Brazil's XP posts 29% increase in first-quarter net profit

SAO PAULO (Reuters) - Brazilian brokerage XP said on Tuesday its net profit jumped 29% in the first quarter from a year earlier, with net revenues almost in line with market expectations, boosted by fixed income.

The U.S.-listed company, which also operates as an investment firm and adviser in deals, reported a 1.03 billion reais ($201.3 million) net profit for the quarter ended in March.

Net revenue rose 29% year-on-year to 4.05 billion reais; analysts polled by LSEG had expected revenue of 4.03 billion reais.

Revenues of XP's main retail business, through which it intermediates investments for individuals, grew by 22% in gross terms, with fixed-income revenue more than doubling year-on-year.

The country's central bank has cut the Selic, Brazil's benchmark interest rate, by a total of 325 basis points since last August. Even so, equities volume has not shown yet a material recovery from the levels it reached before the easing cycle.

"We expected this to be the tone throughout 2024," Chief Financial Officer Bruno Constantino told journalists, referring to fixed income as a highlight of the quarter's results.

Constantino said he expects interest rates in Brazil and the U.S. to remain at levels he sees as high "for some time."

Interest rates futures priced on Tuesday a 67% likelihood of a pause in the easing cycle in June in Brazil, after the central bank reduced the pace of rate cuts earlier this month.

XP revenues were also boosted by its corporate and issuer services business, with gross revenues rising 91% amid a strong market for debt issuance in Brazil.

Earnings before taxes (EBT) came in at 1.09 billion reais, up 33%, while the EBT margin rose to 26.9% from 26%.

($1 = 5.1167 reais)

(Reporting by Paula Arend Laier and Andre Romani; Editing by David Gregorio and Leslie Adler)