XP Posts Record Year as Wholesale Surge and Retail Diversification Power 15% Earnings Growth
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XP Inc. delivered a fourth consecutive quarter of record adjusted net income, posting R$ 1.33 billion (~$229M) in 4Q25, a 10% increase over the year-ago period and essentially flat versus Q3. The deceleration from the 20% growth seen in Q1 reflects a normalization trajectory, but the company closed 2025 with the strongest annual result in its history.
Gross revenue reached R$ 5.24 billion (~$903M) in the quarter, up 12% year-on-year and 7% sequentially, driven by diversification across both the retail and wholesale segments. For the full year, gross revenue hit R$ 19.5 billion (~$3.4B), an 8% advance that XP achieved despite headwinds from shorter investment durations and reduced market activity.
The real standout was profitability. Adjusted EBT reached R$ 1.55 billion (~$267M), up 20% year-on-year and 16% quarter-on-quarter, pushing the EBT margin to 31.3% — a 252 basis-point expansion over 4Q24 and 271 basis points above Q3. This margin trajectory signals that the operating leverage in XP’s platform is accelerating even as top-line growth moderates.
Corporate & Issuer Services was the main growth driver, generating R$ 895 million (~$154M) in revenue in 4Q25, up 49% year-on-year and 23% sequentially. The surge was fueled by a reacceleration of DCM (debt capital markets) activity in the second half and XP’s expanding ability to cross-sell derivatives and credit solutions to its corporate client base. For the full year, wholesale revenue reached R$ 2.73 billion (~$471M), up 19%, solidifying its position as what management describes as one of Brazil’s most relevant investment banking franchises — built in just five years.
Retail revenue reached R$ 3.86 billion (~$666M) in 4Q25, up 8% year-on-year and 4% sequentially. The growth was broad-based, with meaningful contributions from funds, fixed income, and the new verticals ecosystem — insurance, cards, retirement plans, global investments, and digital accounts. Cross-sell momentum remained strong: life insurance premiums reached R$ 502 million (~$87M), up 25% year-on-year; retirement plan assets hit R$ 95 billion (~$16.4B), up 17%; and card transaction volume grew 11% to R$ 14.6 billion (~$2.5B).
The annualized retail take rate held at 1.25%, stable quarter-on-quarter, though down 4 basis points year-on-year for the full year. This modest compression reflects the ongoing mix shift toward fee-based advisory and lower-margin products, a structural trend that XP views as positive for client retention and long-term revenue quality.
SG&A expenses totaled R$ 1.7 billion (~$293M) in Q4, up 10% year-on-year, with the full year coming in at R$ 6.4 billion (~$1.1B), up 8%. The last-twelve-months efficiency ratio held at 34.7%, stable both year-on-year and sequentially, while the compensation ratio improved to 23.2% from 23.7% a year earlier. This combination of steady cost ratios and rising margins is evidence of the operating leverage embedded in XP’s platform model.
Adjusted net income for 2025 reached R$ 5.2 billion (~$897M), a 15% increase over 2024’s R$ 4.5 billion (~$776M). Full-year EBT hit R$ 5.46 billion (~$941M), up 10%, with the EBT margin expanding to 29.6%, 52 basis points above the prior year. Adjusted EPS climbed 18% to R$ 9.90, outpacing net income growth as buyback programs continued to reduce the share count. The full-year ROAE expanded 94 basis points to 23.9%, while the ROTE — which XP considers more comparable to peers — reached 29.5%, up 78 basis points.
The quarterly ROAE of 22.8% dipped 59 basis points year-on-year and 20 basis points sequentially, a function of XP entering 2026 with a temporarily elevated capital base. The BIS Ratio was above the company’s 16%–19% guidance target, with management signaling intent to optimize capital allocation — a euphemism for continued buybacks and dividends. In 2024, XP returned 74% of net income to shareholders through dividends and repurchases, and the payout trajectory suggests a similar approach in 2025.
Client assets under custody reached R$ 1.49 trillion (~$257B) at year-end, up 16% year-on-year and 5% sequentially, with the R$ 1.5 trillion milestone crossed in January 2026. The broader total client asset base — combining AuC, AuM, and AuA — hit R$ 2.08 trillion (~$359B), a 22% expansion driven by R$ 94 billion in accumulated retail net inflows during 2025 and R$ 111 billion in market appreciation.
Net inflows remained solid at R$ 32 billion in Q4, with retail net inflows stable at R$ 20 billion. Active clients grew 2% to 4.8 million, while the total advisor network held at 18,000, down approximately 1% as XP continues to professionalize its distribution force — shifting from transaction-oriented brokers toward full-service financial planners.
The expanded loan portfolio reached R$ 78 billion (~$13.4B), surging 27% year-on-year and 16% quarter-on-quarter, as XP deepens its credit penetration — still a relatively nascent business line. Fee-based advisory now represents 21% of retail client assets, up from prior quarters, marking a structural shift in the revenue model toward recurring, less cyclical income.
CEO Thiago Maffra framed the results as validation of XP’s ecosystem strategy, emphasizing the company’s position as Brazil’s first “client-choice” investment platform — where investors can select their preferred advisor compensation model. Management highlighted investments in AI-driven tools for financial planning and advisor productivity, positioning these as key differentiators against traditional banks.
CFO Victor Mansur pointed to the margin expansion as evidence of disciplined capital allocation and operational efficiency. The elevated capital base entering 2026 was explicitly characterized as temporary, with management guiding toward BIS Ratio optimization in the 16%–19% range, implying meaningful capital distributions ahead. The NPS slipped to 65 from 74 in Q3, a data point that bears watching given XP’s client-centric positioning.
| Metric | 4Q25 | 4Q24 | YoY |
|---|---|---|---|
| Gross Revenue (R$ B) | 5.24 | 4.68 | +12% |
| Net Revenue (R$ B) | 4.95 | 4.50 | +10% |
| Adj. EBT (R$ B) | 1.55 | 1.29 | +20% |
| EBT Margin | 31.3% | 28.8% | +252 bps |
| Adj. Net Income (R$ B) | 1.33 | 1.21 | +10% |
| Adj. Basic EPS (R$) | 2.58 | 2.25 | +15% |
| ROAE (ann.) | 22.8% | 23.4% | -59 bps |
| Client Assets / AuC (R$ T) | 1.49 | 1.28 | +16% |
| Net Inflow (R$ B) | 32 | 25 | +28% |
| Active Clients (M) | 4.8 | 4.7 | +2% |
| Corp. & Issuer Rev. (R$ M) | 895 | 601 | +49% |
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Key Facts
— The margin expansion story is real — EBT margin jumped 252 basis points while revenue grew only 12%, demonstrating genuine operating leverage. If the efficiency ratio holds at 34.7% while revenues reaccelerate, profit growth could surprise to the upside.
— The wholesale bank is an underappreciated franchise. At R$ 2.7 billion in annual revenue and growing 19%, it provides a counter-cyclical earnings stream and strategic integration advantages that pure-play retail platforms lack.
— Excess capital is a buyback catalyst. With the BIS Ratio above the 16%–19% target, XP has clear room for aggressive capital returns, which at current valuations (~10x P/E) would be highly EPS-accretive.
Key Facts
— The quarterly ROAE at 22.8% is trending down, not up — and the full-year 23.9% is only 94 basis points above last year despite record results. As the capital base grows and take rates compress, the return trajectory is unclear.
— Client growth has stagnated at 2% with active trading volumes falling — retail DATs dropped 7% year-on-year. The platform may be approaching saturation among its core affluent demographic, and the fee-based transition could accelerate revenue cannibalization before delivering offsetting benefits.
— The NPS drop from 74 to 65 in a single quarter is a red flag for a business built on advisor-client trust. Regulatory risks around fee transparency and the IOF tax changes could further pressure the retail model, while the rapidly expanding loan book introduces credit risk that XP has not yet been tested on through a full cycle.
Brazil’s high-rate environment is a structural headwind for equity market activity, XP’s historical core. While fixed income and new verticals have provided offset, a prolonged period of elevated Selic would compress equity brokerage revenues further and test the durability of the diversification thesis. Itaú BBA downgraded XP to neutral in mid-2025, citing limited upside after a 65% rally and a more difficult operating environment.
The credit portfolio expansion is the most material new risk. At R$ 78 billion and growing 27%, the loan book is approaching a scale where credit losses could meaningfully impact earnings. XP has not yet navigated a full credit cycle as a lender, and the SME banking ambitions add complexity to an already multi-dimensional business model.
Regulatory and tax risk looms. Proposed increases in IOF taxes on offshore investment funds and the potential removal of tax exemptions on CRIs, CRAs, and infrastructure debentures would directly impact client allocation behavior and could reduce XP’s wallet share in these product categories. The ongoing regulatory inquiry into XP’s structured operations adds uncertainty, even if management has stated no material financial exposure.
Key Facts
— XP’s 4Q25 results illustrate both the power and the limits of platform diversification in Brazil’s capital markets. The company has successfully evolved from an equity-centric brokerage into a multi-product financial ecosystem spanning investments, banking, insurance, and wholesale services — a transformation that enabled it to grow earnings 15% in a year when equity market participation declined.
— Among peers, the competitive landscape continues to intensify. BTG Pactual — XP’s most direct rival — operates with both buy and neutral analyst recommendations, and its own wholesale franchise provides similar integrated advantages. Traditional banks are fighting back with improved digital platforms, while Nubank’s expansion into investment products adds pressure from below. XP’s response has been to double down on advisory quality and financial planning — moving up-market rather than down.
— The stock trades at roughly 10x trailing earnings, a discount to international platform peers (~15x) but a premium to local banks (~9x). BTG Pactual maintained a buy recommendation earlier in 2025 with a $22 price target, while Itaú BBA holds neutral at $21. The investment debate ultimately hinges on whether XP’s margin expansion is sustainable or cyclically flattered — and whether the wholesale bank has durably changed the company’s earnings profile. This quarter’s results suggest the answer is increasingly the former, but the compressed ROAE and falling NPS remind investors that execution risks remain in a rapidly evolving business.
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