AGI Inc.

Good afternoon, everyone, and welcome to Edge's fourth quarter and full year 2025 earnings conference call. Today's conference call is being recorded. At this time, I would like to turn the call over to Felipe Gasparo de Vera, head of investor relations. Please go ahead.

Thank you and good afternoon. With me today are Marciano Testa, our founder, chairman and CEO, and Marcelo Dubé, chief financial officer. Throughout this conference call, we will be presenting non-FRS financial information. These are important financial measures for AGI, but are not financial measures as defined by FRS and may not be comparable to similar measures from other companies. Reconciliations of the non-FRS to the FRS financial information are available in the earnings press release. Unless noted otherwise, all figures are presented in Brazilian reais. I'd also like to remind everyone that today's discussion might include forward-looking statements, which are not guarantees of future performance, and therefore, you should not put undue 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. I will now hand over the call to Marciano.

Thanks, Felipe. Good afternoon, everyone. On behalf of the entire AG team, it's my pleasure to welcome you to our first earnings call as a public company. During today's call, we will review our fourth quarter and the full year 2025 results. Our CFO, Marcelo Dubé, and our Head of Investor Relations, Felipe Gaspar, will walk you through the numbers and host a Q&A session. But first, I would like to take a few minutes to share some personal thoughts with you and provide my long-term perspective of the business. And also, I want to build a strong relationship with the investors committed based on transparency, execution, and trust. Let me share a few thoughts on Agibank, our mission, our unique model, and our vision for the future. As many of you know by now, Agibank was built to serve the largest and fastest growing segment of the Brazilian population. Over 100 million social security beneficiaries and the payroll workers, which has historically been underserved by the traditional banks. And the digital-only banks have also struggled to serve them effectively because customers in this segment still value proximity and human interaction when needed. To address this opportunity, we designed a new approach that combines a fully digital bank with a nationwide retail network of smart hubs that are low-cost and more effective than bank branches. We call this our hybrid model, and it has given us a powerful structural advantage in the Brazil Payroll-linked financial ecosystem. We can acquire customers and serve them in a better way. at lower costs enabling us to build strong engagement and become the primary bank of our customers our model allow us to scale efficiently and continue growing with the same asset-like benefits that define azure this creates a powerful flywheel effect within our ecosystem More engagement leads to more products per customer, better data, a stronger risk model, and improved economics across our platform. And to do this, we rely heavily on advanced technology, including a proprietary core bank system without legacy constraint that was designed to integrate with new technologies, such as artificial intelligence, to automate processes across our organization and write new opportunities more effectively. data science to constantly collect and analysis proprietary information that we use to improve our customer experience increase efficiency and scale our operations and software application that we use to engage with our customers in our smart hubs outside of the competitor's offices and our client mobile phones this is not new But differentiating through technology has been a core principle of mine. We use our technology to help bridge the gap for customers who are not naturally tech savvy. Millions and perhaps billions of people outside the United States have learned over generations not to trust banks because of them. they poor service and high cost and many of these people will need to sometimes a little help to feel more comfortable managing the small amount of money they have digitally that is exactly what you do so as all of you know this is our first earnest call it's a very important to me and for you keep in mind the three principles that anchor our long-term management philosophy First principle, we live for the customer. The core of our strategy is keeping customers deeply engaged in our hybrid platform. We help them access their benefits and payroll in a better way, help them become more comfortable using digital tools, offer them a small amount of the security credit, and then use our technology and data to offer them a growing range of financial solutions to help them across different areas of their lives. Our total addressable market continues to expand year after year in Brazil, driving by three factors, demographic, income, and educational. Based on our unique hybrid business model, we can address favorable demographic trends. On top of that, the majority of the population in Brazil is still lower middle class, and they have barriers in accessing resources such as education. which is unlikely to change radically over the next decade. To help them overcome these barriers created a long runway for Agibank's growth. Second principle, we continuously enhance our technology. We believe that delivering the best experience in the payroll ecosystem requires constant innovation. Customer behaviors evolving rapidly with a new technology. and expectation continue to rise at the same times the regulatory environment involves constantly and we must always remain one step ahead as i mentioned technology is a core enable of our strategy so we will always be looking to invest and innovate in this area Part of the capital we raise in the IPO will be investing in even more technology to empower our customers and make us even more efficient than we already are. Enablers to provide you a strong combination of growth and profitability. The last principle, but not least, we have an entrepreneurial culture focused on long-term component returns. We believe in building a business that compounds value over many years. Whenever necessary, we will prioritize the long-term interests of the company and its shareholders over the short-term outcomes. Looking ahead, we believe that over the next five years, our market is going to continue to expand, enabling us to grow. We plan to do this with discipline and evaluating new opportunities based on the potential to consistently create value for our shareholders. And finally, we are and we remain a long-term focus on company. And I am looking forward to sharing this journey with you, earning your trust and improving the lives of our customers together. I am always open to any question or concerns through our journey together, above and beyond this first earnest call. And with that, I will pass over to Marcelo and Felipe, who will walk you through our performance in more details.

Thank you again. Thank you, Marciano, and good afternoon, everyone. This is Marcelo, CFO of AGI. I'm pleased to report that we delivered a strong set of results for the fourth quarter and the full year 2025, which demonstrates the strength of our unique hybrid business model. In the fourth quarter and throughout 2025, we continue 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 the new product releases and integrations, and maintaining our status among Brazil's most efficient and trusted financial institutions. Today, I will walk through our fourth quarter and 2025 results and offer some insights. Before hopping into results, I'd like to make a quick comment on our relationship with the INSS, which is Brazil's Social Security Administration, responsible for the payroll of 42 million beneficiaries. Agibank maintains a contractual relationship with the INSS to provide benefits, payments, and payroll credit underwriting. As part of an ongoing auditing process, the INSS and AGI Bank executed two operational agreements, one in November 2025 related to the benefits payments in AGI's accounts, and another in January 2026 related to the origination of INSS payroll credit. These agreements set standards for enhanced customer service and product delivery aligned with updated regulations. Although the discussions resulted in temporary suspensions that impacted credit origination for INSS clients in 4Q25, operations fully resumed by mid-January 2026. Commenting briefly on the addressable market and our strategic positioning, AGI has a nationwide hybrid model with over 1,100 smart hubs deployed with an opportunity to expand alongside our digital solutions. When we look at Brazil landscape, we see a 733 billion reais market in secured loans from INSS beneficiaries, private and public workers, representing approximately 100 million individuals we can serve with our specialized products. Adding complementary cross-selling products such as payroll, credit cards, personal loans, insurance and fees, we see a total addressable market of 2.1 trillion reais. We would like to start off by showing how AGI delivers substantial yearly growth across some of the most important indicators, maintaining its position as a relevant player in this market and reiterating the high potential for the coming years. Taking a closer look at customer growth, as seen on slide 9, total active customers count increased 73% in 2025. And we exit the fourth quarter with 6.7 million active clients, which we define as those using at least one product at quarter end. Agi customers with primary banking relationships average over five products, rising above seven products among our most mature cohorts, underscoring the cross-selling opportunity within our model and validating our relationship-centric strategy. Turning to our credit portfolio on slide 10, total loan balances grew 44% in 2025 to 34.9 billion reais. Our credit portfolio maintains a healthy mix with secured loans representing 86% of total or 29.9 billion reais and unsecured loans representing 14% or 4.9 billion reais. We believe this mix brings a sustainable balance of profitability, credit quality and a focus on long-term relationships with our clients. In private payroll credit, an offering we launched in March 2025 centered around a more conservative approach, our portfolio reached 0.9 billion reais. 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 systems continue to be less accessible. AGI finished 2025 with 0.3 billion reais. Unsecured lending, restricted to account holders who maintain primary relationship and directly deposit arrangements with AGI, which significantly mitigates default exposure while improving margins, expanded 18.3% during 2025 to 4.8 billion reais. Within INSS payroll credit, we continue to successfully execute against our strategy of being the disruptor of this segment in Brazil, as we can see on slide 11. Based on our strong positioning with the INSS, we further increase our market share of payroll credit, reaching 8.9%, a gain of 250 bps compared to 2024. with regards to credit quality on slide 12 non-performing loans exceeding 90 days reached 3.7 percent by year end 2025 impacted primarily by two factors first a larger share of private payroll credit which has structurally higher delinquency ratio compared to nss loans and second no recurring effects from the INSS suspensions beginning in August and ending in January 2026. Nevertheless, NPLs by end of 2025 of the overall portfolio remaining comfortably below the average for consumer credit in Brazil. The coverage ratio measured by provisions over NPLs above 90 days was 189.4% by end of 2025. Turning now to our revenue on slide 13. In the fourth quarter, we delivered a total revenue of 2.96 billion, an increase of 6% quarter over quarter. For the full year, the total revenue was 10.7 billion, growing 46.8% year over year. On slide 14, we see net interest income growing 19% in the year. to 4.7 billion reais net interest margin was 12.5 percent for the year resulting from a loan portfolio more weighted towards secured loans moving to efficiency on slide 15 which highlights the operating leverage embedded in our unique business model as discussed our proprietary physical digital channel network drives a highly efficient scalable operation Our operating efficiency ratio, which we calculate as NII plus fee revenue divided by operating and personal expenses, improved to 40.6%, an approximately 590 basis points improvement year-over-year as revenue growth continues to outpace expenses. Continuing down the income statement and to slide 16, net income in the fourth Q2025, reached 215 million reais supporting the 1.05 billion figure for the full year an increase of 31.8 year-over-year with return on equity of 35.8 maintaining agi as one of brazil's most profitable financial services companies speaking briefly to our funding approach on slide 17 As a regular debt issuer, AGI maintains established relationships with Brazil's credit markets, diversifying funding sources to support portfolio expansion. As a result, total deposits reached R$ 37.8 billion, an increase of 50% from 2024. Institutional counterparties represented 51% of total funding, while retail sources came to a share of 49%. We follow conservative principles aligning secured credit portfolio durations and indexation with corresponding funding sources, safeguarding spreads against markets and interest rate fluctuations. Lastly, as you can see on slide 18, our capital adequacy ratio stood at 15.5, exiting 2025, with a Tier 1 capital ratio of 14.2%. AGIES consistently above average ROE track record enables self-sustaining capital generation. As a reminder, IPO proceeds will appear in our Q1 2026 financial statements, but if reflected in 2025's capital structure, we estimate a capital adequacy ratio of circa 19%. Looking forward, we remain confident in our capacity to address the financial needs of millions of Brazilians. On behalf of AGI, I would like to thank you all for your interest and support. And now we would like to open the call for the Q&A session. Thank you very much. Operator.

Thank you. We will now begin the Q&A section for investors and analysts. If you have a question, please click on raise hand for all your questions or write it down in the Q&A section for written questions. Please remember that your company's name should be visible for your question to be taken. Our first question comes from Tito Labarta with Goldman Sachs. Your microphone is open.

Hi, good evening, Marciano, Marcelo, and Felipe. Thank you for the call and taking my questions, and congrats on the IPO. Just to follow up, thanks for the color on the relationship with the INSS, but just one question we get from investors. Just to get comfortable that there won't be any other suspensions or delays in your ability to to underwrite credit and also to sell insurance. Just, I mean, how comfortable are you that, you know, this is, you know, definitely behind you that there won't be any other risks related to that? And I mean, do you feel like, you know, for the rest of this year and going forward, that's behind you completely? And then I guess the second question, more, I guess, on the competitive environment. I mean, I think you have a unique position with the hybrid model, but as interest rates come down? I mean, do you see a risk of increasing competition, either from incumbents or FinTech trying to go after this market? Any color you can give on that would also be helpful. Thank you.

Great. Hi, Tito. Thanks for the question. Good to be talking to you. So, first of all, In terms of the relationship with INSS, we have a contractual relationship with INSS for years. We believe that we pass through an audit process and we sign two agreements with the authority and that validates our processes going forward. as long as we are in compliance with the process and with the adjustments that we made, which we are. So based on that, we have no reason to believe that there's a possibility of a different type of suspension or friction with the with the authority. So all of our operations are back to normal, full normalized. The user experience is also in full operation in terms of the relationship with the NSS. So we really believe this is a turn page in our relationship with them. So that's the first part of your question. The second part We believe the competition in terms of relation to the interest rates, we have to remember that our business positioning, it is focused on the experience of the client. We serve an underserved big portion of the population in Brazil that is less related with the cycles of the economy, but on how they are being left behind both by the incumbent banks and the digital-only banks. So, we believe we still won't see any important variation in terms of that due to the interest rates. I think also Marciano can complement on that. Marciano, hand over to you.

Okay, Marcelo, thank you. Thank you for the question, Tito. So, yeah, we see as a very competitive market between the players. and a very high structural demand from the population side payroll credit is the biggest and biggest credit portfolio for individuals in brazil the reason for this the payroll credit is the most affordable and cheapest credit for individuals in our country we are very well positioned to capture the opportunities in the payroll credits ecosystem basically we see three structural factors to support our thesis for the long term. First, demographic trends, education, and average income in Brazil. So our country's population is aging rapidly, and we are very well-positioned with our hybrid model that allows us to offering advisors to this segment. It is not simple for this segment to navigate in the digital world for itself, especially to the complexity transaction as a portability of financial products or in the open finance platform. Hedge Bank has been built to solve a very specific problem who The question is how to use technology to improve the lives of the largest population that is not natural tech savvy. Because of that, we have always operate at the interaction of the technology, data, and human interactions. So somebody can say that the new older people are more digital, right? Here, we see the second factor, that is education. Unfortunately, we don't see signs that we will have a revolution of the education system in Brazil, and the people still have less access to better education. And the third, it is an average income in Brazil, more than 65% of the population have an income less than $400 monthly. Also, we don't see radical changes in this structural situation in Brazil over the decade. Based on that, we see several barriers to replicate our model. in the incumbent side. They don't have the specific setup to address this especially segment. While the other digital banks have the best extruder of the cost, but it's not the best model in terms of channels and customer journey to advisor most of this part of the population, right? And finally, we We have decided to invest heavily to be an AI-driven company in the next 12 to 24 months. And we can continue to deliver the best hybrid experience to the customers and improve our efficiency rates and scale. To continue to be relevant, we'll be the bigger player in the payroll credit ecosystem in Brazil. Thank you.

Great. Thank you, Marciano and Marcelo. And congrats again.

Thank you, Tito.

Our next question comes from Eduardo Rosman with BTG.

Hi. Hi, everyone. Congrats on the numbers. Congrats on the IPO. I have two questions here. The first one, just trying to understand, you know, the dynamics at the start of the year, right? Because we've been tracking, you know, INSS payroll lending and it has been weak for everyone, right? Because of all the changes going through, right? The social security entity, right? So given the relevance of the segment to your business, right? how should this impact your results? Should we expect a softer start to the year with results improving at the second half? So it would be great to understand a little bit what's going on. And my second question would be regarding the private payroll lending, right? As far as I understand, You were one of the first movers in the product, right, with the goal of gaining experience and understanding how it works. However, at the margin, it seems that your appetite for the product has come down, right? So just wanted to confirm if that's the case, what happened, you know, or if you can, you know, come back with more growth or more appetite in the future, depending on the changes that the product is going through. Thanks a lot. Okay.

Hi, Osman. Good to be talking to you. Thanks for the question. Marcelo here. So, first of all, on the credit origination in the INSS product, So, first of all, in the market itself, there were some frictions in the beginning of the year. We see normalization of the flows of production since mid-February. And that is also combined with our situation as well, because as you know, we got the temporary suspension from December to mid-January. and we were able to back to be back in full operation after that and we see now since end of the last month uh the pace of origination in our case now talking about agi uh as uh pre-suspension levels so we are you know very comfortable with the production and origination of credit that we see every day especially in the nss payroll loans so that's one thing so and we believe implicitly that we are originating market share at the margin the way we were before the suspensions, which means above average, above the market share that we have, which is 8.9%. We believe that we are already reaching the numbers of meetings in terms of the market share origination at the margin. Right? So that's one thing for the NSS production. And then the private payroll, Yeah, you are correct. You have the full reading on the situation regarding the beginning of the operations last year. We demonstrated our operational and technological readiness to be the first to offer this product in the market. We took a more cautious approach throughout the year and we see this product as operated by two types of competitors. One is the incumbents who have the behavior, the relationship, who know the companies that these potential clients work for. And the other types are the challengers who have to develop their own model to work with this product. And within this segment, we believe we have state-of-the-art capabilities to develop credit modeling, as we demonstrated already in the way we run our credit business throughout the last few years. So we now are comfortable with the models that we developed to operate the private payroll. And we already seen in this month of March, the product is starting to ramp up in our production technology here at AGI. So we are now taking a very more realistic approach to grow in this product.

Perfect. Thanks a lot. Thank you, Osmond.

Yes, so we have the question from Jorge Cury. He has audio issues and then he asked to ask for him here. So the question is, so he would like to ask why NPL ratio went up from 30 kill to 40 kill.

and why net interest margin came down from the third queue to the fourth queue can you please give give us color on what is driving this so this is the question okay thank you Felipe thanks Jorge for the question so regarding the NPLs we believe first of all that we have structurally low and low risk and comfortable levels of NPLs in our portfolio have to remember that a big portion of our portfolio uh is in the uh social secured payroll loans which have under two percent npls but we've been increasing the private payroll and we have also the unsecured loans who have both of them uh most uh close to the teams uh npls and what we saw in the fourth quarter uh we saw mixed influence on the private payrolls, the vintages, the first vintages of the private payrolls starting to mature and to influence the average of the NPLs in one hand. And the other hand, also as a factor of the denominator, we did have the slowdown in the production because of the suspension, which halted the pace of origination, the pace of growth in the total credit portfolio, which in turn took us to a higher ratio in terms of the NPLs. But we are very comfortable to say that is not a a different trend in terms of growing NPLs. This is the number that we should run in the equilibrium, in the stability going forward in terms of NPLs, given that we will continue to grow private payrolls and they have a higher number in terms of this ratio. Regarding the NIMS, on the other hand, there's a few factors impacting the NIMS since the beginning of last year, which is one, mixed more towards the secure lending compared to unsecured, which has tighter spreads, as we know. There's one factor. The other factor is that on the unsecured loans by themselves, we have been also working with slightly lower rates for the customer because remember we our strategy is focusing in the long-term relationship with these clients we want to maintain them with us in our portfolio but it's important to say that this is the kind of names that we think is healthy for the business that is true sustainable going forward. And we have one or another factor that impacted the year and it might be reverted this next year, which is the interest rates. Although we have a very conservative approach to ALM to match durations indexation when we see uh abrupt impacts in the interest rates of course they will impact in the cost of funding which happens uh during the year of 2025 uh we know that the selic went up uh almost 300 bases uh in the second half of the year so that impacted also the name on the flip side we can expect uh a potential uh um reduction on this leak which we can capture also in this next quarters as well so maybe philippe can can add a few uh observations on that as well

Thank you, Marcelo. Just to complement one thing, it's important to say that in terms of interest-bearing assets mix, we also have a growth in assets yield to SELIC versus lending operations. So when we see financial assets and treasury allocation, it has a bigger share over the interest-bearing assets when compared to the end of 2024, so it helps in this kind of explanation about the net interest margin about the fourth quarter.

Thank you. Our next question comes from Gustavo Schroden. with Cici. Your microphone is open.

Hi guys. First of all, congratulations on the IPO. And I have two questions here. The first one is regarding the commissions and fees and revenues which declined. in the quarter, so I'd like to understand what is behind this decrease, if it is related to the suspension of INSS originations in the fourth quarter, late last year, if it is behind this decrease. And my second question is is regarding the selling in general and administrative expenses, which also we saw a relevant decrease of almost 31% quarter on quarter. So, if you could explain us what is behind this decrease in the selling in general and administrative expenses. Thank you.

Okay, thanks, Jordi. Good to be talking to you. So, in one hand, on the fees, we see the fees as a very sustainable business for us. As you know, we have the full distribution. We work as a broker, selling customized insurance to a public that really looks for products that can complement their wallet of solutions. This is one thing. In the fourth quarter, we have some impact on the overall slowdown of the production and the cross-sell that impacted the selling of insurance. This is one thing, but when we look at the adjustments that we made, derived from the agreements that we executed with the authority of the Social Security in Brazil. We see nowadays already, since the middle of the quarter, the user experience in acquiring insurance totally normalized. and the product flowing very well. So we're very comfortable to affirm and to state that this is a product that will continue to be very important revenue stream of the business, very important contributor of our returns going forward. So that's one thing for the insurance. Regarding the G&A and the expenses, Yes, we see a reduction in the fourth quarter. At one hand, we see part portion of that is related to the cost to serve that we pay related to a variable part of the expenses as we have the disruptions of the suspensions that uh impacted the quarter uh both the payments of the the payrolls uh and part of the fourth quarter that uh impacted uh part of the variable um the cost to serve that we have to pay for the salaries for each of the individuals that we are paying and the other part We see no recurring events on the model of lawsuits that we have because we started using AI. We are, as Marciano said, heavily investing in AI in the company. We have initiative in tackling lawsuits with AI agents that reads all the proceeds and prepares the defenses and that increases a lot the number of the percentage of victories that we have. in these massive lawsuits that we have, and that made us, allowed us to make an adjustment in the model that we use to provision lawsuits in the company. So, we were able to adjust this model in the fourth quarter, and that produced also an additional impact in the G&A. So, those are the main factors that we can mention here.

Thank you, Marcelo. Very clear. Thank you.

Our next question comes from Pedro Leduc with Itaú BBA. Your microphone is open.

Hi, guys. Good evening. Thank you so much for taking the question. Just to make sure I understood the explanation behind SG&A, there was a reversal in legal contingencies in the fourth quarter. Because you've read through all the stuff and you've found that you have maybe too much provision, so there was an actual reversal and then the run rate going forward is going to be kind of the one we saw here. Is that right?

Hi, LeDuc, good to be talking to you. Yes, that's right. That's the reading. It's a reversion based on the much better model that we established throughout the investing in AI for the lawsuits.

All right, great. And then just on NIMS, you mentioned that the fourth quarter is sort of the level we should see as well. But there's going to be a mixed effect, you know, that should maybe play in your favor or the Selic should play in your favor. So when you talked about NIMS being this level, is it a mixed constant or funding cost constant? Just want to make sure I got that one too.

Yeah, so the mix will maintain and skills a little bit always more to the secured level than the unsecured. So remember, we only offer unsecured credit for those clients who receive their salary with us. So we'll keep growing in the number of beneficiaries of clients that we are able to be the primary relationship and to pay the payroll and to offer the unsecured. But as we grow and have the mix more here to this secure lending in terms of credit portfolio, we have a tighter spread, but we don't see the product as a product by itself. We see a client view and how can we look at cross-sell for this client so we can add all the products together. As we say, we have in the newest cohort, more than 75% of our clients have five or more products with us. But in terms of the NIM, so that's right, more result of mix. And then we can capture a short-term impact on the reducing of the SELIC rates going forward. So, yes, that's kind of the explanation for the NIMs going forward.

Thank you so much, Marcelo. See you next time.

Thank you, Ludo.

Our next question comes from Marcelo Mizzari with Bradesco BBI. Your microphone is open.

Hello, guys. Thanks for the opportunity. So my question is regarding the growth of the portfolio. So if this beginning of the year is changing the idea or the budget to growth the pensioners portfolio of the payroll looking to this year. So if you guys can give us a little bit I cannot say that it's a guidance, but it's a perspective in terms of growth looking forward, and also in the private payroll, as we saw a reduction of the growth of this portfolio. Thank you.

hi let's talk to you so in terms of the in terms of the growth um so one thing that is uh we are able to say as you know we don't provide formal guidance but uh we as we already are comfortable to say that the pace of origination in in overall credit portfolio is back to the pre-suspension levels we are comfortable to say that irrespectively to what growth we will show in the first queue, we are very confident with the estimates consensus that we have in the street in terms of reaching the total portfolio that you see in the consensus. So that's one thing that we can say in terms of the growth of the portfolio. So we are comfortable with that and also applies for the private payroll. So as I said, Private payroll is a product that has, we see that as a huge opportunity in terms of diversification of activities within AGI and we have Vertical working here to develop this product and to develop the credit model specialized for this process so that we don't see growth by itself, we want to have growth in a sustainable way that brings, in one hand, profitability to the stakeholders, to the shareholders, and also security so that we don't lose the pace in terms of the NPL. So we will also... beating the growth going forward for the private payroll as well, in terms of what we're having in consensus for the estimates that we've been in conversations with you.

Can I do a follow-up here? So regarding the private payroll, so are you guys seeing any, so in terms of the perspective of interest rates to this product, so are you guys seeing a worse environment in terms of competition or something that can change the idea of the growth of the mindset of how much you can grow on this product?

yeah we we see this product as i said as two types of competition one from from the incumbents who have the relationship with this client who know the behavior uh and to can and that can model in a in a different way and scale fastest product and then the challengers right but that have to um build their models by themselves. And we, as we know, we have the experience with payroll products. We know the way the Consignado INSS developed 20 years ago and how we know that it will take time for this product to stabilize. But also, we are already comfortable with the credit model that we developed. We think that there is no winner takes all in this product. There will be a lot of demand for this product and we'll be able to tap a big chunk, a big portion of this demand of this market going forward. Also, we have a lot of experience in doing portability because the way we work already with the other secured lending products that we have. And we'll be able also to benefit from that and to also bring more stabilized portfolios within the payroll loan by doing also portability. So that's kind of the way. I'll also pass to Felipe to complement a little bit here.

Yes, Marcelo, I think it's important to mention that we saw the same evolution 20 years ago with the development of the rails of the products just as INSS. We have strong capabilities built on this experience to keep growing. in this portfolio as well. And just to mention, I think it's important that there is no cannibalization in our case. It's a complete upside for us. We started in a more conservative way, as Marcelo mentioned, but now we are ready to accelerate going forward. Thank you.

Okay, thank you.

Our next question comes from Renato Meloni Autonomous. Your microphone is open.

Hi, everyone. Good to see you all here. Congrats on the results on the IPO. Just first a quick follow-up on the SG&A. Can you give us an order of magnitude of how much was the provision reversal and how much was reduction in the variable expenses there? And then my question here is a bit on rates and NIM, right? So you earlier were mentioning that you have lower rates or focusing on the long-term. perspective here with the client. Assuming that we'll have lower rates in Brazil eventually and the government will probably try to reduce the cap rates in the regulated products, what's going to be the strategy there? Do you think you're going to be able to maintain similar rates for some time and gain some spreads there, or you're going to pass that through to clients and remain below the cap? Thank you.

um hi renato marcello here um good to be talking to you so in terms in terms of the working with this so again i have to reiterate that we see our uh our approach to this market as looking at clients as a whole not a not a the the payroll nss as a product by itself right so we'll keep continuing and we see ourselves as position to continue to grow and gain market share in this market, independent of the cycles of the economy, be it in high rates or low rates. So continue to work with this client to generate cross-sell, to generate long-term relationship. what we see usually the correlation with the lag. So the rates will probably start to go down. It has already started to go down in Brazil, and there will be a correlation of the caps, but there is also a lag in that. So within this period of time, there will be an arbitrage to capture temporarily benefit rates. But the way we have our own distribution system to operate this client, we don't suffer. We have a bigger buffer, we understand, because we also don't have third parties to distribute this product. So when rates go down or or go up there's also a part of the fees of more costs that in general the market pays that we don't do so we can kind of maneuver better the strategy of maintaining the relationship with this client So with that, I'll pass to Felipe to complement also this question.

Yes, Marcelo. And just to mention that this is an efficiency game. So as we don't rely on 30 powers, for example, to originate credit, we are able to be more efficient not only in acquisition of the customers, but also in terms of cost to serve. And this unit economics provides us this leverage to keep growing and keep growing in this segment as well.

And just the first question on the follow-up on SG&A, if you can break that apart, the two effects that you mentioned earlier.

Yeah, Milon, it was a little bit cut off the part that you asked about the G&A. Can you repeat that, please?

Oh, yeah, of course. I apologize. So you mentioned the one-off effect from legal and then lower variable costs. Can you split that up for us and give us an order of magnitude of which effect was what?

yeah uh so it was uh the part of the of the variable was like in terms of the reduction i would say 20 of the reduction came from the variable cost and 80 came from the reduction came from from the uh revision in the in the law expenses that's perfect thanks again guys and congratulations

Our next question comes from Jamie Friedman with Psych. Your microphone is open.

Hi, good evening. It's Jamie at Psych. I wanted to ask, the company's had significant improvement in the efficiency ratios. I was just wondering how durable you see those, and if I could, as my follow-up, In terms of some of the investment considerations for 2026 and beyond, how do you see the technology investments required to, you know, address both some of the services and the expansion of the company overall? So the first is on efficiency, the second is on technology. Thank you.

Hey, good to be talking to you. So, in terms of the efficiency ratio, we see our model as scalable to capture gains of operational leverage throughout the last years, based on the strategic position that we have and based on heavy investments in technology. We see that in the future we can still capture more operational leverage. We've been heavily investing in AI. We want to see ourselves as an AI-driven company within a period of the next 24 months by immersing all of our C-level in AI initiatives. We have already initiatives that are measurable in the company. And I think for that, I can invite Marciano to speak a little bit of the projects that we have in place here. Marciano, please.

Thank you, Marcelo. Great question. So I would say that it can be...

AI can be a disruptor, but also a powerful opportunity to the companies depending on how quickly a company is able to adapt and able in the into its core business right for many companies globally the real changer challenger is not understanding ai but it's actually integrate in deeply into systems process and culture so in our case we see ai as a natural extension of our strategy Agishmak has been built to solve a very specific problem. We use technology to improve the lives of the largest population that is not naturally tech savvy. And so it puts in a very strong position today. We see AI as a significant opportunity to become a truly AI driven bank over the next 12 to 24 months. enhancing key areas such as credit underwriting, customer service, fraud preventions, collections, marketing, and overall the operational efficiencies as you asked. So, another important point here that it will not carry the same legacy constraints as many traditional banks. We operate on a proprietary card bank system designed to be flexible and fully integrate with the modern technology stacks. This allows us to connect uh seamlessly um with the the the listed foundational uh ai models and external solutions without the limitation of the legacy architecture right so um yeah you we we are excited to the the results that we can see and just for give you a a quick color about the this impact we have 40 percent in cost avoid relate our call centers and over the next uh 12 months and also our ai agents are 80 percent more efficient when you compare it to the human contact so while also maintain a high higher service levels and accommodating our fast pace of growing the customer base So basically, we see also in the fraud detections, reduce 90% review the time of the fraud alerts. And also, as Marcelo mentioned, the legal workflow. Today, all we use AI agents to avoid fraud. costs for legal process, for litigations, and we have a very, very material result of that. So we have many layers of the length that we already use, and we see a very massive opportunity to improve our efficiency ratio based on the AI impact.

Thank you. This then concludes today's presentation. You may disconnect now.