Good afternoon, and welcome to XP Inc.'s First Quarter 2023 Earnings Call. I'm Andre Martins, Head of Investor Relations. And with me are our CEO, Thiago Maffra; and our CFO, Bruno Constantino, who will be available for the Q&A section. I kindly ask you to refer to the legal disclaimer section on the beginning of our presentation about forward-looking statements. Additional information on forward-looking statements can be found on the SEC filings section of our website. It's important to remind that this call has a translation option to Portuguese. And the participants who want to ask questions may raise their hands on the Zoom tool. Now I'll pass over to Thiago Maffra, who will deliver the opening remarks.

Good afternoon, and thank you all for joining us today. I want to begin today's call with a few comments about the first quarter, our outlook for 2023 and our longer-term positioning. Then I will turn it over to our CFO Bruno, who will present Q1 results in more detail. So let's start with our quarterly performance. As you all know, the macroeconomic outlook remains challenging. In Brazil, we continue to face a high interest rate environment similar to other economies around the world. In addition, a large Brazilian corporate filed for bankruptcy in the quarter causing important loss for its investors, creditors and bondholders. As a result, capital markets and corporate credit remain under pressure, which has impacted the financial advisor exchange since many investors are keeping their savings in liquid, low-risk products, while they wait for this scenario to improve. While this headwinds has too impacted our core business in the first quarter, we keep advancing in our long-term journey in getting closer to the 1 trillion client assets milestone, having ended Q1 with BRL954 billion. Additionally, our ecosystem continues to grow with the net addition of 89,000 clients and 688 financial advertisers. On the financials, excluding the one-time loss, our gross revenue expanded 7% year-over-year, while EBT and net income grew 14% and 8% year-over-year. While these adjusted numbers look better, these are still not the growth rates that we are used to and which we believe we will see again when the macro environment improves. However, when we look at our first quarter performance, I see positive signs of strength and resilience in our business model, as well as efficiencies from our cost structure improvement. For example, in Q1, our new verticals revenues, which are less cyclical were strong. Revenue from retirement plans, cards, credit and…

Thank you, Maffra, and good evening, everyone. I will walk through our financials in more detail and provide some additional commentary and perspective on our revenue, expenses and earnings. But before I continue, I want to remind everyone that we are showing some adjusted metrics this quarter, which exclude the one-time impact of a non-recurring loss related to the bonds of a large corporate issuer that filed for bankruptcy in January. We held some of these bonds in our inventory for our clients to be able to trade and some of these bonds in our own investment portfolio. The value of these bonds dropped significantly when the corporate issuer filed for bankruptcy. As a result, we incurred a one-time loss of BRL164 million impacting our total gross revenue, with BRL95 million allocated in retail fixed income and BRL69 million in other revenue. This event also had a negative impact to overall capital market activity in Brazil. This is not excluded in our numbers, obviously, but important to note that the event hurt (ph) overall DCM volumes and revenues in retail fixed income and insurer services. Now let's move to Slide 12. As you can see, we have created a column highlighting the one-time loss I just mentioned. So our gross revenue. Our total gross revenue in the quarter was BRL3.3 billion, flat quarter-over-quarter and plus 2% year-over-year. If we exclude the one-time loss, our total gross revenue was closer to BRL3.5 billion, 5% growth quarter-over-quarter and 7% year-over-year. As Maffra mentioned, our total revenue growth is not where we would like it to be. But considering the weak macro and capital markets environment, we believe our top line numbers show the resilience of our business model and the benefits of the diversification that we have been building over the last…

Thank you, Bruno. So now we will move to the Q&A session. We have a lot of -- I ask you to be patient. We have a lot of hands raised, and we will as usual, do want to serve – first serve basis. The first question is from Tito Labarta from Goldman Sachs. Hi, Tito.

Hi, Andre. Hey, Bruno. Hey Maffra. Thank you for the call and taking my questions. Congratulations on the good results. A couple of questions if I can. I guess, just first on the inflows, we had already known before they came out today. Just help us think about sort of the rest of the year, do you think those inflows can recover? And just, along those lines, right, your revenues were fairly stable considering all the impact, relatively weak inflows. Just to think about what can drive revenues up from here and how dependent would that be on inflows increasing? And then just a second question on the guidance. I know you kept the guidance and you also had some of the impacts here, could potentially be on-track at least for the bottom end of the guidance, do you think -- is it fair to think that this is like a seasonally weak quarter, and can earnings improve from here? I mean, you definitely delivered on the expenses. It goes back a little bit in revenues grow, to sum it all up, kind of revenue growth outlook given the inflows that you have right now, and if there is upside from here? Thank you.

Hello, Tito. How are you? Thank you very much for being here and for your question. I will take the first part and Bruno can take the second one. About the inflows, being very honest and direct to you, it's hard to imagine that in an environment like we have today, our investors, they are afraid, they have high-level of uncertainty and with the high-interest rates at 13.75%, they prefer to keep their money in very liquid and very low-risk investments. So it's hard to imagine that we will have like the same levels of net inflows that we had in the past, if -- especially the level of uncertainty, okay. Not much the interest rates, of course, it helps if it goes down. But when you get the two things together, that's the difficult part. And to give you some numbers, when we look -- of course, we track all the inflows and outflows throughout the financial institutions and all of them went down, I would say at the same level. So we don't see any player getting more efficient against us than others. So that in our opinion, reflects that it's more important there -- the liquid products like LCA's, CGs with tax-free at 13.75%, then anything else. And the second point is, if you look at the inflows, not the net-new money, we are closer to all-time highs, what happened. We see higher outflows and when we look at outflows, they are more concentrated on companies. So it's not on the individuals, it's more on companies that because they need the cash. They have lower credits at the banks right now. They have a tough environment. So we see a lot of outflows of companies right now. So in our opinion, it's something that cyclical, that's part of the investment business. We have cycles and we are in a bad cycle for investments, but at the other hand, we have all the new verticals, all the new business lines that are growing, and more than compensating the decreasing investments.

Yeah. And to answer your other part of the question, Tito, about the revenue part of net inflows being lower, it's less relevant today than it was in the bull market for sure. And also what Maffra mentioned about, net inflow, it's a component of two numbers, gross inflow, and outflow. So if the net inflow is lower because the outflow is higher, for example, in wholesale, especially for corporate in companies as Maffra mentioned, it doesn't mean that the revenue is going to be severely impacted by that number. On the contrary, if we keep the level of inflows and outflows, being higher we can depending on the case, even make more revenue in the short-term. Your second part of the question, about the guidance and if there is a seasonality, I believe, yes. I believe that the first quarter was really weak in terms of capital market activity, especially after what happened in January. The corporate credit market was dysfunctional in the first quarter, we see it resuming right now, but is still -- it's very weak so far this year. When we look at a longer-term period for DCM, for example, the last five years on average, there was a seasonality that favors the second semester compared to the first semester. Around 40% of the revenue in the first semester compared to 60% in the second semester. We do not know if it's going to be the case this year, but the beginning of the year was really weak regarding the capital market.

Great. Thanks, Bruno. Thank you, Maffra. That's very helpful. And maybe if I can -- just one follow-up Maffra on the -- the gross inflows. Any color you can give on how I guess those gross inflows with individuals have evolved over the last year? I mean, have those decelerated as well or any acceleration there, just help us -- since you put that out there, just if you can put that into context, just also given the market?

I'll pass it over to Bruno, so...

Thanks, Maffra. Tito, just to give you a few numbers. So we do not disclose the gross inflow, but just for you to have the big picture, when we look at the first quarter this year and compared to the average quarters of last year, the inflow was down around 5%, that's the number. So considering the macro-environment is not much in our view. But when we look at outflows, it was up 20%. So that's what has been hurting the most the net inflow. When we break down between our -- I would call our core engine of retail investors and segregate the wholesale part, mostly companies, the core engine of our business, all the outflow related to the total client assets, it's been stable. It has not increased. So we don't see a problem there. Of course, the level is not where we'd like to be, but as Maffra mentioned, considering that investors are not investing, they are keeping their savings in beta liquid low-risk of products. We understand it's a headwind for the investment business. But even with this environment, the core engine in terms of a percentage of outflow compared to total client assets, it's not increasing.

Okay. That's very helpful, Bruno. And I do see the retail AUC went up and Corporate AUC going down, so, it's good context. Thanks very much.

Thank you, Tito. Have a good one. Next question is from Mario Pierry from Bank of America. Hi, Mario.

Hi guys. Thanks for taking my question. Let me ask two questions as well. First one, on your cost reductions. If you're expecting to make any more changes to your employee base, also if you could be a little bit more specific in which areas where these reductions concentrated in? And you mentioned that you expect the stock-based compensation to go up in the second quarter, back to the fourth quarter levels. I was just trying to understand why? So that's on expenses. And then my second question is related to your NPS score. And again it's still is a high NPS, but I think it's down to 70 and used to be a peak of 77, can you be can you give us some color on why NPS is going down, what are you doing to improve that? Thank you.

Hello, Mario. Thank you for your question. It's Thiago here. So, about your first question about employees and areas, what happened is, since I became the CEO of the company, we have been implementing what we called a digital transformation of the company. So last year I would say, we finished the reorganization of the business units of the whole structure of the multi-disciplinary teams in the company. And of course, you know that but, when you do a transformation, when you reorganize the company, you have some efficiency gains. You have some -- because imagine that you have 10 piece of Lego and when you put together, you only need eight, okay. So part of the reduction is because of these transformation, which we on the company on the pass through three years, okay. In part, it's because we committed some excess during the pandemic. We over-hired. We hired people not necessarily with our culture. So, part, it's because of efficient and part is because of the excess. So all the reductions they are done. So, as Bruno mentioned, when you have a company with owners, with partners, we are very fast to correct the mistakes we did. So we already did the corrections. You guys can see on the numbers, and we don't have any specific areas. Of course, we have intelligence like to say where to cut more, where to cut less, but we did cut all over the company, but of course, we preserve the business lines that are in early stage, of course, we preserve like the risk areas of the company credit and so on compliance and so on. So, but the reductions there are done. On your first question, I believe you, asked about the SG&A. As Bruno mentioned, the guidance still holds.…

And I can take the question about the share-based compensation. Yeah, we had cancellations of restricted stock units and performance stock units in this quarter, and that resulted in lower level then we expect to see in the next quarters to come that's why I mentioned that we should come back without this impact that is only one-time. We should come back to a normal level as of the fourth quarter, something between BRL160 million to BRL170 million and not the BRL53 million that we saw in the first quarter. And also just to comment there, we also had recently the new partners that we more than welcome in our partnership and the match that is going to happen in the second quarter. So all of that together, we should have an increase in that expense line going forward.

Okay. Now that's clear. Let me just follow up then -- just to be clear, there were no one-off charges related to this headcount reduction. There were no severance charges taken this quarter?

It's in there.

Sorry.

Everything is in there. I don't know if you heard me, sorry.

So everything is -- can you quantify how much were the severance charges?

We are -- look I would stick to the guidance -- annual guidance that we have. It's BRL5 billion to BRL5.5 billion SG&A ex incentives. That's the annual guidance and as Maffra mentioned, considering what happened in the first quarter, we are leaning towards the low-end of the guidance.

Okay. Thank you very much.

Thank you, Mario.

Next question Geoffrey Elliott from Autonomous Research. Good evening, Jeff.

Hi. Can you hear me, okay?

Yes. We can hear you.

Hello? Great. Thanks very much for taking the question. On capital, first of all, the buyback program has been completed, do you talk about that 50% payout ratio in the slides, why not announce another buyback now and what are you thinking in terms of options for deploying capital? And then second, related to that Modal, it's been a while since we heard much there, but we did see that form F-4 cancellation, why it was not issued and when should we expect Modal to close? Thank you.

Hi, Geoff. So I will start with the second one first. We expect to close soon. Now the only pending part is central bank approval,. As you mentioned, we -- we have withdrawn the F-4, because we went in a different route to conclude that transaction, everything happen as planned. So the General Meeting of Modal was approved. So everything is on track and now it's only Central Bank approval. Hopefully, we're going to get it during the first semester, but we cannot guarantee it. In terms of the capital allocation, and share buyback, yeah, we have completed the program of the BRL2 billion if you look at all the blocks that we have bought including Itau and Itau that's blocked last year in less than 12 months, we have bought back around BRL2.7 billion. BRL1.8 billion in 2022, BRL916 million already this year. As Maffra mentioned, we're going to probably keep a similar payout ratio, which is around 50%. We don't know what the net income for 2023 will be. We are still in the first semester, we have our guidance BRL3.8 billion BRL4.4 billion of net income, and we're going to complete in the second semester, either through dividends or share buyback, we haven't decided yet.

Understood. Thank you.

Thanks, Jeff.

Next in line, Olavo Arthuzo from UBS.

Hi guys. Can you hear me well?

Hi.

Can you hear me well guys?

Yes, we can.

Yes.

Okay, sorry for that. Thank you. Thank you, everybody, for taking my question. Actually, I have two questions basically related to the credit card business. Because the overall trend of credit cards continues to expand well and I believe this is evolving according to the expectations of the company. So my first question on this regard is that we noted the increased penetration of cards on active clients, they stood at more than 20% this quarter. So my question is how much more could this figure increase like. Is there a target that you guys can share with us for this penetration, like 40%, maybe 50% or even above that? And my other question on credit cards is basically related to the monthly average spending. Because as you can see here, it's dropped to BRL4,200 (ph) this quarter, which is below the average of the last year or even well below when compared to the first quarter of 2021 So could you just like clarify if this is solely related to stricter credit policies with lower limits or something like debts, that were my two questions? Thank you very much.

Hello, Olavo. Thank you very much for your question. About the first question, about penetration in credit cards, remember that we started only at XP, if clients above 50K. So that was the segment that we started and there we stuck for like almost a year. Then we went to XP clients below 50K, okay and I would say in December, someone recalled me here, but in December or November last year we started like to escalate the card on Rico -- Rico brand. So when we look at the penetration that we can achieve, if you look at the five big banks and if you look like the affluent brands for these banks, they have 90% penetration. So, out of 10 clients at one-off is this affluent brands in these banks, nine out of 10 have credit cards. So that's our target, of course, it's going to take a while, but we believe we can increase the penetration a lot. So we don't have any specific target, of course, 90%, it's very high, but. We are improving. We are delivering. We have a lot of new features, and new benefits in the cards for the next months or quarters. So we are working on penetration and more than penetration, we are -- we have been working a lot on high-level of services to increase the share of the wallet we have. Of course, when you have the primary card of someone you have 80% of TPV. So that's our main focus right now. And again, we're going to deliver new features, new products, and new benefits, so we can increase the penetration. And about the expansion that you mentioned, as we start to move down the pyramid or for segmentation, for example, with clients below 50K at XP and Rico clients. Of course, we have lower spending per client at two segments because if you get the top clients, they have like 10K spending. If you go to the bottom we have -- I would say 2000, 2,500 spending per customer. So that's why you're seeing the spending going down because we are increasing the number of clients at the low segmentation.

And Maffra, can I just add one comment? That, I think, it's pertinent to the question. You have to think about our strategy here. And our strategy is pretty clear. It's a long-term journey, so on a quarterly basis, it's hard to analyze, but if you extend the view to the long-term, cards, we started with cards. We didn't have a digital bank account, which is essential for cards, but we didn't have it, because we are moving brick-by-brick. Looking after our profitability as we go down this road and this long-term journey. Now we have the digital bank accounts, so those things and of course we need to evolve all of those new products and services, and we're going to do it by listening to our clients. But our strategy is totally connected with the evolution of penetration and cross-selling in our ecosystem. And the slide that I talked about in my part of the presentation, it makes clear how fast XP and our ecosystem, can scale anything we put to say the BRL750 million that we added on revenues in only 15 months of new verticals, not related to investment directly where we come from. It's something that tells about the potential of cross-sell and scaling those new businesses. But it takes time, I wouldn't just focus on a quarter, would extend the view and that's what we're going after, is to be able to convince our clients to do everything in their financial life with XP. If we are able to do that, they're going to be also able to get the link with the banks, it takes time, but we are going after it.

Okay. Thank you very much. Just a quick follow-up on this. Can you just share with us how much of debt of that BRL4,200 (ph) monthly average spending like represents of the average credit limits that you guys give to your clients, just for us to understand the potential here?

No, it's hard to make the math. We -- for many of our clients, we have a dynamic limit for example. So you -- because it's related to the investments. We would have to segregate the portion that a clean credit and we do not give that type of disclosure. So I'm sorry, I cannot -- help you to make that math. I know what you're planning, trying to see the potential, but, yeah, we expect all those new verticals as I mentioned. When you add them together, this year we expect the revenue to grow between 50% to 60%.

Yeah. But just to complement Bruno here, you can assume that, of course, we have some opportunity, some room, like to better manage the credit limits of the bottom segmentation of our customers, but I would say that the increase of TPV, the growth for the business, the biggest opportunity is not there, because different from other players. The limit constraint is not a big issue for our customers. Of course, we have an opportunity, we can better manage some clients, but it's not a huge opportunity.

Yes. Thank you very much, guys.

Thanks you, Olavo.

Thank you. Next question Neha from HSBC. Good evening Neha.

Good evening. Congratulations on the results and thank you for taking my question. Two quick questions, first on the IFA business. Could you shed some light about what is the sentiment with the IFA, right now? Inflows or net inflows are a bit weak. There is more investment in fixed-income securities, which are plain vanilla. So, are you seeing some mortality in terms of the number of new IFAs opening up? Your gross [Technical Difficulty] the strong, but any color would be very helpful if there has been a change in the economics for the IFA network, and also any change in the competitive dynamics regarding IFAs? My second question is regarding your markets -- easy market share. You mentioned that if I'm not -- if I didn't hear you incorrectly, you mentioned about 20% to 25% market share could be achievable in the longer-term. Is there a time horizon that you have in mind and what are the main drivers for you almost doubling your market share? Thank you so much.

Okay. Hi, Neha. Thank you. This is Bruno, I'll take the first one and Maffra can take the second one. So regarding the IFA, first -- first thing to have in mind, the IFA business model is a very asset-light business model with not too big an investment portfolio of clients, you can break even when you compare to the bank manager's salary for example. And one of the reasons is not only because it is asset-light, but it because has tax benefits compared to the bank manager as well. Of course, this tough environment for the Investment Business makes it harder to grow at an accelerated pace. So, everybody is gearing this headwind in terms of investments, but it doesn't mean people are below the water, that's not the case. For those biggest IFA offices that have -- during the -- you know, especially during the bull market have invested a lot -- have maybe hired IFAs paying a lump-sum, there was too much, considering the environment we are now, they need to adjust exactly like XP did and they have done and we are together with them, helping them. But those biggest IFA offices are also the most capitalized ones. So we do not see any problem in terms of financial health in our IFA network. And to your point about attracting IFAs, I mean I think the numbers speak for themselves. We -- in the first quarter, we added more on a net basis, more than 600 new IFAs XP, still is the main destination of new IFAs. This market keeps growing even in a tough macro-environment and I believe, especially with the new regulation of CVM, that it's really good for the IFA business. This will continue going forward and XP is going to be there for all the new IFAs that want to join our platform.

Hello, Neha, I can take the second question, okay? The way I like to see when we say that we have 11% market share, we are only talking about individuals. If you look and if you include companies, we have only 8% market share. But -- and when you break down going back three individuals, when you break down the segmentation, we have I would say 2% at the bottom, clients with zero to BRL300,000 AUC, we have, let's say about 20% on the middle BRL300,000 to BRL10 million, and we have 5% at the top of the pyramid. So 2% at the bottom, 20% in the middle, 5% at the top. So we have been investing a lot like -- to go down, basically this technology. So a few years ago, it was very hard for us to go below BRL300,000, today, we have Internal Advisors or IFAs folks on customers above BRL25,000. Why that's possible because we have much more technology, we have CRM, we have all the information ways of having higher account loads and to serve these clients. In the middle, it's more of the same, how we keep increasing, and at the top, it's how we create even better services for high-net-worth and ultra-high-net-worth customers. So we have been investing a lot on the extremes and we have been investing in the middle to continue to grow. One way you mentioned, how many years in what time horizon, we could reach 20% or 25%. If you go back, since 2020, we increased 400 basis points of our market share. So in good years, we increased 160 bps, and last year, that was a very tough environment for investments, we increased 80 bps. So that's the plan, how we keep increasing 150 bps to 200 bps per year. Of course, in tough years we will grow less, in better years we will grow more. So that's how we see and how we do that, we like to say that we are the only house in Brazil that is 100% focused on investments. So we don't sell products, we sell services. We sell allocation. We have a higher level of sales when you compare today, in comparison to the other players, and that's how we differentiate ourselves. Of course in a very tough environment like now that people are worried about the political environment, about the macroenvironment and you have a 13.75% interest rate. People get very comfortable with low-risk, very liquid products. So it's harder to convince them like to really invest to buy portfolios to leave the Bank's income here, but we know this macroenvironment is temporary. It's going to change at some point and we believe we can go back to a faster pace of growth.

Understood. If I can just follow-up quickly on the -- the market share question. So you mentioned that you are investing a lot in technology to be able to expand your share in the bottom of the pyramid. What strategies do you have for the top of the pyramid? We have 5% share at the top of the pyramid, where do you see you can go in the top of the pyramid? Thank you so much.

Yeah. When you go to the top of the pyramid is much more personalized, it serves because each client is different when you're talking about high-net-worth and ultra-high-net-worth clients. So one point that was very important for us to be competitive was the -- I am just trying to remember the word [Foreign Language] secured services, so we have been investing a lot, because we have to do the custody of the funds, we have to do the administration of the funds and so it's something that we have been building (ph) for the past two years, but it takes time. I would say that we are close to having the same level of service of other house at the top. So we believe we can start to gain a lot of market share.

Perfect. If I can just -- one last thing on the IFAs, what is your current market share in terms of number of IFAs and in terms of the AUC, which is coming from the IFAs? Thank you so much.

Yeah. We have 70% market share in the IFA business. The AUC, we do not disclose, we just keep saying it's less than half of the total, but we do not give a number. And to your question, when we think about channels, distribution channels, of course, IFA is an important one and one that we expect to keep growing. And as I mentioned, XP is going to be there with all the tools that we have to help them succeed. But we also have many more channels. We are agnostic about channels, we want to be an entrepreneurship hub, where an entrepreneur in the investment business can connect to our platform. So for example wealth, service business that if I'm not mistaken we announced this new channel in the pandemic back in 2020. It's growing a lot, consultants, and other channels in our ecosystem. So it's not only IFA. IFA is important, we're going to keep growing, but we have many more channels.

Excellent. Thank you so much.

Thank you, Neha. Bye-bye. Next question, Marcelo Telles from Credit Suisse. Hi, Telles. Thank you for joining us.

Hi. Can you hear me now?

Yes, we can.

Hi, Maffra. Hi, Bruno. Hi, Andre. Thanks for the time. I have two questions. Regarding the net inflow which you already alluded to the BRL16 billion in the quarter, the yield curve is implying a decline in interest rates. Do you -- how do you think that impacts your business, especially the willingness of your clients who maybe start taking more risk again? I mean, do you need to see just like an inverted yield curve already would be enough to see perhaps a rebound or net inflows or do we need to see perhaps interest rates going to-single digit levels to really start bringing people back if you can comment on that considering we are potentially monetary easy cycle, so that's my first question. And the second question is with regards to your revenue performance in the quarter was quite resilient despite the very difficult micro-environment. Looking at your accounting disclosure, we see I think the revenue from services that were down quite meaningfully about 14% quarter-over-quarter. And we saw the net income from financial instruments, I think, going from BRL14 million to BRL500 million. So I just want to know is there any known recurrence or some extra revenues that maybe structured operations that might have helped you in the quarter? Or do you think this is just more back to normality given that the fourth quarter was already, let's say, a very-very weak quarter from that standpoint? Just to understand how sustainable this level of revenues in the first quarter can be in the quarters to come? Thank you.

Okay, Thanks. So your -- I will start from the second question and then --

I can take the first one.

Yeah. Go back to the first one. So about the net income from financial instrument, there you mentioned quarter-over-quarter it was a growth of around 10% if I'm not mistaken. So there, I mean, it's -- if you look on a longer term view, net income from financial instruments has been grown in relevance in the accounting income statement compared to the net revenue from services rendered. And that has to do -- we have two main things. Number-one, is the floating revenue that is a financial instrument, so it's embedded in that number. And number two, the brokerage commission part of the accounting income statement has been suffering because of the equity market. If you look at that number, for example, last year brokerage commissions, we had a higher number of BRL560 million, for example, in the first-quarter of '22 that went down to BRL494 million in the first-quarter of this year. So this number has been decreasing because of the macro-environment and net income. A lot of components in there, but I would highlight the floating part of it.

Well, about your first question, that is, of course, if we have lower interest-rate level, of course, is good for our business. Okay, we have been through other cycles in the past once we start to see the interest rates going down and the shape of the curve being upwards low, but it's the best for the business, okay, because we see longer durations, we see more investments in act which is we see people moving back from fixed-income funds that have much lower ROA to multimarket funds to [indiscernible] funds. So, we expect -- once we start to see interest rates going down, we expect people reallocating from low ROA fixed-income products to more high-yield products. Okay. So, of course, we benefit from that. Another aspect of that, once we start to see interest rates going down, it means that probably the level of confidence of our investors, of the Brazilian investors, they are higher, so people are more willing to move from the banks like to XP to invest in more diversified portfolios. So it's, I would say, a win-win scenario. It's good for the business. And the third point is about capital markets, as we already mentioned many times here today, the capital markets for revenues for XP in Q4, they were really low and Q1 they are even lower. Okay. So it was the lowest level for the past many quarters, okay. And, of course, we -- you guys, of course, have the public information that you can see. We start to see capital markets going back again after the largest Americanas event, light event. So we start to see things going back to normal, but still far from the peaks that we saw in the past, okay. But again, once we start to see interest rates going down, we expect net-new money should go up, we expect revenues from higher yield products going up, we start to see capital markets getting better, so it's good for the business.

Thank you. And just a follow-up on your -- on your last point. So if rates -- you think like even if rates, let's say, they stabilized, let's say, low-double-digit levels, let's say, 10% or so, you think that you could still see a possible impact on your business? They don't need to go to a single-digit level question [Multiple Speakers]

I would say that's more than the level, okay, if it's 10 or 9 or 11. The problem is when you have a high-level of uncertainty, okay, you see all the prices around the globe going down, inflation very-high, the price stuff everything bonds going down and so on. The investors, they get the freight, okay. They buy low-risk products. And in Brazil, you know very well, we have tax-free products with daily liquidity with 13.75, so it's hard to convince someone to move from that to any other product, okay. If the macroenvironment, the level of confidence gets better, for me, it doesn't matter if it's 9 or 10, okay, it's not that the point that will change how much money we will make or so on, so -- but there is a mix of very-high interest rates with high uncertainty, that's the biggest problem right now, okay. But again for us, it's not. When we had 2%, it's also not the best scenario for the business. Something like high-single-digits, I would say that's the best scenario for the business.

And just to add here, probably we have many portfolio managers here in the call, investors that have funds and it works pretty much the same. Right now, I bet a lot of portfolio managers look at many opportunities in the stock market, but still they are getting outflows and not inflows risk aversion. So it's not only the level of interest rates, as Maffra mentioned, it's about risk aversion. Whenever people -- and that can change quickly. We don't know when or how, but it does happen because it's a cycle. And when that happens, then people will jump in and we're going to start seeing inflows back in riskier funds. And then you start a different type of cycle. So level of interest rates is important, but it's not key, risk aversion, it's more important.

Thank you for your question. That is -- it was the last one. So we would like to thank you all for participating in the call. We will be available at the IR team to discuss the results with you and have a good night everyone.

Thank you everyone for being on the call. Thank you very much. See you guys next time.