Brazilian Broker XP’s Profits Rise on Growth in Assets Under Custody

Brazilian brokerage XP Inc weathered a tough economic backdrop to post a 17% jump in first-quarter adjusted profit on Tuesday as assets under custody jumped and more users took advantage of its services. The country’s biggest brokerage said its assets in custody rose 22% in the quarter to 873 billion reais ($175.69 billion) as people pumped money into its range diversified products, such as bonds, derivatives and pension funds.

This helped offset a 28% decline in average daily retail transactions caused by a deterioration in the economic outlook for emerging markets in light of the war in Ukraine and tighter monetary policy globally. XP’s net inflows of R$46 billion were also 4% lower than the prior quarter, while the total value of XP’s credit card purchases increased 2.2% sequentially as customers reduced their expenses due to rising inflation.

“We had a very difficult macro scenario,” Chief Financial Officer Bruno Constantino said, citing the impact of the Omicron variant of COVID-19 and the war in Ukraine. Constantino also mentioned what he called a “portfolio effect”, with clients seeking more fixed income assets rather than riskier assets such as equities, which faced greater volatility over the course of the year. the period.

In the three months ended March 31, XP’s loan portfolio grew by 12% to reach 11.5 billion reais as it continued to expand its banking services, while the number of active customers grew by 17%. The company’s adjusted net profit jumped 17% to 987 million reais thanks to a 19% increase in net sales.

($1 = 4.9614 reais)

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