Brazilian broker XP’s profit gains from higher client assets

(Reuters) – XP Inc posted a jump in third-quarter profit on Tuesday, as client assets at the Brazilian broker accelerated and helped offset weaker net inflows due to higher interest rates.

Last month, Brazil’s central bank held its key interest rate steady for the second straight policy meeting and warned inflation was still running high and that the global outlook remains volatile.

In the 12 months through September, inflation reached 7.17%, slightly above the 7.1% forecast and well above the central bank’s target of 3.5%, with a tolerance margin of 1.5 percentage points on either side.

The country’s largest brokerage said its net inflows of 35 billion reais ($6.80 billion) were 7% lower from a year ago, while the total purchase value on XP’s credit card doubled to 6.6 billion reais.

Total client assets rose 17% to 925 billion reais as people poured money into its diverse range of products such as bonds, derivatives and pension funds, while active client numbers grew 15%.

The company’s net income rose 10% to 1.03 billion reais in the third quarter and net revenue jumped 14% to 3.62 billion reais.

Retail gross revenue rose 2% to 2.63 billion reais, while institutional revenue surged 105% to 577 million reais.

($1 = 5.1485 reais)

(Reporting by Mehnaz Yasmin in Bengaluru; Editing by Shailesh Kuber)