Profits of Brazilian broker XP benefit from the increase in client assets

November 8 (Reuters) – XP Inc. (XP.O) posted a jump in third-quarter profits on Tuesday as the Brazilian broker’s client assets accelerated and helped offset lower net inflows due to higher interest rates.

Brazil’s central bank last month held its key interest rate steady for the second straight policy meeting and warned that inflation was still high and the global outlook remained volatile.

In the 12 months to September, inflation hit 7.17%, slightly above the forecast of 7.1% and well above the central bank’s target of 3.5%, with a margin of tolerance of 1.5 percentage points on either side.

The country’s largest brokerage said its net inflows of 35 billion reais ($6.80 billion) were 7% lower than a year ago, while the total value of purchases on XP’s credit card doubled to 6.6 billion reais.

Total client assets grew 17% to R$925 billion as people invested money in its diverse range of products such as bonds, derivatives and pension funds, while the number of active customers increased by 15%.

The company’s net profit rose 10% to 1.03 billion reais in the third quarter and net sales jumped 14% to 3.62 billion reais.

Gross retail revenue rose 2% to 2.63 billion reais, while institutional revenue jumped 105% to 577 million reais.

($1 = 5.1485 reais)

Reporting by Mehnaz Yasmin in Bangalore; Editing by Shailesh Kuber

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