UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN
PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of November 2023
Commission File Number: 001-39155
XP Inc.
(Exact name of registrant as specified in its
charter)
20, Genesis Close
Grand Cayman, George Town
Cayman Islands KY-1-1208
+55 (11) 3075-0429
(Address of principal executive office)
Indicate by check mark whether the registrant files
or will file annual reports under cover of Form 20-F or Form 40-F:
Indicate by check mark if the registrant is submitting
the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Indicate by check mark if the registrant is submitting
the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
SIGNATURE
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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XP Inc. |
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By: |
/s/ Bruno Constantino Alexandre dos Santos |
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Name: |
Bruno Constantino Alexandre dos Santos |
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Title: |
Chief Financial Officer |
Date: November 13, 2023
EXHIBIT INDEX
Exhibit 99.1
XP Inc.
Interim condensed consolidated
financial statements at
September 30, 2023
and report on review
Report on review of interim condensed
consolidated financial statements
To the Board of Directors and Shareholders
XP Inc.
Introduction
We have reviewed the accompanying interim condensed consolidated balance
sheets of XP Inc. and its subsidiaries ("Company") as at September 30, 2023 and the related interim condensed consolidated statements
of income and comprehensive income for the quarter and nine-month period then ended, and the interim condensed consolidated statements
of changes in equity and cash flows for the nine-month period then ended, and explanatory notes.
Management is responsible for the preparation and presentation of these
interim condensed consolidated financial statements in accordance with International Accounting Standard (IAS) 34 - Interim Financial
Reporting issued by the International Accounting Standards Board (IASB). Our responsibility is to express a conclusion on these interim
condensed consolidated financial statements based on our review.
Scope of review
We conducted our review in accordance with Brazilian and International
Standards on Reviews of Interim Financial Information (NBC TR 2410 - Review of Interim Financial Information Performed by the Independent
Auditor of the Entity, and ISRE 2410 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity, respectively).
A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance
with Brazilian and International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us
to believe that the accompanying interim condensed consolidated financial statements referred to above are not prepared, in all material
respects, in accordance with IAS 34.
São Paulo, November 13, 2023
/s/ PricewaterhouseCoopers
Auditores Independentes Ltda.
CRC 2SP000160/O-5
Tatiana Fernandes Kagohara Gueorguiev
Contadora CRC 1SP245281/O-6
PricewaterhouseCoopers Auditores Independentes
Ltda., Av. Brigadeiro Faria Lima 3732, 16o, partes 1 e 6, Edifício Adalmiro Dellape Baptista B32, São
Paulo, SP, Brasil, 04538-132
T: +55 (11) 4004-8000, www.pwc.com.br
XP Inc. and its subsidiaries
Unaudited interim
condensed consolidated balance sheets
As of September 30, 2023
In thousands of Brazilian Reais
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Assets |
Note |
September 30,
2023
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December 31, 2022 |
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Cash |
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3,821,699 |
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3,553,126 |
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Financial assets |
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214,837,814 |
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177,681,987 |
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Fair value through profit or loss |
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120,853,702 |
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96,730,159 |
Securities |
4 |
101,038,694 |
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87,513,004 |
Derivative financial instruments |
5 |
19,815,008 |
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9,217,155 |
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Fair value through other comprehensive income |
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38,486,172 |
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34,478,668 |
Securities |
4 |
38,486,172 |
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34,478,668 |
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Evaluated at amortized cost |
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55,497,940 |
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46,473,160 |
Securities |
4 |
6,174,973 |
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9,272,103 |
Securities purchased under agreements to resell |
3 |
12,251,986 |
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7,603,820 |
Securities trading and intermediation |
9 |
3,569,085 |
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3,271,000 |
Accounts receivable |
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620,008 |
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597,887 |
Loan operations |
7 |
26,645,487 |
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22,211,161 |
Other financial assets |
15 |
6,236,401 |
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3,517,189 |
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Other assets |
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7,585,713 |
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5,760,811 |
Recoverable taxes |
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301,890 |
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163,248 |
Rights-of-use assets |
12 |
203,552 |
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258,491 |
Prepaid expenses |
8 |
4,400,808 |
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4,240,107 |
Other |
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2,679,463 |
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1,098,965 |
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Deferred tax assets |
17 |
2,022,609 |
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1,611,882 |
Investments in associates and joint ventures |
11 |
2,260,841 |
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2,271,731 |
Property and equipment |
12 |
347,659 |
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310,894 |
Goodwill and Intangible assets |
12 |
2,550,984 |
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844,182 |
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Total assets |
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233,427,319 |
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192,034,613 |
The accompanying notes are an integral
part of the unaudited interim condensed consolidated financial statements.
XP Inc. and its subsidiaries
Unaudited interim
condensed consolidated balance sheets
As of September 30, 2023
In thousands of Brazilian Reais
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Liabilities and equity |
Note |
September 30, 2023 |
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December 31, 2022 |
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Financial liabilities |
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158,536,984 |
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127,708,578 |
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Fair value through profit or loss |
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32,888,077 |
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22,134,674 |
Securities |
4 |
14,342,482 |
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13,529,265 |
Derivative financial instruments |
5 |
18,545,595 |
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8,605,409 |
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Evaluated at amortized cost |
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125,648,907 |
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105,573,904 |
Securities sold under repurchase agreements |
3 |
39,517,091 |
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31,790,091 |
Securities trading and intermediation |
9 |
17,062,044 |
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16,062,697 |
Financing instruments payable |
13 |
53,093,731 |
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43,683,629 |
Accounts payables |
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603,789 |
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617,394 |
Borrowings |
14 |
1,259,822 |
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1,865,880 |
Other financial liabilities |
15 |
14,112,430 |
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11,554,213 |
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Other liabilities |
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54,793,152 |
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47,172,782 |
Social and statutory obligations |
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711,123 |
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968,119 |
Taxes and social security obligations |
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488,388 |
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365,419 |
Retirement plans liabilities |
16 |
53,279,708 |
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45,733,815 |
Provisions and contingent liabilities |
20 |
109,595 |
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43,541 |
Other |
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204,338 |
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61,888 |
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Deferred tax liabilities |
17 |
73,982 |
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111,043 |
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Total liabilities |
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213,404,118 |
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174,992,403 |
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Equity attributable to owners of the Parent company |
18 |
20,013,943 |
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17,035,735 |
Issued capital |
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25 |
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24 |
Capital reserve |
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18,745,482 |
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19,156,382 |
Other comprehensive income(loss) |
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106,650 |
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(133,909) |
Treasury shares |
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(117,117) |
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(1,986,762) |
Retained earnings |
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1,278,903 |
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- |
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Non-controlling interest |
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9,258 |
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6,475 |
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Total equity |
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20,023,201 |
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17,042,210 |
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Total liabilities and equity |
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233,427,319 |
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192,034,613 |
The accompanying notes are an integral
part of the unaudited interim condensed consolidated financial statements.
XP Inc. and its subsidiaries
Unaudited interim condensed consolidated statements
of income and of comprehensive income
For the nine and three months
period ended September 30, 2023, and 2022
In thousands of Brazilian Reais, except earnings per share
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Nine months period ended
September 30, |
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Three months period ended
September 30, |
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Note |
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2023 |
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2022 |
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2023 |
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2022 |
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Net revenue from services rendered |
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21 |
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4,651,223 |
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4,375,806 |
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1,822,475 |
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1,558,302 |
Net income/(loss) from financial instruments at amortized cost and at fair value through other comprehensive income |
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21 |
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1,261,859 |
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1,131,100 |
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141,716 |
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563,461 |
Net income/(loss) from financial instruments at fair value through profit or loss |
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21 |
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4,901,451 |
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4,663,766 |
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2,167,729 |
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1,498,562 |
Total revenue and income |
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10,814,533 |
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10,170,672 |
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4,131,920 |
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3,620,325 |
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Operating costs |
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22 |
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(3,230,253) |
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(2,799,646) |
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(1,121,583) |
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(976,920) |
Selling expenses |
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23 |
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(110,016) |
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(91,141) |
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(49,812) |
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(32,649) |
Administrative expenses |
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23 |
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(3,914,035) |
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(4,273,233) |
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(1,544,184) |
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(1,502,793) |
Other operating income (expenses), net |
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24 |
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25,079 |
|
22,329 |
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(18,293) |
|
29,257 |
Expected credit losses |
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10 |
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(237,331) |
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(56,042) |
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(114,782) |
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(28,205) |
Interest expense on debt |
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(450,570) |
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(252,683) |
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(135,318) |
|
(127,519) |
Share of profit (loss) in joint ventures and associates |
|
11 |
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43,812 |
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(13,648) |
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9,431 |
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1,425 |
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Income before income tax |
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2,941,219 |
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2,706,608 |
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1,157,379 |
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982,921 |
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Income tax credit (expense) |
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17 |
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(81,842) |
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91,102 |
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(70,790) |
|
47,957 |
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Net income for the period |
|
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|
2,859,377 |
|
2,797,710 |
|
1,086,589 |
|
1,030,878 |
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|
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|
|
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Other comprehensive income |
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Items that can be subsequently reclassified to income |
|
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Foreign exchange variation of investees located abroad |
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|
(22,284) |
|
(12,269) |
|
23,008 |
|
9,904 |
Gains (losses) on net investment hedge |
|
|
|
20,139 |
|
7,555 |
|
(22,064) |
|
(7,283) |
Changes in the fair value of financial assets at fair value through other comprehensive income |
|
|
|
223,462 |
|
238,547 |
|
(178,019) |
|
263,249 |
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss) for the period, net of tax |
|
|
|
221,317 |
|
233,833 |
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(177,075) |
|
265,870 |
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|
|
|
|
|
|
|
|
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Total comprehensive income for the period |
|
|
|
3,080,694 |
|
3,031,543 |
|
909,514 |
|
1,296,748 |
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|
|
|
|
|
|
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|
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Net income attributable to: |
|
|
|
|
|
|
|
|
|
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Owners of the parent company |
|
|
|
2,856,525 |
|
2,796,101 |
|
1,086,152 |
|
1,030,746 |
Non-controlling interest |
|
|
|
2,852 |
|
1,609 |
|
437 |
|
132 |
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income attributable to: |
|
|
|
|
|
|
|
|
|
Owners of the parent company |
|
|
|
3,077,842 |
|
3,029,934 |
|
909,077 |
|
1,296,616 |
Non-controlling interest |
|
|
|
2,852 |
|
1,609 |
|
437 |
|
132 |
|
|
|
|
|
|
|
|
|
|
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Earnings per share from total income attributable to the ordinary equity holders of the company |
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
|
26 |
|
5.3195 |
|
5.0122 |
|
1.9873 |
|
1.8548 |
Diluted earnings per share |
|
26 |
|
5.2813 |
|
4.8566 |
|
1.9620 |
|
1.7977 |
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of the unaudited
interim condensed consolidated financial statements.
XP Inc. and its subsidiaries
Unaudited interim
condensed consolidated statements of changes in equity
For the nine and three months
period ended September 30, 2023, and 2022
In thousands of Brazilian Reais, except earnings per share
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|
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Attributable
to owners of the parent |
|
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Capital
reserve |
|
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|
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|
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Notes |
Issued
Capital |
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Additional
paid-in capital |
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Other
Reserves |
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Other
comprehensive income and Other |
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Retained
Earnings |
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Treasury
Shares |
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Total |
Non-Controlling
interest |
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Total
Equity
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Balances as of December
31, 2021 |
|
23 |
|
6,821,176 |
|
8,102,139 |
|
(334,563) |
|
- |
|
(171,939) |
|
14,416,836 |
2,793 |
|
14,419,629 |
Comprehensive income for
the period |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Net income for the period |
|
- |
|
- |
|
- |
|
- |
|
2,796,101 |
|
- |
|
2,796,101 |
1,609 |
|
2,797,710
|
Other comprehensive income,
net |
|
- |
|
- |
|
- |
|
233,833 |
|
- |
|
- |
|
233,833 |
- |
|
233,833 |
Transactions
with shareholders - contributions and distributions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share based plan |
25 |
- |
|
- |
|
460,734 |
|
- |
|
- |
|
- |
|
460,734 |
490 |
|
461,224 |
Other changes in equity,
net |
|
- |
|
- |
|
- |
|
(8,394) |
|
- |
|
- |
|
(8,394) |
(160) |
|
(8,554) |
Private issuance of shares |
|
1 |
|
74,905 |
|
- |
|
- |
|
- |
|
- |
|
74,906 |
- |
|
74,906 |
Treasury shares |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(509,115) |
|
(509,115) |
- |
|
(509,115) |
Allocations of the net
income for the period |
|
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|
|
|
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|
|
|
|
|
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|
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Dividends distributed |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
(1,712) |
|
(1,712) |
Balances as of September
30, 2022 |
|
24 |
|
6,896,081 |
|
8,562,873 |
|
(109,124) |
|
2,796,101 |
|
(681,054) |
|
17,464,901 |
3,020 |
|
17,467,921
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances as of December
31, 2022 |
|
24 |
|
6,986,447 |
|
12,169,935 |
|
(133,909) |
|
- |
|
(1,986,762) |
|
17,035,735 |
6,475 |
|
17,042,210 |
Comprehensive income for
the period |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income for the period |
|
- |
|
- |
|
- |
|
- |
|
2,856,525 |
|
- |
|
2,856,525 |
2,852 |
|
2,859,377 |
Other comprehensive income,
net |
|
- |
|
- |
|
- |
|
221,317 |
|
- |
|
- |
|
221,317 |
- |
|
221,317 |
Transactions with shareholders
- contributions and distributions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share based plan |
25 |
- |
|
30,088 |
|
247,191 |
|
- |
|
- |
|
- |
|
277,279 |
946 |
|
278,225 |
Other changes in equity,
net |
|
- |
|
- |
|
- |
|
19,242 |
|
- |
|
- |
|
19,242 |
293 |
|
19,535 |
Private issuance of shares |
18 |
1 |
|
1,886,172 |
|
211,153 |
|
- |
|
- |
|
- |
|
2,097,326 |
- |
|
2,097,326 |
Treasury shares |
18 |
- |
|
- |
|
(2,785,504) |
|
- |
|
- |
|
1,869,645 |
|
(915,859) |
- |
|
(915,859) |
Allocations of the net
income for the period |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends distributed |
|
- |
|
- |
|
- |
|
- |
|
(1,577,622) |
|
- |
|
(1,577,622) |
(1,308) |
|
(1,578,930) |
Balances as of September
30, 2023 |
|
25 |
|
8,902,707 |
|
9,842,775 |
|
106,650 |
|
1,278,903 |
|
(117,117) |
|
20,013,943 |
9,258 |
|
20,023,201 |
The accompanying notes are an integral part of the unaudited
interim condensed consolidated financial statements.
XP Inc. and its subsidiaries
Unaudited interim
condensed consolidated statements of cash flows
For the nine and three months
period ended September 30, 2023, and 2022
In thousands of Brazilian Reais, except earnings per share
|
|
|
|
|
Nine months ended
September 30,
|
|
|
Note |
2023 |
|
2022 |
Operating activities |
|
|
|
|
|
Income before income tax |
|
|
2,941,219 |
|
2,706,608 |
|
|
|
|
|
|
Adjustments to reconcile income before income taxes |
|
|
|
|
|
Depreciation of property, equipment and right-of-use assets |
|
12 |
80,185 |
|
83,613 |
Amortization of intangible assets |
|
12 |
89,746 |
|
76,648 |
Loss on write-off of right of use assets, property, equipment and intangible assets and lease, net |
|
12 |
49,425 |
|
3,177 |
Share of profit or (loss) in joint ventures and associates |
|
11 |
(43,812) |
|
13,648 |
Expected credit losses on financial assets |
|
|
237,331 |
|
56,042 |
Income from share in the net income of associates measured at fair value |
|
11 |
3,410 |
|
(74,005) |
Provision for contingencies, net |
|
20 |
26,807 |
|
7,301 |
Net foreign exchange differences |
|
|
(264,525) |
|
(193,361) |
Share based plan |
|
25 |
278,225 |
|
461,224 |
Interest accrued |
|
|
448,228 |
|
279,852 |
(Gain) / Loss on the disposal of investments |
|
11 |
26,367 |
|
- |
|
|
|
|
|
|
Changes in assets and liabilities |
|
|
|
|
|
Securities (assets and liabilities) |
|
|
(10,686,644) |
|
(22,518,320) |
Derivative financial instruments (assets and liabilities) |
|
|
(689,347) |
|
(2,330,757) |
Securities trading and intermediation (assets and liabilities) |
|
|
692,601 |
|
(2,809,615) |
Securities purchased (sold) under resale (repurchase) agreements |
|
|
3,988,038 |
|
7,744,496 |
Accounts receivable |
|
|
23,638 |
|
(132,112) |
Loan operations |
|
|
(3,557,417) |
|
(7,601,787) |
Prepaid expenses |
|
|
40,177 |
|
(213,571) |
Other assets and other financial assets |
|
|
(3,769,115) |
|
(1,963,291) |
Accounts payable |
|
|
(18,085) |
|
(346,139) |
Financing instruments payable |
|
|
4,587,411 |
|
15,279,083 |
Social and statutory obligations |
|
|
(308,312) |
|
(394,322) |
Tax and social security obligations |
|
|
119,215 |
|
(167,160) |
Retirement plans liabilities |
|
|
7,545,893 |
|
10,792,833 |
Other liabilities and other financial liabilities |
|
|
2,575,401 |
|
1,990,809 |
|
|
|
|
|
|
Cash from/(used in) operations |
|
|
4,416,060 |
|
750,894 |
|
|
|
|
|
|
Income tax paid |
|
|
(335,003) |
|
(351,932) |
Contingencies paid |
|
20 |
(2,642) |
|
(1,580) |
Interest paid |
|
|
(80,029) |
|
(109,226) |
Net cash flows (used in) from operating activities |
|
|
3,998,386 |
|
288,156 |
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
Acquisition of property and equipment |
|
12 |
(66,977) |
|
(33,528) |
Acquisition of intangible assets |
|
12 |
(182,796) |
|
(15,618) |
Cash acquired in business combination |
|
|
770,887 |
|
- |
Acquisition of subsidiaries, net of cash acquired |
|
|
- |
|
(35,183) |
Acquisition of associates and joint ventures |
|
11 |
- |
|
(209,562) |
Disposal of investments |
|
11 |
29,589 |
|
- |
Net cash flows used in investing activities |
|
|
550,703 |
|
(293,891) |
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
Acquisitions of borrowings |
|
30 |
1,252,828 |
|
- |
Acquisition of treasury shares |
|
18(c) |
(915,859) |
|
(509,115) |
Issuance of debt securities |
|
30 |
373,481 |
|
1,890,500 |
Payments of borrowings and lease liabilities |
|
30 |
(1,907,948) |
|
(75,982) |
Payment of debt securities in issue |
|
30 |
(38,619) |
|
(175,999) |
Dividends paid |
|
18 |
(1,577,622) |
|
- |
Transactions with non-controlling interests |
|
|
293 |
|
(160) |
Dividends paid to non-controlling interests |
|
|
(1,308) |
|
(1,712) |
Net cash flows from (used in) financing activities |
|
|
(2,814,754) |
|
1,127,532 |
|
|
|
|
|
|
Net increase in cash and cash equivalents |
|
|
1,734,335 |
|
1,121,797 |
Cash and cash equivalents at the beginning of the period |
|
|
4,967,480 |
|
3,751,861 |
Effects of exchange rate changes on cash and cash equivalents |
|
|
(12,304) |
|
28,368 |
Cash and cash equivalents at the end of the period |
|
|
6,689,511 |
|
4,902,026 |
Cash |
|
|
3,821,699 |
|
2,601,041 |
Securities purchased under agreements to resell |
|
3 |
1,719,000 |
|
1,748,737 |
Bank deposit certificates |
|
4 |
207,813 |
|
250,248 |
Other deposits at Central Bank |
|
|
940,999 |
|
302,000 |
The accompanying notes are an integral part of the unaudited
interim condensed consolidated financial statements.
XP Inc. and its subsidiaries Notes to unaudited interim condensed consolidated financial statements As of September 30, 2023 In thousands of Brazilian Reais, unless otherwise stated | |
XP Inc. (the “Company”) is a Cayman
Island exempted company with limited liability, incorporated on August 29, 2019. The registered office of the Company is 20, Genesis Close,
in George Town, Grand Cayman.
XP Inc. is currently the entity which is registered
with the U.S. Securities and Exchange Commission (“SEC”). The common shares are trading on the Nasdaq Global Select Market
(“NASDAQ-GS”) under the symbol “XP”.
XP Inc. is a holding company controlled by XP Control
LLC, which holds 66.60% of voting rights and is controlled by a group of individuals.
XP Inc. and its subsidiaries (collectively, “Group”
or “XP Group”) is a leading, technology-driven financial services platform and a trusted provider of low-fee financial
products and services in Brazil. XP Group are principally engaged in providing its customers, represented by individuals and legal entities
in Brazil and abroad, various financial products, services, digital content and financial advisory services, mainly acting as broker-dealer,
including securities brokerage, private pension plans, commercial and investment banking products such as loan operations, transactions
in the foreign exchange markets and deposits, through our brands that reach clients directly and through network of Independent Financial
Advisers (“IFAs”).
These unaudited interim condensed consolidated
financial statements as of September 30, 2023, were approved by the Board of Director’s meeting on November 13, 2023.
| 1.1 | Share buy-back program |
In May 2022, the Board of Directors approved a
share buy-back program. Under the program, XP may repurchase up to the amount in dollars equivalent to R$1.0 billion of its outstanding
Class A common shares over a period beginning on May 12, 2022, continuing until the earlier of the completion of the repurchase or May
12, 2023, depending upon market conditions.
On November 4, 2022, the Board of Directors approved
an amendment to the share buy-back program. Under the amended program, XP Inc may repurchase up to the amount in dollars equivalent to R$2.0
billion of its outstanding Class A common shares (therefore, an increase of the maximum amount of R$1.0 billion compared to the original
program). The program period has not been amended, continuing until the earlier of the completion of the repurchase or May 12,
2023, depending upon market conditions.
The repurchase limit of R$2.0 billion has been
reached on March 31, 2023, and, therefore, the share buy-back program has terminated. At the end of the share buy-back program, the company
repurchased 25,037,192 shares (equivalent to R$ 2,059 million or US$ 394 million), which were acquired at an average price of US$ 15.76
per share, with prices ranging from US$ 10.69 to US$ 24.85.
| 1.2 | Share purchase agreement with Itaú |
On June 8, 2022, XP signed a share purchase agreement
with Itaú Unibanco. Under this agreement, XP purchased 1,056,308 outstanding Class B common shares from Itaú Unibanco, equivalent
to approximately US$24 million (R$ 117 million), or US$22.65 per share – the same price for which Itaú Unibanco sold 6,783,939
Class A shares on June 7, 2022, to third parties. These shares are held in treasury.
On November 10, 2022, XP signed a share purchase
agreement with Itaúsa S.A. Under this agreement, XP purchased 5,500,000 outstanding Class A common shares from Itaúsa S.A.,
equivalent to approximately U$105 million (R$ 562 million), or U$19.10 per share (R$ 102.14 per share). XP utilized its existing cash
to fund this share repurchase.
Those transactions are not part of the share buy-back
program (Note 1.1) announced by XP on May 11, 2022.
| 1.3 | Cancellation of treasury shares |
On April 5, 2023, the Company’s Board of
Directors approved the cancellation of 31,267,095 Class A shares (5.6% of total issued shares, on this date) held by the Company in treasury.
Total issued shares count, on April 5, 2023, went from 560,534,012 to 529,266,917 after cancellation.
| 1.4 | Termination of shareholders agreement between XP Control LLC, General Atlantic (XP) Bermuda, Iupar
Group, ITB Holding Ltd. and Itaú Unibanco Holding S.A. |
On July 10, 2023, XP Inc. announced the termination
of its shareholders agreement executed between XP Control LLC, General Atlantic (XP) Bermuda, Iupar Group, ITB Holding Ltd. and Itaú
Unibanco Holding S.A. originally expected to continue until October 2026. As the main result of the termination, Iupar Group will no longer
have the right to nominate members to XP Inc’s board of directors, which was reduced from 11 to 9 members.
XP Inc. and its subsidiaries Notes to unaudited interim condensed consolidated financial statements As of September 30, 2023 In thousands of Brazilian Reais, unless otherwise stated | |
| 1.5 | Corporate reorganization |
In order to improve corporate structure, Group's
capital and cash management, XP Inc is conducting entity reorganizations, as follows:
i) Inversion of
financial institutions in Brazil. At the end of the reorganization XP CCTVM will become a wholly owned subsidiary of Banco XP. As of September
30, 2023, the transaction is still subject to approval by the Central Bank of Brazil.
ii) Reorganization
of international operations. The entities XP Holding US and XP Holding UK, which are no longer wholly owned subsidiaries of XP Investimentos
S.A. and are now directly owned by XP Inc. The transaction was completed on October 20, 2023.
No material impacts
on Group’s financial position and results of operations are expected due to the previously described corporate reorganization.
| 2. | Basis of preparation and changes to the Group’s accounting policies |
The unaudited interim condensed consolidated balance
sheet as of September 30, 2023, and the unaudited interim condensed consolidated statements of income and comprehensive income, changes
in equity and cash flow for the nine months period ended September, 2023 and 2022 (the “financial statements”) have been prepared
in accordance with IAS 34 Interim Financial Reporting as issued by the International Accounting Standards Board (“IASB”).
The unaudited interim condensed consolidated financial
statements have been prepared on a historical cost basis, except for financial instruments that have been measured at fair value.
The unaudited interim condensed consolidated financial
statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction
with the Group’s annual consolidated financial statements as of December 31, 2022. The list of notes that were not presented in
this unaudited interim condensed is described below:
Note to financial statements of
December 31, 2022
|
Description |
3. |
Summary of significant accounting policies |
4. |
Significant accounting judgements, estimates and assumptions |
5. |
Group structure |
11. |
Accounts receivable |
12. |
Recoverable taxes |
21. |
Social and Statutory obligations |
22. |
Tax and social security obligations |
26. (a) |
Key-person management compensation |
The accounting policies adopted are consistent
with those of the previous financial year and corresponding interim reporting period, except for the new accounting policies adopted for
the current interim reporting period, see Note 2 (b).
The unaudited interim condensed consolidated financial
statements are presented in Brazilian reais (“R$”), which is the Group’s presentation currency and all amounts disclosed
in the financial statements and notes have been rounded off to the nearest thousand currency units unless otherwise stated.
| b) | New standards, interpretations and amendments adopted by the Group |
The accounting policies adopted in the preparation
of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group’s
annual consolidated financial statements for the year ended December 31, 2022. The Group has not early adopted any standard, interpretation
or amendment that has been issued but is not yet effective.
Those amendments or standards apply for the first
time in 2023, but do not have a material impact on the interim condensed consolidated financial statements of the Group:
IFRS 17 – Insurance Contracts: The group
evaluated the impacts of applying this standard and concluded that it is not material to its current operations.
XP Inc. and its subsidiaries Notes to unaudited interim condensed consolidated financial statements As of September 30, 2023 In thousands of Brazilian Reais, unless otherwise stated | |
Amendments to IAS 1 – Presentation of Financial
Statements: Requires that only information about material accounting policies are disclosed, eliminating disclosures of information that
duplicate or summarize IFRS requirements.
Amendments to IAS 8 - Accounting Policies, Changes
in Accounting Estimates and Errors – Includes the definition of accounting estimates: monetary amounts subject to uncertainties
in their measurement.
Amendments to IAS 12 – Income Taxes: Clarifies
that the exemption for accounting for deferred taxes arising from temporary differences generated in the initial recognition of assets
or liabilities is not applicable to lease operations.
There were no changes since December 31, 2022,
in the accounting practices adopted for consolidation of the Company’s direct and indirect interests in its subsidiaries for the
purposes of these unaudited interim condensed consolidated financial statements.
Subsidiaries are all entities (including structured
entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns
from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date
that control ceases.
The acquisition method of accounting is used to
account for business combinations by the Group.
Intercompany transactions, balances and unrealized
gains on transactions between Group companies are eliminated. Unrealized losses are also eliminated unless the transaction provides evidence
of an impairment of the transferred asset. Accounting policies of subsidiaries have been changed where necessary to ensure consistency
with the policies adopted by the Group.
Non-controlling interests in the results and equity
of subsidiaries are shown separately in the statement of income and of comprehensive income, statement of changes in equity and balance
sheet, respectively.
Associates are companies in which the investor
has a significant influence but does not hold control. Investments in these companies are initially recognized at cost of acquisition
and subsequently accounted for using the equity method. Investments in associates and joint ventures include the goodwill identified upon
acquisition, net of any cumulative impairment loss.
Under the equity method of accounting, the investments
are initially recognized at cost and adjusted thereafter to recognize the Group’s share of the post-acquisition profits or losses
of the investee in the Group’s income statement, and the Group’s share of movements in other comprehensive income of the investee
in the Group’s other comprehensive income. Dividends received or receivable from associates and joint ventures are recognized as
a reduction of the carrying amount of the investment.
Unrealized gains on transactions between the Group
and its associates and joint ventures are eliminated to the extent of the Group’s interest in these entities. Unrealized losses
are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of equity-accounted
investees have been changed where necessary to ensure consistency with the policies adopted by the Group.
If its interest in the associates and joint ventures
decreases, but the Group retains significant influence or joint control, only the proportional amount of the previously recognized amounts
in other comprehensive income is reclassified in income, when appropriate.
| (iii) | Interests in associates and joint ventures measured at fair value |
The Group has investments in associates measured
at fair value in accordance with item 18 of IAS 28 – Investments in Associates and Joint Ventures. These investments are held through
XP FIP Managers and XP FIP Endor, which are venture capital organizations. In determining whether the fund meets the definition of
a venture capital organization, management considers the investment portfolio features and objectives. The portfolio classified in
this category has the objective to generate growth in the value of its investments in the medium term and have an exit strategy. Additionally,
the performance of these portfolios is evaluated and managed considering a fair value basis of each investment.
XP Inc. and its subsidiaries Notes to unaudited interim condensed consolidated financial statements As of September 30, 2023 In thousands of Brazilian Reais, unless otherwise stated | |
| d) | Business combinations and other developments |
On February 25, 2022, we entered into a binding
agreement to acquire 100% of the total capital of Habitat Capital Partners Asset Management, a manager focused on real estate funds. The
asset was created with a focus on real estate operations outside the major Brazilian centers and with a strategy of monitoring the entire
process in-house, from securitization to control of collection processes. The closing occurred in May 2022, and the acquisition is not
considered material for XP Inc. interim consolidated financial statements. The total consideration R$65,353, which have been fully settled,
was composed of: i) R$52,416 paid in cash and ii) R$12,937 as a fair value of the contingent consideration. The purchase price was mostly
allocated to goodwill (R$ 60,037 – see Note 12), representing the value of expected synergies arising from the acquisition.
In addition, the Company incurred in direct costs
for the business combinations which were expensed as incurred.
(ii) BTR Benefícios
e Seguros
On August 15, 2022, the Group exercised its call
options over the equity of BTR Benefícios e Seguros (“BTR”) which allowed the Group to acquire up to 100% of the total
share of BTR Benefícios e Seguros. This acquisition allows the Group to further strengthen its operations on the Health and Benefits
front, with a focus on corporate customers. The management of health plans today is a priority topic on the corporate market agenda as
it represents, in Brazil, one of the largest costs to most companies. The closing occurred on October 3, 2022, and the total consideration
paid, in cash, was R$1,254. This acquisition is not considered material for XP Inc. consolidated financial statements.
(iii) Banco Modal S.A.
On January 6, 2022, XP Inc entered into a binding
agreement to acquire up to 100% of Banco Modal's total shares, in a non-cash equity exchange transaction.
The transaction was approved by Administrative
Council for Economic Defense (CADE) in July 2022 and by Brazilian Central Bank (BACEN) in June 2023. The closing occurred on July 1, 2023,
the date on which the Group obtained control of 704,200,000 issued shares of Banco Modal S.A. Under the terms of this transaction, on
the closing date, Banco Modal's former shareholders received 18,717,771 of newly issued XP Inc's BDRs at the price of R$ 112.05 per unit
of BDRs, paid in consideration for the acquisition of 100% of Banco Modal's shares. This quantity of BDRs reflects the initial consideration
of 19.5 million BDRs adjusted for the interest on equity amount of R$ 82,052, distributed by Banco Modal between the signing date of the
binding agreement and the closing date of the transaction.
On the settlement date with Banco Modal's former
shareholders, the transaction was recorded in accordance with Banco Modal's equity fair value as of July 1, 2023, with an allocation of
the purchase price between (i) the amount of fair value of the identifiable assets acquired and liabilities assumed and (ii) the goodwill
arising at this date, corresponding to the difference between the total consideration transferred and the fair value of identifiable assets
acquired and liabilities assumed. The total consideration transferred corresponds to the fair value of the 18,717,771 XP Inc BDR's at
the closing date for an amount of R$ 2,097,326. The goodwill is R$ 1,232,547 and is attributable to the workforce and the high profitability
of the acquired business.
The table below shows, on the closing date of the
transaction, the fair value attributed to each of the identified intangible assets not recorded in the acquiree's balance sheet, as well
as the fair value measurement method and their useful lives:
Identified assets at the acquisition date |
|
Amount |
|
Method |
|
Expected useful life |
Retail client portfolio |
|
169,828 |
|
Multi-Period Excess Earnings |
|
6 years, 11 months |
Institutional client portfolio |
|
51,629 |
|
Multi-Period Excess Earnings |
|
4 years, 6 months |
Core deposits |
|
134,273 |
|
With and Without |
|
9 years, 6 months |
Trademarks |
|
29,909 |
|
Relief-from-Royalty |
|
5 years |
Softwares |
|
4,311 |
|
Cost Approach |
|
5 years |
Total |
|
389,950 |
|
|
|
|
For the period from July 1, 2023 to September 30,
2023, Banco Modal contributed R$ 20,613 to XP Inc's net income and R$ 149,747 to XP Inc's net revenues. If the acquisition date was on
the beginning of the reporting period, XP Inc's combined net income and revenue for the nine months period ended September 30, 2023, would
be R$ 2,555,445 and R$ 10,842,304, respectively.
XP Inc. and its subsidiaries Notes to unaudited interim condensed consolidated financial statements As of September 30, 2023 In thousands of Brazilian Reais, unless otherwise stated | |
The table below shows the fair value of the net
assets acquired and the preliminary allocation of the purchase price consideration (including goodwill arising on the acquisition), as
well as the impacts on the Group's cash flows:
Fair value of net assets acquired |
July 1, 2023 |
Assets |
|
Cash and cash equivalents |
770,887 |
Financial assets |
4,295,122 |
Investments in associates and joint ventures |
765 |
Property and equipment |
39,532 |
Intangible assets |
67,663 |
Other assets |
751,682 |
Total assets |
5,925,651 |
|
|
Liabilities |
|
Financial liabilities |
4,667,146 |
Other liabilities |
783,675 |
Total liabilities |
5,450,822 |
Net assets at fair value |
474,829 |
|
|
Identified assets |
|
Client portfolios |
221,457 |
Core deposits |
134,273 |
Trademarks |
29,909 |
Software |
4,311 |
Total identified assets |
864,779 |
|
|
Preliminary goodwill |
|
Purchase consideration transferred |
2,097,326 |
(Less) fair value of identified assets |
(864,779) |
Goodwill |
1,232,547 |
|
|
Analysis of cash flow on acquisition |
|
Net cash acquired with the subsidiary |
770,887 |
Issuance of shares – XP Inc (non-cash) |
- |
Net of cash flow on acquisition (investing activities) |
770,887 |
(i) SPAC Transactions
On April 25, 2022, XPAC Acquisition Corp., a special
purpose acquisition company sponsored by the Group (“XPAC”), entered into a business combination agreement with SuperBac,
a Brazilian biotechnology company.
On May 2, 2023, SuperBac informed XPAC that it
had decided to terminate the Business Combination Agreement, due to adverse market conditions, among other factors. Following the termination
of the proposed business combination with SuperBac, the board of directors of XPAC determined that it is in the best interests of XPAC
and its shareholders to accelerate the liquidation date of XPAC.
Following the announcement about the termination
of the Business Combination Agreement and the intention of early liquidation, XPAC’s management was approached by professional investors
interested in acquiring and taking control of XPAC. On July 10, 2023, XPAC Acquisition Corp. entered into a Purchase and Sponsor Handover
Agreement. Pursuant to the agreement, XPAC Sponsor LLC transferred control of XPAC Acquisition Corp., by selling 4,400,283 Class B ordinary
shares and 4,261,485 private placement warrants to acquire 4,261,485 Class A ordinary shares of XPAC held by the Sponsor, for a total
purchase price of $250. As a condition to the consummation of the Sponsor Handover, new members of XPAC’s board of directors and
a new management team for XPAC were appointed by the existing Board, and the existing Board members and the existing management team have
resigned. Furthermore, the name of XPAC Acquisition Corp. was changed to Zalatoris II Acquisition Corp.
The Purchase and Sponsor Handover Agreement was
approved by the XPAC’s shareholders at an extraordinary general meeting of shareholders on July 27, 2023, the date on which the
Group ceases to control XPAC.
XP Inc. and its subsidiaries Notes to unaudited interim condensed consolidated financial statements As of September 30, 2023 In thousands of Brazilian Reais, unless otherwise stated | |
| (ii) | Termination of XTAGE client operations |
On October 18, 2023, XP Inc announced the termination
of XTAGE's operations, which is scheduled to take place on December 15, 2023. XTAGE's operations are not considered material to the Group.
After termination, XP Inc's customers can continue to have exposure to digital assets through funds (including Exchange-traded Funds,
ETFs) regulated by the Brazilian securities commission (CVM).
In reviewing the operational performance of the
Group and allocating resources, the chief operating decision maker of the Group (“CODM”), who is the Group’s Chief Executive
Officer (“CEO”) and the Board of Directors (“BoD”), represented by statutory directors holders of ordinary shares
of the immediate parent of the Company, reviews selected items of the statement of income and of comprehensive income.
The CODM considers the whole Group as a single
operating and reportable segment, monitoring operations, making decisions on fund allocation and evaluating performance based on a single
operating segment. The CODM reviews relevant financial data on a combined basis for all subsidiaries and joint ventures. Disaggregated
information is only reviewed at the revenue level (Note 21), with no corresponding detail at any margin or profitability levels.
The Group’s revenue, results and assets for
this one reportable segment can be determined by reference to the unaudited interim condensed consolidated statements of income and of
comprehensive income and unaudited interim condensed consolidated balance sheet.
See Note 21 (c) for a breakdown of total revenue
and income and selected assets by geographic location.
The preparation of unaudited interim condensed
consolidated financial statements of the Group requires management to make judgments and estimates and to adopt assumptions that affect
the amounts presented referring to revenues, expenses, assets and liabilities at the reporting date. Actual results may differ from these
estimates.
In preparing these unaudited interim condensed
consolidated financial statements, the significant judgements and estimates made by management in applying the Group’s accounting
policies and the key sources of estimation uncertainty were the same as those that are set in the consolidated financial statements for
the year ended December 31, 2022.
| 3. | Securities purchased (sold) under resale (repurchase) agreements |
a) Securities
purchased under resale agreements
|
September 30, 2023 |
|
December 31, 2022 |
Collateral held |
1,941,284 |
|
834,975 |
National Treasury Notes (NTNs) (i) |
1,418,174 |
|
645,188 |
Financial Treasury Bills (LFTs) (i) |
43,456 |
|
- |
Debentures (ii) |
114,145 |
|
84,065 |
Real Estate Receivable Certificates (CRI) (ii) |
202,421 |
|
82,633 |
Other |
163,088 |
|
23,089 |
|
|
|
|
Collateral repledged |
10,313,956 |
|
6,771,526 |
National Treasury Bills (LTNs) (i) |
- |
|
227,713 |
National Treasury Notes (NTNs) (i) |
2,672,346 |
|
2,842,159 |
Financial Treasury Bills (LFTs) (i) |
1,500,214 |
|
- |
Debentures (ii) |
2,637,732 |
|
929,346 |
Real Estate Receivable Certificates (CRIs) (ii) |
2,516,420 |
|
2,019,639 |
Agribusiness Receivables Certificates (CRAs) (ii) |
133,476 |
|
101,091 |
Agribusiness Credit Bill (LCAs) (ii) |
- |
|
171,730 |
Interbank Deposits Certificates (CDIs) (ii) |
344,742 |
|
- |
Other |
509,026 |
|
479,848 |
|
|
|
|
Expected Credit Loss (iii) |
(3,254) |
|
(2,681) |
|
|
|
|
Total |
12,251,986 |
|
7,603,820 |
XP Inc. and its subsidiaries Notes to unaudited interim condensed consolidated financial statements As of September 30, 2023 In thousands of Brazilian Reais, unless otherwise stated | |
(i) Investments in purchase and sale commitments
collateral-backed by sovereign debt securities refer to transactions involving the purchase of sovereign debt securities with a commitment
to sale originated mainly in the subsidiaries XP CCTVM, Banco XP and in exclusive funds.
(ii) Refers to corporate debt assets, which are
low-risk investments collateral-backed.
(iii) The reconciliation of gross carrying amount
and the expected credit loss segregated by stages are presented in the Note 10.
As of September 30, 2023, securities purchased
under resale agreements were carried out at average interest rates of 11.76% p.a. (13.65% p.a. as of December 31, 2022).
As of September 30, 2023, the amount of R$ 1,719,000
(December 31, 2022 - R$ 646,478), from the total amount of collateral held portfolio, is being presented as cash equivalents in the statements
of cash flows.
| b) | Securities sold under repurchase agreements |
|
September 30,
2023
|
|
December 31,
2022
|
National Treasury Bills (LTNs) |
3,186,421 |
|
8,569,145 |
National Treasury Notes (NTNs) |
19,820,683 |
|
12,347,218 |
Financial Treasury Bills (LFTs) |
1,889,299 |
|
533,509 |
Debentures |
4,543,392 |
|
1,831,846 |
Real Estate Receivables Certificates (CRIs) |
8,662,411 |
|
6,471,410 |
Financial Credit Bills (LFs) |
708,211 |
|
1,111,890 |
Agribusiness Receivables Certificates (CRAs) |
706,674 |
|
925,073 |
Total |
39,517,091 |
|
31,790,091 |
|
|
|
|
As of September 30, 2023, securities sold under
repurchase agreements were agreed with average interest rates of 12.98% p.a. (December 31, 2022 – 13.65% p.a.), with assets pledged
as collateral.
XP Inc. and its subsidiaries Notes to unaudited interim condensed consolidated financial statements As of September 30, 2023 In thousands of Brazilian Reais, unless otherwise stated | |
| a) | Securities classified at fair value through profit and loss are presented in the following table: |
|
|
|
|
|
|
|
September
30, 2023 |
|
|
|
|
|
|
|
December 31, 2022 |
|
Gross carrying amount |
|
Fair
value |
|
Group portfolio |
|
Retirement plan assets (i) |
|
Gross carrying amount |
|
Fair
value
|
|
Group portfolio |
|
Retirement plan assets (i) |
Financial assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At fair value through profit or loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available portfolio |
100,993,988 |
|
101,038,694 |
|
47,851,968 |
|
53,186,726 |
|
86,273,732 |
|
86,336,920 |
|
40,648,295 |
|
45,688,625 |
Brazilian onshore sovereign bonds |
34,400,337 |
|
34,549,725 |
|
32,431,057 |
|
2,118,668 |
|
25,262,407 |
|
25,127,998 |
|
22,799,302 |
|
2,328,696 |
Investment funds |
52,046,550 |
|
52,046,549 |
|
2,164,190 |
|
49,882,359 |
|
42,274,069 |
|
42,274,069 |
|
2,389,131 |
|
39,884,938 |
Stocks issued by public-held company |
4,489,126 |
|
4,489,126 |
|
4,141,437 |
|
347,689 |
|
5,494,957 |
|
5,494,957 |
|
5,155,761 |
|
339,196 |
Debentures |
2,790,291 |
|
2,637,028 |
|
2,205,113 |
|
431,915 |
|
5,013,524 |
|
4,990,882 |
|
2,768,843 |
|
2,222,039 |
Structured notes |
120,336 |
|
154,067 |
|
154,067 |
|
- |
|
243,790 |
|
285,560 |
|
285,560 |
|
- |
Bank deposit certificates (ii) |
639,183 |
|
627,310 |
|
627,310 |
|
- |
|
525,778 |
|
541,294 |
|
523,859 |
|
17,435 |
Agribusiness receivables certificates |
725,809 |
|
716,452 |
|
716,452 |
|
- |
|
1,998,287 |
|
1,984,686 |
|
1,964,977 |
|
19,709 |
Real estate receivables certificates |
1,719,301 |
|
1,707,372 |
|
1,707,372 |
|
- |
|
1,799,625 |
|
1,803,111 |
|
1,800,671 |
|
2,440 |
Financial credit bills |
408,877 |
|
446,821 |
|
40,726 |
|
406,095 |
|
663,589 |
|
738,028 |
|
16,981 |
|
721,047 |
Real estate credit bill |
154,257 |
|
154,580 |
|
154,580 |
|
- |
|
2,299,236 |
|
2,302,124 |
|
2,302,124 |
|
- |
Agribusiness credit bills |
389,479 |
|
384,077 |
|
384,077 |
|
- |
|
254,300 |
|
256,129 |
|
256,129 |
|
- |
Commercial notes |
805,219 |
|
857,162 |
|
857,162 |
|
- |
|
334,568 |
|
348,025 |
|
292,705 |
|
55,320 |
Others (iv) |
2,305,223 |
|
2,268,425 |
|
2,268,425 |
|
- |
|
698,470 |
|
794,211 |
|
641,086 |
|
153,125 |
Investments held in trust accounts |
- |
|
- |
|
- |
|
- |
|
1,176,084 |
|
1,176,084 |
|
1,176,084 |
|
- |
US government bonds (iii) |
- |
|
- |
|
- |
|
- |
|
1,176,084 |
|
1,176,084 |
|
1,176,084 |
|
- |
Total |
100,993,988 |
|
101,038,694 |
|
47,851,968 |
|
53,186,726 |
|
87,449,816 |
|
87,513,004 |
|
41,824,379 |
|
45,688,625 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (i) | Those financial products represent investment contracts that
have the legal form of retirement plans, which do not transfer substantial insurance risk to the Group. Therefore, contributions received
from participants are accounted for as liabilities and an asset of the participant in the linked Specially Constituted Investment Fund
(“FIE”). Besides assets which are presented segregated above, as retirement plan assets, the Group has proprietary assets
to guarantee the solvency of our insurance and pension plan operations, under the terms of CNSP Resolution No. 432/2021, presented as
Group portfolio, within investment funds line. As of September 30, 2023, those assets represent R$ 193,501 (December 31, 2022 - R$183,732). |
| (ii) | Bank deposit certificates include R$ 207,813 (December 31, 2022 – R$252,877) presented as cash equivalents
in the statements of cash flows. |
| (iii) | Related to investments received through IPO transactions derived by XPAC Acquisition Corp. These funds
are restricted for use and may only be used for purposes of completing an initial business combination or redemption of public shares
as set forth in XPAC Acquisition Corp. trust agreement. See note 2 (d)(b)(i). |
| (iv) | Mainly related to bonds issued and traded overseas and other securities. |
XP Inc. and its subsidiaries Notes to unaudited interim condensed consolidated financial statements As of September 30, 2023 In thousands of Brazilian Reais, unless otherwise stated | |
Securities at fair value through other comprehensive income are presented
in the following table:
|
September 30,
2023
|
|
December 31,
2022
|
|
Gross carrying amount |
|
Fair
value
|
|
Gross carrying amount |
|
Fair
value
|
Financial assets |
|
|
|
|
|
|
|
At fair value through other comprehensive income |
|
|
|
|
|
|
|
Brazilian onshore sovereign bonds |
35,974,645 |
|
35,821,669 |
|
33,532,740 |
|
32,931,403 |
Brazilian offshore sovereign bonds |
- |
|
- |
|
1,379,129 |
|
1,321,258 |
Foreign sovereign bonds |
2,627,473 |
|
2,664,503 |
|
- |
|
- |
Corporate bonds |
- |
|
- |
|
238,730 |
|
226,007 |
Total |
38,602,118 |
|
38,486,172 |
|
35,150,599 |
|
34,478,668 |
| b) | Securities evaluated at amortized cost are presented in the following table: |
|
September 30,
2023
|
|
December 31,
2022
|
|
Gross carrying amount |
|
Book
value
|
|
Gross carrying amount |
|
Book
value
|
Financial assets |
|
|
|
|
|
|
|
At amortized cost (i) |
|
|
|
|
|
|
|
Brazilian onshore sovereign bonds |
3,662,935 |
|
3,659,176 |
|
5,835,971 |
|
5,834,628 |
Foreign sovereign bonds |
- |
|
- |
|
1,743,688 |
|
1,742,311 |
Rural product note |
610,626 |
|
610,384 |
|
507,131 |
|
506,927 |
Commercial notes |
1,906,410 |
|
1,905,413 |
|
1,188,237 |
|
1,188,237 |
Total |
6,179,971 |
|
6,174,973 |
|
9,275,027 |
|
9,272,103 |
(i) Includes expected credit losses in the amount
of R$ 4,998 (December 31, 2022 – R$2,924). The reconciliation of gross carrying amount and the expected credit loss segregated by
stages are presented in the Note 10.
| c) | Securities on the financial liabilities classified at fair value through profit or loss are presented
in the following table: |
|
September 30,
2023 |
|
December 31,
2022
|
|
Gross carrying amount |
|
Fair
value
|
|
Gross carrying amount |
|
Fair
value
|
Financial liabilities |
|
|
|
|
|
|
|
At fair value through profit or loss |
|
|
|
|
|
|
|
Securities |
13,886,608 |
|
13,886,608 |
|
13,048,246 |
|
13,048,246 |
| d) | Debentures designated at fair value through profit or loss are presented in the following table: |
On May 6, 2021, XP Investimentos, issued non-convertible
Debentures, in the aggregate amount of R$ 500,018, with the objective of funding the Group’s working capital for the construction
of “Vila XP” at São Roque, State of São Paulo and designated this instrument as fair value through profit or
loss in order to align it with the Group’s risk management and investment strategy. The principal amount is due on April 10, 2036.
The accrued interest is payable every month from the issuance date and is calculated based on the IPCA (Brazilian inflation index) plus
5% p.a.
|
September 30,
2023
|
|
December 31,
2022
|
|
Gross carrying amount |
|
Fair
value
|
|
Gross carrying amount |
|
Fair
Value
|
Financial liabilities |
|
|
|
|
|
|
|
At fair value through profit or loss |
|
|
|
|
|
|
|
Debentures |
589,383 |
|
455,874 |
|
567,838 |
|
481,019 |
XP Inc. and its subsidiaries Notes to unaudited interim condensed consolidated financial statements As of September 30, 2023 In thousands of Brazilian Reais, unless otherwise stated | |
Unrealized gains/(losses) due to own credit risk
for liabilities for which the fair value option has been elected are recorded in other comprehensive income. Gain/(losses) due to own
credit risk were not material for the nine months period ended September 30, 2023, and 2022.
Determination of own credit risk for items for
which the fair value option was elected
The debenture’s own credit risk is calculated
as the difference between its yield and its benchmark rate for similar Brazilian federal securities.
e.1) Difference between aggregate fair value and
aggregate remaining contractual principal balance outstanding
The following table reflects the difference between
the aggregate fair value and the aggregate remaining contractual principal balance outstanding as of September 30, 2023, for instruments
for which the fair value option has been elected.
|
|
|
|
|
|
September 30, 2023 |
|
|
Contractual principal outstanding |
|
Fair value |
|
Fair value/(under) contractual principal outstanding |
Long-term debt |
|
|
|
|
|
|
Debentures |
|
589,383 |
|
455,874 |
|
(133,509) |
| e) | Securities classified by maturity: |
|
|
|
Assets |
|
|
|
Liabilities |
|
September 30,
2023
|
|
December 31,
2022
|
|
September 30,
2023
|
|
December 31,
2022 |
|
|
|
|
|
|
|
|
Financial assets |
|
|
|
|
|
|
|
At fair value through PL and at OCI |
|
|
|
|
|
|
|
Current |
96,276,364 |
|
73,569,049 |
|
13,886,607 |
|
13,048,246 |
Non-stated maturity |
56,267,523 |
|
49,001,359 |
|
13,886,607 |
|
13,048,246 |
Up to 3 months |
29,573,326 |
|
18,739,708 |
|
- |
|
- |
From 4 to 12 months |
10,435,515 |
|
5,827,982 |
|
- |
|
- |
|
|
|
|
|
|
|
|
Non-current |
43,248,502 |
|
48,422,623 |
|
455,875 |
|
481,019 |
After one year |
43,248,502 |
|
48,422,623 |
|
455,875 |
|
481,019 |
|
|
|
|
|
|
|
|
Evaluated at amortized cost |
|
|
|
|
|
|
|
Current |
3,819,854 |
|
7,952,328 |
|
- |
|
- |
Up to 3 months |
9,855 |
|
3,327,313 |
|
- |
|
- |
From 4 to 12 months |
3,809,999 |
|
4,625,015 |
|
- |
|
- |
|
|
|
|
|
|
|
|
Non-current |
2,355,119 |
|
1,319,775 |
|
- |
|
- |
After one year |
2,355,119 |
|
1,319,775 |
|
- |
|
- |
|
|
|
|
|
|
|
|
Total |
145,699,839 |
|
131,263,775 |
|
14,342,482 |
|
13,529,265 |
The reconciliation of expected loss to financial
assets at amortized cost – securities segregated by stages is demonstrated in Note 10.
| 5. | Derivative financial instruments |
The Group trades derivative financial instruments
with various counterparties to manage its overall exposures (interest rate, foreign currency and fair value of financial instruments)
and to assist its customers in managing their own exposures.
Below is the composition of the derivative financial instruments portfolio
(assets and liabilities) by type of instrument, stated fair value and by maturity:
XP Inc. and its subsidiaries Notes to unaudited interim condensed consolidated financial statements As of September 30, 2023 In thousands of Brazilian Reais, unless otherwise stated | |
|
September 30,
2023
|
|
Notional |
|
Fair
Value |
|
% |
|
Up to 3
months
|
|
From 4 to
12 months |
|
Above
12 months
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
Options |
2,263,704,106 |
|
7,013,848 |
|
89 |
|
1,616,676 |
|
2,759,120 |
|
2,638,052 |
Swap contracts |
222,234,131 |
|
3,433,806 |
|
9 |
|
400,195 |
|
276,974 |
|
2,756,637 |
Forward contracts |
51,978,867 |
|
8,750,850 |
|
2 |
|
7,233,271 |
|
212,686 |
|
1,304,893 |
Future contracts |
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
Options |
2,205,051,357 |
|
8,738,756 |
|
86 |
|
723,594 |
|
2,653,937 |
|
5,361,225 |
Swap contracts |
225,013,220 |
|
2,315,402 |
|
9 |
|
370,702 |
|
1,335,943 |
|
608,757 |
Forward contracts |
103,833,614 |
|
7,447,278 |
|
4 |
|
7,015,096 |
|
212,581 |
|
219,601 |
Future contracts |
17,605,614 |
|
44,159 |
|
1 |
|
29,167 |
|
3,017 |
|
11,975 |
Total |
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2022
|
|
Notional |
|
Fair Value |
|
% |
|
Up to 3
months
|
|
From 4 to
12 months
|
|
Above
12 months
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
Options |
1,253,758,408 |
|
5,542,340 |
|
94 |
|
1,209,290 |
|
1,931,618 |
|
2,401,432 |
Swap contracts |
32,705,136 |
|
2,828,613 |
|
2 |
|
62,729 |
|
350,012 |
|
2,415,872 |
Forward contracts |
16,058,162 |
|
549,953 |
|
1 |
|
352,796 |
|
132,119 |
|
65,038 |
Future contracts |
34,679,065 |
|
296,249 |
|
3 |
|
73,621 |
|
222,628 |
|
- |
Total |
1,337,200,771 |
|
9,217,155 |
|
100 |
|
1,698,436 |
|
2,636,377 |
|
4,882,342 |
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
Options |
852,098,826 |
|
7,086,946 |
|
84 |
|
1,387,988 |
|
1,781,457 |
|
3,917,501 |
Swap contracts |
13,755,838 |
|
839,421 |
|
1 |
|
44,526 |
|
261,669 |
|
533,226 |
Forward contracts |
13,548,954 |
|
511,167 |
|
1 |
|
150,119 |
|
224,932 |
|
136,116 |
Future contracts |
140,039,765 |
|
161,574 |
|
14 |
|
53,421 |
|
72,349 |
|
35,804 |
Others (i) |
84,184 |
|
6,301
|
|
-
|
|
6,301
|
|
-
|
|
-
|
Total |
1,019,527,567 |
|
8,605,409 |
|
100 |
|
1,642,355 |
|
2,340,407 |
|
4,622,647 |
| (i) | Related to Public Warrants and Private placement Warrants liabilities issued by XPAC Acquisition Corp. See note 2 (d)(b)(i). |
The Group has three types of hedge relationships:
hedge of net investment in foreign operations; fair value hedge and cash flow hedge. For hedge accounting purposes, the risk factors measured
by the Group are:
| · | Interest
Rate: Risk of volatility in transactions subject to interest rate variations; |
| · | Currency:
Risk of volatility in transactions subject to foreign exchange variations; |
| · | Stock
Grant Charges: Risk of volatility in XP Inc stock prices, listed on NASDAQ. |
The structure of risk limits is extended to the
risk factor level, where specific limits aim at improving the monitoring and understanding processes, as well as avoiding concentration
of these risks.
The structures designed for interest rate and exchange
rate categories take into account total risk when there are compatible hedging instruments. In certain cases, management may decide to
hedge a risk for the risk factor term and limit of the hedging instrument.
XP Inc. and its subsidiaries Notes to unaudited interim condensed consolidated financial statements As of September 30, 2023 In thousands of Brazilian Reais, unless otherwise stated | |
a)
Hedge of net investment in foreign operations
The objective of the Group was to hedge the risk
generated by the US$ variation from investments in our subsidiaries in the United States, XP Holdings International and XP Advisors Inc.
The Group has entered into forward contracts to protect against changes in future cash flows and exchange rate variation of net investments
in foreign operations known as Non-Deliverable Forward (“NDF”) contracts.
The Group undertakes risk management through the economic relationship between hedge instruments and hedged items, in which it is expected
that these instruments will move in opposite directions, in the same proportions, with the aim of neutralizing the risk factors.
|
|
Hedged item |
|
Hedge instrument |
|
|
Book Value |
|
Variation in value recognized in Other comprehensive income |
|
Notional value |
|
Variation in the amounts used to calculate hedge ineffectiveness |
|
|
|
|
|
Strategies |
|
Assets |
|
Liabilities |
|
|
|
September 30, 2023 |
|
|
|
|
|
|
|
|
|
|
Foreign exchange risk |
|
|
|
|
|
|
|
|
|
|
Hedge of net investment in foreign operations |
|
472,870 |
|
- |
|
(20,139) |
|
467,849 |
|
22,242 |
Total |
|
472,870 |
|
- |
|
(20,139) |
|
467,849 |
|
22,242 |
|
|
|
|
|
|
|
|
|
|
|
December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
Foreign exchange risk |
|
|
|
|
|
|
|
|
|
|
Hedge of net investment in foreign operations |
|
395,564 |
|
- |
|
(17,281) |
|
414,043 |
|
18,480 |
Total |
|
395,564 |
|
- |
|
(17,281) |
|
414,043 |
|
18,480 |
The Group’s fair value strategy consists
of hedging the exposure to variation in fair value on the receipt, payment of interests and exchange variation on assets and liabilities.
The group applies fair value hedges as follows:
| · | Hedging
the exposure of fixed-income securities carried out through structured notes. The market risk hedge strategy involves avoiding temporary
fluctuations in earnings arising from changes in the interest rate market in Reais. Once this risk is offset, the Group seeks to index
the portfolio to the CDI, through the use of derivatives (DI1 Futuro). The hedge is contracted in order to neutralize the total exposure
to the market risk of the fixed-income funding portfolio, excluding the portion of the fixed-income compensation represented by the credit
spread of Banco XP S.A., seeking to obtain the closest match deadlines and volumes as possible. |
| · | Hedging
to protect the change in the fair value of the exchange and interest rate risk of the component of future cash flows arising from the
XP Inc bond issued (financial liability) recognized in the balance sheet of XP Inc in July 2021 by contracting derivatives. |
| · | Hedging
the exposure of fixed-income securities carried out through sovereign and corporate bonds issued in local or foreign currencies, mainly
US Dollars. The market risk hedge strategy involves avoiding temporary fluctuations in statements of income arising from changes in the
interest rate market. Once this risk is offset, the Group seeks to index the portfolio to the CDI, through the use of derivatives. |
The effects of hedge accounting on the financial
position and performance of the Group are presented below:
|
|
Hedged item |
|
Hedge instrument |
|
|
Book Value |
|
Variation in value recognized in income |
|
Notional value |
|
Variation in the amounts used to calculate hedge ineffectiveness |
|
|
|
|
|
Strategies |
|
Assets |
|
Liabilities |
|
|
|
September 30, 2023 |
|
|
|
|
|
|
|
|
|
|
Interest rate and foreign exchange risk |
|
|
|
|
|
|
|
|
|
|
Structured notes |
|
- |
|
14,755,798 |
|
(366,523) |
|
14,847,814 |
|
365,568 |
Issued bonds |
|
- |
|
3,556,685 |
|
116,754 |
|
3,411,023 |
|
(153,251) |
Fixed income bonds |
|
1,501,868 |
|
- |
|
81,378 |
|
1,509,832 |
|
(74,594) |
Total |
|
1,501,868 |
|
18,312,483 |
|
(168,391) |
|
19,768,669 |
|
137,723 |
XP Inc. and its subsidiaries Notes to unaudited interim condensed consolidated financial statements As of September 30, 2023 In thousands of Brazilian Reais, unless otherwise stated | |
|
|
Hedged item |
|
Hedge instrument |
|
|
Book Value |
|
Variation in value recognized in income |
|
Notional value |
|
Variation in the amounts used to calculate hedge ineffectiveness |
|
|
|
|
|
Strategies |
|
Assets |
|
Liabilities |
|
|
|
December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
Interest rate and foreign exchange risk |
|
|
|
|
|
|
|
|
|
|
Structured notes |
|
- |
|
10,648,559 |
|
726,798 |
|
10,663,672 |
|
(734,656) |
Issued bonds |
|
- |
|
3,889,699 |
|
323,881 |
|
3,646,613 |
|
(362,994) |
Fixed income bonds |
|
3,589,909 |
|
- |
|
(163,541) |
|
3,577,084 |
|
165,164 |
Total |
|
3,589,909 |
|
14,538,258 |
|
887,138 |
|
17,887,369 |
|
(932,486) |
In March 2022, XP Inc recorded a new hedge structure,
in order to neutralize the impacts of XP share price variation on highly probable labor tax payments related to share-based compensation
plans using SWAP-TRS contracts. The transaction has been elected for hedge accounting and classified as cash flow hedge in accordance
with IFRS 9. Labor tax payments are due upon delivery of shares to employees under share-based compensation plans and are directly related
to share price at that time.
The effects of hedge accounting on the financial
position and performance of the Group are presented below:
|
|
Hedged item |
|
Hedge instrument |
|
|
Book Value |
|
Variation in value recognized in Other comprehensive income |
|
Notional value |
|
Variation in the amounts used to calculate hedge ineffectiveness |
|
|
|
|
|
Strategies |
|
Assets |
|
Liabilities |
|
|
|
September 30, 2023 |
|
|
|
|
|
|
|
|
|
|
Market price risk |
|
|
|
|
|
|
|
|
|
|
Long term incentive plan taxes |
|
- |
|
444,083 |
|
(46,981) |
|
446,861 |
|
45,797 |
Total |
|
- |
|
444,083 |
|
(46,981) |
|
446,861 |
|
45,797 |
December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
Market price risk |
|
|
|
|
|
|
|
|
|
|
Long term incentive plan taxes |
|
- |
|
262,756 |
|
346,900 |
|
261,818 |
|
(348,248) |
Total |
|
- |
|
262,756 |
|
346,900 |
|
261,818 |
|
(348,248) |
The table below presents, for each strategy, the
nominal value and the adjustments to the fair value of the hedging instruments and the book value of the hedged object:
|
|
|
|
|
|
September 31, 2022 |
Hedge Instruments |
|
Notional amount |
Book value |
Variation in fair value used to calculate hedge ineffectiveness |
Hedge ineffectiveness recognized in income |
Assets |
Liabilities |
Interest rate risk |
|
|
|
|
|
|
Futures |
|
19,542,748 |
1,501,868 |
18,070,445 |
148,952 |
(26,752) |
Foreign exchange risk |
|
|
|
|
|
|
Futures |
|
693,769 |
472,870 |
242,038 |
11,013 |
(1,812) |
Market price risk |
|
|
|
|
|
|
Swaps |
|
446,861 |
- |
444,083 |
45,797 |
(1,184) |
|
|
|
|
|
|
|
XP Inc. and its subsidiaries Notes to unaudited interim condensed consolidated financial statements As of September 30, 2023 In thousands of Brazilian Reais, unless otherwise stated | |
|
|
|
|
|
|
December 31, 2022 |
|
|
Notional amount |
Book value |
Variation in fair value used to calculate hedge ineffectiveness |
Hedge ineffectiveness recognized in income |
Hedge Instruments |
|
Assets |
Liabilities |
Interest rate risk |
|
|
|
|
|
|
Futures |
|
17,604,185 |
3,589,909 |
14,218,543 |
(890,103) |
(41,295) |
Foreign exchange risk |
|
|
|
|
|
|
Futures |
|
697,227 |
395,594 |
319,715 |
(23,903) |
(2,825) |
Market price risk |
|
|
|
|
|
|
Swaps |
|
261,818 |
- |
262,756 |
(348,248) |
(1,348) |
The table below presents, for each strategy, the
notional amount and the fair value adjustments of hedge instruments and the book value of the hedged item:
|
|
September 30, 2023 |
|
December 31, 2022 |
Strategies |
|
Hedge instruments |
Hedged item |
|
Hedge instruments |
Hedged item |
|
Notional amount |
Fair value adjustments |
Book value |
|
Notional amount |
Fair value adjustments |
Book value |
Hedge of fair value |
|
19,768,669 |
137,723 |
(168,391) |
|
17,887,369 |
(932,486) |
887,138 |
Hedge of net investment in foreign operations |
|
467,849 |
22,242 |
(20,139) |
|
414,043 |
18,480 |
(17,252) |
Hedge of cash flow |
|
446,861 |
45,797 |
(46,981) |
|
261,818 |
(348,248) |
346,900 |
Total |
|
20,683,379 |
205,762 |
(235,511) |
|
18,563,230 |
(1,262,254) |
1,216,786 |
The table below shows the breakdown notional value
by maturity of the hedging strategies:
|
September 30,
2023
|
|
0-1 year |
1-2 years |
2-3 years |
3-4 years |
4-5 years |
5-10 years |
Over 10 years |
Total |
Hedge of fair value |
410,950 |
3,264,937 |
5,923,184 |
6,342,558 |
2,875,727 |
939,816 |
11,497 |
19,768,669 |
Hedge of net investment in foreign operations |
435,069 |
32,780 |
- |
- |
- |
- |
- |
467,849 |
Hedge of cash flow |
101,231 |
345,630 |
- |
- |
- |
- |
- |
446,861 |
Total |
947,250 |
3,643,347 |
5,923,184 |
6,342,558 |
2,875,727 |
939,816 |
11,497 |
20,683,379 |
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2022
|
|
0-1 year |
1-2 years |
2-3 years |
3-4 years |
4-5 years |
5-10 years |
Over 10 years |
Total |
Hedge of fair value |
229,368 |
707,421 |
2,773,333 |
5,913,477 |
5,930,291 |
2,333,479 |
- |
17,887,369 |
Hedge of net investment in foreign operations |
381,958 |
- |
32,085 |
- |
- |
- |
- |
414,043 |
Hedge of cash flow |
261,818 |
- |
- |
- |
- |
- |
- |
261,818 |
Total |
873,144 |
707,421 |
2,805,418 |
5,913,477 |
5,930,291 |
2,333,479 |
- |
18,563,230 |
XP Inc. and its subsidiaries Notes to unaudited interim condensed consolidated financial statements As of September 30, 2023 In thousands of Brazilian Reais, unless otherwise stated | |
Following is the breakdown of the carrying amount
of loan operations by class, sector of debtor, maturity and concentration:
Loans by type |
September 30,
2023
|
|
December 31, 2022 |
|
Pledged asset loan |
23,577,597 |
|
20,198,764 |
|
Retail |
12,171,132 |
|
10,932,086 |
|
Companies |
6,762,345 |
|
5,311,675 |
|
Credit card |
4,644,120 |
|
3,955,003 |
|
Non-pledged loan |
3,324,673 |
|
2,061,774 |
|
Retail |
408,552 |
|
309,468 |
|
Companies |
721,931 |
|
546,678 |
|
Credit card |
2,194,190 |
|
1,205,628 |
|
Total loans operations |
26,902,270 |
|
22,260,538 |
|
Expected Credit Loss (Note 10) |
(256,783) |
|
(49,377) |
|
Total loans operations, net of Expected Loss |
26,645,487 |
|
22,211,161 |
|
|
|
|
|
|
By maturity |
September 30,
2023
|
|
December 31, 2022 |
|
Overdue by 1 day or more |
218,829 |
|
69,855 |
|
Due in 3 months or less |
6,385,085 |
|
2,427,127 |
|
Due after 3 months through 12 months |
4,152,477 |
|
7,211,321 |
|
Due after 12 months |
16,145,879 |
|
12,552,235 |
|
Total loans operations |
26,902,270 |
|
22,260,538 |
|
By concentration |
|
|
September 30,
2023
|
|
December 31, 2022 |
|
Largest debtor |
828,918 |
|
814,284 |
|
10 largest debtors |
3,176,489 |
|
2,458,714 |
|
20 largest debtors |
4,361,443 |
|
3,241,494 |
|
50 largest debtors |
5,985,340 |
|
4,484,877 |
|
100 largest debtors |
7,463,939 |
|
5,615,708 |
|
XP Inc offers loan products through Banco XP to its customers. The majority of the loan products offered are collateralized by customers’
investments on XP platform and credit products strictly related to investments in structured notes, in which the borrower is able to operate
leveraged, retaining the structured note itself as guarantee for the loan.
The reconciliation of loans operations according
with IFRS 9 is demonstrated in Note 10.
|
September 30,
2023
|
|
December 31, 2022 |
Commissions and premiums paid in advance (a) |
4,032,782 |
|
3,863,986 |
Marketing expenses |
22,310 |
|
16,893 |
Services paid in advance |
56,526 |
|
48,775 |
Other expenses paid in advance |
289,190 |
|
310,453 |
Total |
4,400,808 |
|
4,240,107 |
|
|
|
|
Current |
875,001 |
|
789,609 |
Non-current |
3,525,807 |
|
3,450,498 |
(a) Mostly comprised by long term investment programs
implemented by XP CCTVM through its network of IFAs. These commissions and premiums paid are recognized at the signing date of each contract
and are amortized in the statement of income of the Company, linearly, according to the investment term period.
XP Inc. and its subsidiaries Notes to unaudited interim condensed consolidated financial statements As of September 30, 2023 In thousands of Brazilian Reais, unless otherwise stated | |
| 9. | Securities trading and intermediation (receivable and payable) |
Represented by operations at B3 on behalf of and
on account of third parties, with liquidation operating cycle between D+1 and D+3.
|
September 30,
2023
|
|
December 31, 2022 |
Cash and settlement records |
1,174,352 |
|
1,394,451 |
Debtors pending settlement |
2,495,815 |
|
1,980,341 |
Other |
11,748 |
|
1,387 |
(-) Expected losses on Securities trading and intermediation (a) |
(112,830) |
|
(105,179) |
Total Assets |
3,569,085 |
|
3,271,000 |
|
|
|
|
Cash and settlement records |
205,040 |
|
171,659 |
Creditors pending settlement |
4,101,371 |
|
2,401,828 |
Customer’s cash on investment account |
12,755,633 |
|
13,489,210 |
Total Liabilities |
17,062,044 |
|
16,062,697 |
(a) The reconciliation of gross carrying amount
and the expected loss segregated by stages according to IFRS 9 were demonstrated in Note 10.
| 10. | Expected Credit Losses on Financial Assets and Reconciliation of carrying amount |
It is presented below the reconciliation of gross
carrying amount of financial assets through other comprehensive income and financial assets measured at amortized cost – that have
their ECLs (Expected Credit Losses) measured using the three-stage model, the low credit risk simplification and the simplified approach
and the ECLs as of September 30, 2023:
|
|
|
|
September 30, 2023 |
|
|
Gross carrying amount |
Expected Credit Losses |
Carrying amount, net |
|
|
|
|
|
Financial assets at fair value through other comprehensive income |
|
|
|
|
Low credit risk simplification |
|
|
|
|
Securities (i) (vi) |
|
38,486,172 |
(8,088) |
38,486,172 |
Financial assets amortized cost |
|
|
|
|
Low credit risk simplification |
|
|
|
|
Securities (i) (viii) |
|
6,179,971 |
(4,998) |
6,174,973 |
Securities purchased under agreements to resell (i) |
|
12,255,240 |
(3,254) |
12,251,986 |
Three stage model |
|
|
|
|
Loans and credit card operations (ii) (iii) (iv) (vii) (viii) |
|
26,902,270 |
(240,231) |
26,662,039 |
Simplified approach |
|
|
|
|
Securities trading and intermediation |
|
3,681,915 |
(112,830) |
3,569,085 |
Accounts receivable |
|
668,213 |
(48,205) |
620,008 |
Other financial assets |
|
6,286,377 |
(49,976) |
6,236,401 |
|
|
|
|
|
Total losses for on-balance exposures |
|
94,460,158 |
(467,582) |
94,000,664 |
|
|
|
|
|
Off-balance exposures (v) |
|
8,166,048 |
(16,552) |
8,149,496 |
|
|
|
|
|
Total exposures |
|
102,626,206 |
(484,134) |
102,150,160 |
| (i) | Financial assets considered in Stage 1, |
| (ii) | As of September 30, 2023, are presented in Stage 1: Gross amount of R$ 24,886,627 and ECL of R$ 58,108;
Stage 2: Gross amount of R$ 1,854,864 and ECL of R$ 62,712; Stage 3: Gross amount of R$ 160,779 and ECL of R$ 119,412, respectively. |
XP Inc. and its subsidiaries Notes to unaudited interim condensed consolidated financial statements As of September 30, 2023 In thousands of Brazilian Reais, unless otherwise stated | |
| (iii) | Gross amount: As of September 30, 2023 there were transfers between Stage 1 to Stage 2 of R$ 1,401,037;
Stage 1 to Stage 3 of R$ 117,455; Stage 2 to Stage 1 of R$ 475,493; Stage 2 to Stage 3 of R$ 32,819; Stage 3 to Stage 1 of R$ 15 and Stage
3 to Stage 2 of R$ 100. |
| (iv) | Expected credit loss: As of September 30, 2023 there were transfers between Stage 1 to Stage 2 of R$ 49,451;
Stage 1 to Stage 3 of R$ 80,781; Stage 2 to Stage 1 of R$ 1,316; Stage 3 to Stage 1 of R$ 1; Stage 2 to Stage 3 of R$ 28,759 and Stage
3 to Stage 2 of R$ 17. |
| (v) | Include credit cards limits and letters of guarantee. |
| (vi) | The loss allowance for ECL of R$ 8,087 on securities at fair value through other comprehensive income does
not reduce the carrying amount, but an amount equal to the allowance is recognized in OCI as an accumulated impairment amount, with corresponding
impairment gains or losses recognized in the statement of income. |
| (vii) | During the nine months period ended September 30, 2023, there was R$ 70,443 of write-off. |
|
|
|
|
December 31, 2022 |
|
|
Gross carrying amount |
Expected Credit Losses |
Carrying amount, net |
|
|
|
|
|
Financial assets at fair value through other comprehensive income |
|
|
|
|
Low credit risk simplification |
|
|
|
|
Securities (i) |
|
35,150,599 |
(8,077) |
35,142,522 |
Financial assets amortized cost |
|
|
|
|
Low credit risk simplification |
|
|
|
|
Securities (i) |
|
9,275,027 |
(2,924) |
9,272,103 |
Securities purchased under agreements to resell (i) |
|
7,606,501 |
(2,681) |
7,603,820 |
Three stage model |
|
|
|
|
Loans and credit card operations (ii) (iii)(iv) |
|
21,168,048 |
(43,149) |
21,124,899 |
Simplified approach |
|
|
|
|
Securities trading and intermediation |
|
3,376,179 |
(105,179) |
3,271,000 |
Accounts receivable |
|
632,673 |
(34,786) |
597,887 |
Other financial assets |
|
3,568,298 |
(51,109) |
3,517,189 |
|
|
|
|
|
Total losses for on-balance exposures |
|
80,777,325 |
(247,905) |
80,529,420 |
|
|
|
|
|
Off-balance exposures (credit card limits) (v) |
|
4,759,298 |
(6,228) |
4,753,070 |
Other off-balance exposures |
|
- |
(15,214) |
(15,214) |
|
|
|
|
|
Total exposures |
|
85,536,623 |
(269,347) |
85,267,276 |
| (i) | Financial assets considered in Stage 1. |
| (ii) | As of December 31, 2022, are presented in Stage 1: Gross amount
of R$ 21,168,048 and ECL of R$ 21,312; Stage 2: Gross amount of R$ 1,073,170 and ECL of R$ 7,656; Stage 3: Gross amount of R$ 19,319
and ECL of R$ 14,181, respectively. |
| (iii) | As of December 31, 2022 there were transfers between Gross amount
Stage 1 to Stage 2 of R$ 945,055; Stage 1 to Stage 3 of R$ 12,373; Stage 2 to Stage 1 of R$ 449,698; Stage 2 to Stage 3 of R$ 6,642;
Stage 3 to Stage 1 of R$ 5 and Stage 3 to Stage 2 of R$ 5. |
| (iv) | As of December 31, 2022, there were transfers between ECL Stage
1 to Stage 2 of R$ 6,940; Stage 1 to Stage 3 of R$ 8,624; Stage 2 to Stage 1 of R$ 1,091 and Stage 2 to Stage 3 of R$ 5,308. |
| (v) | As of December 31, 2022, there were no transfers between stages. |
XP Inc. and its subsidiaries Notes to unaudited interim condensed consolidated financial statements As of September 30, 2023 In thousands of Brazilian Reais, unless otherwise stated | |
| 11. | Investments in associates and joint ventures |
Set out below are the associates and joint ventures
of the Group as of September 30, 2023, and December 31, 2022.
Entity |
December 31, 2022 |
Changes in
Equity (iii)
|
Equity in earnings / Fair value |
Other comprehensive income |
September
30,
2023
|
Equity-accounted method |
|
|
|
|
|
Associates (i.a) |
748,306 |
(10,793) |
43,812 |
263 |
781,588 |
Measured at fair value |
|
|
|
|
|
Associates (ii) |
1,523,425 |
(40,762) |
(3,410) |
- |
1,479,253 |
Total |
2,271,731 |
(51,555) |
40,402 |
263 |
2,260,841 |
Entity |
December 31, 2021 |
Changes in
Equity |
Equity in earnings / Fair value |
Other comprehensive income |
September 30, 2022 |
Equity-accounted method |
|
|
|
|
|
Associates |
790,744 |
(24,257) |
(12,604) |
(797) |
753,086 |
Joint ventures |
1,197 |
1,073 |
(1,044) |
(31) |
1,195 |
Measured at fair value |
|
|
|
|
|
Associates (ii) |
1,221,424 |
365,179 |
74,005 |
- |
1,660,608 |
Total |
2,013,365 |
341,995 |
60,357 |
(828) |
2,414,889 |
(i) As of September 30, 2023, and December 31,
2022, includes the interests in the total and voting capital of the following companies:
(a) Associates - Wealth High Governance Holding
de Participações S.A. (49.9% of the total and voting capital on September 30, 2023, and December 31, 2022); Primo Rico Mídia,
Educacional e Participações Ltda. (21.83% of the total and voting capital on September 30, 2023 and 29.26% on December 31,
2022); Novus Capital Gestora de Recursos Ltda. (27.5% of the total and voting capital on September 30, 2023) and NK112 Empreendimentos
e Participações S.A. (49.9% of the total and voting capital on September 30, 2023, and December 31, 2022).
(ii) As mentioned in Note 2 (c)(iii), the Group
valued the investments held through our investment funds at fair value. The fair value of investments is presented in the statement of
income as Net income/(loss) from financial instruments at fair value through profit or loss.
(iii) During the nine months period ended September
30, 2023, includes total or partial disposal of investments in Grimper Capital, BlueMacaw and OHM Research.
| 12. | Property, equipment, goodwill, intangible assets and lease |
|
|
|
|
|
|
As of January 1, 2022 |
313,964 |
820,975 |
Additions |
33,528 |
15,618 |
Business combination |
- |
60,037 |
Write-offs |
(1,179) |
(1,998) |
Transfers |
(15,018) |
- |
Foreign exchange |
(283) |
(3,147) |
Depreciation / amortization in the period |
(23,201) |
(76,648) |
As of September 30, 2022 |
307,811 |
814,837 |
Cost |
392,022 |
1,097,103 |
Accumulated depreciation / amortization |
(84,211) |
(282,266) |
XP Inc. and its subsidiaries Notes to unaudited interim condensed consolidated financial statements As of September 30, 2023 In thousands of Brazilian Reais, unless otherwise stated | |
As of January 1, 2023 |
310,894 |
844,182 |
Additions |
27,445 |
131,989 |
Business combination (i) |
39,532 |
1,690,160 |
Write-offs |
(831) |
(27,140) |
Foreign exchange |
69 |
1,539 |
Depreciation / amortization in the period |
(29,450) |
(89,746) |
As of September 30, 2023 |
347,659
|
2,550,984 |
Cost |
527,472 |
2,807,161 |
Accumulated depreciation / amortization |
(179,813) |
(256,177) |
(i) Related to fair value of identifiable assets
and goodwill arising from the business combination with Banco Modal (Note 2(d)(a)(iii)).
| b) | Impairment test for goodwill |
Given the interdependency of cash flows and the
merger of business practices, all Group’s entities are considered a single cash generating units (“CGU”) and, therefore,
a goodwill impairment test is performed at the single operating level. Therefore, the carrying amount considered for the impairment test
represents the Company’s equity.
The Group performs its annual impairment test in
December and when circumstances indicates that the carrying value may be impaired. The Group’s impairment tests are based on value-in-use
calculations. The key assumptions used to determine the recoverable amount for the cash generating unit were disclosed in the annual consolidated
financial statements for the year ended December 31, 2022. As of September 30, 2023, there were no indicators of a potential impairment
of goodwill.
Set out below, are the carrying amounts of the
Group’s right-of-use assets and lease liabilities and the movements during the period.
|
Right-of-use
assets |
|
Lease
liabilities
|
|
|
|
|
As of January 1, 2022 |
284,509 |
|
318,555 |
Additions (i) |
30,998 |
|
31,086 |
Depreciation expense |
(60,412) |
|
- |
Interest expense |
- |
|
16,717 |
Revaluation |
8,662 |
|
(89) |
Effects of exchange rate |
(2,911) |
|
(3,052) |
Payment of lease liabilities |
- |
|
(73,921) |
As of September 30, 2022 |
260,846 |
|
289,296 |
Current |
- |
|
70,562 |
Non-current |
260,846 |
|
218,734 |
As of January 1, 2023 |
258,491 |
|
285,637 |
Additions (i) |
2,909 |
|
2,909 |
Depreciation expense |
(50,735) |
|
- |
Business combination (Note 2(d)(a)(iii)) |
17,493 |
|
19,802 |
Write-off |
(21,454) |
|
- |
Interest expense |
- |
|
17,912 |
Revaluation |
803 |
|
- |
Effects of exchange rate |
(3,955) |
|
(4,123) |
Payment of lease liabilities |
- |
|
(95,813) |
As of September 30, 2023 |
203,552 |
|
226,324 |
Current |
48,866 |
|
28,850 |
Non-current |
154,686 |
|
197,474 |
| (i) | Additions to right-of-use assets in the period include prepayments
to lessors and accrued liabilities. |
XP Inc. and its subsidiaries Notes to unaudited interim condensed consolidated financial statements As of September 30, 2023 In thousands of Brazilian Reais, unless otherwise stated | |
The Group did not recognize rent expense from short-term
leases and low-value assets for the nine-month periods ended September 30, 2023, and 2022 and for the three months period ended September
30, 2023, and 2022. The total rent expense for the nine-month periods ended September 30, 2023 of R$ 20,148 (R$9,355 – September
30, 2022) and for the three month periods ended September 30, 2023 of R$ 11,585 (R$5,322 – September 30, 2022) includes other expenses
related to leased offices such as condominiums.
| 13. | Financing Instruments Payable |
|
|
September 30,
2023
|
|
December 31,
2022
|
|
|
|
|
|
Market funding operations (a) |
|
47,039,876 |
|
38,093,772 |
Deposits |
|
22,634,528 |
|
20,261,532 |
Demand deposits |
|
1,732,031 |
|
803,031 |
Time deposits |
|
20,551,994 |
|
19,445,276 |
Interbank deposits |
|
350,503 |
|
13,225 |
Financial bills |
|
7,811,965 |
|
5,675,596 |
Structured notes |
|
16,241,251 |
|
12,109,576 |
Others |
|
352,132 |
|
47,068 |
Debt securities (b) |
|
6,053,855 |
|
5,589,857 |
Debentures |
|
2,656,003 |
|
2,028,681 |
Bond |
|
3,397,852 |
|
3,561,176 |
Total |
|
53,093,731 |
|
43,683,629 |
|
|
|
|
|
Current |
|
18,195,324 |
|
19,794,572 |
Non-current |
|
34,898,407 |
|
23,889,057 |
| (a) | Market funding operations maturity |
Maturity - September 30, 2023 |
|
|
|
|
|
|
|
|
Class |
|
Within 30 days |
From 31 to 60 days |
From 61 to 90 days |
From 91 to 180 days |
From 181 to 360 days |
After 360 days |
Total |
Demand deposits |
|
1,732,031 |
- |
- |
- |
- |
- |
1,732,031 |
Time deposits |
|
2,728,716 |
2,675,060 |
1,547,959 |
2,123,360 |
2,614,317 |
8,862,582 |
20,551,994 |
Interbank deposits |
|
- |
- |
100,825 |
- |
72,287 |
177,391 |
350,503 |
Financial bills |
|
176,147 |
- |
171,827 |
162,222 |
1,672,423 |
5,629,346 |
7,811,965 |
Structured notes |
|
19,409 |
75,678 |
35,670 |
57,840 |
198,410 |
15,854,244 |
16,241,251 |
Others |
|
83,179 |
29,742 |
6,124 |
17,788 |
187,639 |
27,660 |
352,132 |
Total |
|
4,739,482 |
2,780,480 |
1,862,405 |
2,361,210 |
4,745,076 |
30,551,223 |
47,039,876 |
Maturity – December 31, 2022 |
|
|
|
|
|
|
|
|
Class |
|
Within 30 days |
From 31 to 60 days |
From 61 to 90 days |
From 91 to 180 days |
From 181 to 360 days |
After 360 days |
Total |
Demand deposits |
|
803,031 |
- |
- |
- |
- |
- |
803,031 |
Time deposits |
|
3,604,494 |
4,273,475 |
5,187,106 |
1,382,514 |
2,016,732 |
2,980,955 |
19,445,276 |
Interbank deposits |
|
- |
- |
- |
3,092 |
- |
10,133 |
13,225 |
Financial bills |
|
- |
- |
2,390 |
1,637,547 |
405,901 |
3,629,758 |
5,675,596 |
Structured notes |
|
- |
- |
5,720 |
35,773 |
261,019 |
11,807,064 |
12,109,576 |
Others |
|
- |
- |
1,031 |
13,053 |
32,984 |
- |
47,068 |
Total |
|
4,407,525 |
4,273,475 |
5,196,247 |
3,071,979 |
2,716,636 |
18,427,910 |
38,093,772 |
XP Inc. and its subsidiaries Notes to unaudited interim condensed consolidated financial statements As of September 30, 2023 In thousands of Brazilian Reais, unless otherwise stated | |
| (b) | Debt securities maturity |
The total balance is comprised of the following
issuances:
|
|
September 30,
2023
|
|
December 31,
2022
|
|
Rate type |
Up to 1 year |
1-5 years |
Total |
|
Up to 1 year |
1-5 years |
Total |
Bonds (i) |
Fixed rate |
122,645 |
3,275,207 |
3,397,852 |
|
128,710 |
3,432,466 |
3,561,176 |
Debentures (ii) (iii) |
Floating rate |
1,584,026 |
1,071,977 |
2,656,003 |
|
106,118 |
1,922,563 |
2,028,681 |
Total |
|
1,706,671 |
4,347,184 |
6,053,855 |
|
234,828 |
5,355,029 |
5,589,857 |
Current |
|
|
|
1,706,671 |
|
|
|
234,828 |
Non-current |
|
|
|
4,347,184 |
|
|
|
5,355,029 |
|
|
|
|
|
|
|
|
|
On July 1, 2021, XP Inc. concluded the issuance
of a gross of US$750 million senior unsecured notes with net proceeds of US$739 million (R$ 3,697 million) with maturity on July 1, 2026,
and bear interest at the rate of 3.250% per year and will be guaranteed by XP Investimentos S.A. On September 30, 2023, the total amount
is R$ 3,436,471, out of which R$ 3,397,852 is held by entities outside the Group and as such is included in the consolidated financial
statement.
| (ii) | XP Energia debentures |
On December 8, 2021, XP Energia issued non-convertible
Debentures in the amount of R$485,511. The Debentures series has a maximum authorized issuance up to R$1,000,000. The objective is to
fund the Group’s working capital and treasury investments related to wholesale electricity trade business. The principal amount
is due and will be paid on the maturity date of December 8, 2023. The interest rate is CDI+2.5% annually payable. On September 30, 2023,
the total amount is R$ 824,592, out of which R$ 513,942 is held by entities outside the Group and as such is included in the consolidated
financial statement.
(iii)
XP Investimentos debentures
On July 19, 2022, XP Investimentos issued non-convertible
debentures in the amount of R$1,800,000 (R$900,000 of series 1 and R$900,000 of series 2). The debentures series, added together, has
a maximum authorized issuance up to R$1,800,000. The principal amount is due and will be paid on the maturity date as follow: (i) June
23, 2024 (series 1) and (ii) June 23, 2025 (series 2). The interest rates for series 1 and series 2 debentures are CDI+1.75% and CDI+1.90%,
respectively. On September 30, 2023, the total amount is R$ 2,142,061.
|
Annual interest rate % |
|
Maturity |
|
September 30, 2023 |
|
December 31, 2022 |
|
|
|
|
|
|
|
|
Banco Nacional de México (i) |
2.55% |
|
May 2023 |
- |
|
1,586,052 |
International Finance Corporation (IFC) (ii) |
CDI (*) + 0.74% |
|
April 2023 |
- |
|
279,828 |
Banco Nacional de México |
Term SOFR(**) + 0.40% |
|
August 2024 |
1,258,844 |
|
- |
Banco Daycoval |
15.66% |
|
September 2024 |
978 |
|
- |
Third parties |
|
|
|
1,259,822 |
|
1,865,880 |
|
|
|
|
|
|
|
Total borrowings |
|
|
|
1,259,822 |
|
1,865,880 |
|
|
|
|
|
|
|
Current |
|
|
|
1,259,822 |
|
1,865,880 |
Non-current |
|
|
|
- |
|
- |
XP Inc. and its subsidiaries Notes to unaudited interim condensed consolidated financial statements As of September 30, 2023 In thousands of Brazilian Reais, unless otherwise stated | |
(*) Brazilian Interbank Offering Rate (CDI).
(**) Secured Overnight Financing Rate (SOFR).
(i) On May 5, 2023, according to the maturity date,
the loan agreement was fully settled.
(ii) Loan agreement entered into on March 28, 2018.
The principal amount is due on the maturity date and accrued interests payable at every six months. On April 17, 2023, according to the
maturity date, the loan agreement was fully settled.
Some of the obligations above contain financial
covenants, which have certain performance conditions. The Group complied with these covenants throughout the duration of the contracts
(Note 29 (ii)).
| 15. | Other financial assets and financial liabilities |
|
September 30,
2023 |
|
December 31,
2022 |
Foreign exchange portfolio |
4,239,672 |
|
2,145,174 |
Receivables from IFAs |
167,361 |
|
172,884 |
Compulsory and other deposits at central banks |
1,721,616 |
|
1,119,169 |
Other financial assets |
157,728 |
|
131,071 |
(-) Expected losses on other financial assets (i) |
(49,976) |
|
(51,109) |
Total |
6,236,401 |
|
3,517,189 |
|
|
|
|
Current |
5,271,303 |
|
2,791,244 |
Non-current |
965,098 |
|
725,945 |
(i) The reconciliation
of gross carrying amount and the expected loss according to IFRS 9 are presented in Note 10.
| b) | Other financial liabilities |
|
September 30,
2023 |
|
December 31,
2022 |
Foreign exchange portfolio |
4,562,194 |
|
2,405,429 |
Structured financing (i) |
2,114,191 |
|
1,933,522 |
Credit cards operations |
6,442,407 |
|
4,987,390 |
Contingent consideration (ii) |
574,026 |
|
566,930 |
Commitments subject to possible redemption (iii) |
- |
|
1,049,130 |
Lease liabilities |
226,324 |
|
285,638 |
Others |
193,288 |
|
326,174 |
Total |
14,112,430 |
|
11,554,213 |
Current |
13,595,779 |
|
11,014,262 |
Non-current |
516,651 |
|
539,951 |
| (i) | Financing for maintenance of financial assets required to perform
financial transactions. |
| (ii) | Contractual contingent considerations mostly associated with the investment acquisition. The maturity
of the total contingent consideration payment is up to 5 years and the contractual maximum amount payable is R$ 1,105,000 (the minimum
amount is zero). |
| (iii) | Related to the IPO transaction of XPAC Acquisition Corp. that occurred on August 3, 2021. The capital
issued by XPAC Acquisition Corp. includes conditionally redeemable Class A ordinary shares that feature redemption rights that are either
within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s
control. On July 27, 2023, the Group ceased to control XPAC Acquisition Corp., see note 2 (d)(b)(i) for more information. |
XP Inc. and its subsidiaries Notes to unaudited interim condensed consolidated financial statements As of September 30, 2023 In thousands of Brazilian Reais, unless otherwise stated | |
| 16. | Retirement plans liabilities |
As of September 30, 2023, active plans are principally
accumulation of financial resources through products PGBL and VGBL structured in the form of variable contribution, for the purpose of
granting participants with returns based on the accumulated capital in the form of monthly withdraws for a certain term or temporary monthly
withdraws.
In this respect, such financial products represent
investment contracts that have the legal form of private pension plans, but which do not transfer insurance risk to the Group. Therefore,
contributions received from participants are accounted for as liabilities and balance consists of the balance of the participant in the
linked Specially Constituted Investment Fund (“FIE”) at the reporting date (Note 4 (a)(i)).
Changes in the period:
|
Nine
months period ended September 30, |
|
2023 |
|
2022 |
As of January 1 |
45,733,815 |
|
31,921,400 |
Contributions received |
2,047,327 |
|
1,968,179 |
Transfer with third party plans |
4,637,059 |
|
8,529,102 |
Withdraws |
(2,884,406) |
|
(2,627,886) |
Other provisions (Constitution/Reversion) |
108,899 |
|
27,440 |
Monetary correction and interest income |
3,637,014 |
|
2,896,120 |
As of September 30 |
53,279,708 |
|
42,714,355 |
Deferred tax assets (DTA) and deferred tax liabilities
(DTL) are comprised of the main following components:
|
Balance Sheet |
|
September 30,
2023
|
|
December 31, 2022 |
Tax losses carryforwards |
892,195 |
|
575,120 |
Goodwill on business combinations (i) |
13,552 |
|
6,376 |
Provisions for IFAs’ commissions |
76,793 |
|
71,986 |
Revaluations of financial assets at fair value |
(232,081) |
|
(214,456) |
Expected credit losses (ii) |
252,733 |
|
58,208 |
Profit sharing plan |
138,046 |
|
269,949 |
Net gain (loss) on hedge instruments |
(35,215) |
|
(11,169) |
Share-based compensation |
734,170 |
|
566,721 |
Other provisions |
108,434 |
|
178,104 |
Total |
1,948,627 |
|
1,500,839 |
Deferred tax assets |
2,022,609 |
|
1,611,882 |
Deferred tax liabilities |
(73,982) |
|
(111,043) |
|
|
|
|
|
Net change in the nine months period
ended September 30,
|
|
Net change in the three months period
ended September 30,
|
|
2023 |
2022 |
|
2023 |
2022 |
|
|
|
|
|
|
Tax losses carryforwards |
317,075 |
373,146 |
|
250,665 |
164,871 |
Goodwill on business combinations (i) |
7,176 |
(2,872) |
|
6,640 |
3,826 |
Provisions for IFAs’ commissions |
4,807 |
(2,887) |
|
(13,762) |
(12,183) |
Revaluations of financial assets at fair value |
(17,625) |
(206,257) |
|
183,680 |
(173,076) |
Expected credit losses (ii) |
194,525 |
8,017 |
|
162,866 |
(3,913) |
Profit sharing plan |
(131,903) |
(132,926) |
|
(111,391) |
(119,315) |
Net gain (loss) on hedge instruments |
(24,046) |
(30,098) |
|
71,210 |
(44) |
Share based plan |
167,449 |
183,342 |
|
55,233 |
67,085 |
Other provisions |
(69,670) |
(44,205) |
|
(47,511) |
(64,411) |
Total |
447,788 |
145,260 |
|
557,630 |
(137,162) |
XP Inc. and its subsidiaries Notes to unaudited interim condensed consolidated financial statements As of September 30, 2023 In thousands of Brazilian Reais, unless otherwise stated | |
| (i) | For Brazilian tax purposes, goodwill is amortized at least in 5 years on a straight-line basis when the
entity acquired is sold or merged into the acquirer company. |
| (ii) | Include expected credit loss on accounts receivable, loan operations and other financial assets. |
The changes in the net deferred tax were recognized as follows:
|
Nine
months period ended September 30, |
|
2023 |
|
2022 |
|
|
|
|
As of January 1 |
1,480,442 |
|
1,244,135 |
Foreign exchange variations |
(37,718) |
|
(21,289) |
Business combination (Note 2(d)(a)(iii)) |
394,101 |
|
- |
Charges to statement of income |
287,352 |
|
319,165 |
Tax relating to components of other comprehensive income |
(175,549) |
|
(152,615) |
As of September 30 |
1,948,628 |
|
1,389,396 |
|
|
|
|
Unrecognized deferred taxes
Deferred tax assets are recognized for tax losses
to the extent that the realization of the related tax benefit against future taxable profits is probable. The Group did not recognize
deferred tax assets of R$ 7,704 (December 31, 2022 - R$ 13,001) mainly in respect of losses from subsidiaries overseas and that can be
carried forward and used against future taxable income.
| b) | Income tax expense reconciliation |
The tax on the Group’s pre-tax profit differs
from the theoretical amount that would arise using the weighted average tax rate applicable to profits of the consolidated entities. The
following is a reconciliation of income tax expense to profit (loss) for the period, calculated by applying the combined Brazilian statutory
rates at 34% for the nine and three-months period ended September 30:
|
Nine months period |
|
Three months period |
ended September 30, |
|
ended September 30, |
|
2023 |
2022 |
|
2023 |
2022 |
Income before taxes |
2,941,219 |
2,706,608 |
|
1,157,379 |
982,921 |
Combined tax rate in Brazil (a) |
34% |
34% |
|
34% |
34% |
Tax expense at the combined rate |
1,000,014 |
920,247 |
|
393,508 |
334,193 |
|
|
|
|
|
|
Income (loss) from entities not subject to taxation |
453 |
58 |
|
21 |
8 |
Effects from entities taxed at different rates |
30,121 |
47,484 |
|
5,126 |
46,657 |
Effects from entities taxed at different taxation regimes (b) |
(877,752) |
(1,066,638) |
|
(302,998) |
(397,565) |
Intercompany transactions with different taxation |
(62,743) |
(18,503) |
|
(23,032) |
(6,224) |
Tax incentives and related donation programs |
(4,018) |
- |
|
(1,365) |
- |
Nondeductible expenses (non-taxable income), net |
(43,164) |
1,734 |
|
(7,472) |
(40,614) |
Effect from social contribution on net income rate (Law No. 14,183) |
- |
(4,439) |
|
- |
(25) |
Others |
38,931 |
28,955 |
|
7,002 |
15,613 |
Total |
81,842 |
(91,102) |
|
70,790 |
(47,957) |
|
|
|
|
|
|
Current |
368,781 |
228,063 |
|
109,161 |
11,193 |
Deferred |
(286,939) |
(319,165) |
|
(38,371) |
(59,150) |
Total expense / (credit) |
81,842 |
(91,102) |
|
70,790 |
(47,957) |
XP Inc. and its subsidiaries Notes to unaudited interim condensed consolidated financial statements As of September 30, 2023 In thousands of Brazilian Reais, unless otherwise stated | |
| (a) | Considering that XP Inc. is domiciled in Cayman and there is no income tax in that jurisdiction, the combined
tax rate of 34% demonstrated above is the current rate applied to XP Investimentos S.A. which is the holding company of all operating
entities of XP Inc. in Brazil. |
| (b) | Certain eligible subsidiaries adopted the PPM tax regime and the effect of the presumed profit of subsidiaries
represents the difference between the taxation based on this method and the amount that would be due based on the statutory rate applied
to the taxable profit of the subsidiaries. Additionally, some entities and investment funds adopt different taxation regimes according
to the applicable rules in their jurisdictions. |
Other comprehensive income
The tax (charge)/credit relating to components
of other comprehensive income is as follows:
|
Before
tax |
|
|
|
After
tax |
|
|
|
|
|
|
Foreign exchange variation of investees located abroad |
(12,270) |
|
- |
|
(12,270) |
Gains (losses) on net investment hedge |
14,281 |
|
(6,726) |
|
7,555 |
Changes in the fair value of financial assets at fair value |
384,437 |
|
(145,890) |
|
238,547 |
As of September 30, 2022 |
386,448 |
|
(152,616) |
|
233,832 |
|
|
|
|
|
|
Foreign exchange variation of investees located abroad |
(22,284) |
|
- |
|
(22,284) |
Gains (losses) on net investment hedge |
26,758 |
|
(6,619) |
|
20,139 |
Changes in the fair value of financial assets at fair value |
392,392 |
|
(168,930) |
|
223,462 |
As of September 30, 2023 |
396,866
|
|
(175,549) |
|
221,317 |
The Company has an authorized share capital of
US$ 35, corresponding to 3,500,000,000 authorized shares with a par value of US$ 0,00001 each of which:
| · | 2,000,000,000 shares are designated as Class A
common shares and issued; and |
| · | 1,000,000,000 shares are designated as Class B
common shares and issued. |
The remaining 500,000,000 authorized but unissued
shares are presently undesignated and may be issued by our board of directors as common shares of any class or as shares with preferred,
deferred or other special rights or restrictions. Therefore, the Company is authorized to increase capital up to this limit, subject to
approval of the Board of Directors.
On January 10, 2022, XP Inc issued 445,328 Class
A common shares (R$ 70,030) as part of our acquisition of a minority stake of Vista Capital (non-cash transaction).
On July 1, 2023, XP Inc issued 18,717,771 Class
A common shares (R$ 2,097,326) to acquire up to 100% of Banco Modal´s shares, in a non-cash equity exchange transaction.
As of September 30, 2023, the Company had R$25
of issued capital which were represented by 435,366,147 Class A common shares and 112,717,094 Class B common shares.
| (b) | Additional paid-in capital and capital reserve |
Class A and Class B common shares, have the following
rights:
| · | Each holder of a Class B common share is entitled,
in respect of such share, to 10 votes per share, whereas the holder of a Class A common share is entitled, in respect of such share, to
one vote per share. |
| · | Each holder of Class A common shares and Class
B common shares vote together as a single class on all matters (including the election of directors) submitted to a vote of shareholders,
except as provided below and as otherwise required by law. |
| · | Class consents from the holders of Class A common
shares and Class B common shares, as applicable, shall be required for any modifications to the rights attached to their respective class
of shares the rights conferred on holders of Class A common shares shall not be deemed to be varied by the creation or issue of further
Class B common shares and vice versa; and |
| · | the rights attaching to the Class A common shares
and the Class B common shares shall not be deemed to be varied by the creation or issue of shares with preferred or other rights, including,
without limitation, shares with enhanced or weighted voting rights. |
XP Inc. and its subsidiaries Notes to unaudited interim condensed consolidated financial statements As of September 30, 2023 In thousands of Brazilian Reais, unless otherwise stated | |
The Articles of Association provide that at any
time when there are Class A common shares in issue, Class B common shares may only be issued pursuant to: (a) a share split, subdivision
of shares or similar transaction or where a dividend or other distribution is paid by the issue of shares or rights to acquire shares
or following capitalization of profits; (b) a merger, consolidation, or other business combination involving the issuance of Class B common
shares as full or partial consideration; or (c) an issuance of Class A common shares, whereby holders of the Class B common shares are
entitled to purchase a number of Class B common shares that would allow them to maintain their proportional ownership and voting interests
in XP Inc.
The Board of Directors approved in December 2019
a share based long-term incentive plan, which the maximum number of shares should not exceed 5% of the issued and outstanding shares.
As of September 30, 2023, the outstanding number of shares reserved under the plans were 16,405,218 restricted stock units (“RSUs”)
(December 31, 2022 – 13,684,424) and 1,860,129 performance stock units (“PSUs”) (December 31, 2022 – 2,527,242)
to be issued at the vesting date.
The additional paid-in capital refers to the difference
between the purchase price that the shareholders pay for the shares and their par value. Under Cayman Law, the amount in this type of
account may be applied by the Company to pay distributions or dividends to members, pay up unissued shares to be issued as fully paid,
for redemptions and repurchases of own shares, for writing off preliminary expenses, recognized expenses, commissions or for other reasons.
All distributions are subject to the Cayman Solvency Test which addresses the Company’s ability to pay debts as they fall due in
the natural course of business.
The Group registered treasury shares in its Equity
as a result of the following transactions: (i) the merger of XPart into XP Inc., which was settled through XP Inc.’s own shares;
(ii) the share buy-back program, approved in May 2022, amended in November 2022 and ended in March 2023; (iii) the shares purchase agreements
with Itaú Unibanco, signed on June and November 2022. Treasury shares are registered as a deduction from equity until the shares
are canceled or reissued.
On April 5, 2023, the Company’s Board of
Directors approved the cancellation of 31,267,095 Class A common shares (R$ 2,785,504) held by the Company in treasury.
As of September 30, 2023, the Group held 1,056,308
shares in treasury (19,203,135 – December 31, 2022) with an amount of R$ 117,117 (R$ 1,986,762 - December 31, 2022).
(d)
Dividends distribution
The Group has not adopted a dividend policy with
respect to future distributions of dividends. The amount of any distributions will depend on many factors such as the Company's results
of operations, financial condition, cash requirements, prospects and other factors deemed relevant by XP Inc. board of directors and,
where applicable, the shareholders.
For the nine months period ended September 30,
2023, XP Inc. declared and paid dividends to its shareholders in the total amount of US$ 320 million (R$ 1,577,622). The dividends were
settled on September 25, 2023.
Non-controlling shareholders of some XP Inc’s
subsidiaries have received dividends in the period ended of September 30, 2023.
(e)
Other comprehensive income
Other comprehensive income consists of changes
in the fair value of financial assets at fair value through other comprehensive income, while these financial assets are not realized.
Also includes gains (losses) on net investment hedge and foreign exchange variation of investees located abroad.
XP Inc. and its subsidiaries Notes to unaudited interim condensed consolidated financial statements As of September 30, 2023 In thousands of Brazilian Reais, unless otherwise stated | |
| 19. | Related party transactions |
The main transactions carried with related parties, conducted on an
arm’s length basis, including interest rates, terms and guarantees, and period-end balances arising from such transactions are as
follows:
|
Assets (Liabilities) |
|
Revenue (Expenses) |
|
|
|
|
Nine months |
Three months period ended September 30, |
period ended
September 30,
|
Relation and transaction |
September 30, 2023 |
December 31, 2022 |
|
2023 |
2022 |
2023 |
2022 |
|
|
|
|
|
|
|
|
Shareholders with significant influence (i) |
- |
(3,562,079) |
|
6,104 |
(156,942) |
- |
(53,106) |
Securities |
- |
238,088 |
|
17,403 |
18,294 |
- |
8,394 |
Securities purchased under agreements to resell |
- |
- |
|
5,101 |
8,665 |
- |
1,680 |
Accounts receivable |
- |
476 |
|
424 |
519 |
- |
46 |
Securities sold under repurchase agreements |
- |
(3,800,643) |
|
(16,824) |
(184,420) |
- |
(63,226) |
| (i) | These transactions are mainly related to Itaúsa S.A. Group. |
Transactions with related parties also includes
transactions among the Company and its subsidiaries in the course of normal operations include services rendered such as: (i) education,
consulting and business advisory; (ii) financial advisory and financial consulting in general; (iii) management of resources and portfolio
management; (iv) information technology and data processing; (v) insurance and (vi) loan operations. The effects of these transactions
have been eliminated and do not have effects on the consolidated financial statements.
| 20. | Provisions and contingent liabilities |
The Company and its subsidiaries are party to judicial
and administrative litigations before various courts and government bodies, arising from the ordinary course of operations, involving
tax, civil and labor matters and other issues. Periodically, Management evaluates the tax, civil and labor risks, based on legal, economic
and tax supporting data, in order to classify the risks as probable, possible or remote, in accordance with the chances of them occurring
and being settled, taking into consideration, case by case, the analyses prepared by external and internal legal advisors.
|
September 30,
2023
|
|
December 31,
2022 |
Civil contingencies |
24,944 |
|
20,419 |
Labor contingencies |
37,992 |
|
7,908 |
Other provisions (i) |
46,659 |
|
15,214 |
Total provision |
109,595 |
|
43,541 |
|
|
|
|
Judicial deposits (ii) |
13,317 |
|
12,077 |
(i) In 2005, the Brazilian Central Bank initiated
an administrative proceeding in order to investigate an alleged failure by Banco Modal to inform the Brazilian Central Bank about transactions
carried out by one of its clients. The administrative proceeding was concluded in 2009 with the imposition of a fine of R$200. On 2010,
Modal appealed from such decision to the Ministry of Finance, who decided to increase the fine to R$15,864. On 2010, Modal appealed from
the Ministry of Finance’s decision to a Civil Court, who also dismissed the appeal. The updated amount of the fine is R$44,952 (R$
39,985 as of December 31, 2022).
(ii) There are circumstances in which the Group
is questioning the legitimacy of certain litigations or claims filed against it. As a result, either because of a judicial order or based
on the strategy adopted by management, the Group might be required to secure part or the whole amount in question by means of judicial
deposits, without this being characterized as the settlement of the liability. These amounts are classified as “Other assets”
on the balance sheets and referred above for information.
XP Inc. and its subsidiaries Notes to unaudited interim condensed consolidated financial statements As of September 30, 2023 In thousands of Brazilian Reais, unless otherwise stated | |
Changes in the provision during the period
|
Nine months period ended
September 30,
|
|
Three months period
ended September 30, |
|
2023 |
2022 |
|
2023 |
2022 |
At the beginning of period |
43,541 |
29,310 |
|
78,778 |
32,385 |
Business combination (Note 2(d)(a)(iii)) |
70,910 |
- |
|
70,910 |
- |
Monetary correction |
4,292 |
3,152 |
|
1,830 |
1,073 |
Provision accrued |
45,542 |
7,503 |
|
11,726 |
5,032 |
Provision reversed |
(52,048) |
(202) |
|
(51,438) |
- |
Payments |
(2,642) |
(1,580) |
|
(2,211) |
(307) |
At the end of period |
109,595 |
38,183 |
|
109,595 |
38,183 |
Nature of claims
Most of the civil and administrative claims involve
matters that are normal and specific to the business and refer to demands for indemnity primarily due to: (i) financial losses in the
stock market; (ii) portfolio management; and (iii) alleged losses generated from the liquidation of customers assets in portfolio due
to margin cause and/or negative balance. As of September 30, 2023, there were 361 civil and administrative claims for which the likelihood
of loss has been classified as probable, in the amount of R$ 24,944 (December 31, 2022 - R$ 20,419).
Labor claims to which the Group is party primarily
concern: (i) the existence (or otherwise) of a working relationship between the Group and IFAs; and (ii) severance payment of former employees.
As of September 30, 2023, the Company and its subsidiaries are the defendants in 105 cases (December 31, 2022 – 28) involving labor
matters for which the likelihood of loss has been classified as probable, in the amount of R$ 37,992 (December 31, 2022 - R$ 7,908).
Contingent liabilities - probability of loss
classified as possible
In addition to the provisions mentioned above,
the Company and its subsidiaries are party to several labor, civil and tax contingencies in progress, in which they are the defendants,
and the likelihood of loss, based on the opinions of the internal and external legal advisors, is considered possible. The contingencies
amount to approximately R$ 1,298,356 (December 31, 2022 - R$ 893,745).
Below these claims are summarized by nature:
|
September 30,
2023
|
|
December 31, 2022 |
Tax (i) (ii) |
645,651 |
|
543,463 |
Civil (iii) |
404,388 |
|
335,644 |
Labor (iv) |
248,318 |
|
14,638 |
Total |
1,298,356 |
|
893,745 |
| (i) | Employees Profit Sharing Plans: At the end of years 2015, 2019 and 2021 tax authorities issued assessments
against the Group claiming mainly for allegedly unpaid social security contributions on amounts due and paid to employees as profit sharing
plans related to calendar years of 2011, 2015, 2017 and 2018. According to the tax authorities the Group profit sharing plans did not
comply with the provisions of Law 10,101/00. |
| a. | Tax assessment related to 2011: The first and the second administrative
appeals were denied, and currently the Group awaits for the judgment of the special appeal by the Superior Court of the Administrative
Council of Tax Appeals (“CARF”). There are other favorable CARF precedents on the |
XP Inc. and its subsidiaries Notes to unaudited interim condensed consolidated financial statements As of September 30, 2023 In thousands of Brazilian Reais, unless otherwise stated | |
subject and the Group obtained legal opinions
that support the Group’s defense and current practice. The amount claimed is R$ 20,571.
| b. | Tax assessment related to 2015: The first administrative appeal
was denied, and currently the Group awaits for the judgment of the second appeal by the CARF. There are other favorable CARF precedents
on the subject and the Group obtained legal opinions that support the Group’s defense and current practice. The amount claimed
is R$ 53,205. |
| c. | Tax assessment related to 2017: In addition to the claim related
to the employees profit sharing plan tax authorities are also challenging the deductibility for Corporate Income Tax (IRPJ) and Social
Contribution of Net Profits (CSLL) purposes of the amounts paid under such plan to the members of the Group’s Council. An administrative
appeal was filed against the assessment, which is awaiting judgment by the Federal Revenue Service of Brazil (“RFB”). The
total amount claimed is R$115,911. |
| d. | Tax assessment related to 2018: The Group will appeal against
the assessment. The total amount claimed is R$139,211 and the risk of loss for this claim was classified as possible. |
| e. | In June 2022, the Group was notified by the Public Labor Ministry
for allegedly unpaid FGTS (Fund for Severance Indemnity Payment) on the amounts paid to employees under profit sharing plans related
to years 2015 to 2020. According to the tax authorities the Group profit sharing plans did not comply with the provisions of Law 10,101/00.
The Group presented its administrative defense and awaits for the judgment of the appeal. The total amount claimed is R$ 135,738. The
risk of loss for this claim was classified as possible. |
(ii)
Amortization of goodwill: The Group also received three tax assessments in which the tax authorities challenge the deductibility for Corporate
Income Tax (IRPJ) and Social Contribution of Net Profits (CSLL) of the expenses deriving from the amortization of goodwill registered
upon the acquisitions made by the Group between 2013 and 2016. According to the tax authorities the respective goodwill was registered
in violation of Laws 9,532/97 and 12,973/14, respectively. Currently, the three proceedings are pending judgment by the first instance
of RFB. Also, the Group has filed two lawsuits to prevent the issuance of new tax assessments related to such goodwill for other periods.
| (iii) | The Group is defendant in 1,108 (December 31, 2022 – 688) civil and administrative claims by customers
and investment agents, mainly related to portfolio management, risk rating, copyrights and contract termination. The total amount represents
the collective maximum value to which the Group is exposed based on the claims’ amounts monetarily restated. |
| (iv) | The Group is defendant in 232 (December 31, 2022 – 28) labor claims by former employees. The total amount represents the collective
maximum value to which the Group is exposed based on the claims’ amounts monetarily restated. |
| 21. | Total revenue and income |
| a) | Net revenue from services rendered |
Revenue from contracts with customers derives
mostly from services rendered and fees charged at daily transactions from customers, therefore mostly recognized at a point in time.
Disaggregation of revenue by major service lines are as follows:
|
Nine months period ended
September 30, |
|
Three months period ended September 30, |
|
2023 |
2022 |
|
2023 |
2022 |
Major service lines |
|
|
|
|
|
Brokerage commission |
1,506,965 |
1,558,443 |
|
525,257 |
498,109 |
Securities placement |
1,292,184 |
1,270,534 |
|
636,694 |
525,088 |
Management fees |
1,214,837 |
1,168,686 |
|
414,479 |
361,209 |
Insurance brokerage fee |
126,830 |
105,891 |
|
43,334 |
35,048 |
Commission fees |
569,812 |
327,179 |
|
205,963 |
134,974 |
Other services |
374,863 |
368,117 |
|
169,425 |
149,324 |
Gross revenue from services rendered |
5,085,491 |
4,798,850 |
|
1,995,152 |
1,703,752 |
(-) Sales taxes and contributions on services (i) |
(434,268) |
(423,044) |
|
(172,677) |
(145,450) |
Net revenue from services rendered |
4,651,223 |
4,375,806 |
|
1,822,475 |
1,558,302 |
XP Inc. and its subsidiaries Notes to unaudited interim condensed consolidated financial statements As of September 30, 2023 In thousands of Brazilian Reais, unless otherwise stated | |
(i) Mostly related to taxes on services (ISS) and
contributions on revenue (PIS and COFINS).
| b) | Net income/(loss) from financial instruments |
|
Nine months period ended
September 30, |
|
Three months period ended September 30 |
|
2023 |
2022 |
|
2023 |
2022 |
Net income/(loss) from financial instruments at fair value through profit or loss |
5,008,430 |
4,715,330 |
|
2,220,100 |
1,517,816 |
Net income/(loss) from financial instruments measured at amortized cost and at fair value through other comprehensive income |
1,323,397 |
1,185,122 |
|
148,627 |
589,801 |
Total income from financial instruments |
6,331,827 |
5,900,452 |
|
2,368,727 |
2,107,617 |
(-) Taxes and contributions on financial income |
(168,517) |
(105,586) |
|
(59,282) |
(45,594) |
Net income/(loss) from financial instruments |
6,163,310 |
5,794,866 |
|
2,309,445 |
2,062,023 |
| c) | Disaggregation by geographic location |
Breakdown of total net revenue and income and selected
assets by geographic location:
|
Nine months period ended September 30, |
|
Three months period ended September 30, |
|
2023 |
2022 |
|
2023 |
2022 |
Brazil |
10,379,863 |
9,836,021 |
|
4,019,307 |
3,480,424 |
United States |
388,592 |
327,561 |
|
95,104 |
135,073 |
Europe |
46,078 |
7,090 |
|
17,509 |
4,828 |
Revenues |
10,814,533 |
10,170,672 |
|
4,131,920 |
3,620,325 |
|
|
|
|
|
|
|
|
|
|
September 30,
2023 |
December 31,
2022 |
Brazil |
|
|
|
12,133,313 |
8,649,964 |
United States |
|
|
|
538,776 |
488,158 |
Europe |
|
|
|
73,108 |
49,496 |
Selected assets (i) |
|
|
|
12,745,197 |
9,187,618 |
(i) Selected assets are total assets of the Group, less: cash, financial
assets and deferred tax assets and are presented by geographic location.
None of the clients represented more than 10% of our revenues for the
periods presented.
|
Nine months period ended September 30, |
|
Three months period ended September 30, |
|
2023 |
2022 |
|
2023 |
2022 |
Commission and incentive costs |
2,261,797 |
2,075,839 |
|
780,542 |
713,318 |
Operating losses |
109,598 |
39,662 |
|
20,877 |
14,919 |
Other costs |
858,858 |
684,145 |
|
320,164 |
248,683 |
Clearing house fees |
351,763 |
314,435 |
|
134,130 |
106,930 |
Third parties’ services |
53,719 |
47,044 |
|
21,624 |
17,615 |
Credit card cashback |
274,113 |
162,152 |
|
91,603 |
62,252 |
Other |
179,263 |
160,514 |
|
72,807 |
61,886 |
Total |
3,230,253 |
2,799,646 |
|
1,121,583 |
976,920 |
XP Inc. and its subsidiaries Notes to unaudited interim condensed consolidated financial statements As of September 30, 2023 In thousands of Brazilian Reais, unless otherwise stated | |
| 23. | Operating expenses by nature |
|
Nine months period ended September 30, |
|
Three months period ended September 30, |
|
2023 |
2022 |
|
2023 |
2022 |
Selling expenses (a) |
110,016 |
91,141 |
|
49,812 |
32,649 |
Administrative expenses |
3,914,035 |
4,273,233 |
|
1,544,184 |
1,502,793 |
Personnel expenses |
2,706,430 |
3,051,211 |
|
1,047,685 |
1,057,337 |
Compensation |
969,871 |
1,244,477 |
|
393,419 |
382,045 |
Employee profit-sharing and bonus |
1,132,467 |
1,186,772 |
|
428,598 |
463,673 |
Executives profit-sharing |
99,579 |
101,000 |
|
35,014 |
41,857 |
Other personnel expenses (b) |
504,513 |
518,962 |
|
190,654 |
169,762 |
Other taxes expenses |
51,590 |
51,362 |
|
19,606 |
19,170 |
Depreciation of property and equipment and right-of-use assets |
80,185 |
83,613 |
|
26,650 |
24,637 |
Amortization of intangible assets |
89,746 |
76,648 |
|
44,602 |
19,017 |
Data processing |
528,288 |
485,885 |
|
194,777 |
169,822 |
Technical services |
103,785 |
133,695 |
|
50,032 |
59,679 |
Third parties’ services |
230,348 |
281,917 |
|
108,589 |
107,075 |
Other administrative expenses (c) |
123,663 |
108,902 |
|
52,243 |
46,056 |
Total |
4,024,051 |
4,364,374 |
|
1,593,996 |
1,535,442 |
(a) Selling expenses refer to advertising and publicity.
(b) Other personnel expenses include benefits,
social charges and others.
(c) Other administrative expenses include rent,
communication and travel expenses, legal and judicial and other expenses.
| 24. | Other operating income (expenses), net |
|
Nine months period ended September 30, |
|
Three months period ended September 30, |
|
2023 |
2022 |
|
2023 |
2022 |
Other operating income |
155,626 |
83,104 |
|
38,332 |
47,621 |
Revenue from incentives from Tesouro Direto, B3 and others |
9,065 |
43,086 |
|
5,744 |
38,622 |
Other operating income (a) |
146,561 |
40,018 |
|
32,588 |
8,999 |
|
|
|
|
|
|
Other operating expenses |
(130,547) |
(60,775) |
|
(56,625) |
(18,364) |
Legal proceedings and agreement with customers |
(35,055) |
(6,989) |
|
(4,317) |
(2,547) |
Charity |
(8,739) |
(23,388) |
|
(2,776) |
(3,658) |
Other operating expenses (b) |
(86,753) |
(30,398) |
|
(49,532) |
(12,159) |
Total |
25,079 |
22,329 |
|
(18,293) |
29,257 |
(a) Other operating income include recovery of
charges and expenses, reversal of operating provisions, interest received on tax and others.
(b) Other operating expenses include fines and
penalties, association and regulatory fees and other expenses.
| (i) | Outstanding shares granted and valuation inputs |
The maximum number of shares available for issuance
under the share-based plan shall not exceed 5% of the issued and outstanding shares.
Set out below are summaries of XP Inc's Restricted
Stock Units (“RSU”) and Performance Stock Units (“PSU”) activity for the nine months period ended September 30,
2023.
XP Inc. and its subsidiaries Notes to unaudited interim condensed consolidated financial statements As of September 30, 2023 In thousands of Brazilian Reais, unless otherwise stated | |
|
|
RSUs |
|
PSUs |
|
Total |
(In thousands, except weighted-average data, and where otherwise stated) |
|
Number of units |
|
Number of units |
|
Number of units |
|
|
|
|
|
|
|
Outstanding, January 1 |
|
13,684,424 |
|
2,527,242 |
|
16,211,666 |
Granted |
|
4,040,196 |
|
42,647 |
|
4,082,843 |
Forfeited |
|
(1,162,415) |
|
(709,760) |
|
(1,872,175) |
Vested |
|
(156,987) |
|
- |
|
(156,987) |
Outstanding, September 30 |
|
16,405,218 |
|
1,860,129 |
|
18,265,347 |
For the nine and three month periods ended September
30, 2023, total compensation expense of both plans was, respectively, R$ 393,029 and R$ 184,213 (2022 - R$ 611,962 and R$ 186,311), including
R$ 102,302 and R$ 46,709 (2022 - R$ 144,213 and R$ 39,765) of tax provisions, and does not include any tax benefits on total share-based
compensation expense once this expense is not deductible for tax purposes. The tax benefits will be perceived when the shares are converted
into common shares.
The original weighted-average grant-date fair value
of RSU and PSU shares was US$27 and US$ 34.56 respectively. In May 2020, the Company decided to update the measurement condition of its
PSU shares, replacing the TSR measurement from US Dollars (US$) to Brazilian Reais (R$), being therefore subject to exchange variation.
The weighted-average grant-date fair value of PSU shares for the updated plan was US$52.41. The incremental fair value will be recognized
as an expense over the period from the modification date to the end of the vesting period. All other conditions of the PSU shares plan
have not been modified.
| 26. | Earnings per share (basic and diluted) |
Basic earnings per share is calculated by dividing
net income for the period attributed to the owners of the parent by the weighted average number of ordinary shares outstanding during
the period.
Diluted earnings per share is calculated by dividing
net income attributable to owners of XP Inc by the weighted average number of shares outstanding during the year plus the weighted average
number of shares that would be issued on conversion of all dilutive potential shares into shares by applying the treasury stock method.
The shares in the share-based plan are the only shares with potential dilutive effect.
The following table presents the calculation of
net income applicable to the owners of the parent and basic and diluted EPS for the nine and three months period ended September 30:
|
Nine months period ended September 30, |
|
Three months period ended September 30, |
|
2023 |
2022 |
|
2023 |
2022 |
Net income attributable to owners of the parent |
2,856,525 |
2,796,101 |
|
1,086,152 |
1,030,746 |
Basic weighted average number of outstanding shares (i)(iii) |
536,996 |
557,863 |
|
546,560 |
555,705 |
Basic earnings per share – R$ |
5.3195 |
5.0122 |
|
1.9873 |
1.8548 |
Effect of dilution |
|
|
|
|
|
Share-based plan (ii) (iii) |
3,881 |
17,867 |
|
1,086,152 |
17,660 |
Diluted weighted average number of outstanding shares (iii) |
540,877 |
575,730 |
|
553,599 |
573,365 |
Diluted earnings per share – R$ |
5.2813 |
4.8566 |
|
1.9620 |
1.7977 |
| (i) | See on Note 18, the number of XP Inc.’s outstanding common shares during the period. |
| (ii) | See on Note 25, the number of shares granted and forfeited during the period regarding XP Inc.’s Share-based plan. |
| (iii) | Thousands of shares. |
| 27. | Determination of fair value |
The Group measures financial instruments such as
certain financial investments and derivatives at fair value at each balance sheet date.
XP Inc. and its subsidiaries Notes to unaudited interim condensed consolidated financial statements As of September 30, 2023 In thousands of Brazilian Reais, unless otherwise stated | |
Level 1: The fair value of financial instruments
traded in active markets is based on quoted market prices at the end of the reporting period. The financial instruments included in the
level 1 consist mainly in public financial instruments and financial instruments negotiated on active markets (i.e., Stock Exchanges).
Level 2: The fair value of financial instruments
that are not traded in active markets is determined using valuation techniques, which maximize the use of observable market data and rely
as little as possible on entity-specific estimates. If all significant inputs required to fair value as an instrument are directly or
indirectly observable, the instrument is included in level 2. The financial instruments classified as level 2 are composed mainly from
private financial instruments and financial instruments negotiated in a secondary market.
Level 3: If one or more of the significant inputs
is unobservable, the instrument is included in level 3. This is the case for unlisted equity securities.
Specific valuation techniques used to value financial
instruments include:
| · | Financial
assets (other than derivatives) – The fair value of securities is determined by reference to their closing prices on the date of
presentation of the consolidated financial statements. If there is no market price, fair value is estimated based on the present value
of future cash flows discounted using the observable rates and market rates on the date of presentation. |
| · | Swap
– These operations swap cash flow based on the comparison of profitability between two indexers. Thus, the agent assumes both positions
– put in one indexer and call on another. |
| · | Forward
– at the market quotation value, and the installments receivable or payable are prefixed to a future date, adjusted to present
value, based on market rates published at B3. |
| · | Futures
– Foreign exchange rates, prices of shares and commodities are commitments to buy or sell a financial instrument at a future date,
at a contracted price or yield and may be settled in cash or through delivery. Daily cash settlements of price movements are made for
all instruments. |
| • | Options – option contracts give the purchaser the right to buy the instrument at a fixed price negotiated
at a future date. Those who acquire the right must pay a premium to the seller. This premium is not the price of the instrument, but only
an amount paid to have the option (possibility) to buy or sell the instrument at a future date for a previously agreed price. |
| • | Other financial assets and liabilities – Fair value, which is determined for disclosure purposes,
is calculated based on the present value of the principal and future cash flows, discounted using the observable rates and market rates
on the date the financial statements are presented. |
| • | Loans operations – Fair value is determined through the
present value of expected future cash flows discounted using the observable rates and market rates on the date the financial statements
are presented. |
| • | Contingent consideration: Fair value of the contingent consideration liability related to acquisitions
is estimated by applying the income approach and discounting the expected future payments to selling shareholders under the terms of the
purchase and sale agreements. |
Below are the Group financial assets and liabilities
by level within the fair value hierarchy. The Group assessment of the significance of a particular input to the fair value measurement
requires judgment and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy
levels:
|
|
September 30, 2023 |
|
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Fair Value |
|
Book Value |
Financial Assets |
|
|
|
|
|
|
|
|
|
|
Financial assets at Fair value through profit or loss |
|
|
|
|
|
|
|
|
|
|
Securities |
|
92,707,210 |
|
8,331,484 |
|
- |
|
101,038,694 |
|
101,038,694 |
Derivative financial instruments |
|
616,504 |
|
19,198,504 |
|
- |
|
19,815,008 |
|
19,815,008 |
Investments in associates measured at fair value |
|
- |
|
- |
|
1,478,728 |
|
1,478,728 |
|
1,478,728 |
Fair value through other comprehensive income |
|
|
|
|
|
|
|
|
|
|
Securities |
|
38,486,172 |
|
- |
|
- |
|
38,486,172 |
|
38,486,172 |
Evaluated at amortized cost |
|
|
|
|
|
|
|
|
|
|
Securities |
|
3,861,937 |
|
2,455,683 |
|
- |
|
6,317,620 |
|
6,174,973 |
Securities purchased under agreements to resell |
|
- |
|
12,178,380 |
|
- |
|
12,178,380 |
|
12,251,986 |
Securities trading and intermediation |
|
- |
|
3,569,085 |
|
- |
|
3,569,085 |
|
3,569,085 |
Accounts receivable |
|
- |
|
620,008 |
|
- |
|
620,008 |
|
620,008 |
XP Inc. and its subsidiaries Notes to unaudited interim condensed consolidated financial statements As of September 30, 2023 In thousands of Brazilian Reais, unless otherwise stated | |
Loan operations |
|
- |
|
27,270,090 |
|
- |
|
27,270,090 |
|
26,645,487 |
Other financial assets |
|
- |
|
6,236,401 |
|
- |
|
6,236,401 |
|
6,236,401 |
Financial liabilities |
|
|
|
|
|
|
|
|
|
|
Fair value through profit or loss |
|
|
|
|
|
|
|
|
|
|
Securities |
|
13,820,753 |
|
521,729 |
|
- |
|
14,342,482 |
|
14,342,482 |
Derivative financial instruments |
|
44,159 |
|
18,501,436 |
|
- |
|
18,545,595 |
|
18,545,595 |
Evaluated at amortized cost |
|
|
|
|
|
|
|
|
|
|
Securities sold under repurchase agreements |
|
- |
|
39,564,461 |
|
- |
|
39,564,461 |
|
39,517,091 |
Securities trading and intermediation |
|
- |
|
17,062,044 |
|
- |
|
17,062,044 |
|
17,062,044 |
Financing instruments payable |
|
- |
|
53,566,020 |
|
- |
|
53,566,020 |
|
53,093,731 |
Borrowings |
|
- |
|
1,259,682 |
|
- |
|
1,259,682 |
|
1,259,822 |
Accounts payables |
|
- |
|
603,789 |
|
- |
|
603,789 |
|
603,789 |
Other financial liabilities |
|
- |
|
13,538,404 |
|
574,026 |
|
14,112,430 |
|
14,112,430 |
|
|
December 31, 2022 |
|
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Fair Value |
|
Book Value |
Financial Assets |
|
|
|
|
|
|
|
|
|
|
Financial assets at Fair value through profit or loss |
|
|
|
|
|
|
|
|
|
|
Securities |
|
73,022,643 |
|
14,490,361 |
|
- |
|
87,513,004 |
|
87,513,004 |
Derivative financial instruments |
|
296,249 |
|
8,920,906 |
|
- |
|
9,217,155 |
|
9,217,155 |
Investments in associates measured at fair value |
|
- |
|
- |
|
1,523,425 |
|
1,523,425 |
|
1,523,425 |
Fair value through other comprehensive income |
|
|
|
|
|
|
|
|
|
|
Securities |
|
34,478,668 |
|
- |
|
- |
|
34,478,668 |
|
34,478,668 |
Evaluated at amortized cost |
|
|
|
|
|
|
|
|
|
|
Securities |
|
7,579,658 |
|
1,695,368 |
|
- |
|
9,275,026 |
|
9,272,103 |
Securities purchased under agreements to resell |
|
- |
|
7,172,777 |
|
- |
|
7,172,777 |
|
7,603,820 |
Securities trading and intermediation |
|
- |
|
3,271,000 |
|
- |
|
3,271,000 |
|
3,271,000 |
Accounts receivable |
|
- |
|
597,887 |
|
- |
|
597,887 |
|
597,887 |
Loan operations |
|
- |
|
20,874,930 |
|
- |
|
20,874,930 |
|
22,211,161 |
Other financial assets |
|
- |
|
3,517,189 |
|
- |
|
3,517,189 |
|
3,517,189 |
Financial liabilities |
|
|
|
|
|
|
|
|
|
|
Fair value through profit or loss |
|
|
|
|
|
|
|
|
|
|
Securities loaned |
|
13,048,246 |
|
481,019 |
|
- |
|
13,529,265 |
|
13,529,265 |
Derivative financial instruments |
|
167,874 |
|
8,437,535 |
|
- |
|
8,605,409 |
|
8,605,409 |
Evaluated at amortized cost |
|
|
|
|
|
|
|
|
|
|
Securities sold under repurchase agreements |
|
- |
|
31,370,050 |
|
- |
|
31,370,050 |
|
31,790,091 |
Securities trading and intermediation |
|
- |
|
16,062,697 |
|
- |
|
16,062,697 |
|
16,062,697 |
Financing instruments payable |
|
- |
|
43,669,798 |
|
- |
|
43,669,798 |
|
43,683,629 |
Borrowings |
|
- |
|
1,814,714 |
|
- |
|
1,814,714 |
|
1,865,880 |
Accounts payables |
|
- |
|
617,394 |
|
- |
|
617,394 |
|
617,394 |
Other financial liabilities |
|
- |
|
10,987,283 |
|
566,930 |
|
11,554,213 |
|
11,554,213 |
As of September 30, 2023, and December 31, 2022,
the total contingent consideration liability is reported at fair value and is dependent on the profitability of the acquired associate
and businesses. The total contingent consideration is classified within Level 3 of the fair value hierarchy. The contingent consideration
liability represents the maximum amount payable under the purchase and sale agreements discounted using a weighted average rate of 11.13%
p.a. change in the discount rate by 100 bps would increase/decrease the fair value by R$ 5,594. The change in the fair value in the contingent
consideration between the acquisition date and September 30, 2023, was not material.
The investments held through our investees which
are considered to be venture capital investments are classified as Level 3 of the fair value hierarchy. The inputs used by the Group are
derived for discounted rates for these investments using a capital asset model to calculate a pre-tax rate that reflects current market
assessments of the time value of money and the risk specific to the asset. Change in the discount rate by 100 bps would increase/decrease
the fair value by R$ 14,784.
Transfers into and out of fair value hierarchy
levels are analyzed at the end of each consolidated financial statement. As of September 30, 2023, the Group had no transfers between
Level 2 and Level 3.
XP Inc. and its subsidiaries Notes to unaudited interim condensed consolidated financial statements As of September 30, 2023 In thousands of Brazilian Reais, unless otherwise stated | |
| 28. | Management of financial risks and financial instruments |
The Group’s activities are exposed to a variety
of financial risks: credit risk, liquidity risk, market risk (including currency risk, interest rate risk and price risk), and operational
risk. The Group’s overall risk management structure focuses on the unpredictability of financial markets and seeks to minimize potential
adverse effects on the Group’s financial performance. The Group uses derivative financial instruments to mitigate certain risk exposures.
It is the Group’s policy that no trading in derivatives for speculative purposes may be undertaken.
Management has overall responsibility for establishing
and supervising the risk management structure of the Group. Risk Management is under a separated structure from business areas, reporting
directly to senior management, to ensure exemption of conflict of interest, and segregation of functions appropriate to good corporate
governance and market practices.
The risk management policies of the Group are established
to identify and analyze the risks faced, to set appropriate risk limits and controls, and to monitor risks and adherence to the limits.
Risk management policies and systems are reviewed regularly to reflect changes in market conditions and in the activities of the Group.
The Group, through its training and management standards and procedures, developed a disciplined and constructive control environment
within which all its employees are aware of their duties and obligations.
Regarding one specific subsidiary XP CCTVM, the
organizational structure is based on the recommendations proposed by the Basel Accord, in which procedures, policies and methodology are
formalized consistent with risk tolerance and with the business strategy and the various risks inherent to the operations and/or processes,
including market, liquidity, credit and operating risks. The Group seek to follow the same risk management practices as those applying
to all companies.
Such risk management processes are also related
to going concern management procedures, mainly in terms of formulating impact analyses, business continuity plans, contingency plans,
backup plans and crisis management.
The unaudited interim condensed consolidated financial
statements do not include all financial risk management information and disclosures required in the annual financial statements; they
should be read in conjunction with the Group’s annual financial statements as of December 31, 2022. There have been no changes in
the risk management department or in any risk management policies since the year-end.
Sensitivity analysis
According to the market information, the Group
performed the sensitivity analysis by market risk factors considered relevant. The largest losses, by risk factor, in each of the scenarios
were presented with an impact on the profit or loss, providing a view of the exposure by risk factor of the Group in exceptional scenarios.
The following sensitivity analyzes do not consider the functioning dynamics of risk and treasury areas, since once these losses are detected,
risk mitigation measures are quickly triggered, minimizing the possibility of significant losses.
|
|
|
|
|
|
September 30,
2023
|
Trading portfolio |
Exposures |
Scenarios |
Risk factors |
Risk of variation
in: |
I |
|
II |
|
III |
Fixed interest rate |
Fixed interest rate in Reais |
(695) |
|
(44,417) |
|
(72,455) |
Exchange coupons |
Foreign currencies coupon rate |
(175) |
|
(63,238) |
|
(127,887) |
Foreign currencies |
Exchange rates |
(6,547) |
|
112,377 |
|
350,409 |
Price indexes |
Inflation coupon rates |
(149) |
|
(23,349) |
|
(41,891) |
Shares |
Shares prices |
(4,719) |
|
18,892 |
|
(418,917) |
Seed Money (i) |
Seed Money |
(2,981) |
|
(74,512) |
|
(149,022) |
|
|
(15,266) |
|
(74,247) |
|
(459,763) |
XP Inc. and its subsidiaries Notes to unaudited interim condensed consolidated financial statements As of September 30, 2023 In thousands of Brazilian Reais, unless otherwise stated | |
|
|
|
|
|
December 31,
2022 |
Trading portfolio |
Exposures |
Scenarios |
Risk factors |
Risk of variation
in: |
I |
|
II |
|
III |
Fixed interest rate |
Fixed interest rate in Reais |
(174) |
|
(231,438) |
|
(483,589) |
Exchange coupons |
Foreign currencies coupon rate |
(15) |
|
(5,407) |
|
(10,418) |
Foreign currencies |
Exchange rates |
(2,089) |
|
22,825 |
|
(120,873) |
Price indexes |
Inflation coupon rates |
(118) |
|
(19,523) |
|
(40,147) |
Shares |
Shares prices |
(4,689) |
|
(46,927) |
|
(242,687) |
Seed Money (i) |
Seed Money |
(6,685) |
|
(167,106) |
|
(334,211) |
|
|
(13,770) |
|
(447,576) |
|
(1,231,925) |
| (i) | Related to seed money strategy, which includes several risk factors that are disclosed in aggregate. |
Scenario I: Increase of 1 basis point in the rates
in the fixed interest rate yield, exchange coupons, inflation and 1 percentage point in the prices of shares, commodities and currencies;
Scenario II: Project a variation of 25 percent
in the rates of the fixed interest yield, exchange coupons, inflation, price of shares, commodities and currencies, both rise and fall,
being considered the largest losses resulting by risk factor; and
Scenario III: Project a variation of 50 percent
in the rates of the fixed interest yield, exchange coupons, inflation, prices of shares, commodities and currencies, both rise and fall,
being considered the largest losses resulting by risk factor.
The Group’s objectives when managing capital
are to safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits
for other stakeholders, and maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital
structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell
assets to reduce debt.
The Group also monitors capital based on the net
debt and the gearing ratio. Net debt is calculated as total debt (including borrowings, lease liabilities, Structured financing and debentures
as shown in the balance sheet) less cash and cash equivalent (including cash, Securities purchased under agreements to resell and certificate
deposits as shown in the statement of cash flows). The gearing ratio corresponds to the net debt expressed as a percentage of total capital.
The net debt and corresponding gearing ratios as of September 30, 2023,
and December 31, 2022, were as follows:
|
|
September 30, 2023 |
|
December 31, 2022 |
Group debt (Note 30) |
|
7,977,841 |
|
8,175,437 |
Structured financing (Note 15 (b)) |
|
2,114,191 |
|
1,933,522 |
Total debt |
|
10,092,032 |
|
10,108,959 |
Cash |
|
(3,821,699) |
|
(3,553,126) |
Securities purchased under resale agreements (Note 3 (a)) |
|
(1,719,000) |
|
(646,478) |
Bank deposit certificates (Note 4 (a)(ii)) |
|
(207,813) |
|
(252,877) |
Other deposits at Central Bank (Note 15 (a)) |
|
(940,999) |
|
(514,999) |
Net debt |
|
3,402,521 |
|
5,141,479 |
|
|
|
|
|
Total Equity attributable to owners of the Parent company |
|
20,013,943 |
|
17,035,735 |
Total capital |
|
23,416,464 |
|
22,177,214 |
Gearing ratio % |
|
14.53% |
|
23.18% |
| (i) | Minimum capital requirements |
Although capital is managed considering the consolidated
position, certain subsidiaries are subject to minimum capital requirement from local regulators.
XP Inc. and its subsidiaries Notes to unaudited interim condensed consolidated financial statements As of September 30, 2023 In thousands of Brazilian Reais, unless otherwise stated | |
The subsidiary XP CCTVM, leader of the Prudential
Conglomerate (which includes Banco XP), under BACEN regulation regime, is required to maintain a minimum capital and follow aspects from
the Basel Accord.
The subsidiary XP Vida e Previdência operates
in Private Pension Business and is oversight by the SUSEP, being required to present Adjusted Shareholders' Equity (PLA) equal to or greater
than the Minimum Required Capital (“CMR”), CMR is equivalent to the highest value between base capital and Venture Capital
Liquidity (“CR”).
On September 30, 2023, the subsidiaries XP CCTVM
and XP Vida e Previdência were in compliance with all capital requirements.
There is no requirement for compliance with a minimum
capital for the other Group companies.
In relation to the long-term debt contracts, including
multilateral instruments, recorded within “Borrowings” (Note 14), the Group was required to comply with certain performance
conditions, such as profitability and efficiency indexes.
On September 30, 2023, there are no contracts under
financial covenants (December 31, 2022 – R$ 279,828). The Group complied with these covenants throughout the duration of the contracts.
|
|
|
|
|
|
Debt securities (i) |
|
|
|
|
Borrowings |
|
Lease liabilities |
|
Debentures and notes |
|
Bonds |
|
Total |
Total debt as of January 1, 2022 |
|
1,928,782 |
|
318,555 |
|
705,975 |
|
4,128,306 |
|
7,081,618 |
Acquisitions / Issuance |
|
- |
|
31,086 |
|
1,890,500 |
|
- |
|
1,921,586 |
Payments/repurchase |
|
(2,061) |
|
(73,921) |
|
(175,999) |
|
- |
|
(251,981) |
Revaluation |
|
- |
|
(89) |
|
- |
|
- |
|
(89) |
Net foreign exchange differences |
|
(49,607) |
|
(3,052) |
|
- |
|
(147,043) |
|
(199,702) |
Interest accrued |
|
48,663 |
|
16,717 |
|
117,530 |
|
93,790 |
|
276,700 |
Interest paid |
|
(24,924) |
|
- |
|
(20,463) |
|
(63,839) |
|
(109,226) |
Total debt as of September 30, 2022 |
|
1,900,853 |
|
289,296 |
|
2,517,543 |
|
4,011,214 |
|
8,718,906 |
|
|
|
|
|
|
|
|
|
|
|
Total debt as of January 1, 2023 |
|
1,865,880 |
|
285,637 |
|
2,596,519 |
|
3,911,383 |
|
8,659,419 |
Acquisitions / Issuance |
|
1,251,850 |
|
2,909 |
|
373,481 |
|
- |
|
1,628,240 |
Business combination (Note 2(d)(a)(iii)) |
|
978 |
|
19,802 |
|
- |
|
- |
|
20,780 |
Payments/repurchase |
|
(1,812,135) |
|
(95,813) |
|
- |
|
(38,619) |
|
(1,946,567) |
Revaluation |
|
- |
|
- |
|
- |
|
- |
|
- |
Net foreign exchange differences |
|
(74,653) |
|
(4,123) |
|
- |
|
(188,096) |
|
(266,872) |
Interest accrued |
|
27,902 |
|
17,912 |
|
296,681 |
|
101,441 |
|
443,936 |
Interest paid |
|
- |
|
- |
|
(21,295) |
|
(58,734) |
|
(80,029) |
Total debt as of September 30, 2023 |
|
1,259,822 |
|
226,324 |
|
3,245,386 |
|
3,727,375 |
|
8,458,907 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (i) | Debt securities includes Debentures measured at FVPL presented in Note 4(e) and does not include fair
value adjustments of (i) Debentures - R$ 133,509 (R$ 86,819 - 2022) and (ii) Bonds - R$ 329,523 (R$ 350,207 - 2022). |
| b. | Non-cash investing and financing activities |
Non-cash investing and financing activities disclosed
in other notes include the business combination with Banco Modal through an equity exchange transaction – R$ 2,097,326 (see Note
2(d)(a)(iii)).
On November 13, 2023, the Board of Directors approved
the distribution of dividends in the amount equivalent to US$ 0.73 per share. The dividends will be paid on December 22, 2023.
XP Inc. and its subsidiaries Notes to unaudited interim condensed consolidated financial statements As of September 30, 2023 In thousands of Brazilian Reais, unless otherwise stated | |
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