Tito Labarta: Sure. Understood. Thanks, Bruno. Maybe just one quick follow-up on the inflows. I think in the past, I know your net inflows are low, but you mentioned in the past that your gross inflows actually much higher, right? So you are seeing outflows. Any color you can give on gross inflows you’re doing?
Bruno Santos: Yes. It’s stable. It’s not improving, but it’s also not deteriorating further, where we have more volatility in terms of gross inflows and outflows is in the corporate and company clients that with the threshold of BRL700 million of annual revenue, it’s allocated into retail client assets. So there we have more volatility.
Tito Labarta: Okay. Great. Thank you, Bruno.
Antonio Guimaraes: Thanks, Tito. Next question comes from Gabriel Gusan from Citi.
Gabriel Gusan: Hey, guys. Good evening. So a couple of questions. First, can you remind us what is inside of the revenues and the main contributions there? And why we saw such a strong pace this quarter, both in the sequential comparison in year-over-year. And also, we saw this quarter your effective tax rate come up both in the accounting and the managerial view. Can you remind us why is that? What’s the driver of the ups and downs. Thank you.
Bruno Santos: I’ll take that. Gusan, thanks. Other revenue, by definition, it’s everything that we cannot allocate in the other segments, retail, institutional, corporate and insurer services. The main revenue there, it’s the remuneration over our own cash, ALM, asset liability management, but we also have a lot of other stuff that does not fit in the previous segments that I just mentioned. In third quarter, specifically, we had a some one-offs impact that made the revenue higher that we do not see happening in the following quarters. Like, for example, we had the termination of this pack. There was a financial positive in that with an associated expense. So net impact for EBITDA was zero, but something around BRL40 million impacted positively the revenue and also negatively impacted the SG&A.
And regarding effective tax rate, third quarter, basically capital markets activity. That’s what explains the DCM activity, a lot of revenue at the broker-dealer level if you look at securities placement in our accounting income statement, you’re going to see all-time high there and broker-dealer has 40% tax bracket. So it pushed up the accounting effective tax rate. When we look with a longer time horizon, it’s our expectation that EBT should be growing at a faster pace than net income, exactly because effective tax rate should be higher going forward. But that’s on an annual basis — on a quarterly basis, there is going to be volatility.
Gabriel Gusan: Perfect. Thank you.
Antonio Guimaraes: Great. Next one is Eduardo Rosman from BTG.
Eduardo Rosman: Hi, everyone. Congrats on the numbers. I have a question on your credit card business. We’ve been able to see a very strong growth in revenues. But I wanted to know if we should be thinking about this business as an important bottom line contributor in the future or not, right? I asked that because as far as I know, your clients that invest a lot, probably you have to offer like cash back or invest back. You have a lot of benefits. Your clients do not go into revolving, so I just wanted to try to understand this still, if it’s possible to generate a good amount of bottom line in the future with that business. And also trying to understand your risk appetite, right? We just saw, say, the market as a whole going through problems, I think clearly, you didn’t face the same, let’s say, headwinds, but just trying to understand if you could increase your risk appetite and eventually attract more clients that don’t have a lot of AUC with you using the credit card to do that, right?
So thanks a lot.
Thiago Maffra: Thanks for the question, Rosman. Well, first, when we look at the bottom line of — or the contribution margin of credit cards as of today is still negative, but we expect like that should change, I would say, at the end of this year, beginning of next year. So it will start to be positive contributor on margin for XP, okay? So as you know, the business of credit card, there is a J curve as we are escalating issuing new cards, but we are at the point to become positive, okay. When we look at NPL, of course, we have a big part of the — our portfolio, something like BRL4.5 billion to BRL5 billion out of BRL7 billion, that’s collateralized. So the NPL is very low, okay? But when we look at the whole portfolio, it’s close to the NPL over 90 days is close to 1%, okay?
And when we look at the provisions we have, today, it’s 2%. So we have two times provisions over what we are realizing on NPL. So that’s basically — it’s because of the profile of the customers we have, of course, okay? So the NPL that we have is much lower than what the market has, okay? So we have been expanding the portfolio at Rico brand that has a higher NPL, but with a very good LA ratio when you look at the revenues over provisions. So these two are very good.
Eduardo Rosman: No. Great, Maffra. If I may just another question here on another topic, right? I think Bruno was talking about that the company has excess, let’s say, capital, right? And you actually paid a lot this year, right? If we add buybacks and the dividends, I’m assuming here, let’s say, BRL4.5 billion, which is more than 100% the net income, right? Naturally, I don’t think that, that’s sustainable over time. But just trying to understand if it’s your idea to over time to keep paying dividends and/or kind of buybacks on a recurring basis in the future. Thanks.
Bruno Santos: You want me to take that, Maffra? Yes, the answer is yes. We are going to keep returning capital to shareholders through buybacks or dividends. And what I mentioned in the presentation, when we look at our capital ratio at XP Inc. level, we ended this quarter, third quarter above 22%. So it’s too under leverage. We are conservative in terms of our balance sheet. We are not going to be where the banks in Brazil, for example, that we compete against usually are with capital ratio around 14% to 15%. But we see room to leverage a little bit more, especially considering that we have a bank. Now we are under corporate restructuring in our group to have the bank as the parent company of the Prudential conglomerate with the broker-dealer below it and that’s something ongoing in the Central Bank and that will give us the possibility to use the bank better.
And by that, I mean, as the main vehicle for funding instruments because a bank, as you know, can fund itself at a cheaper with a strong depth in terms of market achievements. So going forward, we are going to keep our profitability. We expect to keep growing our earnings, and we do not need to retain capital to keep growing. And with that in mind, yes, you can expect us to keep distributing capital to shareholders as we move forward. Great. Thanks, Bruno and Maffra.
Antonio Guimaraes: Thank you, Rosman. Now let’s try to connect with Batista again from UBS. Batista, please.
Thiago Batista: Hi, guys. Can u hear me?
Bruno Santos: Yes.
Antonio Guimaraes: Yes.
Thiago Batista: Okay. Sorry for the other time. Yes. I have one question about the profitability of XP. You already mentioned in the past that we should achieve 30%, but when do you believe this is possible, would be 10 years, five years, I want to have a time horizon for this? Because when we look for international peers, we can see some players like Fineco that has an ROE of 30%. But we also have [indiscernible] ROE of 20%. So trying to see when — if it’s three, five, 10 years or so to achieve this level. And the second question is a follow-up about that new money. I know that you answered already a lot of questions about it. But how negative has been the latest, let’s say, LCA, LCI, LIG. How much negative has been those instruments for XP? And if part of the corporate structure that you just mentioned is to be able to issue LCA, LCA is difficult, but at least LCA. So if this is linked with your corporate structure?
