XP Inc (NASDAQ: XP) reported second-quarter fiscal year 2026 net income of 1.4 billion reais, a 5% year-over-year increase, driven by strong performance in its wholesale banking segment.

Gross revenue rose 8% to 5.1 billion reais, while client assets expanded 17% to reach 2.2 trillion. The company maintained a Basel capital ratio of 20.3% and executed 1 billion reais in share buybacks during the quarter.

Financial Performance

XP’s adjusted earnings before taxes (EBT) grew 15% year-over-year to 1.6 billion reais, resulting in an adjusted EBIT margin of 32%. This margin expansion reflects operating leverage from controlled expenses and lower mark-to-market impacts compared to the prior period.

Retail revenue totaled 3.9 billion reais, up 8% year-over-year. Excluding mark-to-market effects on fixed income corporate credit, retail revenue growth would have been 15% for the first half of FY26. Equities revenue increased 11% to nearly 1.1 billion reais, despite an 8% sequential drop in average daily trading volume (ADTV). The funds platform revenue grew 22% year-over-year due to management and performance fee bookings.

Wholesale Banking Growth

The wholesale banking segment, comprising corporate, issuer services, and institutional revenues, surged 32% year-over-year. Corporate segment revenues led this expansion, growing 117% year-over-year and 22% sequentially, supported by cross-selling of derivatives, foreign exchange, and credit solutions.

Issuer services faced headwinds from reduced fixed income offerings, particularly tax-exempt instruments, amid wider credit spreads. However, management noted signs of normalization in the fixed income pipeline towards the end of the quarter.

Capital Management & Strategy

XP closed the quarter with a Basel ratio of 20.3% and a Common Equity Tier 1 (CET1) ratio of 17.1%. The company aims to operate within a target range of 16% to 19% for the full year, facilitating continued capital distribution.

In Q2, XP executed 1 billion reais in share buybacks, closing one program while maintaining another open program of the same size. Combined with 500 million reais in dividends distributed in June, total announced capital distribution for 2026 reached nearly 2.5 billion reais. The company also announced the cancellation of approximately 11.8 million treasury shares, representing roughly 2.3% of outstanding shares.

What the Numbers Show

A significant divergence exists between XP’s risk-weighted assets (RWA) growth and its corporate revenue expansion. While total RWAs grew approximately 26% year-over-year—primarily driven by credit RWA associated with the corporate business—corporate revenues expanded 117% over the same period. This disparity highlights the high return-on-risk profile of the wholesale banking segment, where revenue generation is outpacing the accumulation of regulatory capital requirements.

Strategic Outlook

Management emphasized a strategy focused on personalized financial services and ecosystem completeness. The company plans to launch a platform for small and medium-sized enterprises (SMEs) in September, featuring cards, acquiring, and collateralized credit. CEO Thiago Maffra stated that the company continues to target double-digit growth for FY26, supported by a diversified revenue base and ongoing product launches across retail and corporate segments.

XP Inc (NASDAQ: XP) announced that its board of directors has approved the cancellation of existing treasury Class A shares held by the company. The move reduces the total number of outstanding shares, impacting the capital structure of the fintech firm.

The company cancelled 11,791,755 Class A shares on this date. This action represents 2.3% of the total shares outstanding prior to the cancellation.

Share Count Adjustment

The total share count decreased from 520,292,030 to 508,500,275 following the cancellation. The reduction reflects the removal of treasury shares from the active float.

What the Numbers Show

The cancellation of 2.3% of the total share base indicates a deliberate reduction in equity supply. With the share count dropping by nearly 12 million units, each remaining share represents a slightly larger proportion of the company's net assets, assuming no concurrent changes to total equity value.