Good evening, everyone. Thanks for waiting. We’re just giving up some seconds for everyone to join. I’m Andre Martins, Head of Investor Relations. And on behalf of the company, I’d like to thank you all for your interest in our quarterly earnings call. Today, we have with us Bruno Constantino, our CFO. We will both be available for the Q&A session right after the presentation. Remember that you can raise your hand in the Zoom tool, I see that as usual we have some raised hands, and we will answer them after the presentation. Please refer to our legal disclaimer on Page 2. There we have – we clarify actually the forward-looking statements, their definition, and on our IR website you can find additional documents to forward-looking statements and why they might differ from actual results. So without further ado, I’ll pass the word to Bruno Constantino, we have a lot to talk about today. And it’s later in São Paulo, right, Bruno, than usual. So let’s get going with the presentation. Thank you so much every one of you for the interest.

Sure. Thank you, Andre. Good evening, everyone, a pleasure to be here with all of you one more time in our 12 [ph] earnings call. This call might take a little longer than usual. But, I promise, I’ll try to be as brief as possible, so we can jump into Q&A. So we can move to the highlights. So here on Slide 5, the highlights, we have selected 4 main highlights for third quarter 2022. First is the improvement in our disclosure, always considering feedbacks from investors, and thinking about how to enhance our transparency over time. We have changed 3 points in our managerial disclosure. We have incorporated, Digital Content into Retail. As you know, Digital Content is an enabler, much more than our relevant contributor to our revenue. So it doesn’t make sense to disclose it on a standalone basis anymore. Number two, we separated Corporate clients, companies with annual revenues above R$700 million annually from Retail clients. This change was motivated by: one, growth of the Corporate business, which was irrelevant until the end of 2021 last year, and has been gaining traction throughout this year, as you’re going to see throughout the presentation as well; and number two, different profile of clients as well; and third, we have opened the Retail revenue base on its main product classes, I think this is the main change in terms of disclosure that we are making from now. What are the main product classes? One, Equities; two, Fixed Income; and three, Funds Platform. I hope that will help all of you understanding the dynamics of each business line depending on what the macro environment is. The second highlight is about expenses. We’re still absorbing the impact of headcount growth in 2021, as you know. But we do believe that…

Thank you, Bruno. So let’s go to the Q&A. Our first question comes from Tito Labarta from Goldman Sachs. Hey, Tito?

Hi. Yeah. Can you hear me? Good evening, Bruno and Andre. Thanks for the call. Thanks for all the additional information that’s very helpful and useful to think about and help us model the business. So appreciate the color. A couple of questions, I guess, one, just looking at the retail revenue breakdown, right, you show there that other line has increased a lot, I think. Is that – should that be just mostly a function of the higher interest rates that we’re in right now, and as rates come down that should come down? And second question on the inflows, and I used to have the guidance, the 10 to 15. Have you seen any – we saw the equities picked up a little bit into Q – I would expect in lower interest rate environment should be positive for that, but with markets doing a little bit better. Any visibility there in terms of the inflows either like by segment, are you seeing more interest in equities, it’s still more like fixed income, just to try to get a sense of when there can be an inflection points on those inflows kind of longer term?

Yeah, the other retail, most of it is flows, revenue, that is a retail revenue, and goes into other. That’s the most relevant one. Okay. Regarding your second question about client assets inflow, net client, net inflow, both. It’s what I said, zero. When you have uncertainty as an individual investors, a fluent client, with a lot of uncertainty in the market, where if you’re going to buy a longer duration, secured, fixed income security, you’re going to get a nominal remuneration that is less than the one that you can have with daily liquidated, and then it makes hard, it’s a headwind, and even in that scenario, net new money that is about R$10 billion as per month. In a scenario like that usually people they freeze, they wait, they don’t have to, they have an instrument that is daily liquid based on a nominal terms, more than extending the duration. So it’s not easy. You need to do a lot of explanations. And that’s why advisories are so important in a scenario like that. But it’s not an easy sell. And that’s what explains in my view, the weaker net inflow. We have seen stabilization across all signals, but not a reversal yet. We still have a lot of uncertainty upon us. You have a global inflation. You have a global recession. You have higher interest rates, where Fed funds are going to stop. You have a war still going on. You have a lot now. So many things happening, Brazil has a new government that needs to tell about what the fiscal policy is going to be, and so on. So, too much uncertainty, in my view, to see a reversal. But the good thing is, it has stabilized. So, I think, with – the worst is behind us. That’s the point.

Great. Thanks, Bruno. Thanks. I’m just looking, because you also disclose the assets sort of by segments. So just how much of like Equities was up like R$30 billion, but I don’t know how much of that which is the market performance versus potential inflows, because looking at the fixed income, it was like R$20 billion last quarter, down to R$20 billion, so just to try to understand what drove the increase in net assets by segment?

You mean the equity in the third quarter going to – compare it to the second quarter?

Yeah, if we look on the breakdown of the AUC was like R$278 billion, it was R$247 billion last quarter. So imagine there’s a market appreciation in there, so looking at the fixed income number. It was lower relative to last quarter, so just to sort to see how those inflows are evolving by segment now?

Okay. I got it. Yeah, I would have to get what was exactly the market appreciation of equities, quarter-over-quarter. I think, I can get back – we can get back to you later. But at the end of the day, we’re not opening anymore adjusted anything like adjusted client assets or anything like that. So, as we segregated corporate from retail, in our view, it doesn’t make sense, because corporate by nature has a different kind of volatility compared to retail. But, of course, we can have some unusual movements in one single quarter, whenever we have something like that. We are going to explain in our earnings release. Okay.

Okay. Thanks, Bruno, and thanks again for the additional disclosure.

Thank you, Tito. Next is Geoffrey from Autonomous. Hey, Geoff, good evening.

Hi. Can you hear me okay?

Hi, Geoff.

Hi. Can you hear me?

Yeah.

Great. Thank you for taking the question. And thanks for the new disclosure. There’s been some articles recently talking about IFAs moving away from XP. I wondered if you could elaborate on why you think some of those IFA moves have happened. And can you confirm are these IFAs where you had the long-term exclusivity and in place, and they decided to pay a break fee to go somewhere else?

Yeah, look, Geoff, it’s a competition. So a competitor comes, pays. The IFA decides to go or we do not think it’s worth retaining the IFA, whatever the case is. Then it happens. It’s natural. It’s not the first. And it’s not going to be the last time that it happens. Okay. Remember that we have more than 13,000 IFA – we have close to 12,000. We have more than 13,000 advisors in total. But we have close to 12,000 IFAs in our network. We have approximately, if you look only at the IFA world 70% roughly speaking market share. So it’s something natural, okay, we look at it as a natural thing that will happen again. And it has happened in the past. Yes, the IFAs that you referred to, they have long-term contracts. You also – I mean, you can in this quarter, we had if you go in our financials, you’re going to be able to see the disclosure of revenue, where we have revenue from incentives from B3 [indiscernible] and others. Part of that revenue when we get back, the fine that we have in the contracts, it goes in there. So this quarter, if I’m not mistaken, the total amount of that line was close to R$40 million. And part of it was helped by one IFA, and we might have that going forward as well. So we got that revenue and get the cash back. And that’s it.

When they decide to leave, do they tell you that’s purely a financial consideration for them? Or are the elements of your competitors’ offerings that they’re choosing? Because they think the competitor offers something that XP doesn’t?

Money.

Got it. Thanks very much.

Thank you, Geoff.

Thank you, Geoff. Have a good one.

Thank you.

Next Thiago from UBS. Good evening, Thiago. How are you?

Yes. Are you guys hear me?

Yeah.

Yeah, Thiago, How are you?

Okay. Thanks for the new disclosure, very good. You did in the new format. I have one question about the excess cash that you mentioned in the press release. You mentioned R$5 billion. I wanted to make sure if I understood the concept of this excess cash. So in the case of no real event position, or M&A, do XP will be able to distribute these R$5 billion highs in the coming years? Or part of this R$5 billion should be use it in your organic expansion. So with CapEx, with IT investments, so only to make sure if this R$5 billion should be distributed in the near future, if you don’t have any bigger monies?

Look, the R$5 billion in the near future. I don’t think so, in the future, yes. But in the near future, I don’t think so. Why is that? Number one, we are conservative. The way we approach our financials, and we always think about the long-term. Number two, we still have a lot of uncertainty upon us, I just talked about it. So, we think, it’s – we are here for the long-term, it’s wise to keep a higher, let’s say, margin of safety in moments like that. And what I can tell you, Thiago, is we keep generating cash, our company does generated a lot of cash on an annual basis. And, yes, we are going to keep evaluating the excess cash, because we are distributing. We think R$5 billion is enough for now to keep as access capital in our balance sheet. We can change our mind in the future and decide to work with less than that, or a little bit more, but for now, R$5 billion, seems more than enough. And the excess above the R$5 billion, yeah, we can keep distributing to shareholders. Remember that XP is a disrupter. We are in the financial industry, mostly in Brazil. And we have less than 2% of the financial industry revenue pool. So we are at a very early stage of the potential that the financial industry in Brazil offers as a disrupter. And the opportunities might arise. But, right now, where we are in our strategy, what we have done, I think that XP has already invested a lot our expense numbers they show it. So we have invested a lot in new verticals, we have put in place our digital account, we have cards, we have launched cards at Rico brands. We have our offshore…

Very clear, Bruno. Thanks.

Thank you, Thiago.

Next question from Morgan Stanley. Hi, how are you?

Hi, Bruno, Andre, how are you?

Hi, Jorge.

Congrats on the numbers. And, again, I know it’s been said before, but really, thank you very much for the additional disclosure, I think, it’s going to go a long way in helping the market understand that your business, so thanks for that. My question is carrying around what you’ve been discussing, Bruno, so sorry for that. But when you think about your retail business, is it you think the direction of interest rates that would potentially improve the inflows, or is it actually the level of interest rates? And I’m thinking, obviously, on the Equities business, which is a big part of the revenues. And I’m saying this, because, we’ve – hopefully, we’ve seen the pick-up rates, right? I mean, the Central Bank has been on pause now, and the next move hopefully is now. So the fact that rates are going to start to come down, do you think that’s the trigger? Or is the trigger actually the absolute level of rates? And what do you think that absolute level is for us to get – for you to get more inflows into the Equities business?

Yeah, I think, it’s more of the direction than the level. But remember, what I just mentioned a few minutes ago, retail investors, they look to nominal terms. So, if interest rate is still going down, but the long-term rates are lower than the spot rate, that’s a headwind, because you need to convince me to explain, why is it? What is the premium embedded? What is the expectation of futures rates, and so on? We do that. Of course, we do. But it’s a headwind, I would say. But at the end of the day, it’s more about the direction in my view, but we need to take out part of the uncertainty. And then when we take out parts of the uncertainty, equity market should react first, I guess, as usually, and investors will fall, it’s the cycle that we’ve had in the past. For ourselves, the best – I would say the best. The sweet spot is when you have boom market start forming, but level of interest rates are still high. For XP, the interest rate is 2%. It’s not the best scenario, honestly. Would be in the middle range, I don’t know 6% to 8%, something like that, when you have a more stable environment with higher level of interest rates, but stable. That’s a good environment, a very good environment. But we navigate in all kinds of scenarios. We have been watching this, the mix gets worse. But we keep growing and we grow at a slower pace. That’s what it’s happening exactly in 2022. But the business is resilient, no matter what the macro environment is.

Great, Bruno, thank you. And I have a second question. And can you remind those what is the level of asset attrition a year later, when you lose a IFA, I remember, maybe like a year ago or so you published a press release with some of the actual numbers of specific IFAs that you lost in the past and the numbers were very, very small. Has that change – and then, can you remind us what the level is today? And what policy compared to IFAs you lost 3, 4 years ago?

Yeah, sure. Now the 70% to 80% of the client asset stays within XP. It doesn’t migrate. What we lose is basically the growth of that IFA office. If it was a good IFA office, we lose. If it was not a very good IFA office, I mean, we don’t use much. At the end of the day that’s basically it. Because when the IFA migrates, the clients’ hours, the client has XP account, has XP app everything, and then we have more than 13 advisors in our ecosystem that would be more than willing to serve that client, and that’s what happens.

Great. Thank you. Thanks. And thanks again for the vision of disclosure.

Sure.

Next, Mario from Bank of America.

Hi, Andre. Hi, Bruno. Thank you for taking my question. Also, we really appreciate the improved disclosure. My question is related to what Jorge just asked you, right. Last year, are you published this report saying that 80% of the AUC of the IFAs were left stayed with you. So when we see the slowdown in your net new money, are you able to break down for us? How much is like lower inflows and how much is like due to higher outflows? Can you just give us a dynamics right that you sing between inflows and outflows? And then my second question is related to your buyback, right. So you’re increasing a buyback program by R$1 billion on your presentation, you showed that you only executed half of your previous buyback. So I’m assuming is to have R$1.5 billion left to be bought back. But I wanted to understand the decision between buybacks and dividends. Why are you doing everything in buybacks and not in the form of dividends?

Okay, Mario. Your first question, it hasn’t changed, it’s not the slower pace of net client assets, it’s not because of migration of IFAs. Of course, there is a component, but it’s a small, okay, it’s a small. So it’s basically the macro environment posing a headwind in terms of bringing more money into the platform. We’re still bringing, but not with the size or amount that we would like to and think we can do it. So it’s not related to IFA leaving the platform. Your second question about buyback, you’re right, in what you said it’s approximately R$1.5 billion, considering the additional R$1 billion we announced today that we have to buy back shares until May next year. In the reason we decided for buyback is basically, because we think it’s a more attractive option nowadays. That’s basically the reason. But it can be dividends, but its audited buyback shares.

And, Bruno, any updates on the Itaú and Itaúsa decision to continue to sell down their stacks. Are you talking to them? Could you use your buyback then to negotiate directly with them?

No news about that. We – Itaú and Itaúsa, they have our direct contact for sure. They know we are here to help them to sell whatever they want. We have said that. But as far as, I know, it’s not in their intention. So I don’t know you would have trust me, Mario.

Okay, thank you.

Thank you, Mario.

Marcelo Telles from Credit Suisse. Hi, Telles. Good evening.

Hi Andre. Hi, Bruno. Thanks for the time and started to be sound like a broken record here, but I’m very happy to see the disclosure. You guys did so great initiative. I think there’s definitely help people understand that the story, so well done. I have a couple of questions, actually three questions. The first one, with regards to investment in IFAs, as you mentioned, in your presentation, right, you had about R$4.2 billion of invest investments in a plus some M&A, as well. And, I remember, I think until recently, I think kind of like a softer guidance for investments in IFAs, on a yearly basis would be – to be something similar to the amortization, right, of the investments in IFA. So, which I thought I think was about R$400 million a year. So how should we think about that going forward? I mean, is that still a reasonable assumption. So that’s my first question. The second question is more of a housekeeping item. I was looking at your adjusted gross cash flow. And for the second quarter is a bit different versus the number that you guys published, I think there’s almost like a R$600 million difference. So I just want to understand, what was the changer, I think, you guys had about R$9.8 billion in gross cash flow, and I think now is around like R$9.2 billion, so understand the difference? And my last question is more of a strategic question, thinking of your business, going forward, of course, very successful in investment platform, you’ve been adding new businesses to your core business, cards, the bank, and so on. When you think of your business today, including this new products. What are the areas that you think you are not in yet that you’d like to be? I don’t know, I’m thinking – acquiring maybe more like a digital bank. So how should we think about your business, 5 years down the road? Would still look different – very different from what we’re having today with this new product, or maybe more of the same? Thank you.

Thank you, Telles. Regarding your first question about IFA amount of annual investment, it’s hard to tell you mentioned about a soft guidance, probably, when we get that kind of question, we answer a number, I don’t know if we should. But at the end of the day, it depends, because we analyze case by case that’s how we do it. And, as I mentioned, in terms of the capital allocated in the IFA distribution network, we analyzed all the deals that we have done using several different metrics, using the data that we have for so many years with those IFAs, considering payback, return on equity, and so on. So it’s hard to tell how much is going to be. What I can tell you is, we do have part of our long-term contracts with our IFA distribution network. There is a component that is upon certain performance. Okay. So that part of the investments if the IFA reached the performance that we have established in contract then we have to pay X million additional. And when we do that, because it’s embedded into the same contract, it goes into that line, the prepaid expense. So that’s one part of the explanation. And we keep doing, our network keeps growing. You can see by our number of IFAs and so on, and we keep doing some incentives and contracts with our IFAs, when we think it’s a good opportunity. It’s a win-win situation for XP and the IFA, of course. This year, we probably are around putting out together R$500 million greater than the R$400 million. If you look at the prepaid expense, it has increased a little bit this year, but it’s not relevant, if you want to download. So I don’t have a specific number to tell…

No, Bruno. That’s very clear. Thank you so much. If allow me just to follow-up on one of the previous questions from the other analysts. I think regarding the, I think, Thiago asks that question about the R$5 billion excess capital that you mentioned your earliest release, which, by the way, thanks for putting that there, I think that’s very helpful indeed. That this R$5 billion does that include the amount of money to have, let’s say, to do warehousing, or to participate like in a syndicate? How should we think about that? Or this is, in addition, to what you already have, let’s say allocated, let’s call it your, let’s say, minimum operating cash, right?

Yeah. No, it doesn’t mean, you need separate capital from cash, the way we use to get the R$5 billion, we use metrics to adjust all our assets, beyond the prudential conglomerates for the whole group. Okay, that’s what we do here. And we adjust our assets by risk, and compare that with our available capital, also for the whole group. And we use our internal tariff that is pretty much similar to what we have in our prudential conglomerates, that’s how we get to the excess capital, that we have cash. Cash is not an issue for us in the sense that we are – we have NAV, net asset value, we could leverage our balance sheets, if we wanted to, but that’s a different discussion. So I would answer your question, yes, everything is taken into account to consider the R$5 billion, but just bear in mind that cash and excess capital, they are not the same thing, because in a financial institution like ourselves, those things they get confused sometimes. This one of the reasons that I talked about the cash flow from operations, for example, that we have to disclose from the accounting perspective, it’s tricky, you cannot look at a company like XP. Cash flow from operation operations, your operations are not making or generating cash flow in this quarter, that quarter, it doesn’t make any sense to make this analysis, because, for example, if we take a financial assets, that is that we have bought in our assets, liability part, for example, like a government bonds, there is longer than 90 days, and we just decide to sell and invest in something shorter-term like 60 days, it will not be there anymore in this cash flow account, because it will go directly into cash…

Thanks a lot, Bruno and Andre.

Thank you, Telles.

Thank you, Telles. Nice to hear from you. Okay, that was the last question. Thank you all for sticking with us. It’s a busy earning season, right, Bruno? Everyone is looking at the results. So…

You guys are busy, I know.

Yeah, everyone’s busy. So we will be happy to connect with you guys over the next few weeks to discuss the results and anything you might have interest that I don’t know, Bruno, if you want to say…

Hello, everybody, thank you all. And probably you’re going to have doubts, and I mean, we released a lot of new numbers, so count on us to help you understand anything you need. So thank you very much.

Thank you, all. Have a great night.

Have a great night. Bye-bye