AGBK

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

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

I will now hand over the call to Marciano.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

I pass to Marcello complement.

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

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

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

The next question comes from Gustavo Schroden.

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

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

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

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

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

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

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

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

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

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

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

Okay.

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

Okay.

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

All right, guys. Thank you very much.

Thank you, Schroden.

The next question comes from Ricardo Buchpigel with BTG.

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

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

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

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

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

Thank you.

The next question comes from Pedro Leduc with Itaú BBA.

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

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

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

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

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

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

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

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

Probably.

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

Okay.

The next question comes from Marcelo Mizrahi with Bradesco BBI.

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

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

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

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

Zero.

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

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

Okay. Thank you.

The next question comes from Renato Meloni with Autonomous Research.

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

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

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

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

Renato, can you complete your question again, please?

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

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

Okay

positive that's gonna be sustained?

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

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

That's perfect. Nice. Thank you.

Okay.

The next question comes from Neha Agarwalla with HSBC.

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

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

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

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

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

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

We are not providing formal guidance at this point.

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

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

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

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

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

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

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

Okay, perfect. Thank you very much.

Thank you.

The next question comes from Henrique Navarro with Santander.

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

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

Thank you all.

Good afternoon everyone, and welcome to Agi'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 Gaspar Oliveira, Head of Investor Relations. Please go ahead.

Thank you, and good afternoon. With me today are Marciano Testa, our Founder, Chairman, and CEO, and Marcello Dubeux, Chief Financial Officer. Throughout this conference call, we will be presenting non-IFRS financial information. These are important financial measures for Agi, but are not financial measures as defined by IFRS and may not be comparable to similar measures from other companies.

Reconciliations of the non-IFRS to the IFRS financial information are available in the earnings press release. Unless noted otherwise, all figures are presented in Brazilian reais. 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 Agi 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, Marcello Dubeux, and our Head of Investor Relations, Felipe Gaspar, will walk you through the numbers and host a Q&A session.

First, I would like to take a few minutes to share some personal thought with you and provide my long-term perspective of the business, and also I want to build a strong relationship with the investor community 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. 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 combine 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 Brazilian payroll-linked financial ecosystem. We can acquire customers and serve them in a better way at lower cost, 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-light benefits that define Agibank. 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.

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 process across our organization and write new opportunities more effectively.

Data science to constantly collect and analyze proprietary information that we use to improve our customer experience, increase efficiency, and scale our operations. Software application that we use to engage with our customers in our Smart Hubs outside of the competitors' 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 generation not to trust banks because of their poor service and high cost. 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 we do. As all of you know, this is our first earnings call. It's very important to me and for you keep in mind the three principle 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 small amount of the secured credit, and then use our technology and data to offer them a growing range of financial solution to help them across different areas of their lives. Our total addressable market continue to expand year after year in Brazil, driven 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 the resources such as education, which is unlikely to change radically over the next decade. To help them overcome these barriers, creating 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 behavior is evolving rapidly with new technology, and expectations continue to rise. At the same time, the regulatory environment evolves constantly, and we must always remain one step ahead.

As I mentioned, technology is a core enabler of our strategy, so we will always be looking to invest and innovate in this area. Part of the capital we raised in the IPO, we will be investing in even more technology to empower our customers and make us even more efficient than we already are, enabling us 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 compound 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 it. We plan to do this with discipline and evaluating new opportunities based on the potential to consistently create value for our shareholders.

Finally, we are and we remain a long-term focused 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 earnings call. With that, I will pass over to Marcello and Felipe, who will walk you through our performance in more details. Thank you again.

Thank you, Marciano, and good afternoon, everyone. This is Marcello, 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 continued to execute against our core strategic priorities, growing our client base in Brazil with a focus on multi-product relationships, expanding our market leadership in the payroll credit segment through 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 Agibank executed two operational agreements, one in November 2025 related to the benefits payments in Agi's accounts, and another in January 2026 related to origination of INSS payroll credit.

These agreements set standards for enhanced customer service and product delivered aligned with updated regulations. Although the discussions resulted in temporary suspensions that impacted credit origination for INSS clients in 4Q 2025, 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 the Brazilian landscape, we see a BRL 733 billion market in secure 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 BRL 2.1 trillion.

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 nine, total active customers count increased 73% in 2025.

We exited 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 BRL 34.9 billion. Our credit portfolio maintains a healthy mix, with secure loans representing 86% of total or BRL 29.9 billion and unsecured loans representing 14% or BRL 4.9 billion. 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 BRL 0.9 billion. 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 BRL 0.3 billion.

Unsecured lending restricted to account holders who maintain primary relationship and directed deposit arrangements with Agi, which significantly mitigates default exposure while improving margins, expanded 18.3% during 2025 to BRL 4.8 billion. Within INSS payroll credits, 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 increased our market share of payroll credit reaching 8.9%, a gain of 250 basis points compared to 2024. With regards to credit quality on slide 12, non-performing loans exceeding 90 days reached 3.7% 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 INSS loans. 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 remained 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 total revenue of BRL 2.96 billion, an increase of 6% quarter-over-quarter. For the full year, the total revenue was BRL 10.7 billion, growing 46.8% year-over-year. On slide 14, we see Net Interest Income growing 19% in the year to BRL 4.7 billion. Net Interest Margin was 12.5% 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 personnel 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 Q 2025 reached BRL 215 million, supporting the BRL 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 BRL 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 indexation with corresponding funding sources, safeguarding spreads against market 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%.

Agi's consistently above average ROE track record enables self-sustaining capital generation. As a reminder, IPO proceeds will appear in our Q1 2026 financial statements. 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. 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 audio 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, Marcello, and Felipe. Thank you for the call and taking my questions, and congrats on the IPO. Just to follow up, you know, thanks for the color on the relationship with the INSS. You know, 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 underwrite credit and also to sell insurance. I mean, how comfortable are you that, you know, this is definitely behind you, that there won't be any other risks related to that? I mean, do you feel like, you know, for the rest of this year and going forward, that's behind you completely?

I guess just second question, more I guess on the competitive environment. I mean, I think you have a unique position with the hybrid model. As interest rates come down, I mean, do you see a risk of increasing competition either from incumbents or fintechs 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. First of all, in terms of the relationship with INSS, we have a contractual relationship with INSS for years. We believe that we passed through an audit process and we signed 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. Based on that, we have no reason to believe that there's a possibility of a different type of suspension or friction with the authority. All of our operations are back to normal, fully normalized. The user experience is also fully operational in terms of the relationship with the INSS.

We really believe this is a turned page in our relationship with them. That's the first part of your question. The second part, we believe the competition in terms of relation to the interest rates. You 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. We believe we still won't see any important variation in terms of that due to the interest rates. I think also Marciano can comment on that. Marciano, I'll hand over to you.

Okay, Marcello, thank you. Thank you for the question, Tito. Yeah, we see as a very competitive market between the players and a very high structured demand from the population side. Payroll credit is the 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. Our country's population is aging rapidly. We are very well positioned with our hybrid model to allow us to offer advisors to this segment.

It is not simple for this segment to navigate in the digital world for their self, especially to the complex transaction as a portability of financial products or in the Open Finance platform. Agibank has been built to solve a very specific problem. 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 the human interactions. Somebody can say that the new older people are more digital, right? Here we see this, the second factor is 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 the better education.

The third is 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 special segment. While the other digital banks have the best structure of the cost, but it's not the best model in terms of channels and customer journey to address most of this part of the population, right? Finally, we have decided to invest heavily to be an AI-driven company in the next 12-24 months. 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 Marcello, and congrats again.

Thank you, Tito.

Our next question comes from Jorge Kuri with Morgan Stanley. Your microphone is open. Mr. Kuri, your microphone is open. You can talk.

Can you hear me? Sorry, apologies. Can you hear me?

Okay, we can hear you now.

Is this good? Can you hear me?

Yes, Jorge, we can hear you. How are you? Hello.

I can't hear you, Jorge.

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? 'Cause 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? Given the relevance of the segment to your business, how should this impact your results? Should we expect a softer start to the year with results improving at the second half? It would be great to understand a little bit what's going on. 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? 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, Rosman. Good to be talking to you. Thanks for the question. Marcello here. First of all, on the credit origination in the INSS product, 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 be back in full operation after that. We see now, since end of the last month, the pace of origination in our case, now talking about Agi, as pre-suspension levels.

We are, you know, very comfortable with the production and origination of credit that we see every day, especially in the INSS payroll loans. That's one thing. 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 metrics in terms of the market share origination at the margin. Right. That's one thing for the INSS production. 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. The other types are the challengers who have to develop their own model to work with this product. 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. 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 starting to ramp up in our production technology here at Agi. We are now taking a very more realistic approach to grow in this product.

Perfect. Thanks a lot.

Thank you. Awesome.

Yes. We have the question from Jorge Kuri. He has audio issues, and then he asked it to ask for him here. The question is, he would like to ask why NPL ratio went up from third Q to fourth Q, and why Net Interest Margin came down from the third Q to the fourth Q. Can you please give us color on what is driving this? This is the question.

Okay. Thank you, Felipe. Thanks, Jorge, for the question. 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 is in the Social Security payroll loans, which have under 2% NPLs. We've been increasing the private payroll, and we have also the unsecured loans who have both of them most close to the teens' NPLs. What we saw in the fourth quarter, we saw a mix influence on the private payrolls, the vintages or the first vintages of the private payroll is starting to mature and to influence the average of the NPLs on one hand.

On the other hand, also as a factor of 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. We are very comfortable to say that is not 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 secured lending compared to unsecured, which has tighter spreads, as we know, is 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 our strategy is focusing in the long-term relationship with this client. We want to maintain them with us in our portfolio. It's important to say that this is the kind of NIMs that we think is healthy for the business, that is structural, sustainable going forward.

We have one other 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 the ratios indexation, when we see abrupt impacts in the interest rates, of course, they will impact in the cost of funding, which happened during the year of 2025. We know that the Selic went up almost 300 basis points in the second half of the year, so that impacted also the NIM. On the flip side, we can expect a potential reduction on the Selic, which we can capture also in this next quarters as well. Maybe Felipe can add a few observations on that as well. Felipe?

Yes. Thank you, Marcello. 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. 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, 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 Citi. Your microphone is open.

Hi, guys. First of all, congratulations on the IPO. I have two questions here. The first one is regarding the commissions and fees revenues, which declined in the quarter. I would 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. My second question is regarding the selling, general, and administrative expenses, which also we saw a relevant decrease of almost 31% quarter-on-quarter. If you could explain us what is behind this decrease in the selling, general, and administrative expenses. Thank you.

Okay. Thanks, Schroden. Good to be talking to you. So on the one hand, on the fees, we see the fees as 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.

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. 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. That's one thing for the insurance. Regarding the G&A and the expenses, yes, we see a reduction in the fourth quarter.

On one hand, we see 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 impacted the quarter, both the payments of the payrolls and part of the fourth quarter that impacted part of the variable cost to serve that we have to pay for the salaries for each of the individuals that we are paying. The other part, we see non-recurring event 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 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. That allowed us to make an adjustment in the model that we use to provision lawsuits in the company. We were able to adjust this model in the fourth quarter, and that produced also an additional impact in the G&A. Those are the main factors that we can mention here.

Thank you, Marcello. Very clear. Thank you.

Thank you, Schroden.

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 had maybe too much provision, so there was an actual reversal and the run rate going forward is gonna 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 through all the investing in AI for the lawsuits.

All right, great. Then just on NIMs, you mentioned that the fourth quarter is sort of the level we should see as well. There's gonna be a mix effect now that should maybe play in your favor or the Selic should play in your favor. When you talked about NIMs being this level, was it a mix constant or funding cost constant? Just wanna make sure I got that one too.

Yeah. The mix will maintain and is skewed a little bit always more to the secured level than the unsecured. Remember, we only offer unsecured credit for those clients who receive their salary with us. 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. As we grow, and have the mix more skewed to the secured 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 in for this client so we can add other products.

As we say, in the newest cohort boarding, 75% of our clients have five or more products with us. In terms of the NIM, that's right, more a result of mix, and then we can capture a short-term impact on the reduction of the Selic rates going forward. Yes, that's kind of the explanation for the NIMs going forward.

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

Thank you, Leduc.

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

Hello, guys. Thank you. Thanks for the opportunity. My question is regarding the growth of the portfolio. 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. 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. Also in the private payroll as we saw a reduction of the growth of this portfolio. Thank you.

Hi, Mizrahi. Nice talking to you. In terms of the growth, one thing, we are able to say, as you know, we don't provide formal guidance, but as we already are comfortable to say that the pace of origination in overall credit portfolio is back to the pre-suspension levels. We are comfortable to say that, irrespective of what growth we will show in the first Q, we are very confident with the consensus estimates that we have in the street in terms of reaching the total portfolio that is seen in the consensus. That's one thing that we can say in terms of the growth of the portfolio. We are comfortable with that. It also applies for the private payroll.

As I said, private payroll is a product we see that as a huge opportunity in terms of diversification of activities within Agi. We have a vertical working here to develop this product and to develop the credit model specialized for this product so that we don't see growth by itself. We want to have growth in a sustainable way that brings, on one hand, profitability to, you know, to the stakeholders, to the shareholders, and also security so that we don't lose the pace in terms of the NPL. We will also be building the growth going forward for the private payroll as well in terms of what we have in consensus for the estimates that we've been in conversations with you.

Can I do a follow-up here?

Sure.

Regarding the private payroll, in terms of the perspective of interest rates to this product, 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 from on this product? Thank you.

Yeah. We see this product, as I said, as two types of competition. One from the incumbents who have the relationship with this client, who know the behavior, and that can model in a different way and scale fast this product, and then the challengers, right? That have to build their models by themselves. We, as we know, 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 that this product to stabilize. Also we 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. That's kind of the way. I'll also pass to Felipe to complement a little bit here.

Yes, Marcello, 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. 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 Marcello 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 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? My question here is a bit on rates and NIM, right? You earlier were mentioning that you have lower rates, you're 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 gonna be the strategy there? Do you think you're gonna be able to maintain similar rates for some time and gain some spreads there, or you're gonna pass that through to clients and remain below the cap? Thank you.

Hi Renato. Marcello here. Good to be talking to you. Again, I have to reiterate that we see our approach to this market as looking at the client as a whole, not the payroll INSS as a product by itself, right? We'll keep continuing, and we see ourselves as positioned 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. Continue to work with this client to generate cross-sell, to generate long-term relationship. What we see usually, the correlation with the lag. 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. Within this period of time, there will be an arbitrage to capture temporarily benefit rates. 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. When rates go down or go up, there's also a part of the fees or more cost that in general the market pays that we don't do. We can kind of maneuver better the strategy of maintaining the relationship with this client. With that, I'll pass to Felipe to complement also this question.

Yes, Marcello, just to mention that this is an efficiency game. As we don't rely on third parties, 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. These unit economics provide us this leverage to keep growing and keep growing this in this segment as well.

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

Yep. Meloni, 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. It was the part of the variable was like in terms of the reduction. I would say 20% of the reduction came from the variable costs, and 80% came from the reduction in the SG&A expenses.

That's perfect. Thanks again, guys, and congratulations.

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

Hi, good evening. It's Jamie at Susquehanna, SIG. I wanted to ask, the company's had significant improvement in the efficiency ratios. I was just wondering how durable you see those. 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 new services and the expansion of the company overall? So the first is on efficiency, the second's on technology. Thank you.

Hey, hi. Good to be talking to you. 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 in 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 see 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 the AI initiatives. We have already initiatives that are measurable in the company. I think with, for that, I can invite Marciano to speak a little bit of the projects that we have in place here. Marciano, please.

Thank you, Marcello. Great question. I would say that it can be AI can be a disruptor, but also a powerful opportunity to the companies, depends on how quickly a company is able to adapt and integrate into its core business, right? For many companies globally, the real challenger is not understanding AI, but it's actually integrate deeply into systems, process and culture. In our case, we see AI as a natural extension of our strategy. Agibank 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. It puts us in a very strong position today.

We see AI as a significant opportunity to become a truly AI-driven bank over the next 12-24 months, enhancing key areas such as credit underwriting, customer service, fraud prevention, collections, marketing, and the overall operational efficiency as you asked. Another important point here that we not carry the same legacy constraints as many traditional banks. We operate on a proprietary core bank system designed to be flexible and fully integrate with the modern technology stacks. This allow us to connect seamlessly with the latest foundational AI models and external solutions without the limitation of the legacy architecture, right? We are excited to the results that we can see.

Just to give you a quick color about the impact, we have 40% in cost avoidance related to our call centers and over the next 12 months. Also, our AI agents are 80% more efficient when you compare it to the human contact. While also maintaining higher service levels and accommodate our fast pace of growing the customer base.

Basically we see also in the fraud detection a 90% reduction in the review time of the fraud alerts. Also, as Marcello mentioned, the legal workflow today we use our AI agent to avoid costs per process for legal processes for litigations, and we have a very material result of that. We have many layers of the bank that we already use, and we see a very massive opportunity to continue to improve our efficiency ratio based on the AI impact.