AGI Q3 2026 Earnings Call Transcript

AGI (NYSE:AGBK) reported third-quarter financial results on Wednesday. The transcript from the company’s third-quarter earnings call has been provided below.

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Summary

AGI reported a 63% increase in earnings before tax and a 40% rise in net income quarter over quarter, marking its best quarter in 2026 despite challenging macroeconomic conditions in Brazil.

The company emphasized its strategic focus on becoming an AI-driven banking platform, enhancing technology, and promoting an entrepreneurial culture, with the addition of a new AI leader, Rafael Cicada.

AGI’s subscription program, AGI Plus, has rapidly grown, reaching over 700,000 subscribers, contributing to a predictable revenue model and high customer engagement.

Credit origination reached a record 10.2 billion reais, up 77% year over year, with private payroll loans growing 130% year over year, and fee revenues increasing by 80% quarter over quarter.

Management announced a share repurchase program, reflecting confidence in AGI’s long-term value and strength of the business model.

The company aims to continue expanding market share in INSS payroll credit, maintaining operational leverage, and improving ROE by focusing on unsecured loans and a balanced product mix.

AGI’s funding strategy remains robust, with diversified sources and recent credit rating upgrades, supporting portfolio expansion.

Full Transcript

OPERATOR

Good afternoon everyone and welcome to AGI’s third 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 Gastparo Oliveira, Head of Investor Relations. Please go ahead.

Felipe Gastparo Oliveira (Head of Investor Relations)

Hello everyone and welcome to AGI’s third quarter 2026 earnings conference call. Thank you for joining us. I’m Felipe, Head of Investor Relations. Joining me today are Marciano Testa, Founder and CEO of AGI, and Marcelo Dube, our CFO and Investor Relations Officer. Before we begin, I’d like to highlight what makes this quarter especially important from an investor perspective. Throughout 2026 we have been focused on improving our operating platform, accelerating our commercial momentum, and expanding our sources of revenue. This quarter provides important evidence of that progress. We are seeing stronger credit origination, increasing customer engagement, growing fee revenues, and improvement in profitability and operating efficiency.

These developments are particularly relevant because they reinforce the scalability and diversification of our business model. Throughout this conference call we will be presenting certain non-IFRS financial measures. These are important measures for AGI’s management but should not be considered in isolation or as a substitute for IFRS measures and may not be comparable to similarly titled measures reported by other companies. Reconciliations between non-IFRS and IFRS measures are available in our earnings release. Unless otherwise noted, all figures discussed today are presented in Brazilian reais.

I’d also like to remind everyone that today’s discussion may include forward-looking statements which are based on management’s current expectations and assumptions and are subject to risks and uncertainties that could cause actual results to differ materially. These statements are not guarantees of future performance. This outlook reflects management’s current expectations and assumptions, including among others, assumptions regarding the trajectory of Brazil’s benchmark interest rates, the pace of credit originations, the regulatory environment governing payroll-linked lending, and general macroeconomic conditions in Brazil, and is not a guarantee of future performance. The outlook is only effective as of the date given and should not be considered updated or reaffirmed unless and until we do so publicly.

Moving to today’s agenda with three main topics. First, Marciano will share a strategic update on how we are building an AI-driven banking platform. Second, he will discuss the rapid growth of AGI and how it’s creating new opportunities for recurring revenues. And finally, Marcelo will walk us through our third quarter results, highlighting our growth momentum, operating performance, and profitability. With that, let me hand it over to Marciano. Marciano, over to you.

Marciano Testa (Chief Executive Officer)

Good afternoon everyone. I am excited to begin this quarter of 2026 earnings call with positive news. We are going to show you our platform engine is fully normalized. In this quarter we grew over 63% in earnings before tax and around 40% in net income quarter over quarter. This is the best quarter result of this year despite the macroeconomic scenario in Brazil. All of these results and the normalization pace of growth are based on the three anchor principles that guide our strategy decisions for the long term. First, we live for the customer, which means that we prioritize client value when we make all of our decisions. Second, we win with technology, so we continuously enhance our technology capabilities, especially with AI or another new technology solution to serve and operate in a way. And third, promote an entrepreneurial culture to figure out a new perspective of the business, diversify and grow while maintaining disciplined focus long term.

In this slide you can see AGI is one platform with many engines. Our business units face the customer, one proprietary tech stack, data and intelligence with AI embedded throughout powering them all. We built once and share across every business unit. Every line of our customer base improves as we grow: customer acquisition, cost to serve, funding, and especially cost of credit. That is the architecture behind our operating leverage. As I said in our second principle, to continue to enhance our technology platform and attract new talents to join us, it is my pleasure to announce our new partner, Rafael Cicada, formerly a leader in AI at McKinsey, who is an important resource to drive our platformization technology through the integration of AI to support all of our business units. We keep pushing hard to become fully AI-driven in the next few months. We are already seeing very good signs in terms of gaining efficiency ratio and scalability, at the same time improving customer experience.

But I believe the biggest positive impact will come from the data science and credit models that will become much more precise, especially in the prediction model to predict new delinquencies and adjust in real time while you visualize the variable changes, deploying credit in different challenges, cycles of the economy, and maintain the cost of credit under control. This is a strong capability that we have in our organization, proving over 10 years of good long-term track record.

But now in the AI era we boost these capabilities even further. Even though the macroeconomic scenario will be more challenging, we see ourselves as a cyclical business. Now I would like to highlight the bank by subscription. We have a financial strategy with our subscription program called AGI. We have just begun collecting the result of this amazing project to diversify and increase the revenues with assets like capital allocation. We launched the pilot project at the end of the second quarter and now, four months later, we reached over 700,000 subscribers, growing by close to 200% quarter over quarter. That is a powerful, predictable revenue model going forward.

Also it functions as a stickier tool to keep our customer base highly engaged in our platform while they enjoy all benefits as a member of Plus. Here you can see some examples of the benefits, such as prioritized exclusive access to the learning platform, mobile top-ups, streaming platforms, also an exclusive network of medical consultations. On top of that, exclusive access to the pharmacy network with hard-discount medicines, another important benefit tailor-made for our customer base.

As a result we achieved 78 points in NPS, one of the highest in the industry. The improvements in the customer satisfaction that I mentioned translate in our numbers here. We grew our customer base 10% quarter over quarter. Our credit origination grew over 40% quarter over quarter. With that, we surpassed our milestone with over 10% market share in the payroll credit of INSS, which places AGI in the top five payroll lending banks within the payroll ecosystem in Latin America. Also another impressive milestone on the fee side: over 244 million in fee revenues in this quarter.

And finally we achieved 276 million in the third quarter. Before I hand over to Marcelo, I would like to comment on the share purchase program we announced on October 27th, authorizing the repurchase of up to 3 million Class A shares over the next 12 months. On behalf of the board and the management team, this reflects our conviction in the long-term value of AGI and the strength of our business model. It is also a balanced decision on capital. Our over 18% capital adequacy ratio allows us to return value to shareholders while preserving the capital we need to fund customer growth and technology.

Any repurchase will be made at management’s discretion. Our priority is growing the business with disciplined returns. With that, I pass it over to Marcelo and Felipe to go over the results. Thank you.

Marcello Winik Dubeux (Financial and IR Officer)

Thank you, Marciano, and good afternoon, everyone. In the third quarter, the groundwork we laid in the first half began to show in our numbers: record customer retention, our strongest origination in more than a year, a recovery in fee revenues, and higher earnings. We made further progress against our core strategic priorities, maintaining position among Brazil’s most efficient and trusted financial institutions. On today’s call, I will walk you through our third quarter results and the details behind them. In the third quarter, we saw the momentum in the first half of 2026 translating into growth and results. We delivered our strongest quarterly credit origination in over a year at 10.2 billion reais, up 77% year over year and 43% quarter over quarter. Private payroll loans reached 2.3 billion reais, up 130% year over year and 61% quarter over quarter, with first-payment defaults continuing to improve in newer cohorts.

Fee revenues were 244 million reais in the third quarter, up 30% year over year and 80% quarter over quarter, led by insurance brokerage and AGI+ subscriptions. Finally, net income was 276 million reais, up 31% year over year and quarter over quarter, with net margin up 107 bps year over year and 226 bps quarter over quarter. Taking a closer look at customer growth, as seen on slide 10, total active client count increased 29% in the third quarter compared to the prior-year period and 9% quarter over quarter. We reached 8.3 million active customers as of the end of the third quarter of 2026, which we define as those with at least one active product at quarter-end, a 43% CAGR over the past six years. This growth demonstrates the resilience of our acquisition channels and success in customer satisfaction and retention, as earlier explained by Marciano.

Turning to our credit portfolio on slide 11, total loan balances grew 12% year over year and 5% quarter over quarter in the third quarter of 2026 to 38.8 billion reais. Our credit portfolio maintains a healthy mix, with secured loans representing 88% of total, or 34.3 billion reais, and unsecured loans representing 12%, or 4.5 billion reais. We believe this mix brings a sustainable balance of profitability, credit quality, and focus on long-term relationships with our clients.

Unsecured lending, which is restricted to customers who maintain primary relationships with AGI, grew to 4.5 billion reais in the third quarter, reflecting the short-term duration of this portfolio. In the third quarter, we continued to grow our base of clients with principality, reaching approximately 1.7 million clients who receive their pensions or benefits in their AGI checking accounts. Year to date, AGI has added more of these clients than any other financial institution in Brazil. Within INSS payroll credit, we continue to successfully execute against our strategy of being a disruptor of this segment in Brazil, as you can see on slide 12.

Based on our strong positioning with the INSS and leveraging our competitive advantages in this segment, our market share in Q3 reached 10%, AGI’s first ever two-digit market share in loans, an increase of 100 bps year over year. It is worth mentioning that we were able to expand our market share by 40 bps just in the third quarter. After overcoming the recent periods of regulatory turmoil in private payroll credit, on slide 13, our portfolio has grown to 2.3 billion reais, an increase of 61% quarter over quarter and 130% year over year. It is worth mentioning that our appetite for origination of this product continues strong, with incremental enhancements to its credit model and observing good evolution in its credit quality, especially with first-payment defaults of new cohorts showing signs of improvement.

As a result, monthly origination sustained between 250 and 300 million reais in the quarter. With regards to credit quality of the overall portfolio, on slide 14, non-performing loans exceeding 90 days increased in the third quarter to 3.5%, up 20 bps quarter over quarter. Nevertheless, NPLs for the overall portfolio remain comfortably below the average for consumer credit in Brazil of 6.2%, which increased 70 bps only in this quarter. That demonstrates how AGI’s credit strategy is structurally resilient, even in a challenging macro environment such as what is currently seen in Brazil.

Moreover, it is worth mentioning that short-term quality indicators we monitor internally continue to reflect stability and a low-risk profile of our portfolios. Moving to slide 15, cost of risk (last 12 months) was 6.1%, up 20 bps quarter over quarter and 70 bps year over year, reflecting both our portfolio mix and the faster pace of our credit origination, as provisions for expected losses are recognized upfront on new vintages. INSS payroll loans remain the anchor of our portfolio, stable at 72.3%, while private payroll loans, currently a fast-growing product, more than doubled their share in the portfolio to 5.8% from 2.8% a year ago.

At the same time, unsecured loans represented 11.6% of the portfolio and other secured loans 10.2%. The coverage ratio was 157% at the end of September, down from 183% in June, as a result of the provisions balance divided by NPLs over 90 days, a level which we consider adequate for a portfolio that is 88% secured. Turning to our revenues on slide 16, in the third quarter we delivered total revenue of 3.2 billion reais, an increase of 15% year over year, favored by a growing credit portfolio as well as growth in fee revenues, which represented 8% of the total in the quarter, up from 4% in the previous quarter. On slide 17, we see net interest income of 1.3 billion reais in the quarter, up 10% year over year and 1% quarter over quarter. The slight decline in NIM is primarily due to asset mix, as the share of secured loans reached 88.4% of the portfolio, up from 86.2% a year ago, with a lower relative contribution from personal loans.

Annualized NIM was 11.8%, down 20 bps quarter over quarter, while NIM after provisions was 6.3%, compressing 50 bps on a quarterly basis, reflecting the faster pace of credit origination in the quarter. Fee revenues, on slide 18, reached 244 million reais in the third quarter, up 30% year over year and 80% quarter over quarter. Such growth was driven by insurance brokerage, with revenues from AGI+ subscriptions now contributing. Moving to efficiency on slide 19, which highlights the operating leverage embedded in our unique and highly scalable business model, our operating efficiency ratio improved to 44.2%, 470 basis points better than the second quarter and 340 basis points better than a year ago.

Our operating efficiency ratio is calculated as operating and personnel expenses divided by NII plus fee revenues net of tax expenses. This improvement mainly reflects NII plus fees growing 9% quarter over quarter, while operating expenses were flat in the third quarter. Reaching the bottom line, net income in the third quarter was 276 million reais, an increase of 38% over the previous quarter and 31% year over year, representing annualized ROE of 22.4%, more than 500 bps up from 16.9% in the second quarter. This is the best level of quarterly profitability year to date, supported by the growth of 63% in earnings before taxes in this third quarter.

Now onto our funding approach on slide 21. As a regular debt issuer, AGI maintains established relationships with Brazil’s credit market, diversifying funding sources to support portfolio expansion. As a result, total funding reached 40.8 billion reais, an increase of 15% from the third quarter of 2025. Institutional counterparties now represent 64% of total funding, while retail sources account for 36%. In August, AGI also received its most recent credit rating upgrade from S&P Global, who raised the bank’s credit rating from AA- to AA, so all three agencies now rate the bank at the AA level.

We consider these upgrades as a significant demonstration of confidence in AGI’s business model. On slide 22, we can see that our total assets have grown to 54.6 billion reais in the quarter, an increase of 22% year over year, with return on assets over the last 12 months of 1.8%, up 10 bps quarter over quarter, driven by higher profitability in the period. Moving to equity on slide 23, shareholders’ equity reached 5.1 billion reais, up 64% year over year, reflecting the IPO proceeds added in February of 2026, and up 5% quarter over quarter now driven by retained earnings.

Lastly, our capital adequacy ratio consolidated at the holding level was 18.1% in the third quarter, down 60 bps in the quarter and up 440 bps year over year. Tier 1 capital ratio stood at 17.2%, also reflecting the receipt of the net proceeds from the IPO. We understand that these levels of capital adequacy allow us to continue investing in customer growth and technology while maintaining focus on long-term returns. To close, the third quarter gave us evidence in origination, in fees, and in earnings that the inflection we described last quarter is underway. We entered the fourth quarter with that momentum and remain focused on execution. On behalf of AGI, thank you for your interest and support. And now we would like to open the call for the Q&A session. Operator.

OPERATOR

Thank you. We’re going to start a question-and-answer session for investors and analysts. If you’d like to ask a question, please click Raise Hand. Our first question is from Chita Labarta with Goldman Sachs.

Chita Labarta (Analyst)

Hi, good evening. Thank you for the call and taking my questions. Congratulations on the strong results. Good to see the INSS loans growing again. So my question: how do you think about loan growth from here right now that you’re growing INSS loans again? Do you think you’re just probably getting started there? Should we see a big acceleration into next year? And then also, on the other hand, the personal loans still, they really grow that much. But on that side you probably have to worry a bit about the macro environment, the credit cycle, which there’s a lot of concerns in the market about that.

So how do you think about both the INSS loans but also unsecured personal loans and the growth outlook for that, and then maybe some of the other, like the private payroll continuing to grow? Thank you.

Marcello Winik Dubeux (Financial and IR Officer)

Thank you, Tito, good to talk to you. Thanks for the question. So regarding, I’ll break up the question in our portfolios. So regarding growth for the next quarter and next year in the environment as well. First of all, in terms of the INSS portfolio, we continue to see space to continue to increase our market share. One thing that is important to remember: we reached 10% market share, which is an important mark for us this quarter. We grew only this quarter 40 bps in terms of market share, and we see space to continue occupying this market and growing going forward. So INSS, yes, will continue to be a big driver of our growth going forward.

Then going to the private payroll loans. That was not part of your question, but I think it is also important to mention we had a 60% growth in this portfolio this quarter and continue in the pace that we’ve been mentioning, that we have appetite to grow from 250, 300 million reais a month in terms of origination. We see demand for that, we see the operational aspects of the product improving consistently over time, and we have appetite to continue to have this part of the portfolio growing and opening some space in our growth.

And then finally the unsecured loans. The good news is that this portfolio stabilized this quarter. So it was the first quarter where we saw that portfolio not reducing, right, so the first time that it is growing, and from now on we expect this portfolio to have more participation. It is a portfolio that has higher yields in our portfolio and we expect that to have more participation, continue to grow over time. One thing also that is important to talk about is that in this year, in the beginning of the year, we had all these disruptions derived from last year and we did not take advantage of the increase of the minimum wages that happened in the beginning of the year. So we still have this effect to happen in the beginning of the year and could be another factor of growth that will be seen only in the first quarter of next year. But it’s still also another boost for our growth.

Chita Labarta (Analyst)

Great, thanks, Marcelo. And maybe just one quick follow-up. I guess now that you’re growing INSS loans again, so a big jump in fees, should that also accelerate from here only because how big the jump was, or was there anything one-time on the fees to think about?

Marcello Winik Dubeux (Financial and IR Officer)

No. Regarding the INSS, we had an acceleration this quarter. A smaller portion of this acceleration was due to the month of September, when we had the expiration of the provisional measure that had an impact on the demand, on the space that the clients had to lend against their salary, right. Remember, we had a 5% reduction in the space where the clients could lend against. So that had a big impact in the month of September, but that has been normalized for the month of October, and we probably will have growth in the fourth quarter, but not the same as the third quarter.

Probably it is more normalized this quarter, and on top of that we were able, and continue to be able, to see fees contributing for the revenues in this fourth quarter going forward.

Chita Labarta (Analyst)

Okay. And just want to be clear on the fee income that jumped, does that also accelerate from here, or is it just a one-time because you started to accelerate this quarter?

Marcello Winik Dubeux (Financial and IR Officer)

No, no, the income is—so I’ll break that down for you also. So the fee income is, on one hand, brokerage, insurance brokerage. That is due to the business model that we have, that we can be together with the clients in front of the client. So as we grow the portfolio, we have the cross-sell opportunity to sell insurance, and so that will continue. So it’s not a one-time. Remember in the beginning of the year we redesigned the journey of selling insurance, and that has been in full effect and operating.

So this is the first quarter where we could see really growing this line. And on top of that, the AGI Plus started to contribute this quarter. It will be a more recurring revenue going forward in the fourth quarter, adding up to the number that we already showed this quarter. So it’s not a one-time, and the fee business will continue to grow from the number that we are seeing this third quarter.

Chita Labarta (Analyst)

Okay, great. Thanks, Marcel.

Marcello Winik Dubeux (Financial and IR Officer)

Thank you, Tito.

OPERATOR

The next question comes from Ricardo Bochpigo with BTG Pactual.

Ricardo Bochpigo (Analyst)

Hi everyone, and thank you for the opportunity of making questions. Over the past 12 months we have seen several changes in the INSS regulation—stricter authentication requirements, more restrictions on what can be offered to customers and how. So it seems from the last couple of results that this disruption seems to be easing and the impact seems to be reducing. So I wanted to understand whether you think any of these changes that happened had any structural impact on the bank’s most profitable products, which are the life insurance and the unsecured loans.

And looking ahead, where do you see the bank’s normalized ROE today compared to the 35–40% levels that you reported in the past couple of years? Thank you.

Marciano Testa (Chief Executive Officer)

Thank you, Ricardo, for the question. Marciano here. So we don’t see concern about the new regulation, especially in the INSS. When you look ahead, we see the regulatory environment as business as usual. All banks, fintechs, and financial institutions operate under a regulatory environment, and it’s our job to be compliant quickly and offer the customer the best experience we can. So when you think about what happened in INSS last year as a low-probability and high-impact, one-off situation in the Social Security Administration, in truth we do not see probable risks to something happening again in the coming years. And in terms of the new regulations, specifically in INSS, we see these improvements in the sector related to customer protection—for example, new biometric. We see this as positive, giving us, with our business model, opportunity to continue growth based on our hybrid model that we can advise the customers and continue growth.

Marcelo can complement.

Marcello Winik Dubeux (Financial and IR Officer)

Yeah, Ricardo, so in terms of the growth that you asked in the end, yes, we are—as you saw in this third quarter—our earnings before taxes already demonstrating strength to grow, growing more than 60%. So we are on our path to show operational leverage. You see our efficiency ratio going down more than 400 bps, and we believe we have space to continue to do that. So gradually the return on equity will continue to grow, as we’ve been mentioning in the previous quarters.

So we are confident that we are in position to, as we grow the portfolio, maintain growing the margins that we expect to grow as we continue to work products with higher margins, as the unsecured loans, as we continue to grow fee business, and we see the operational expenses controlled. We don’t see necessity to add headcount in the corporate levels, for example, due to high-intensity investments in AI and technology. So the operational leverage—we have a setup to see that happening going forward over the next quarters.

Ricardo Bochpigo (Analyst)

Thank you. That’s clear. Just one quick follow-up. I think an important part of the equation for the ROE to improve meaningfully with a normalized tax rate is the unsecured lending, right. So if you could elaborate on if in Q4 you are already seeing any improvement here, it would be also helpful.

Marcello Winik Dubeux (Financial and IR Officer)

Sure. I think so. Unsecured loans—first of all, we saw impacts throughout the year. We have been working with the unsecured loans with a shorter-duration type of portfolio, and because of that and the interruptions that we’ve gone through over the last year, we saw that reducing over time, and we said that that would stabilize as we grew more. And that’s what happened. So the product already stabilized and started to grow. So as we continue to produce more and originate more credit in this type of loan, that will show growth.

And how do we show growth, right? We are the financial institution in Brazil that, in percentage terms, grew the most in terms of new beneficiaries of the INSS in the base this year. So we reached 1.7 million clients with principality that received their benefits in their AGI accounts, and based on that we are able to accurately price what we can offer to them in terms of unsecured loans and have that in a controlled NPL way. So we focus on that to continue to grow this portfolio.

And on top of that, all of these events that happened at the beginning of the year that I mentioned, such as the increase in the minimum wage, also impact the possibility of cross-selling with unsecured loans. And more than that, we will continue to work with this product to have more participation—not percentage way, but growing in a stable way—to maintain this participation that we have in the mix of the portfolio. Okay.

Ricardo Bochpigo (Analyst)

Thank you.

OPERATOR

The next question comes from Pedro Laduque with Itaú BBA.

Pedro Laduque (Analyst)

Hi everybody. Thanks so much for taking the question. Congrats on reigniting the origination and the service fees. One last missing link note that we’re looking for is the NII performance. Maybe it’s because you originated towards the end of the quarter. You already mentioned mix, but you also mentioned that in September a lot came in. So I’m just trying to put it together here—the timing difference—and then I know in the fourth quarter the yield curve again went up, but maybe you guys hedged.

Just trying to see how NIMs could perform now that origination is back on track. Thank you.

Marcello Winik Dubeux (Financial and IR Officer)

Hi, Leduc, thank you for the question. Yes, you’re correct. I mean, we still could not have the time for the portfolio to age enough to show the impact on the NIMs, but we are already seeing that in the month of October as our portfolios continue to build in all of the products that we mentioned here—be it the INSS, be it the private payroll, or the unsecured—and NIMs are happening. So we will certainly see NIMs now in a different trend in this fourth quarter, in line with the mix that we have.

Although we have a challenging macro scenario going forward next year, we did see a slight decrease in the interest rates in this third quarter. Now we probably won’t see that anymore for the rest of the year, but it also contributes a few bps in the NIMs for the rest of the year. Felipe will complement here the question.

Felipe Gastparo Oliveira (Head of Investor Relations)

Yes, just to complement Marcelo, in terms of asset and liability management, we are very conservative. So it helps as well to protect in terms of macro backdrops that we could see ahead.

Pedro Laduque (Analyst)

Thank you, Felipe. Marcelo, congrats again.

Marcello Winik Dubeux (Financial and IR Officer)

Thank you, Leduc.

OPERATOR

I would like to remind you that to ask your question you need to click on Raise Hand. Our next question comes from Marcelo Misray with Bradesco BBI.

Marcelo Misray (Analyst)

Hello everyone. Thanks for the opportunity. My question is regarding the new reality of the cost of funding that we are seeing right now. At those levels of cost of funding, does it still make sense to maintain the new outstanding credit to origination of the pensioners—the payroll to pensioners—at these interest rates? Does it make sense to maintain the origination right now? And how are you guys dealing with these interest rates, the future interest rates on the funding side that we are seeing right now?

Thank you.

Marcello Winik Dubeux (Financial and IR Officer)

Hi Misray, thanks for the question. So that’s a great question. Important for us to clarify again our business model, right? We don’t see the INSS payroll as a product itself. We see the client as a potential portfolio of products. We see our long-term relationship with this client as what generates yield and returns for the company. So the INSS payroll lending is a very powerful tool of CAC, of cross-selling, of long-term relationship, of stickiness with this client.

So we’ve navigated with higher rates than that. Remember that in these last 12 months, one year ago rates were higher than we are now. And we did see other financial institutions not providing these products for the client. But we did, because we really believe in the business model that we have and how we can cross-sell and offer the unsecured, offer the fee business, and maintain the relationship in the long term. So you will see us continue to improve in market share and presence in the market.

With that, I’ll pass to Marciano to also complement my answer.

Marciano Testa (Chief Executive Officer)

Thank you, Marcelo. So just to complement here our business model, we can navigate in this macroeconomic scenario better than other competitors, especially on the asset side, because part of the government spending flows through our platform into our client checking accounts. Also, the increase in the minimum wage annually represents a massive opportunity to expand our credit portfolio across our entire customer base. As I said in the call before, ultimately we have a lower exposure to the unemployment risk based on our customer profile.

Of course the cost of funding is a challenge for everyone, but as that is the case we will have more focus on the high-margin products to be able to at least maintain our net interest margin, or I can say increase the NIM in the next quarters. So thank you.

Marcelo Misray (Analyst)

Thank you.

OPERATOR

With no further questions, AGI’s conference is now closed. We thank you for participating and wish you a nice evening.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company’s SEC filings and official press releases. Corporate participants’ and analysts’ statements reflect their views as of the date of this call and are subject to change without notice.