AGI Q1 2026 Earnings Call Transcript

Quartr
Provided by Quartr
May 5, 2026

Key Takeaways

  • Positive Sentiment: Total active customers grew 53% year‑over‑year to 7.1 million, with multi‑product penetration rising (average >6 products, >7 for mature cohorts), underscoring strong cross‑sell potential.
  • Positive Sentiment: Loan balances rose 30% YoY to BRL 35.5 billion, 87% secured; private payroll reached BRL 1 billion and INSS market share was 9% (+210 bps YoY), while IPO proceeds boosted equity and capital ratios (consolidated CAR 19.3%, Tier‑1 18.1%).
  • Positive Sentiment: Origination and fee trends recovered through March — management says total origination reached 106% of pre‑suspension levels and fee business rebounded — driving improved operating efficiency (ratio 43.2%) and recurring net income of BRL 186.5 million (+14.7% QoQ).
  • Neutral Sentiment: Asset quality shows signs of normalization with NPLs >90 days at 3.6% and coverage of 165%, but a change in write‑off timing (360→270 days) created large write‑offs and reversals that distorted provisioning; NIM faces pressure from asset mix and higher rates (analyzed NIM 12%, after provisions 7.3%).
  • Negative Sentiment: Regulatory uncertainty (TCU review of INSS payroll rules and the new Desenrola 2.0 changes to payroll‑linked credit and card rules) poses potential downside risks; management believes impacts are manageable but continues to monitor developments.
AI Generated. May Contain Errors.
Earnings Conference Call
AGI Q1 2026
00:00 / 00:00

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Operator

Good afternoon, everyone, and welcome to Agi's first quarter 2026 earnings conference call. Today's conference call is being recorded. At this time, I would like to turn the call over to Felipe Gaspar Oliveira, Head of Investor Relations. Please go ahead.

Felipe Gaspar Oliveira
Head of Investor Relations at Agibank

Thank you and good afternoon. With me today are Marciano Testa, our Founder, Chairman and CEO, and Marcello Dubeux, Chief Financial Officer. Throughout this conference call, we'll be presenting non-IFRS financial information. These are important financial measures for Agi, but are not financial measures as defined by IFRS and may not be comparable to similar measures from other companies. Reconciliations of the non-IFRS to the IFRS financial information are available in the earnings press release. Unless noted otherwise, all figures are presented in Brazilian reais, BRL. I would also like to remind everyone that today's discussion might include forward-looking statements which do not guarantee future performance, and therefore, you should not put and do reliance on them. These statements are subject to numerous risks and uncertainties and could cause actual results to differ materially from our expectations. Please refer to the forward-looking statements disclosure in the earnings release.

Felipe Gaspar Oliveira
Head of Investor Relations at Agibank

I will now hand over the call to Marciano.

Marciano Testa
Founder, Chairman, and CEO at Agibank

Good afternoon, everyone, and thank you for joining us today. During today's call, I will walk you through our strategic progress. Following my remarks, our CFO, Marcello Dubeux, and our Head of Investor Relations, Felipe Gaspar, will take you through the financials in more details and then host the Q&A session. We had a solid start to 2026, and we are pleased to share our first quarter results with you. Before going into details, I would like to remind you of the three principles I mentioned in our last earnings call, which is guidance our executions. First, we live for the customers with a clear focus on driven engagement on our hybrid platform and increasing the usage of multiple products. We showed a strong progress in the first quarter, with total active clients growing more than 50% year-over-year to over 7 million.

Marciano Testa
Founder, Chairman, and CEO at Agibank

At the same time, product penetration continued to evolve with customers who have a primary relationship with us using on average more than six products, rising to above seven products among our most matured cohorts, underscoring the cross-selling opportunity within our model and validating our high-touch relationship strategy. Over time, we aspire to become the primary financial institution for all our customers, delivering a growing range of financial solutions to support them across different areas, reinforcing the consistent execution of our long-term strategy. Second principle, enhance our platform. Before going into the numbers, let me start with the important structural evolution of our company. This quarter marks a key step in how we are building Agibank for scale. We have evolved into a business units driven organization where each vertical wants the full customer journey from origination to servicing.

Marciano Testa
Founder, Chairman, and CEO at Agibank

At the same time, we have a centralized risk management data and artificial intelligence across the platform. This is not just a reorganization. It's a structural upgrade in our business architecture. It allows us to combine agility at the business level with consistency and control of the platform levels. As a result, we are improving decision-making speed, reducing cost to serve, and reinforcing our ability to scale efficiently. This model is a key enabler of our profitability and one of the reasons we believe Agi is the structural differentiator and continues to strengthen its position in the market. Finally, the three principles, entrepreneurial culture focused on long-term returns. This quarter clearly demonstrates the resilience of our business model. After the temporary disruption in the payroll credit ecosystem, we saw a consistent recovery through the quarter. By March, our credit origination had already reached 106% of pre-suspension levels.

Marciano Testa
Founder, Chairman, and CEO at Agibank

In March, we observed a clear inflection point in our fee business with a strong recovery following the adjustments implemented earlier in the year. These were very important signs that show that demand remains strong, that our distribution model is responsive, and that our operational execution was efficient even under stress. In simple terms, the disruption was only temporary. Our recovery is structural. This is reinforcing our convictions that our long-term thesis remains fully intact. Summarizing the first quarter of 2026, we demonstrated a resilient business model. Capable of navigating short-term volatility, we also delivered important improvements supported by scalable platform and our new organizational structure and technology foundation. We continue to operate in the largest and underserved market where structural demand remains strong, especially in the payroll lending. We are resilient, we have scalability, and a structural advantage in this market.

Marciano Testa
Founder, Chairman, and CEO at Agibank

Finally, we always operate at the intersection of technology, data, and now artificial intelligence and human interaction, serving a population that is not naturally tech-savvy. This position remains a competitive advantage for our long term. With that, I will now turn it over to Marcello and Felipe, who will walk you through the financial performance in more details and host you in a Q&A section.

Marcello Dubeux
CFO at Agibank

Thank you, Marciano. Good afternoon, everyone. I'm pleased to report that we had a solid start to 2026, which demonstrates the strength of our unique hybrid business model. In the first quarter, we continued to execute against our core strategic priorities, growing our client base in Brazil with a focus on multi-product relationships, expanding our market leadership in the payroll credit segment through new product releases and integrations, and maintaining our status among Brazil's most efficient and trusted financial institutions. Taking a closer look at customer growth, as seen on slide nine, total active customer count increased 53% in the first quarter compared to the prior year-over-year period and 5% quarter-over-quarter. We exited the fourth quarter with 7.1 million active customers, which we define as those using at least one product at quarter end.

Marcello Dubeux
CFO at Agibank

That growth demonstrates the resilience of our thesis, as earlier explained by Marciano. Turning to our credit portfolio on slide 10, total loan balances grew 30% year-over-year in 1Q 2026 to BRL 35.5 billion. Our credit portfolio maintains a healthy mix with secured loans representing 87% of total or BRL 30.7 billion, and unsecured loans representing 13% or BRL 4.8 billion. We believe this mix brings a sustainable balance of profitability, credit quality, and focus on long-term relationships with our clients. In private payroll credit, an offering that completed one year in the first quarter following its March 2025 launch, our portfolio reached BRL 1 billion. It is worth mentioning that our appetite for production of this product remains strong after making enhancements to its credit model.

Marcello Dubeux
CFO at Agibank

For public payroll credit, a growth lever in our credit portfolio that brings our business model to municipalities and regions where the footprint of the traditional banking system continues to be less accessible, Agi finished the first quarter stable at BRL 0.3 billion. Unsecured lending restricted to account holders who maintain primary relationships and direct deposits arrangements with Agi, which mitigates default exposure while improving margins, expanding 4.8% year-over-year to BRL 4.7 billion in this quarter. Quarter-over-quarter, we see a slight decrease sequentially following the suspensions. We saw in this first quarter an increase in the number of clients with principalities surpassing the number of 1.4 million clients. Within an INSS payroll credit, we continue to successfully execute against our strategy of being the disruptor of this segment in Brazil, as you can see on slide 11.

Marcello Dubeux
CFO at Agibank

Based on our strong positioning with the INSS and leveraging our competitive advantages in this segment, our market share in Q1 was 9%, an increase of 210 basis points year-over-year. It is worth mentioning that we were able to maintain our market share levels even though the recent periods of regulatory volatility. With regards to credit quality on slide 12, non-performing loans exceeding 90 days declined slightly in the first quarter to 3.6%, reflecting normalization in defaulting cohorts. At the quarter end, NPLs for the overall portfolio remaining comfortably below the average for consumer credit in Brazil, which continues to trend up. The coverage ratio measured by provisions over NPLs over 90 days was 165% at the end of March, a level we consider comfortable to operate going forward. Turning now to our revenue on slide 13.

Marcello Dubeux
CFO at Agibank

In the first quarter, we delivered a total revenue of BRL 3 billion, an increase of 24% year-over-year and 1% quarter-over-quarter, even considering the disruptions in the period. On slide 14, we see net interest income growth of 9% year-over-year and 4% quarter-over-quarter to BRL 1.3 billion. The slight decline in NIM on an LTM basis is primarily due to asset mix with a lower contribution from personal loans in the credit portfolio and a higher location to other interest-bearing assets which typically carry lower yields compared to loans. On slide 15, we see net interest margin on an analyzed and LTM basis.

Marcello Dubeux
CFO at Agibank

As you can see in the first chart, the analyzed NIM was 12% and after provisions was 7.3%, expanding 50 basis points on a quarterly basis, suggesting that the portfolio is in a normalization path after the impacts of the suspensions. Moving to efficiency on slide 16, which highlights the operating leverage embedded in our unique and highly scalable business model. Our operating efficiency ratio, which we calculate as NII plus fee revenues divided by operating and personal expenses, improved to 43.2% in the first quarter, down 250 basis points quarter-over-quarter, excluding non-recurring events of the 4Q 2025. Continue down the income statement and to slide 17.

Marcello Dubeux
CFO at Agibank

Recurring net income in the first quarter reached BRL 186.5 million, an increase of 14.7% over the previous quarter, adjusted for non-recurring effects primarily related to legal outcomes from civil contingencies, indicating that Agi's profitability improved quarter-over-quarter. Speaking briefly to our funding approach on slide 18, as a regular debt issuer, Agi maintains established relationship within Brazil's credit markets, diversifying funding sources to support portfolio expansion. As a result, total deposits reached BRL 39.3 billion, an increase of 37% from the first quarter 2025. Institutional counterparties represented 55% of total funding, while retail sources came to a share of 45%. Moving to equity on slide 19, it increased 42% in March 2026 compared to December 2025, especially impacted by the IPO proceeds. Agi's consistently above average ROE track record enables self-sustaining capital generation.

Marcello Dubeux
CFO at Agibank

Return on equity over the last 12 months was 26.1%, impacted by the proceeds of the IPO now being accounted for in the net equity. Lastly, as you can see on slide 20, our capital adequacy ratio consolidated at the holding level stood at 19.3% in the first quarter, with a tier 1 capital ratio of 18.1%, reflecting proceeds from the IPO as well. Looking forward, we remain confident in Agi's long-term investment thesis, its execution capacity, and its positioning to be a winner in this segment, addressing the financial needs of millions of Brazilians. On behalf of Agi, I would like to thank you all for your interest and support. Now we would like to open the call for the Q&A session. Thank you very much. Operator.

Operator

Thank you. We will now begin the question and answer session. To ask a question, please click on Raise Hand. The first question comes from Tito Labarta with Goldman Sachs.

Tito Labarta
Tito Labarta
Analyst at Goldman Sachs

Hi. Good evening, Marciano, Marcello, Felipe. Thanks for the call and taking my question. Congrats again on the IPO. I guess my question. Two questions if I can. First, just on the regulatory environment, right? We continue to see a lot of noise there, right? Last week there was talks of the TCU suspending INSS payroll loans. We spoke last week a little bit, but just any update on that? What is the potential risk of that actually happening? Also we saw the Desenrola 2.0 which came out yesterday, making some changes there, particularly for the credit card payroll, and which could potentially impact you, reducing the percentage that you can borrow up against, although extending the duration.

Tito Labarta
Tito Labarta
Analyst at Goldman Sachs

How do you think about those impacts and any other regulatory impacts to consider? Just operationally, thanks for the chart on the monthly origination. That increase that you're seeing, does that also include the unsecured? Because I think that was the headwind this quarter. Are you seeing the unsecured lending also picking up? Thank you.

Marciano Testa
Founder, Chairman, and CEO at Agibank

Hi, Tito. How are you? Thank you for the question. First of all, let's be clear that that is not specific to Agi from TCU, Federal Court of Accounts decision. We don't have a concern about the TCU decision on this matter related to ongoing dialogue among the government and the regulatory bodies. It is under future review across the government institutions. It became public today that the government appealed and suggests maintaining the payroll credit working and keeping suspended the credit cards to the enough period to review the implementations, that is, they suggest to INSS. In our review, a relevant portion of the points raised has already been identified and is being addressed by INSS, Dataprev and also the financial system.

Marciano Testa
Founder, Chairman, and CEO at Agibank

For now, our operational remain fully operating as usual, and if they decide to suspend the credit card for a while, we don't have material impacts in the origination. Also, it's a small part of our credit portfolio. No structure impact to the business. We do not anticipate changes to the products fundamentals, demands dynamic margin or our risk profile, as the focus of the discussion in our restraint and controls and the process. For Agi's perspective, we have already put the majority of the measures required in the TCU in place. Therefore, we should not have the material impact on operational, and at this point, we do not see a material impact or margin of risk. Although we continue to monitor potential developments closely. The second part, the second question, Tito, regarding the Desenrola.

Marciano Testa
Founder, Chairman, and CEO at Agibank

Yesterday, the federal government of Brazil initiated a new phase of the Desenrola program, aimed at reducing the debt service ratio household, in then it's, throughout the set measuring across the different credit products and segments of the financial system. Designed especially for the low-income segment, where historically Brazil has the high DSR over their income. In our case, we can capture opportunity across the customer's life cycle. Around 25% of the unsecured portfolio is eligible for having benefits of the program. It's, hopefully BRL 1.2 billion. Specifically in the INSS side, we see a very positive measure to shrink the compromise of the income from 45% to 40% and keeping reducing 2% every year up to 30%.

Marciano Testa
Founder, Chairman, and CEO at Agibank

Regarding these changes, we are closely following the details as they are implemented and believe we are well-positioned to adapt quickly and leverage our technology and data and capabilities that integrate disruption in our disruption model. Basically structural positive over time because improve customer financial health, support better credit performance and portfolio quality, and reduce long-term risk. The end of this exclusive card linkage margin could allow us to the bank to grow more through the payroll loans where we are specialized. As for unsecured personal loans, we could expect lower NPLs. The credit demand could also potentially increase as a result of our decreasing INSS payroll offering. Also to finally the cross-sell and penetration, and fee products could theoretically increase given a higher disposable income in the salary. Thank you.

Marciano Testa
Founder, Chairman, and CEO at Agibank

I pass to Marcello complement.

Marcello Dubeux
CFO at Agibank

Hi, Tito. Well, just to complement and to also answer your the final part of the question regarding the unsecured loans. Just to complement on the Desenrola, the conclusion is for us that it contributes to a healthier portfolio of credit and therefore allowing us to, one, optimize the payroll credit in one side and have more disposable income of the client to eventually have more cross-sell and more other credit products as well. Going back to the unsecured loans, you asked about the growth, right? For the unsecured loans, we see a normalization of the origination, especially in March. The overall size of the portfolio is still reduced 2% compared to fourth quarter.

Marcello Dubeux
CFO at Agibank

That was mainly due to the short-term duration of the nature of this portfolio and the interruptions that we had throughout the period. That growth is already covered in the month of March. We see very healthy levels already of production of the unsecured.

Tito Labarta
Tito Labarta
Analyst at Goldman Sachs

Okay, great. That's helpful, Marcello and Marciano. Thank you.

Operator

The next question comes from Gustavo Schroden.

Gustavo Schroden
Gustavo Schroden
Analyst at Citi

Hi. Good evening, Marciano or Marcello. Thanks for the call. I have two questions as well. The first one-

Gustavo Schroden
Gustavo Schroden
Analyst at Citi

I'd like to explore with you, still on this regulatory front, regarding the insurance brokerage. We saw a relevant decrease in the quarter, especially compared with last year. You showed the recent trend and a monthly trend. We can see an improvement, but it is still running below last year. What are the actions that the bank has adopted to control these and be back to have a higher brokerage insurance revenues? I think it is important to us to understand how the bank is managing this evolution. And second, about the net interest margin.

Gustavo Schroden
Gustavo Schroden
Analyst at Citi

We understand that there was, let's say, mixed impact in the quarter, that can explain this reduction. If you analyzed in, let's say, one year period, net interest margin is declining even with, let's say, when you had a relevant origination of unsecured loans. Would be great if you share with us what is the trend for net interest margin in the coming quarter. Should we continue to see net interest margin declining or do you think that it is close to a normalization? Thank you.

Marcello Dubeux
CFO at Agibank

Thank you, Schroden. Good to be talking to you. First of all, regarding insurance as we saw here, in the presentation, month of March already, we saw a very steep recovery in the product. The measures that we took throughout the quarter includes reshaping the user experience of the product so that we have full compliance with the all potential norms of this product going forward. That required us to take this product for a few days, weeks out of the market, so that impacted the production of the product. As we saw in March, it recovered its pace.

Marcello Dubeux
CFO at Agibank

In the second part going forward, we foresee this product to continue gradually a recovery to get back its pace, its normal pace of last year. We have a very efficient bank insurance business, and we are very confident that this product will deliver over time. It is normal that it will pick up together with the growth of the whole base of clients and the whole base of credit portfolio that is becoming growing in a faster pace as of now, including month of April as well. We'll see that in the second quarter probably as well. Also, it is worth mentioning that this measure is announced by the Desenrola changing the payroll credit from 96 to 108 months.

Marcello Dubeux
CFO at Agibank

That also might have an impact on the production of insurance as well. It is also an upside in the case in the short to medium term that you can take into consideration. Now talking about NIMs. NIMs are composed by only taking out of the analysis the fee business, only the credit business composed by the unsecured and the secured loans. What we see is that in the more shorter term, when we talk about fourth quarter and first quarter of this year, we see more of a proportion of unsecured revenues, unsecured part of the portfolio contributing to the revenues, which we know that have much lower yields to contribute to the NIMs.

Marcello Dubeux
CFO at Agibank

That's one in one hand, as we saw the portfolio of the unsecured, shrinked a little bit, 2%. Over time, it is expected that to normalize and to pick up and to go back to a point where it contributed, let's say, 12 months ago. But also when you mentioned la that over the last four quarters we see the NIM going down, that's also we have to put into consideration the Selic, right? We saw on average, when you compare Selic from first Q 2025 to this quarter, is 200 basis points on average higher, right? That's a clear impact in the NIMs. Although we do have a very conservative approach to ALM.

Marcello Dubeux
CFO at Agibank

We, as we always say, we lock all the durations and indexations of every new vintage of production of credit. That's every new vintage comes with a new cost of funding, right? If the Selic is going up, eventually, the margins will suffer in the short term. Yeah.

Gustavo Schroden
Gustavo Schroden
Analyst at Citi

Yeah. No. Okay. just a follow-up on that interest margin, just to make clear. Do you think that?

Gustavo Schroden
Gustavo Schroden
Analyst at Citi

On 12%, it is, let's say, close to a normalized level. Do you think that we should, let's say, estimate, net interest margin around this level?

Marcello Dubeux
CFO at Agibank

Yeah. I mean, we are not providing guidance overall in terms of the indicators, right, Schroden. What we can see is that Selic, it will depend. We see the macro scenario changing from the beginning of the year to now. We expected, yeah, lower Selic rates at this point in the year, at least 75 to 100 basis points lower. Now we have to follow what will happen with the Selic over time this year, it'll have a connection to the margins. Also, it'll take probably one, two quarters for the unsecured portfolio to recover and to occupy more space in the overall revenues of the company. That 2 combined will impact it into the normalization of the NIMs.

Marcello Dubeux
CFO at Agibank

We might see still have, the NIMs going, you know, in the same level for one or two quarters to go back, depending on what happens with the Selic.

Gustavo Schroden
Gustavo Schroden
Analyst at Citi

Okay.

Marcello Dubeux
CFO at Agibank

Felipe will complement me. Just a second, Schroden. One second.

Gustavo Schroden
Gustavo Schroden
Analyst at Citi

Okay.

Felipe Gaspar Oliveira
Head of Investor Relations at Agibank

Yes. No. Marcello, just to complement, I think it's important to mention that in the first quarter when we see the net interest margin annualized after provisions, we already had a peak compared to the fourth quarter. It's important to say that it's a sign that is stabilization in terms of margins. Just to add a third point related to the historical figures, one more thing that we have to consider is that the mix between loans and treasury into the interest-bearing assets also went down in the past from around 90% to 82%. It's another headwind that we had in the past. As Marcello mentioned, we are now in this mix stable ahead.

Gustavo Schroden
Gustavo Schroden
Analyst at Citi

All right, guys. Thank you very much.

Marcello Dubeux
CFO at Agibank

Thank you, Schroden.

Operator

The next question comes from Ricardo Buchpigel with BTG.

Ricardo Buchpigel
Ricardo Buchpigel
Analyst at BTG Pactual

Hi, everyone, thank you for the opportunity of making questions. I have two here on my side. First, we saw a sharp reduction on personal expenses this quarter, and it will be interesting to see if there are any one-off impacts helping here, and if we can assume that OPEX are already at normalized levels going forward. Also going back a bit on the discussion on the recovery, and we noticed that loan origination already has started to recover. You also mentioned that March has already reached pre-suspension levels in terms of total loans and even unsecured loans. Can you walk us through whether it makes sense to expect a resumption to positive year-over-year bottom line growth already in Q2?

Ricardo Buchpigel
Ricardo Buchpigel
Analyst at BTG Pactual

I imagine the main variable still missing here would be fees to recover, but wanted to hear your overall thoughts on that. Thank you.

Marcello Dubeux
CFO at Agibank

Hi, Buchpigel. Nice talk to you. In terms of the OPEX, we see that, you know, if you take a, like a LTM basis is in a normalized period. In terms of the specific, the personnel expenses, it is a seasonal impact. Every year we compare projections of variable compensation to the performance of the business. In, coincidentally is similar to first Q 2025, what we had this year. If you sum, you know, the full last four quarters is in line with the last four quarters. We see that in a normalized level already the OPEX. Regarding, can you repeat the second part of the question, Buchpigel? Sorry.

Ricardo Buchpigel
Ricardo Buchpigel
Analyst at BTG Pactual

Given that you already have been seeing improvements in terms of loan origination, secure also have been recovering already in March, if you could make sense to expect a resumption to positive year-over-year bottom line growth already in Q2, if the main question mark here would be the recovery on fees?

Marcello Dubeux
CFO at Agibank

We are not providing guidance on, specifically, net income or any indicator, you know, compared quarter-over-quarter. What we've been saying is that the operationals are clearly back in pace. That is inevitable that at some point in the, you know, short to medium term, it will impact directly in the financials. We should expect that to be back in pace in a later period, especially in the second semester, second half of the year.

Ricardo Buchpigel
Ricardo Buchpigel
Analyst at BTG Pactual

Thank you.

Operator

The next question comes from Pedro Leduc with Itaú BBA.

Pedro Leduc
Analyst at Itaú BBA

Thanks, guys. Good evening. Question on provision expenses for bad credit, around BRL 500 million this quarter. When I look at the breakdown in your financial statements, catches my attention that there were over BRL 800 million in write-offs this quarter and BRL 300 million in reversals of provisions that you had previously that netted out to the BRL 500 million. BRL 500 million then will compare to an NPL formation of north of BRL 800 million, so your coverage declined a lot. Help us understand a little bit what concentrated so many write-offs this 1st quarter. In 1 quarter you did basically all the write-offs you did in the entire of last year, then you reversed some provisions you had. Trying to understand the moving pieces here and how we should think about cost of risk in the coming quarters then. Thank you.

Felipe Gaspar Oliveira
Head of Investor Relations at Agibank

Thank you. Thank you, Pedro Leduc, for the question. I think it's a good opportunity to clarify all these movements that we had in terms of provisions. In terms of this increase that we can see in the write-off, this is driven by a change in the timing that we made that. Before it was 360 days, now it's 270 days, in line with best market prices. This is naturally offset by provision reversals because of the accounting. This is why we could keep the cost of risk and the NPLs stable at the levels in terms of quarter-over-quarter comparisons.

Felipe Gaspar Oliveira
Head of Investor Relations at Agibank

Also these changes in our view, it's improves the alignment between the portfolio dynamics and the accounting accuracy that we have in the balance sheet. This is our view in terms of these write-off movements. In terms of expenses over the portfolio as we can see in terms of cost of risk, we are kind of stable compared to the last quarter.

Pedro Leduc
Analyst at Itaú BBA

You're writing off faster now, in personal loans, I imagine, not in payroll. We should also work with a slightly higher cost of risk. Just help us think about that in the next quarters, please.

Felipe Gaspar Oliveira
Head of Investor Relations at Agibank

No, actually it's for the total portfolios, not even for specific product. Just to clarify, the NPLs of the payroll loans is much more related to mortality, so this is a kind of normalization of the portfolio that we had by changing this criteria of 360 to 270.

Pedro Leduc
Analyst at Itaú BBA

That's great, Felipe. Thank you. Look, if I may, on a second question, just follow up on that personnel expense line. You mentioned briefly, I know there's a schedule of variable compensation. Even when I look relative to last quarter, I mean, your results grew, right? Portfolio grew and compensation then fell. When I look at relative to last year, I understand why they dropped, but, I mean, didn't even drop that much. Was there any specific reversal in bonus or something this quarter in particular?

Marcello Dubeux
CFO at Agibank

No, no, LeDuc. This is so different periods. One is, in one quarter you'll see normal remuneration, normal compensation. For this one is you compare to the full year performance of the company and the KPIs. We have specifically 2025, we not necessarily beat all the estimates internal for budgeting variable compensation, so there's no correlation between fourth quarter and this one.

Pedro Leduc
Analyst at Itaú BBA

Assuming you perform the next quarter, this line goes up accordingly, right?

Marcello Dubeux
CFO at Agibank

Probably.

Pedro Leduc
Analyst at Itaú BBA

Yeah. Well, let's hope so. Thank you.

Marcello Dubeux
CFO at Agibank

Okay.

Operator

The next question comes from Marcello Mizrahi with Bradesco BBI.

Marcelo Mizrahi
Analyst at Bradesco BBI

Hi, guys. I have another question regarding the other liabilities, so the partnership program liabilities. We can see a reduction on the balance sheet. It's another question here is if there is any specific impact on the expenses side because of that, because of this adjustment on the balance sheet of liabilities. Thank you.

Marcello Dubeux
CFO at Agibank

This is regarding the changing the nature of the company by becoming a public company. Before, when Agi was a private company, the partnership program was had different rules. The management would receive eventually sell their shares to the company at some point if they would leave the company. We had a liability provision to buy back the shares of management that would leave the company. But as of now, there's no, it's, this option is not available because it's a public company. Everything will be settled at market. The conversation with the auditors is to write that down from the liabilities, but it went up in the balance sheet.

Marcello Dubeux
CFO at Agibank

Within the net equity, we have the offset of this measure.

Marcelo Mizrahi
Analyst at Bradesco BBI

Okay. no cash impacts and no impacts on our income statement.

Marcello Dubeux
CFO at Agibank

Zero.

Marcelo Mizrahi
Analyst at Bradesco BBI

Okay. Just to do a follow-up here as the last question regarding the cost of risk. In terms of coverage ratio, it makes sense to believe that the coverage ratio will be maintained at the same levels that are now looking forward? Thank you.

Felipe Gaspar Oliveira
Head of Investor Relations at Agibank

Thank you, Mizrahi. Good follow-up. Yes, we see these levels of that we achieved in the first quarter as healthy levels ahead.

Marcelo Mizrahi
Analyst at Bradesco BBI

Okay. Thank you.

Operator

The next question comes from Renato Meloni with Autonomous Research.

Renato Meloni
Analyst at Autonomous Research

Hi, everyone. Good evening. I wanted to follow up on your comments about the Desenrola, and if you can walk us through a bit of the impacts here, right? I'm thinking if you, if you are to maintain the same exposure that you had with clients, right, but you have to reduce the loan margin on payroll, compensating that with unsecured lending, I think this can be very beneficial in the medium term for you guys if you're thinking in terms of the difference in yields here. Of course, there's also a difference in NPLs, but your risk-adjusted margin should start going up, right? Is that the right way to look at this? What do you think it's the pace here?

Renato Meloni
Analyst at Autonomous Research

Do you have to immediately reduce the limits for loan margin, or this is then through the renewals, is another question I had on this. Thank you.

Marciano Testa
Founder, Chairman, and CEO at Agibank

Hi, Renato. Marciano here. Just for start this answer, I'll ask to Marcello complement. It's in the short term, we see a very positive inflow in terms of the increase, the income from the salary of the benefits because they shrink of the compromise. It's, you know, decreased from 45% to 40% now. Goal is to 30% in the future. This is a positive impact in our case because we are a payer provider of the benefits and we can see the flow, the inflow rise in our checking accounts. It's very healthy for our unsecured portfolio. Also we are more confident to rise, to deploy more credit the unsecured side.

Renato Meloni
Analyst at Autonomous Research

Thanks. I don't know if there's an addition to that.

Marcello Dubeux
CFO at Agibank

Renato, can you complete your question again, please?

Renato Meloni
Analyst at Autonomous Research

I'm thinking of the impacts here, right? I think Marciano addressed that. There's a short-term positive impact here since you are extending other types of loans with higher margins to these clients.

Renato Meloni
Analyst at Autonomous Research

That's the short-term impact. Longer term, is that a?

Marcello Dubeux
CFO at Agibank

Okay

Renato Meloni
Analyst at Autonomous Research

positive that's gonna be sustained?

Marcello Dubeux
CFO at Agibank

Yeah. You asked about NPLs as well, right? In the more medium-long term, we believe this is sustainable for. That's exactly where our long-term positioning, strategy positioning is based off, having long-term relationships with the clients, right? We see, as we always say, the payroll loans as a tool or as a relationship product with this client that we maintain to long term. The payrolls are very important in our strategy and with that, having the principality of this client. Having a client that has a more disposable income, more a healthier credit quality, for us is clearly a plus because we will be able to have a long-term relationship with this client and therefore monetize this relationship over time.

Marcello Dubeux
CFO at Agibank

Although you mentioned NPLs, although eventually the NPLs might, because of mix, go a little bit up, we look at the appetite for the products with the loss absorption concept. As long as we can provide a credit product to a client where we see 1.5 to 2 times the NII that product produces over the cost of credit that it has, for us is a product that we have appetite to continue growing. You know, the long-term relationship and the healthier portfolio is the basis for a better quality for us and a positive impact.

Renato Meloni
Analyst at Autonomous Research

That's perfect. Nice. Thank you.

Marcello Dubeux
CFO at Agibank

Okay.

Operator

The next question comes from Neha Agarwala with HSBC.

Neha Agarwala
Neha Agarwala
Director and FinTech Specialist at HSBC

Hi, team. Thank you for taking my question. First, I wanted to talk about the private payroll origination. We saw fourth quarter was a bit slow in terms of the growth in private payroll loan book. In the first quarter, we saw a little bit of pickup. It grew 10% quarter on quarter. However, at the beginning, the origination was much more faster. How do you see this product right now? I remember you mentioned in the last call that you were taking a step back looking at the older vintages and making changes in the private payroll product. What is your view on this product right now, and should we expect more significant acceleration in the coming quarters? My second question is on asset quality.

Neha Agarwala
Neha Agarwala
Director and FinTech Specialist at HSBC

I mean, there was a big pickup in the fourth quarter, and in 1Q, it was a slight decline in the NPL ratio, despite it typically being seasonally worse. Things have been improving on the asset quality front. Should we expect this, these levels to continue in the coming quarter? I mean, we don't need numbers, but just directionally, should the trend continue to improve, or should we expect NPL ratio to increase as you increase the share of unsecured loan book in the overall portfolio? Thank you so much.

Marcello Dubeux
CFO at Agibank

Hi, Neha. Good to talk to you. Marcello here. In terms of the private payroll, as we said in throughout the explanations of the fourth quarter earnings presentations, we throughout the end of last year we took a more cautious approach with this product. We wanted to observe after making some adjustments in the credit modeling. We wanted to go, you know, smaller and see the behavior of those vintages, and we got much more comfortable with that, and we decided to accelerate a bit more. We cautiously accelerate a bit more in this product starting, you know, in the middle of this quarter, especially beginning of March.

Marcello Dubeux
CFO at Agibank

March and April, we can say we already produced on average, north of BRL 200 million a month in the product. That is the level that we plan, conditions maintaining the way they are. That's the level we at least want to maintain growing in the product. That's why we already saw uptick in the portfolio of private payroll in this quarter. Regarding to NPAs, I'll pass to Felipe to complement.

Felipe Gaspar Oliveira
Head of Investor Relations at Agibank

Yes. Thank you, Marcello. Hi, Neha. Good to talk to you. In terms of asset quality, as we discussed it before, we see those levels of NPAs stable ahead due to the mix that we achieved. One more thing that make us feel comfortable about that is the short term, the short terms KPIs related to the healthy of the portfolio. As for example, the NPAs between 15 to 90 days, and also the first payment default of the portfolio that's been improving, over time. This is our view on that. I think you can go to the next question.

Operator

The next question came via Q&A from Rayna Kumar with Oppenheimer. Good evening. Can you provide your outlook for net interest income loan and net income growth in 2026? Is there any financial guidance you can provide based on most recent trends?

Marcello Dubeux
CFO at Agibank

We are not providing formal guidance at this point.

Operator

The next question comes from James Friedman with Susquehanna International Group.

James Friedman
Analyst at Susquehanna International Group

Hi. Good evening and thank you for taking my question. I just had a kinda higher level question. In terms of the regulatory changes at the INSS, is this business as usual and we should be accustomed to it? If you look back over the 10 plus years that you've offered this product, how frequent are there regulatory changes? I know you say in Portuguese it's something like, "Not even the past is certain," but is there any certainty that this is not gonna chronically impact the company's business model?

Marciano Testa
Founder, Chairman, and CEO at Agibank

Hi. Marciano here. Yeah, we don't see some product chronic impact in our business model. Structurally, this product, it's the last 20 years in Brazil this is very stable. Obviously, always when you see the government change, they change a little rules about the products and sometimes the margin to require from the income rise, sometimes down. It's normally of the product and we are very able to adapt our ratios, our model to continue originate very fast and maintain the pace of the origination. We are very confident with this risk.

Marciano Testa
Founder, Chairman, and CEO at Agibank

When you see the changes that the INSS promote yesterday, we are actually very, very excited because when you see the future, the reduction of the compromise of income from 45 to 40, keeping reducing 2% year-over-year up to 30%, is very healthy for the customer maintain the long-term healthy and the portfolio very safe. Basically, we see that as a normally changes of the products in the Brazil market. Thank you.

James Friedman
Analyst at Susquehanna International Group

Okay. Thanks, Marcello. Then as a follow-up, you know, I realize you're not guiding to this, but how should we anticipate the evolution of secured versus unsecured longer term? Like, where do you see those ratios over time and what assumptions may be in there?

Marcello Dubeux
CFO at Agibank

Hi, Jamie. Marcello here. Going forward, as we usually mention, our main products are the unsecured. We consider ourselves as well-positioned in this secured lending ecosystem in Brazil to keep growing, to surpass the BRL 100 billion credit portfolio by the end of the decade. That's a medium-term guidance that we can also always provide and we really believe we are in the path to reach. Today we have 87% of our credit portfolio with unsecured lending. That path will continue to be a pillar of our credit portfolio and probably slightly go a little bit up over time to reach up to 90%. The unsecured might reach up to 10% over time of the credit portfolio.

Marcello Dubeux
CFO at Agibank

That's kind of the long-term trend. No big variations, big changes here in the mix.

James Friedman
Analyst at Susquehanna International Group

Okay, perfect. Thank you very much.

Marcello Dubeux
CFO at Agibank

Thank you.

Operator

The next question comes from Henrique Navarro with Santander.

Felipe Gaspar Oliveira
Head of Investor Relations at Agibank

Yes. I think I can compliment Navarro. I think has any audio issues, but he sent me in parallel the question about the market share in the origination comparing to the market share in the portfolio on the INSS. What we can say as we provide the monthly evolution is that when we see the March, when we see the March origination, we already surpass the market share that we had in the portfolio. Yes, we are seeing the market share evolution and back into growing, surpassing the levels that we had in the portfolio for now. Thank you for the question, Navarro. With that, I pass the floor to operator to end the call. Thank you.

Operator

Thank you, all. This concludes today's conference call. You may now disconnect.

Felipe Gaspar Oliveira
Head of Investor Relations at Agibank

Thank you all.

Analysts
    • Felipe Gaspar Oliveira
      Head of Investor Relations at Agibank
    • Gustavo Schroden
      Analyst at Citi
    • James Friedman
      Analyst at Susquehanna International Group
    • Marcello Dubeux
      CFO at Agibank
    • Marcelo Mizrahi
      Analyst at Bradesco BBI
    • Marciano Testa
      Founder, Chairman, and CEO at Agibank
    • Neha Agarwala
      Director and FinTech Specialist at HSBC
    • Pedro Leduc
      Analyst at Itaú BBA
    • Renato Meloni
      Analyst at Autonomous Research
    • Ricardo Buchpigel
      Analyst at BTG Pactual
    • Tito Labarta
      Analyst at Goldman Sachs
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