mean, like what type of interest rates are you earning on this? I know NPLs are 0, but I assume there's some provisions Involved, what type of NPLs would you expect over time? And how big do you expect the credit portfolio to get? So just trying to estimate how much Will that credit portfolio benefit your take rate? And similarly, on the credit card TPV, any color you can give on a potential take rate there? Yes, sure, Tito. First, we do not disclose, segregate The numbers of the banking, but what I can tell you, it's a low base, but quarter over quarter, the banking relevance. The banking related revenues and by banking related, I mean the credit, the credit card and the facts, 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 in our system for obvious reasons. It's a brand new business that we have started here. So the relevance is the breakdown of the total revenue, it should keep growing as we move further down the road. So That's one thing and that thing by itself increase the take rate everything else constant. And basically because there is not necessarily a custody associated with that revenue, So we increased some basis points there with these banking services and products. And we do not have yet the full digital bank accounts that we're going to have we already have 4 already employees and few clients, but we're going to roll out as we did with the credit card business to the end of this year, okay? So that's about the banking, adding services and products. But of course, the custody is expected to keep growing. And as I mentioned, the math of the custody, we have not reached yet The BRL1 1,000,000,000 of assets under custody. In our custody, that's another important thing to mention, in our custody, we do not consider institutional custody from pension funds, RPPS, some institutional clients that we do have custody inside XP, it's not in that number because they do not talk to the retail revenue. And also, we do not consider AUA assets under administration in that custody despite having a business of administration in our broker dealer as well. But we expect to keep growing the custody and that it's going to reduce. So the take rate, I always answer the same way. It's hard to forecast. I would expect it flat. And why is that? Because There is some compression in terms of prices. They do not affect us directly. As I said before, I believe this price compression is much more skewed into the fixed income funds from the asset managers of the incumbent banks that still charge too high management fees. We do not charge those high management fees in our platform and the mix is skewed into more alternatives and Multi market or equity funds in our platform, it is still underpenetrated in Brazil. Generally speaking, we believe, as we said, the financial deepening is going to be there. So this movement of asset allocation is positive for the take rate still. Interest rates Going up, fixed income should present a more relevant role in our growth, in our revenues. Equities, If it's stable, it's not going to have the tailwind that it had in the past. But as I've said, I mean, It's very resilient business model, no matter what the macro environment is, because of the underpenetration in the market, because of our low relevance in terms of total revenue. When we think about the total revenue pool, we expect to keep growing independently of the macro environment. Yes. Just of the macro environment. Yes. Just to add, Chitoska, about the credit card TPV. We are not opening the target, but just to give you a color today, The only clients that are allowed to order a credit card with us are XP clients above BRL 50 BRL 1,000. So imagine that's less than, I would say, 20%, 30% of our clients when you book equal when you look the clients with less than 50 ks at XP. So there is a lot of room like to see growth in the TPV in the next quarters. You can expect the TPV to go up really fast. And As always, at XP, we remain big, and we want to be one of the main players of credit cards in Brazil in the next few years. And the way we did things here, it's everything is scalable in terms of the technology, the factor behind it, so we can use it for all the 3 brands if we want to. So that's the way we build things. Of course, we need to test, execute and folks deliver, get better, listen to the clients and that's exactly what we have been doing. But when we think about the long term strategy, everything needs to be scalable for many millions of clients in the future. Great. Thanks, Bruno and Maher. That was very helpful. If I could just ask one follow-up then. You mentioned the addressable market of EUR 800,000,000,000, Which you're not fully servicing yet, and you have 3,100,000 clients today. How do you think about the addressable market for clients? I mean, I think your client is more on the higher end, but just thinking about the addressable market for clients. Yes. That's a good point. When you look XP back 2 years back, as I mentioned in my first talk, We have been very focused on investment products. And when you have own investment products, you need people that are money savers. So once you start like to moving forward to credit, you start to move forward like to payments, digital account, then you can go down the priority and increase your target of clients. So for sure, you can expect XP to increase the target of clients when compared to a few years ago. Okay. Thank you. Congratulations again. Thank you, Thiago. Thank you, Thiago. Great to hear from you again. So Now Stefan Grushka, I hope I didn't just one second, just let me disable. Stefan Gluschka. I really hope I'm not mispronouncing your name. Welcome. Thank you. Can you hear me? Yes, Stefan. Go ahead. First of all, you did a great job with my name. It's Perfect. It's a Polish name and a German spelling, so you did extremely well. Thank you very much and also congratulations to this great set of numbers. I've got a few smaller questions for you. The first one being your assets under custody. How would they split? I mean, which part of it is equity, which part of it is fixed income funds. Can you give us a little color about that? Yes. We didn't Stefan, we do not give the exact breakdown. What I can tell you is equities is the most relevant part of the total. But fixed income and the funds platform in general, Those three together would be the both part of the total Castel. And it's not it depends on because 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 order of relevance, equities, funds and fixed income. Okay, perfect. And inside funds, you have multi market equity funds, fixed income funds, so the breakdown is diverse. Understood. Thank you very much. The second question is the number of IFAs. I think you misspoke. I think you meant to say you have 11,000 now, right? And you expect to continue this to grow 36,000 in 3 years. Is that correct? Yes. When I said it's 11,000 in the market and 36,000 in the next few years. Okay. With 11,000, would you still have a market share of like 80% of IFAs, is that still kind of? Yes, roughly, yes, roughly. The point of the IFA is the most important, at least in my opinion, is what Manfred This profession has grown a lot. It has grown a lot in the past years, and we expect to keep like that for everything that we have discussed here, especially when we think about the incumbent banks needing to cut costs and Kohl's branch, so and the financial deepening going on. In our IFA network, hiring and seeking for new IFAs and also other players in the market looking for IFAs. So I think that's a trend that will keep growing in the next years as Mahfra mentioned. We completely agree with you. That's what I'm asking. In a way, I liked a slide that you had around the IPO where you had the chart of how many IFAs you had, so you discontinued that. That's why I was asking about the number. And I have one more question about the profitability of segments. I think if I understood you correctly, 82% of profits come from the Retail segment with 77% of revenues. Can you say a little bit about the profitability of 1st Institutional and then of Issuer Services, which are the 2 other kind of relevant parts. No. Unfortunately, we do not disclose profitability by the segment, especially because when we think about the SG and A, the infrastructure of Our ecosystem is there to serve all of the segments. So either the retail, the institutional segments. They are served by the same infrastructure in most of the cases. So we look at the profitability as a whole and is reported in our numbers. Okay, understood. Thank you very much. Thank you very much for answering these questions. We are in Germany. I've waited for you until midnight. So it was really worth it, I have to say. Thank you for participating in our call, Stefan. Thank you. Thank you so much, Stefan. Always good to hear from different countries. And please let us know through our IR context if you need a follow-up call. We can we will be thrilled to walk you through some of the dynamics of the company in more detail. Thank you. I would love it. Thank you very much. Have a good one. Last but not least, we have Neha from HSBC. Yes, we can. Hi, Neha. Hi, Bruno, and congratulations to Thiago for the new role, And we wish to talk to you often. Thank you for joining the call today. And congratulations on the blockbuster quarter. I think it was very solid earnings performance. Most of my questions are answered, but I wanted to dig a bit upon the financial income, which you said 82% of financial income related to the Retail segment. And if you look at the breakdown of the revenues, the big part of the revenue growth for this quarter has been driven by the financial income and that is becoming more and more relevant for your total revenues. So If we think about projecting that, what are the factors that we should continue? And how should we think about projecting that line? I know a good part of that is related to revenue. But for us analysts, it will be very helpful to understand how do we protect it. And my second question is on Banco XP. I know there's very limited color that you can provide, but The loan portfolio has been growing very well. So if you can give us some sense of what are the kind of rates that you charge for some of the pension and cash loans. What are the rates that you charge for the credit card loans? It's still small, but What are the rates and what are the costs what is the cost of risk that you see for the credit card loans? That will also be very helpful for us. Thank you. Okay. So yes, the net income from Financial Instruments, if I understood correct 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 like REITs. The REITs funds and industry that was in the past non existent in Brazil as well that XP helps to develop not only the primary market, 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 because one thing pushes another, you have more offers, you have more products to trade and then you help the development of the capital markets itself, as I said. REITs is one example. We have the BDRs, you have the fixed income, corporate bonds being traded, all of that when it's a business of flow. So this business of flow, we do are active in this business in order to have products to offer for new clients and existing clients that keep bringing more money into our ecosystem as our assets under custody demonstrate. And also, it's important to enhance the experience of the clients in terms of liquidity in the secondary trading. And one thing brings the other one. So the way I like to think about it is related to the study. It's related to the growth of the volume trading and it's related to this business of flow. Having said that, There is one additional component that goes into the net income from financial instrument that is directly related to interest rates, which is basically the floating revenues 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. That 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 revolving 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 Maafra mentioned above only at XP Brand above 50 ks invested Brazilian reais. The revolving part is not relevant, but of course, in the future, when and if we decide to accept a broader public in other brands, then this equation, depending on the profile of the client, can change going forward. Understood. Could you give us share your pipeline or your vision for Banco XP? What other products do we have in the pipeline for the next year or 2? I know you mentioned that you will launch the digital bank account by the end of this year. But any other products that you have in mind that we should expect for the next year or 2? There is a huge pipeline. When we think about branded, There are different segments and specifics. When we think about individuals, it's one thing. When we think about companies, SMBs, Another thing, so the pipeline is huge. We are planning to have these Strategy Day with investors, sales side analysts, so we can give a little bit more color. I will keep high level, then Mafra can complement you if he wants. But the thing is We're going to have full digital account by the end of this year, and that's important to complement the experience with the credit card and the digital accounts. And then as I mentioned before, The architecture, the foundation of what we have been doing, it's scalable. We can adopt in different brands if we want to. So it's more about a business decision than anything else. But, Mafre, feel free to Yes. I would answer like in a different way. Like we have 3 main pillars that we are going to explore in the next quarters. The first one is banking service in general, and you can include payments, include digital account, credit card, etcetera. And credit. As Bruno mentioned, we are going to have different credit lines in the next quarters. We are Already working on that. We have been working on that for a few quarters, and we are going to launch soon some of them. We have insurance. They just to increase the range of products insurance that we have today. And the third one is thinking on companies from SMBs to corporate companies. We are going to develop a lot of like products focused on this company. So It's a lot of things for the next quarter, as Bruno mentioned. We are going to give a better color of the of Itchy product that we are going to launch on the Investor Day. But for sure, it's a big road map for the next quarters years. We have a lot of work, should you? Yes. Great. Thank you so much. Look forward to your strategy day there and hear more about that. Thank you, Bruno. Thank you, Thiago. Thank you. Thank you, Neha. So we don't have any other raised hands here. So with that, we conclude our Q2 of 2021 earnings call. Thank you, everyone, for the participation. Again, the IR team is always available and alert to schedule calls with you whenever it's convenient. So Bruno, would you like to deliver any closing messages? And then, Mafra. Yes. No, just before Mafra close the call. I would like to mention that before our next meeting in the next the following earnings call. Probably, we are going to have already our DBRs being traded in Brazil. It's something Important for us because retail investors in Brazil will be able to buy directly in through B3, our shares if they want to and that's a consequence of the deal that Itau already announced The market of XP Parts, as you know, Central Bank has approved, and now it's a matter of time to have the general meetings Still pending approval by both general meetings, XP Inks and Xpart, but assuming that everything is going to be smooth and approved in the Q3 at the end of the Q3 this year, we expect to have This transaction completed and BBR is being traded in Brazil. Maffa, I just would like to Thank you all again for being here with us and say that despite the great result that we are delivering this quarter, We only have 1% about 1% of the addressable market that we believe we should pursue in the next years. So as we always say, we are only at the beginning here, and I'm very excited to be with all you guys for the next years. So thank you very much. Thank you. Take care.