Agi (AGBK) Q3 2026 Earnings Call Transcript

DATE

Wed, Nov. 11, 2026

CALL PARTICIPANTS

• Head of Investor Relations - Felipe Gaspar Oliveira
• Founder and Chief Executive Officer - Marciano Testa
• Chief Financial Officer and Investor Relations Officer - Marcello Winik Dubeux

TAKEAWAYS

• Net Income -- BRL 276 million, representing 31.1% growth versus last year and 37.8% growth compared to the second quarter.
• Total Revenue -- BRL 3.2 billion, an increase of 15% versus last year supported by a growing credit portfolio and fee revenue expansion.
• Credit Origination -- BRL 10.2 billion, increasing 76.5% versus last year and 42.5% quarter over quarter.
• Active Customers -- 8.3 million, representing 29% growth versus last year and a 9% increase compared to the previous quarter.
• Agi+ Subscribers -- 700,000 members, growing nearly 200% quarter over quarter following the pilot launch at the end of the second quarter.
• INSS Market Share -- 10%, an increase of 100 basis points versus last year as the company reached its first double-digit share in the payroll credit segment.
• Fee Revenue -- BRL 244.1 million, up 29.8% versus last year and 80.1% quarter over quarter due to insurance brokerage and new subscription revenue.
• Net Interest Income -- BRL 1.3 billion, representing 10% growth versus last year and a 1% increase compared to the prior quarter.
• Efficiency Ratio -- 44.2%, improving 340 basis points versus last year and 470 basis points quarter over quarter as revenue growth outpaced flat operating expenses.
• Annualized ROE -- 22.4%, increasing over 500 basis points from 16.9% in the second quarter.
• Total Loan Portfolio -- BRL 38.8 billion, representing 12.5% growth versus last year and a 4.5% increase compared to the second quarter.
• Secured Loans -- 88% of the total portfolio or BRL 34.3 billion, up from 86.2% a year ago.
• Private Payroll Loans -- BRL 2.3 billion portfolio, increasing 130% versus last year and 60.5% quarter over quarter.
• NPL 90+ Days -- 3.5%, reflecting a 20 basis point increase quarter over quarter while remaining below the Brazilian consumer credit average of 6.2%.
• Cost of Risk -- 6.1% over the last 12 months, up 20 basis points quarter over quarter reflecting a faster pace of origination and upfront provision recognition.
• Annualized NIM -- 11.8%, representing a 20 basis point compression quarter over quarter due to changes in the asset mix.
• Shareholders Equity -- BRL 5.1 billion, increasing 64% versus last year following IPO proceeds added in February 2026.
• Capital Adequacy Ratio -- 18.1%, representing a 440 basis point increase versus last year despite a 60 basis point decline compared to the previous quarter.
• Clients with Principality -- 1.7 million, referring to customers receiving pensions or benefits in their checking accounts.
• Private Payroll Origination -- BRL 250 million to BRL 300 million per month, highlighting management's current appetite for this product segment.

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RISKS

• Dubeux stated, "The slight decline in NIM is primarily to asset mix as the share of secured loans reached 88.4% of the portfolio," noting a lower relative contribution from personal loans.
• Dubeux reported that "nonperforming loans exceeding 90 days increased in the third quarter to 3.5%," representing a 20 basis point rise compared to the second quarter.
• Testa stated, "Of course, the cost of funding is a challenger for everyone," acknowledging the impact of the current macroeconomic environment in Brazil.
• Dubeux noted that NIM after provisions was 6.3%, "compressing 50 bps on a quarterly basis," as a result of the faster pace of credit origination.

SUMMARY

Agi Inc. (NYSE:AGBK) reported a fiscal third quarter characterized by expanded market share in the Brazilian payroll lending market and a transition toward recurring subscription-based revenue. Management stated that the company successfully integrated AI-driven efficiency gains into its operating platform, leading to a significant improvement in the efficiency ratio and annualized return on equity. The company reported that its credit origination reached the highest level in over a year, while the balance sheet remained focused on secured lending products. The launch of the Agi+ subscription program provided a new source of asset-light fee income that contributed to a sequential recovery in total fee revenues. Management stated that it remains focused on long-term shareholder value, supported by a newly authorized share repurchase program and a stable capital adequacy position.

• Management announced the addition of Rafael Siqueira as a new partner to lead the integration of AI across all business units to improve credit prediction models and operational scalability.
• Testa stated, "Agi is one platform with many engines," referring to the company's proprietary foundation that shares tech and data across every business unit.
• The company reported adding more pension-receiving clients than any other financial institution in Brazil during 2026, reaching 1.7 million principality customers.
• Dubeux indicated that unsecured loan portfolios have stabilized and are expected to increase their participation in the total mix to support higher yields.
• Management noted that recent credit rating upgrades from S&P Global to the AA level reflect increased confidence in the company's business model and funding diversification.
• Dubeux stated that while the fourth quarter may see more normalized growth compared to the third quarter, the fee business is expected to continue growing from current levels.
• Testa noted, "Our priority remains growing the business with discipline returns," while commenting on the authorization to repurchase up to 3 million shares.

INDUSTRY GLOSSARY

• INSS: The National Institute of Social Security in Brazil, which manages the pension and social security system for private-sector workers.
• Principality: A metric referring to customers who use a specific bank as their primary financial institution, often indicated by the direct deposit of salaries or benefits.
• NPS: Net Promoter Score, a metric used to measure customer satisfaction and loyalty ranging from -100 to 100.
• NII: Net Interest Income, the difference between the interest income earned on assets and the interest expense paid on liabilities.
• NIM: Net Interest Margin, a ratio that measures how much a bank is earning from its credit products relative to its interest-bearing assets.
• NPL: Non-Performing Loan, a loan that is in default or close to being in default, typically measured at 15 to 90 days past due.
• CAR: Capital Adequacy Ratio, a measure of a bank's available capital expressed as a percentage of its risk-weighted credit exposure.
• Tier 1 Capital: The core measure of a bank's financial strength from a regulator's point of view, composed primarily of common stock and disclosed reserves.

Full Conference Call Transcript

Operator: Good afternoon, everyone, and welcome to Agi's Third Quarter 2026 Earnings Conference Call. Today's conference call is being recorded. At this time, I would like to turn the call over to Felipe Gaspar Oliveira, Head of Investor Relations. Please go ahead.

Felipe Oliveira: Hello, everyone, and welcome to Agi's Third Quarter 2026 Earnings Conference Call. Thank you for joining us. I'm Felipe, Head of Investor Relations. Joining me today are Marciano Testa, Founder and CEO of Agi Inc.; and Marcello Dubeux, our CFO and Investor Relations Officer. Before we begin, I'd like to highlight what makes this quarter especially important from an investor perspective. Throughout 2026, we have been focused on improving our operating platform, accelerating our commercial momentum and expanding our sources of revenue. This quarter provides important evidence of that progress. We are seeing stronger credit origination, increasing customer engagement, growing fee revenues and improvement in profitability and operating efficiency.

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

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

Moving to today's agenda, we have 3 main topics: First, Marciano will share a strategic update on how we are building an AI-driven banking platform. Second, he will discuss the rapid growth of Agi+ and how it's creating new opportunities for recurring revenues. And finally, Marcello will walk us through our third quarter results, highlighting our growth momentum, operating performance and profitability. With that, let me hand it over to Marciano. Marciano, over to you.

Marciano Testa: Good afternoon, everyone. I am excited to begin this quarter of 2026 earnings call with a positive news. We are going to show you our platform engine, it's a fully normalized. In this quarter, we grew over 62% in earnings before tax and around 40% in net income quarter-over-quarter. This is the best quarter results of this year despite the macro economy scenario in Brazil. All of these results and the normalization pace of growth are based on the 3 anchor principles that guide our strategy decision for the long term. First, we live for the customer which is mean that we prioritize client value when we make all of our decisions. Second, we win with technology.

So we continuously enhance our technology capabilities, especially with AI or another new technology solution to serve and operate in a better way. And third, we promote an entrepreneur culture to figure out a new perspective of the business, diversified and grow while we maintain disciplined focus on long-term for our shareholders. In this slide, you can see Agi is one platform with many engines. Our business units face the customer one proprietary foundation, tech stack, data, and intelligence, with AI embedded throughout powering them all. We built once and share across every business units, every line of our cost base improves as we grow. Customer acquisition, cost to serve, funding, and especially cost of credit.

That is the architecture behind our operating leverage. As I said in our second principle to continue enhance our technology platform and attract new talent to join us. Therefore, it's my pleasure to announce our new partner, Rafael Siqueira, the previous Lat Am AI leader in McKinsey with an important resource to drive our platformization technology through the integration of AI to support all of our business units. We keep pushing hard to become a fully AI driven in the next few months. We are already seeing very good signs in terms of gaining efficiency ratio and scalability and at the same time, improving customer experience.

But I believe the biggest positive impact will come from the data science by credit models that will become much more precise, especially in the prediction model to predict new delinquents and adjust in real time while we visualize the variables changes. Deploying credit in different challenges cycle of the economy and maintain the cost of credit under control is a strong capability that we have in our organization, proven by over 10 years good long-term track record. But now in the AI era, we can boost this capability even further. Even though the macro economy scenario will be more challenging we see ourselves as acyclical business. Now I would like to highlight the bank by subscription.

We had an impressive result in the financial statement with our subscription program, call it, Agi+. We have just begun collecting the result of this amazing project to diversify and increase the revenues with asset-light capital allocation. We launched a pilot project at the end of the second quarter, and now 4 months later, we reached over 700,000 subscribers growing by close to 200% quarter-over-quarter. That is a powerful predictable revenue model going forward. Also is a function as a [ sticker tool ] to keep our customer base highly engaging our platform while enjoy all benefits as a member of Agi+.

Here, you can see some example of the benefits such as prioritized access to the learning platform, mobile top-up, streaming platform also exclusive network of medical consultations. And top of that exclusive access to the pharmacy network with higher discount medicines. And other important benefits tailor made for our customer base. As a result, we achieved 78 points in NPS, one of the highest of the industry in Brazil. The improvement in the customer satisfaction that I mentioned translating our numbers. As you can see here, we grew almost 10% of our customer base quarter-over-quarter. Our credit origination grew over 40% in quarter-over-quarter.

With that, we surpassed our milestone by over 10% of market share in the payroll credit of INSS. Such as market share placed Agi in the top 5 payroll lending bank at the biggest payroll ecosystem in Latin America. Also, another impressive milestone in the fee side, over BRL 244 million fee revenues in this quarter. And finally, we achieved BRL 276 million in net income in the third quarter. Before I hand over to Marcello, I would like to comment on the share repurchase program we announced on October 27, authorizing the repurchase of up to 3 million Class A shares over the next 12 months.

On behalf of the Board and the management team, this reflects our conviction in the long-term value of Agi and the strength of our business model. It is also a balanced decision. Our capital position is over 18% capital adequacy ratio, allow us to return value to shareholders while preserving the capital we need to fund customer growth and the technology. Any repurchase will be made at the management discretion, our priority remains growing the business with discipline returns. With that, pass over to Marcello and Felipe to cover the figures in details. Thank you.

Marcello Winik Dubeux: Thank you, Marciano, and good afternoon, everyone. In the third quarter, the groundwork we laid in the first half began to show in our numbers. Record customer additions, our strongest origination in more than a year, a recovery in fee revenues and higher earnings. We made further progress against our core strategic priorities maintaining our position among Brazil's most efficient and trusted financial institutions. On today's call, I will walk you through our third quarter results and details behind them. In the third quarter, we saw the momentum built in the first half of 2026 translating into growth and results.

We delivered our strongest quarterly credit origination in over a year at BRL 10.2 billion, up 77% (sic) [ 76.5% ] year-over-year and 43% (sic) [ 42.5% ] quarter-over-quarter. Private payroll loans reached BRL 2.3 billion, up 130% year-over-year and 61% (sic) [ 60.5% ] quarter-over-quarter with first payment default continue to improve in newer cohorts. Fee revenues were BRL 244 million (sic) [ BRL 244.1 million ] in the third quarter, up 30% (sic) [ 29.8% ] year-over-year and 80% (sic) [ 80.1% ] quarter-over-quarter, led by insurance brokerage and Agi+ subscriptions.

Finally, net income was BRL 276 million, up 31% (sic) [ 31.1% ] year-over-year and 38% (sic) [ 37.8% ] quarter-over-quarter with net margin up 107 bps year-over-year and 226 bps quarter-over-quarter. Taking a closer look at customer growth, as seen on Slide 10, total active client count increased 29% in the third quarter compared to the prior year period and 9% quarter-over-quarter. We reached 8.3 million active customers as of the end of the third quarter of 2026, which we define as those with at least 1 active product at quarter end, a 43% CAGR over the past 6 years.

We believe this growth demonstrates the resilience of our acquisition channels and success in customer satisfaction and retention as earlier explained by Marciano. Turning to our credit portfolio on Slide 11. Total loan balances grew 12% (sic) [ 12.5% ] year-over-year and 5% (sic) [ 4.5% ] quarter-over-quarter in the third quarter of 2026 to BRL 38.8 billion. Our credit portfolio maintains a healthy mix with secured loans representing 88% of total or BRL 34.3 billion, and unsecured loans representing 12% or BRL 4.5 billion. We believe this mix brings sustainable balance of profitability, credit quality, and focus on long-term relationships with our clients.

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

As you can see on Slide 12, based on our strong positioning with the INSS and leveraging our competitive advantages in this segment our market share in Q3 reached 10%, Agi's first ever 2-digit market share in loans, an increase of 100 bps year-over-year. It is worth mentioning that we were able to expand our market share by 40 bps just in the third quarter after overcoming the recent periods of regulatory turmoil. In private payroll credit on Slide 13, our portfolio has grown to BRL 2.3 billion, an increase of 61% (sic) [ 60.5% ] quarter-over-quarter and 130% year-over-year.

It is worth mentioning that our appetite for origination of this product continues strong with incremental enhancements to its credit model and observing good evolution in its credit quality especially with first payment defaults of new cohorts showing signs of improvement. As a result, monthly origination sustained between BRL 250 million and BRL 300 million in the quarter. With regards to credit quality of the overall portfolio on Slide 14, nonperforming loans exceeding 90 days increased in the third quarter to 3.5%, up 20 bps quarter-over-quarter. Nevertheless, NPLs for the overall portfolio remain comfortably below the average for consumer credit in Brazil of 6.2% which increased 70 bps only in this quarter.

That demonstrates how Agi's credit strategy is structurally resilient even in challenging macro environment such as what is currently seen in Brazil. Moreover, it is worth mentioning that short-term quality indicators we monitor internally continue to reflect stability and low-risk profile of our portfolios. Moving to Slide 15. Cost of risk last 12 months was 6.1%, up 20 bps quarter-over-quarter and 70 bps year-over-year, reflecting both our portfolio mix and a faster pace of our credit origination as provisions for expected losses are recognized upfront on new vintages. INSS payroll loans remain the anchor of our portfolio, stable at 72.3%.

While private payroll loans are currently fast-growing product more than doubled their share in the portfolio to 5.8% from 2.8% a year ago. At the same time, unsecured loans represented 11.6% of the portfolio and other secured loans, 10.2%. The coverage ratio was 157% at the end of September, down from 183 in June as a result of the provisions balance divided by NPLs over 90 days, a level which we consider adequate for a portfolio that is 88% secured. Turning to our revenues on Slide 16.

In the third quarter, we delivered total revenue of BRL 3.2 billion, an increase of 15% year-over-year, favored by a growing credit portfolio as well as growing in fee revenues which represented 8% of the total in the quarter, up from 4% in the previous quarter. On Slide 17, we see net interest income of BRL 1.3 billion in the quarter, up 10% year-over-year and 1% quarter-over-quarter. The slight decline in NIM is primarily to asset mix as the share of secured loans reached 88.4% of the portfolio, up from 86.2% a year ago with a lower related contribution from personal loans.

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

Our operating efficiency ratio is calculated as operating and personnel expenses divided by NII plus fee revenues, net of tax expenses. This improvement mainly reflects NII plus fees growing 9% quarter-over-quarter, while operating expenses were flat in the third quarter reaching the bottom line, net income in the third quarter was BRL 276 million, an increase of 38% over the previous quarter and 31% year-over-year representing annualized ROE of 22.4%, more than 500 bps up from the 16.9% in the second quarter. This is the best level of quarterly profitability year-to-date, supported by the growth of 63% on earnings before taxes in this third quarter. Now on to our funding approach on Slide 21.

As a regular debt issuer, Agi maintains established relationship with Brazil's credit markets, diversifying funding sources to support portfolio expansion. As a result, total funding reached BRL 40.8 billion, an increase of 15% from the third quarter of 2025. Institutional counterparties now represent 64% of total funding, while retail sources account for 36%. In August, Agi also received its most recent credit rating upgrades from S&P Global, who raised the bank's credit rating from AA- to AA, so all 3 agencies now rate the bank at the AA level. We consider these upgrades as a significant demonstration of confidence in Agi bank's business model.

On Slide 22, we can see that our total assets have grown to BRL 54.6 billion in the quarter, an increase of 22% (sic) [ 21.6% ] year-over-year with return on assets over the last 12 months of 1.8%, up 10 bps quarter-over-quarter, driven by higher profitability in the period. Moving to equity on Slide 23. Shareholders' equity reached BRL 5.1 billion, up 64% year-over-year reflecting the IPO proceeds added in February of 2026 and up 5% quarter-over-quarter, now driven by retained earnings. Lastly, our capital adequacy ratio consolidated at the holding level was 18.1% in the third quarter, down 60 bps in the quarter and up 440 bps year-over-year.

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

Operator: [Operator Instructions] Our first question is from Tito Labarta with Goldman Sachs.

Daer Labarta: Congratulations on the strong results. Good to see that INSS loans growing again. So my question, how do you think about loan growth from here, right now that you're growing INSS loans, again, do you think -- I mean you're just probably getting started there. Should we see a big acceleration into next year? And then also, on the other hand, the personal loans still didn't really grow that much. But on that side, you probably have to worry a bit about the macro environment, the credit cycle, which there's a lot of concerns in the market about that. So how do you think about both INSS loans but also unsecured personal loans and the growth outlook for that?

And then maybe some of the other like, private payroll continuing to grow.

Marcello Winik Dubeux: Thank you, Tito. Good to talk to you. Thank you for the question. So regarding -- I'll break up the question in our portfolios. So regarding growth for the next quarter and next year in the environment as well. So first of all, in terms of the INSS portfolio, we continue to see space to continue to increase our market share. So one thing that is important to remember, we reached 10% market share, it's an important market for us. This quarter, we grew only this quarter, 40 bps in terms of market share, and we see space to continue occupying this market and growing going forward.

So INSS, yes, will continue to be a big driver of our growth going forward. Then going to the private payroll loans, that was not part of your question, but I think it's also important to mention we had a 60% growth in this portfolio this quarter and continue in the pace that we've been mentioning that we have appetite to grow from BRL 250 million to BRL 300 million a month. In terms of origination, we see demand for that. We see the operations of the product improving consistently over time, and we have appetite to continue to have this part of the portfolio growing and occupying some space in our growth.

And then finally, the unsecured loans, the good news is that this portfolio stabilized this quarter. So it was the first quarter where we saw that portfolio is not reducing, right? So the first time that is growing. And from now on, we expect this portfolio to have more participation. It is a portfolio that has higher yields in our portfolio, and we expect that to have more participation continue to grow over time. One thing also that is important to talk about is that in this year, in the beginning of the year, we had all these disruptions of -- derived from last year.

And we did not take -- took advantage of the increase of the minimum wages that happened in the beginning of the year. So we still have this effect to happen -- the effect to happen in the beginning of the year and could be another factor of growth that will be seen only in the first quarter next year, but still also another boost for our growth.

Daer Labarta: Great. And maybe just one quick follow-up, I guess, now that you're growing INSS loans again. So a big jump in fees. Should that also accelerate from here only because how big the jump was or was there anything onetime on the fees to think about?

Marcello Winik Dubeux: No. Regarding the INSS, we had an acceleration this quarter. A smaller portion of this acceleration was due the month of September that we had the expiration of the provisional measure that had an impact on the demand on the space that the clients had to lend against their salary, right? So remember, we had a 5% reduction in the space of where the clients could lend against.

So that was -- had a big impact in the month of September but that has been normalized for the month of October, and we probably have a growth in the month of -- in the fourth quarter but not as the same as the third quarter probably is more normalized this quarter. And on top of that, we were able and continue to be able to see fees contributing for the revenues in this fourth quarter going forward.

Daer Labarta: And just wasn't clear on the fee income, big jump, does that also accelerate from here? Or was it just a onetime because you started to accelerate this quarter INSS?

Marcello Winik Dubeux: No, no. The fee income is -- so I'll break down that for you also. So the fee income is one hand, brokers, insurance brokers that is due to the business model that we have, that we can be together with the clients in front of the client. So as we grow the portfolio, we have the cross-sell opportunity to sell insurance. And so that will continue. So it's not a one time. Remember, in the beginning of the year, we redesigned the journey of selling insurance, and that has been in full effect and operating. So this is the first quarter where we could see really growing this line.

And on top of that, the Agi+ started to contribute this quarter, it will be a more recurring revenue going forward in the fourth quarter. So adding up to the number that we already showed this quarter. So it's not a onetime and the fee business will continue to grow from the number that we are seeing this third quarter.

Operator: The next question comes from Ricardo Buchpiguel with BTG Pactual.

Ricardo Buchpiguel: Over the past 12 months, we have seen several changes in the INSS regulation with stricter authentication requirements, more restrictions on what can we offer to customers and how. So it seems that from the last couple of results that this disruption seems to be easing and the impact seems to be reducing. So I wanted to understand whether do you think any of these changes that happened had any structural impact on the bank's most profitable products, which are the life insurance and then secured loans. And looking ahead, where do you see the bank's normalized ROE today compared to the 35%, 40% level that you reported in the past couple of years?

Marciano Testa: Thank you, Ricardo, for the question. Marciano here. So we don't see some concern about the new regulation, especially in the INSS. When you're looking ahead, we see the regulatory environment as a business as usual. All banks, fintechs, and financial institutions operate on the regulatory environment and it's our job to be compliant quickly and offer the customer the best experience as you can. So as a -- when are you thinking what happened in INSS last year as a low probability and high impact as a one-off situation is in the Social Security Administration. And the truth, we do not see probable risk to something happening again in the coming years.

And in terms of the new regulatories, specifically in -- we see these improvements in the sector related to the customer protection. As for example, new biometric, we see this a positive giving us of our business model opportunity to continue to grow based on our hybrid model that we can advise the customers and continued growth. Marcello, can you complement?

Marcello Winik Dubeux: Yes. I think are -- so in terms of the growth that you asked in the end, yes, we are -- as you saw in this third quarter, our earnings before taxes already demonstrating strength to growth, growing more than 60%. So we are on our path to show operational leverage. So you see our efficiency ratio going down more than 400 bps. And we believe we have space to continue to do that. So gradually, the return on equity will continue to grow, as we've been mentioning in the previous quarters.

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

Ricardo Buchpiguel: That's clear. Just one quick follow-up. I think an important part of the equation for the ROE to improve meaningfully with a normalized tax rate is the unsecured lending, right? So if you could elaborate on, if in Q4, you're seeing any improvement here will be also helpful.

Marcello Winik Dubeux: Sure. I think -- so unsecured loans, First of all, we saw impacts during throughout the year. So we saw that we have been working with the unsecured loans with a shorter duration type of portfolio. And that -- because of that and the interruptions that we've gone through over the last year we saw that reducing over time, and we said that, that would stabilize as we grew more, and that's what happened. So the project is already stabilized and started to grow. So as we continue to produce more and originate more credit in this type of loan that will show growth. And how do we show growth, right? How do we elaborate it?

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

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

Operator: The next question comes from Pedro Leduc with Itau BBA.

Pedro Leduc: Congrats on reigniting the origination and the service fees. One last missing link note that we're looking for is the NII performance. Maybe it's because you originated towards the end of the quarter. You already mentioned mix. But you also mentioned that in September, a lot came in. So I'm just trying to put it together here the timing difference and then I know in the fourth quarter, the yield curve again went up, but maybe you guys hedged? Just trying to see how NIMs could perform now that origination is back on track.

Marcello Winik Dubeux: Thank you for the question. Yes, you're correct. I mean we still could not have the time for the portfolio to age enough to show the impact on the NIMs. But we are already seeing that in the month of October, as our portfolio continued to grow in both -- in all of the products that we mentioned here, be it the INSS, be it the private payroll or the unsecured and the NIMs are happening. So we'll certainly see NIMs now in a different trend in this fourth quarter.

In line with the mix that we have, in line the -- although we have a challenging macro scenario going forward next year, but we -- we did see a slight decrease in the interest rates in this third quarter. Now we probably won't see that anymore for the rest of the year, but also contributes a few bps also in the NIMs for the rest of the year. Felipe will complement here.

Felipe Oliveira: Yes. Just to complement, Marcello, in terms of asset and liability management, we are very conservative on that. So it helps as well to protect in terms of macro backdrops that we could see ahead.

Operator: [Operator Instructions] Our next question comes from Marcelo Mizrahi with Bradesco BBI.

Marcelo Mizrahi: My question is regarding the new reality of the cost of funding that we are seeing right now. So my question is, at those levels of cost of funding, if it still makes sense to maintain the new outstanding credit to origination of the pensioners, so the payroll to pensioners at these interest rates makes sense to mention right now and how you guys are dealing with these interest rates, the future interest rates on the funding side that we are seeing right now?

Marcello Winik Dubeux: Thanks for the questions. So Mizrahi that's a great question, important for us to clarify again, our business model, right? We don't see the INSS payroll as a product itself. We see that -- we see the client as a potential portfolio of products. We see our long-term relationship with this client as what generates yield and returns for the company. So the INSS payroll lending, it is a very powerful tool of cut, of cross-selling, of long-term relationship, of stickiness with this client. So we've navigated with higher rates than that. Remember that in these last 12 months, if you remember, 1 year ago, rates were higher than they are now.

And we saw -- we did see other financial institutions, not providing these products with the -- for the client, but we did because we really believe in the business model that we have and how we can cross-sell and offer the unsecured, offer the fee business, and maintain relationship with the long term. So we will see us continue to improve in market share and the presence in the market. With that, I'll pass to Marciano to also complement our -- my questions.

Marciano Testa: Thank you, Marcello. So just to complement here, our business model, we can navigate in this macro economy scenario better than other competitors, especially on the asset side because part of the government spending flow through our platform, into our clients' checking accounts, also the increase in the minimum wage annually represent a massive opportunity to expand our credit portfolio across our interior customer base. As I said in the call before, ultimately, we are -- we have a lower exposure to the unemployed risk based on our customer profile. Of course, the cost of funding is a challenger for everyone.

But that in case we will have a more focus on -- in the high-margin products to be able to at least maintain our net interest margin or I can say, increase the NIM, the next quarter. So thank you.

Operator: With no further questions, Agi's conference is now closed. We thank you for participating, and wish you a nice evening.

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