Results conference call: 4th quarter of 2025

Good evening ladies and gentlemen. Welcome to new holdings conference call to discuss the results for the fourth quarter of 2025. A slide presentation is accompanying today's webcast which is available in news investor relations website www.investors.new in English and www inves. This conference is being recorded and the replay can also be accessed on the company's IR website. This call is also available in Portuguese. To access, you can press the globe icon on the lower right side of your Zoom screen and then choose to enter the Portuguese room. After that, select mute original audio. room. Please be advised that all participants will be in a listenon mode. You may submit online questions at any time today using the Q&A box on the webcast. I would now like to turn the call over to Mr. Gileer Misoto, investor relations officer at N Holdings. Mr. Sto, you may proceed. Thank you operator and thank you everyone for joining our earnings call today. With me on today's call are David Vales our founder, chief executive officer and chairman and Giller Magago our chief financial officer. Starting with this quarter's result we introducing a new managerial reporting framework including managerial indicators and our managerial P&L. All financial metrics discussed and presented today reflect this framework. Lag will provide additional details during his presentation. These managerial measures are important to how we manage the business but are not financial measures as defined under IFRS and may not be comparable to other companies. A full reconciliation to the most directly comparable IFRS figures is available in our managerial P&L reconciliation report and in the appendex to this presentation. Unless otherwise noted, all growth rates discussed today are presented on a year-over-year FX neutral basis. Today's discussion may include forward-looking statements which are not guarantees of future performance and involve risks and uncertainties. actual results may defer materially from those expressed or implied. Please refer to the forward-looking statements disclosure included in this earnings presentation for additional information. With that, I will now turn the call over to David. Please go ahead David. Hello everyone and thank you for joining us today. 2025 was a fantastic year for New Bank and Q425 truly showed the strength of our business model. During the year, effectively, most of our key indicators from customer love to scale, engagement, and profitability moved in the right direction while we continue to invest significantly on long-term growth. We closed the year with 131 million customers, adding 17 million net new customers and maintaining an activity rate of 83%. Scale and engage remain the foundation of our model. Artpack reached $15 per active customer up approximately 9% quarter over quarter and 27% year-over-year driven by deeper monetization across our platform. As a result of strong customer growth and higher ARPAC, revenues in Q425 reached $4.9 billion, up 45% year-over-year. Gross profit in the same period reached nearly $2 billion, up 38% year-over-year. At the same time, we maintained discipline with an efficiency ratio of 20% under the new methodology, even as we continued investing in our core markets and new technologies. Net income reached $895 million, translating into a record 33% return on equity while maintaining strong capital buffers and scaling our credit portfolio responsibly. These results reflect the priorities we set and the discipline of execution throughout the year. One way to see this execution is to look at what we put in customers hands across our markets. We launch more than 100 new products and features. More important than the number was the intent. Each launch aimed to deepen engagement, expand access and strengthen unit economics. Individually, these initiatives are incremental. At scale, they compound. In payments, we evolved picss with AI enabled features, launch instant payments in Colombia, and expanded Mexico's cashin and cash out network to more than 30,000 physical points. In credit, we expanded responsibly, launching new payroll loan modalities in Brazil, the subscriptionbased credit card in Colombia, and rolling out programs like Fresh Start to help engaged customers regain access to credit. We also introduced the under 18 credit card, beginning to build financial relationships earlier in customers lives. On the affluvent segment, Ultravleta continued to strengthen our value proposition. Formemes, we scaled credit products and launched tools like charging assistant to help small businesses manage cash flow. Behind this execution was a clear set of priorities guiding our allocation of capital and talent throughout the year. As you may recall, our top priority is to build the largest and most loved retail banking franchise in Latin America. In 2025, we made measurable progress across all three markets. In Brazil, we became the largest private financial institution by number of customers, reaching 113 million with an activity rate of 86%. Scale and engagement continue to reinforce each other. In Mexico, we reached 14 million customers, advanced our banking license process, and roughly half of our customers received their first credit card through new, reinforcing our role in expanding access to credit. In Colombia, we surpassed 4 million customers and the subscriptionbased credit card significantly increased approval rates while maintaining healthy unit economics. In our detail ecosystem, we reached over 12 million unique active customers across initiatives such as new cell, new pay, and new travel. Adoption remains early relative to our base, but growth and satisfaction indicators are compelling on AI and global expansion. Our foundation model new former is now in production for credit decisioning in Brazil and in testing across additional use cases. AI is already improving underwriting conversion and service quality with picks with AI surpassing 10 million monthly active users. In January, we also received conditional approval from the OC for a US national bank charter. Overall, we deliver on our 2025 priorities while strengthening the foundations for what comes next. Let me now turn to how we're thinking about 2026. As we enter 2026, we see this as an inflection year, the year we begin transitioning from a Latin American leader to a global digital banking platform. Our priorities are organized around three pillars. First, winning in our core markets. Brazil and Mexico will continue to absorb the majority of our capital and management attention. In Brazil, we will deepen leadership in the mass market, expand share of wallets and ARPAC, strengthen small businesses, and grow our high income presence through Ultravleta. In Mexico, finalizing our banking license process is critical as it unlocks the next phase of credit growth and customer depth. In Colombia, we will continue scaling credit and bringing a number of new products across all three markets. Our focus remains on experience, principality, and monetization. Second, strengthen foundations for international expansion. During 2026, we will lay the provisional groundwork for our US opportunity, building on the conditional bank charter approval. Latin America remains our primary growth engine. Third, AI as a superpower. We will expand new former to lending in Brazil and credit cards in Mexico and continue putting AI directly into customers hands moving closer to our long-term vision of an AI powered personal banker in every customer's pockets. With that context, I'll hand it over to Lago to walk through the quarter's financial results. Thank you, David, and good evening everyone. Now before moving into the squatter's financials, I will briefly explain an evolution in our disclosures. As new bank has become a multi-product, multi- segment and multicount platform, we are introducing a managerial P&L to provide a clear view of value creation and internal performance. This evolution does not change economic reality. It only clarifies it. The manager P&L is derived entirely from our IFRS results and represents our structural reorganization of IFRS line items designed to enhance comparability and better reflect economic contribution. The framework preserves net income, cash flow, equity, and regulatory capital and is fully reconciled to IFRS. The key benefit is clear visibility into how margins, operating leverage, and value creation evolve as the new bank platform scales across multiple products, segments, and geographies. And to support this new disclosure, we are publishing a detailed managerial P&L reconciliation report on our investor relations website, including the full bridge to IFRS and the complete methodology used. We have also updated historical data back to the first quarter of 2021 under this new framework. With that context, I will now walk you through the quarter's performance already using the manage Europe P&L. We end the quarter with a total portfolio of $ 32.7 billion, up 40% year-over-year, driven primarily by credit cards and unsecure lending. Credit cards increased 12.2% 2% quarter over quarter. This was the strongest quarterly growth since the end of 2023. This reflects continue limit expansion in Brazil supported by our foundational credit models along with typical fourth quarter seasonality. Now unsecure lending balance surpassed $8 billion with record high originations of $4 billion in the fourth quarter. Secure lending grew 3.8% 8% quarter-over-quarter. Recent changes to FGTS regulations have reduced new originations by more than half. Though the impact on outstanding portfolio remains limited given the longer duration nature of the secure loans, we remain very comfortable with the portfolio's growth trajectory and risk profile underpinned by very disciplined credit underwriting and the evolving nature of our credit models. I will now turn to deposits where we continue to build a scalable and resilient funding base. We ended the quarter with total deposits of 41.9 billion up 29% year-over-year with growth across all three countries. In Brazil, growth reflected typical fourth quarter seasonality, including the 13 salary. In Mexico, following pricing and product adjustments in the third quarter, deposits resume growth in the fourth quarter. On funding cost, we saw improvements across all GUS. The cost of deposits declined to 87% of the intrabank rate on a consolidated basis by the end of the fourth quarter, reflecting mixed dynamics, discipline pricing, and seasonality. Now, deposits remain a very strategic lever for us, strengthening balance sheet resilience, supporting earnings, and reinforcing customer engagement while we continue to manage pricing with discipline to preserve attractive economics. Turning to NII, CLA and riskadjusted margins, net interest income increased 13% quarter over quarter driven by portfolic growth and improved funding costs, especially in Mexico. Credit loss allowance increased primarily as a function of growth. As we expanded credit card limits and balances, provisions rose mechanically due to front-loaded origination accounting while underlying credit quality remain stable. We also recorded a one-off item related to Mexico. As background, proofipo is a sectorwide deposit insurance fund to which also are required to contribute to as the largest of people in the country. New was required to make an extraordinary contribution of approximately $25 million which is reflected in interest expenses this quarter. This is a one-time nonrecurring regulatory levy not a reflection of the credit quality or the financial health of our operations in Mexico. Risk adjust the NEIM closed at 10.5%. and would have been broadly stable quarter over quarter excluding the procopo contribution. Moving to asset quality as our portfolio has diversified across products, segments and geos, we are now presenting consolidated NPL metrics. We believe this provides a more holistic view of credit quality across the new bank platform. Now given Brazil's relative size, trends remained largely driven by the Brazilian portfolio where credit performance continues to track our expectations supported by discipline underwriting. As you see in the slide, early stage delinquencies measured by 15 to 90 NPLs improved for the fourth consecutive quarter, declining 20 basis points to 4.1% partially reflecting the seasonality of the quarter in Brazil. As a result of prior improvements in early delinquencies, 90 plus NPLs declined 10 basis points, pointing to 6.6% in the quarter. Coverage ratios remain strong both on total balances basis and on 90 plus NPLs providing continued comfort across loss absorption. We typically see a seasonal uptick in the 15 to 90day NPLs in the first quarter of the year. This pattern is expected for this coming quarter align with historical trends. Overall, we see no signs of deteriorations and remain comfortable with our credit quality indicators. Turning to gross profit, gross profit reached nearly $2 billion in the quarter, up 38% year-over-year. In terms of composition, float contribution increased reflecting strong deposit in flows in Brazil and improved funding economics in Mexico following the pricing adjustments implemented in the prior quarters. Fees also performed well, driven by very strong purchase volumes, supporting the largest quarterly increase in our credit card market shares in Brazil in over 10 quarters. The credit component reflected higher front-loaded credit loss allowances consistent with the strong portfolio growth in the quarter. Now looking ahead, we will remain credit first. Credit represents the largest profit pool in financial services and is a key driver of engagement and relationship depth across our platform. At the same time, fees and float provide diversification and support a more resilient gross profit profile as we continue to scale across products, segments, and geos. Going to the efficiency ratio. Now, as part of our disclosure evolution, we updated the methodology for calculating this metric to better align with industry practice and enhance comparability. Details of this new methodology are included in the appendex to this presentation and we are also presenting the ratio under the prior methodology for reference. Under the new methodology, the efficiency ratio decline to 19.9%. Following below 20% for the first time in our history. This reflects operating leverage with net revenues growing faster than operating expenses even after typical fourth quarter seasonality in marketing and transactional costs. In the fourth quarter, we also recognized approximately $22 million of transition expenses provisions related to our return to office decision which becomes effective only in mid 2026. These cost provisions are temporary and not indicative of the ongoing run rate. Now looking ahead as the V outlined before 2026 is in fact an investment year. We are laying the operational foundations for global expansion and accelerating the adoption of AI and other new technologies across the platform. These are deliberate investments in long-term capacity building a new bank and they will likely put upward pressure on the efficiency ratio in the near term. We are comfortable with this trade-off. The structural drivers of operating leverage, revenue growth, scale, and discipline cost management remain unchanged and we expect efficiency to continue improving over the medium-term as these investments that we are making today begin to generate returns. to close the P&L review. Net income in the fourth quarter, net income increased 50% year-over-year to $895 million, delivering a record high ROE of 33% while we continue investing in growth and maintaining quite robust capital buffers. This includes certain non-recurring items in the quarter. A positive impact of approximately $58 million on net income related to the remed rate increase in Brazil and a negative impact of approximately $29 million related to return to office provisions and the proofipo levy in Mexico. Now together this results demonstrates the scalability of our operating model. growing earnings while sustaining high returns. Now turning to capital and liquidity. At the holdings level, total capital stands at 8.9 billion. Of that $3.6 billion covers regulatory requirement across our three geographies. $2.2 2 billion represent access capital in our operating entities and $3 billion sit at the new holdings level as unrestricted cash and equivalents available to fund both continue growth in our core markets as well as our global ambitions. Now on the liquidity side, available funding of $ 38.8 8 billion represents approximately twice our net credit portfolio of $19 billion, which represents our gross credit portfolio, net of credit card accounts payable, which provides very significant headroom to continue scaling credit responsibly while also seizing the opportunities coming from further balance sheet optimization. Our captain liquidity positions reinforce our ability to invest in growth from a position of strength and that is exactly what we intend to do. Taken together, our cap and liquidity positions are not simply a reflection of our past performance. They are in fact the foundation of what comes next. And we enter 2026 with the financial strength and to win our core markets, the firepower to accelerate globally, and the discipline to do both things responsibly. Now, I'd like to thank you, and we are very happy to take your questions. We will now start a Q&A session for investors and analysts. If you wish to ask a question, please click on raise your hand. If your question is answered, you can exit the queue by clicking on put your hand down. Please limit yourself to one question and a follow-up. If you have further questions, please re-enter the queue. You may submit online questions at any time today using the Q&A box on the webcast. I would now like to turn the call over to Mr. Giler Misoto, investor relations officer. >> Thank you, operator. Could you please open the line for Mr. Eduardo Hosman from BTG Pakto? >> Hi. Hi everyone, good evening. I have a question for David regarding AI. David, do you see a risk that new could be disrupted by AI or do you see new as a potential winner in this transformation? It would be great if you could elaborate a little bit uh since you know I think uh the stock and then the sector you know uh in the US has been suffering lately because of that. Thanks. >> Sure. And the answer is both. It is both a challenge and has potential for disruption as well as significant opportunity. Netnet we think it's a more opportunity than than challenge for us. But we have to take it pretty seriously and we are taking it very seriously. A couple of ways to think about it. I I think there is one specific trend or one common denominator across every technology transformation and this goes all the way to even the internet era which is any business model that relies on simply moving byes from point A to point B where you're effectively a broker tends to be heard the quickest because one of the things that technology does is remove a lot of that friction in in those processes. So I think to some of the some of the commentary that has been around in the market about financial services is I think businesses in financial services that are simply moving money from one point to another point will have the higher risk of potential disruption. You need to be able to add more value than that. And I think from that angle we think we have always believed that credit specifically credit revenue is the actually the most sustainable type of revenue in financial services because of the capital intensity the regulatory nature of it the balance sheet aspect and the proprietariness of the data where AI plays a role and and uh ultimately allows you to make a better decision on that. So I think from one angle there is potential for uh challenging around the business model but I think we're very well positioned given the way we are set up and the strength around credit that we have. I think a couple of our opportunities really on the revenue side and as a reminder we our pack is $15 today and our incumbent competitors are something like 40. So we have a significant opportunity to increase our pack is around uh new crossell and new products that we can be delivering to the very significant consumer base that we have and I think everything around crossell everything about using the data that we already have to offer new products and services it's a big opportunity and now is an enabler and here we've discussed a few times over the past year the significant lift that we're seeing when we're using our own foundation model on credit but also cross-ell and a number of other revenue related opportunities. And then you have the cost side and I think the cost side is a little bit more clear. I think every single company really might benefit from that where every function that you do especially as a bank from customer service to compliance to regulatory to IML will be significantly enhanced or is being significantly enhanced uh through through AI. So netn net I do think that there are uh potential disrupt disruptive vectors in some of the business models but I think when you compare when when you think about the fact that 95% of the world's financial services profits are still concentrated in incumbent banks that still have significantly larger uh cost structures means that we're very well positioned to take advantage of AI as a technology enabler for revenue and cost and ultimely Madly be one of the winners in this in this technology shift. >> Perfect. Thanks a lot for for the big answer. Thanks. >> Operator, could you please open the line for Mr. Horgei from Morgan Stanley? >> Hi. Uh, good afternoon everyone. Congrats on the numbers. I I wanted to ask a question about your loan growth for the quarter. and and I and I guess it's a two-part question. First, can you help us um dimension the impact that your clip increases uh are having on your credit card growth to to to what extent? You know, I know there is evidence seasonality, but if we think at the year-on-year growth rate, how much do you think came from those clip increases? Um how much of that acceleration in credit cards do you think uh is still going to roll over into 2026? Um and then the second part is uh on uh on FGTS. Is there a way to quantify what was the headwind on uh your loan book uh based on FGTS in in other words excluding FGTS what would have been uh the portfolio sequential growth. Thank you. >> Uh, hi Jorge. Thanks for the questions. Let me try to slice them in in those two parts. So your first question was on the clip. Look, this was a year in which we have deployed uh these new technologies and approach to credit underwriting uh very successfully so far in allowing our customers to increase kind of their credit limits especially in Brazil so far. Um and the best way for me to kind of illustrate the magnitude of this increase is maybe refer you to know explanatory note number 32 of our financial statements in which we are then starting to provide what I call the unused credit limits and you can see that unused credit limits went from about $18 billion to $29 billion. So an increase of about know 11 billion dollars which know accounts for about 60% increase in unused credit limits. It's a big one. Um and I think it wouldn't be possible for us to do so if we hadn't been leveraging kind of the the entirety of the predictive AI credit underwriting tools that have been kind of developed by us over the past now 18 to 24 months. Um, have we seen all of those benefits translated into um, net income? The answer is no, not yet. So, usually I think um, at least I I see kind of a credit limits increases playing out in three steps. First, you have to offer the additional credit limits. Then the credit limit translates into purchase volume. Uh, and then you have to see whether the purchase volume will then translate into IB. We are starting to see the first step which is in the fourth quarter of 2025 our market share in purchase volume in Brazil has gone up by about 50 basis points. It was the biggest market share gain that we've seen at New Bank over the past 10 to 11 quarters. Uh there's still more to come and then we still have to see kind of all of those purchase volumes uh reflecting into IBB. uh we even though 2025 was was I think a big uh sign of the magnitude of this ability to increase clip I don't think it will stop there you will continue to see this kind of a unfolding in new models and new improvements throughout 2027 20 2026 2027 and onwards and I would also say that the advent of the predictive AI technology will not stop at clip Brazil right it will be and is being exported to clip Mexico clip Colombia and then we're going to go acquisition Brazil acquisition Mexico what come you're going to go to fraud it's going to go to deposits uh pricing and designs so it's there's a plethora of options that that we're going to be leveraging on. So that's my attempt to address your first question hot. The second question was on FGTS. So the new regulations of FGTS came into effect on November 1st, 2025 and we have seen our originations of FGTS loans dropping by about 50 to 60% in the period in which the new regulation has has become effective. It was more than offset by the growth in public conal in public payroll loans. uh but it has certainly been a headwind to the origination of this very kind of interesting asset class. Thank you, Lago. And is is there a way to to quantify that you know thinking about on a quarter quarter basis what would have been the total balance of credit expansion uh excluding that? So instead of the 11% FX neutral quarter quarter what would have been the number without FTS? >> Yeah, it would have been about uh four 13 to 14%. >> Okay. So quite significant. Thank you Lago. That was super clear. Thanks a lot and congrats again. >> Thanks for >> operator. Could you please open the line for Mr. Pedro Eduki from It? >> Hi guys, good evening. Thank you so much for for taking my question. um a little more as you look into 2026 and I'm going to use some of the prepared remarks there especially in terms of you know the efficiency trajectory uh you mentioned it there's there might be some some pressures I want to see if you can maybe go into detail about it and of course it's a ratio and also as I'm trying to think about revenues of course you're ending on a very high pace of loan book um ni but as I look forward Can you help us understand a bit on the drivers when we see funding costs go up and go down? I'm sorry if we can see that continuing a little bit on the portfolio. Just help us think a bit about these drivers. Now that you are at already, you know, 35% are Thank you, >> Leuki. Thanks for the question. Look, I I will refer to slide 16 of our earnings deck which is uh brings the efficiency ratio evolution and we have seen kind of over the past quarters and years uh the the continuation of the operating leverage potential of the of the organization. We wanted to highlight very clearly that we may see kind of a upward pressure on efficiency ratio in the coming quarters i.e in the short term like the next four to six quarters as a result of very deliberated investments. I would bucket them in three categories. Number one is we have recently announced a return to office policy right in which starting on July 1st 2026 employees will start going back up to the office uh two times uh per week. That means that we're gonna have to kind of prepare the offices, increase the the least area uh to welcome our employees as they prepare to come back to the office. We believe that this will bring enormous benefits to the company including about kind of ingenuity, kind of innovation, coordination, but it does come with an increase in opex in the short term and we wanted to clarify this. I would say that the return to the office will likely bring kind of our efficiency ratio all else constant up by about 80 to 100 basis points. The second bucket I would say uh leuki is the all of the investments that we are making in AI and new technologies. uh so that brings um new talent uh that we have to hire eventually new uh investments in R&D in research and GPUs that will have kind of a short-term costs which we believe will be way way way more offset by the medium-term gains that we're going to have but we will not shy away to make investments in talent R&D and GPU to maximize the impacts uh of our efforts in AI. Um and I would say that kind of uh you have uh return to the office, you have AI and the third one is the globalization. So there is a lot of investments that we are making in laying down the foundation for us to go beyond Brazil, Mexico and Colombia and know a substantial amount of those expenses are not capitalized and are incurred in 2026 for us to collect revenues and margins in the in the following years. So that's the the directional I wouldn't be able to pro provide you at this point in time more kind of a precision on on the facts of all of the all of the three but we think that they would put some kind of a upward pressure in the coming quarters. >> Okay. Thank you so much. >> Operator, could you please open the line for Mr. Fernandez from JP Morgan? Thank you. So, hi David, hi Lago and congrats on the year. most metrics they they look very good but there is one one line here that I think investors are a little bit more a puzzle this quarter that is the tax rate right and I know there is a a manager adjustments and we see uh some incumbents in Brazil also having similar adjustments so I think it's it's easy to understand and explain but regarding this quarter and maybe maybe Lago can help me here I would like to understand what drove the lower accounting tax if this was the DTA uh and you have a lower DTAS but just checking if this was DTA some kind of tax exempt bond IOC and maybe some kind of color going ahead you know what should you expect for the tax rate uh for new bank thank you >> sure so Yudi look I think um the lower effective tax rate in the fourth quarter can be explained by I would say largely two things one completely completely non-recurring and one recurring. What's the non-recurring one? So about beginning of December 2025, the federal government approved an increase in the corporate income tax applicable to to fintax, including those like new bank that essentially kind of increased the progressively the corporate income tax from about 40 to 45% starting in 2026 and then going all the way in the next no two years. Even though that in the medium-term is a headwind for our effective tax rate in the quarter in which this kind of a legislation is passed, we have to rememeasure our deferred tax uh deferred tax assets. So our DTA is remeasured up and that increase in the DTA which was about $58 million UDI is recognized in the fourth quarter of 2025 decreasing the the defective tax rate in the quarter. So that's the portion that I attribute as a nonrecurring one-off event. the recurring ones is that kind of as we increase the amount of investments that we have been making in technology across the firm in Brazil but also in the other countries we end up also benefiting from kind of a technology investments u tax breaks uh that some of the governments provide and that may increase a little bit the opac they are more than offset by lower effective tax rate those are the two u aspects that have kind of impacted ETR this quarter Oh, super clear Lago and you also had the non-recurring on the proof of like the the the deposit as you mentioned. So not the same magnitude but also a negative uh versus this this staywind you had in the quarter. So thank you very much. >> No, you think no that's that's precisely clear. I think we had basically three one-offs in the quarter, right? Uh what I would say one is the $58 million DTA reassessment that we just discussed. The other one was the about $25 million oneoff expense of the proofipo. Uh and the third one was the $22 million uh provision expense for the return to office uh program. Right? So those are the three moving parts that we have. Um DTA positive um return to the office negative and proc negative. >> Super clear. Thank you, Lago. operator, could you please open the line for Mr. Mario Pier from Bank of America? >> Hey guys, um, thanks thanks for taking my question. I wanted to focus a little bit more on on the provision expenses, right? because we we did see your cost of risk go up this quarter and and last quarter if if I recall you were talking about your ability to extend credits to to existing clients because you were employing AI and then you were seeing a a lower cost of risk and and and this reversed this quarter. So I wanted to understand a a little bit better uh what happened with provisions uh uh in the quarter also you know if if you can talk a little bit you showed your NPL relatively stable but this is a consolidated uh NPL correct and and and before you showing us Brazil NPL only it seems like your NPL on a consolidated basis is lower than than the previous number. Just trying to understand why the NPLs as you were expanding into Mexico especially. Uh are you seeing lower NPLs in Mexico than you had in Brazil? Thank you. Mario, thanks so much for the questions. Let me try to address um each of them in order. So the first one is we did have an increase in CLA uh item this quarter and I'll be very clear this was entirely attributed to growth not to any type of asset quality deterioration experienced in the quarter. So we didn't see uh we we saw asset quality performing very much in line with our expectations including the seasonality trends and now we are on like February 25th and we continue to see kind of asset quality metrics trailing our expectations very well in all asset classes in Brazil in Mexico and in Colombia. So we watch this kind of quite closely but as of now we have not seen any signs of degradation in our asset quality. What we have seen to justify um the increase in CLA is not only the increase in the credit book in itself which you can see kind of uh in slide 11 um that grew by about 11% quarter over quarter but also Mario in the increase in credit limits unused credit limits which do not show up as credit portfolio per se but are exposures for which we do need to build CLA Um so uh so again uh CLA growth entirely driven by uh growth in exposure not the gradation of assets. The one thing that I would highlight at least Mario that I I like to see going know on a recurrent basis when I look at those numbers is like NPL formation was fairly stable 3.6 six to 3.5 stage three formation fairly stable and one metric that I personally look as a ballpark mind you is the CLA divided by average credit portfolio so it used to be like 3.9 uh fourth quarter 24 then 4.3 then 3.9 then in the third quarter of 2025 it went down a little bit from 3.9 to 3.3 and now it's back to 3.9 so I think the third quarter uh as We updated the models with higher recovered ratios. It may have come kind of a slightly below. Now it's going back to 3.9. I'm sure you're going to ask the questions, what's next? I think what's next is something around or below the the average between 3.3 and and 3.9 on the coming quarters. Of course, something that we don't control, but that would be more or less now our expectations with the mix that we have today. Um so that's your your your first question. Now I think your second question was on the NPLs. We do provide kind of a now consolidated NPL trends. Uh simply because as we grow the book internationally with Mexico Colombia and hopefully other countries in the next years u we start to see those metrics kind of better representing the economic reality of the company rather than looking at Brazil only. However, if we were to post the Brazilon NPL charts, they would equally show kind of a fairly benign trend of asset qualities moving very much in direction of u of uh uh of seasonality that we expect to see in the fourth quarter. And then your question about look how can you actually aggregate Mexico and Colombia and get to lower NPLs it is justified mostly by the write off policies that we have in those countries then on the the risk of those countries. So for example in Mexico and Colombia we can have shorter writeoff policies than we have in Brazil and that kind of affects the the overall INPL um calculations but in general mum no concerns at this point in time with asset quality. It is super point super important to highlight and I know that you've been following this for many years. So I I speak more for to the to the other uh uh participants of the call. Fourth quarter of every year we usually observe a benign movement in NPLs because of seasonality but equally we do expect to see kind of an uptick in NPL's in the first quarter of 2026 also following natural seasonality. Right. That's very clear L. Thank you. >> Thanks Mario. >> Operator, could you please open the line for Mr. Gustavos Shroen from City? >> Hello. Good evening everybody. Uh thanks for thanks for for the opportunity. My question is regarding um credit products and and also client mix. uh we we could see um relevant increase in loan book for credit cards and personal loans but um I'd like to to explore more the secured loans um Lago explained about Lago explained about the FGTS chains uh recently and it has impacted the the evolution of this portfolio but I'd like to understand the appetite for payroll loans I mean public and pay public and private payroll loans how how how the banks is this um this this this product we should expect some let's say uh replacement um of FGTS by these uh private pearl loans mainly so any any any view on that would be great and also about the the client mix uh should we could you explain us how the bank is evolving in this uh let's say uh exploring the affluent uh market I mean mid to high income customers especially after this increase in credit limits. That would be great. Thank you. >> Well, thanks for the question. Let me try to address the fir first one on the breakdown of originations of our secure loan and then then you may may address the second one on our performance in in both the what we call super core and and high income segments. So um I would basically uh divide our what we call secure loan portfolio in three, right? So we have the FGTS, we have the public payroll loans and we have the private payroll loans. So FGTS um is the one that has recently received kind of a negative impact of the new regulations starting on November 1st, 2025. Uh it has dropped kind of our origin nations by about 50%. uh and uh and we continue to have a very good dialogue with the government to try to influence influence the agenda for 2026 and 2027. Um we have become market leaders in FGTS. It was a very it is and it used to be a very good product and we we we believe it will continue to play an important role in the formation of our secure landing book even though if regulations don't change will probably play a smaller role than it could have played before but that's that's bucket number one bucket number two public conad or public payroll which I put here including both sappi and yasi we are very bullish in this uh we think it is still a market that has kind of a lot of uh opportunity to increase efficiency in the intermediation and in the distributions. We can offer know products at materially lower cost than most of the other market participants. Um and it's now finally entering into a time in which we will see interest rates dropping in Brazil. And with that we hope that kind of a portability will pick up and we like to believe that we're going to be one of the biggest beneficiaries of that um uh of the trend. So I think it is one that we think regulation is there portability is there interest rate uh cycle is there. So we are bullish that this will kind of have an even faster growth in 2026. The third bucket is private conciganado. So this is a a product with which we are very very optimistic and bullish on a structural form. By which I mean it is a way for fintech such as new bank to have access to information and to customers who used to be primarily served by income banks which own the payroll service of large corporates in Brazil. So, it's a massive opportunity for us and it's one that we will lean in as soon as we see uh the material improvements in credit risk that this product offers. We are still not seeing that. I think part of that is kind of a counterparty risk of the corporates. Part of that is the collateral is not yet operating at its full potential. We however think it it's a matter of when, not a matter of if. U Gustavo, you've also been following this quite closely for some time. You may recall that when public concern was introduced a few years ago, it took kind of a year, a year and a half for everything to all of the collaterals to be working well and we are just waiting for this to happen for us to uh lean in more more heavily. Um now let me pause here uh see if you have any follow-ups and then pass the floor to to David for him to comment on the affluent part of your question. >> All clear. Thank you. >> Perfect. Uh last thing I'll say on the on the on the secure lending side is it it is a continues to be a very significant opportunity for us. I think growing within that existing profit pool has been probably more complicated than we expected given the significant operational complexities that the product has. There is a fair amount of features that need to be built into the product specifically around portability. Most of the growth of those products are portability and when customers are doing that portability you need a lot of different integrations. There's also a fair amount of fees. All of that friction is going away. I think the tailwind if there's one single one consistent tailwind in Brazilian financial services is that all those all that friction and cost that historically have improved uh or had had made it harder to to to move towards the best product is going away. So we're seeing accelerating market share gain and we are ready to we're building a lot of those features and we're getting significant share on this on the secure line. So while I I wish the traction to date had been significantly higher I think every single month we're seeing an acceleration of market share in the tailwinds are are helping. On the high income side we continue to see a very good growth. Again this is as this is a competitive environment is a competitive segment. A lot of mark a lot of banks incumbent banks and and others are going up market. We define up market for us as customers that are making above 12 12,000 re per month. So this is not you know 1% of Brazilians this is probably closer to 10% of Brazilians and within this consumer base we already have two out of two out of five about 40% of those Brazilians in that bracket are customers of New Bank today. They're just not really using us as their primary card. We are the third car. We have small share of wallet. A lot of the times was because we gave him a low credit limit initially and if we had opportunities to improve credit limits on mass market and we're seeing that with AI models, we have even more opportunities to improve uh credit limits on high income because it's a customer type that we didn't really understand. So we have to fix credit limits which we're doing. We have to improve the value proposition of the product specifically on credit card which we are. Over the past couple of quarters, we launched new improvements, uh, different cashback rates. We announced a lot of integration with our new travel platform. So, it's a it's a it's it's a it's a really good product where we guaranteed the price of any ticket or hotel that you book in our app. We're seeing customers getting significant value out of that. So, it's very well integrated with the travel value proposition. We announced our um frequent flyer lounge in uh in Guadulio in S. Paulo that is getting a lot of acceptance. So there is a there's a long path of opportunities that we have to improve that product on the credit card side and we see that translating into increasing market share. Uh this segment for us grew something like 40% year-over-year and is gaining share across our portfolio. So we're seeing good traction. A lot of these investments are paid off. The second part of the value proposition is investments which you might know that obviously we've discussed it a few times. Uh it's taken a while for us to build a very very compelling investment value proposition in our app. We're getting very close. We are close to really product parity. We have now all the products that this segment needs in our app. We have fixed income products, equity products, crypto products. We have all the type of visualizations that this customer is asking. So we're getting very close to have a a very good investment platform that it's critical to win these high income segments. So overall these are these two specifically opportunities that you mentioned they are not one two quarter opportunities where you significantly gone. It's these are long journeys of a lot of product improvements but we we feel very good about the progress we've made and and the opportunity we have ahead. And we'll start with just one additional uh point. We we mentioned about the mass market which in in our definition are customers who earn up to 5,000 rais per month. And then you asked about what is called high income which are customers who earn more than 12,000 rays per month. Uh which was the answer that that the VA has provide. But in the middle which is what we call super core i.e. customers who earn from 5 to 12,000 ris per month. It is the segment in which we are growing the fastest. Right. So if the V mentioned that in the high income we've been growing at about 40% per year in what we call super core we are growing at about 100% in 2025. So I I would kind of invite you and and others to kind of uh segment this at least in three parts. Um and I think there's a massive opportunity for us to go into the super core there as well. >> Super clear guys. Thank you very much. Paria could please open a line for Lea Gawala from HSBC. >> Hi, thank you for taking my question. Uh keep it short. Just wanted to follow up on the private payroll segment. Uh we do understand your concerns regarding operational complexities at this point. uh but we do see a lot of uh other lenders being more aggressive in this market and uh the market has has doubled in 2025. Do you see the risk of some of your customers who might have a personal loan with you uh uh going or have a credit card with you going to other banks and taking private payroll loans and ultimately their leverage increases and that could impact the asset quality for those customers for you on the unsecured side? >> Yeah, very good question and yes we are very mindful of those two risks which I call kind of the cannibalization i.e. customers borrowing from another bank and kind of uh uh us losing the primary banking relationship. That's one. The second one is structural subordination, right? So, uh customers borrowing and providing collateral and ourselves becoming structurally subordinated to someone else. The same can be can can be make when we lean in into this product. Even though we are being very mindful of this, we have not yet seen any evidence that any of those two risks that you you you've laid out are materializing within our our customer base. In fact, most of the customers who have been applying for a private payroll loans have been customers with higher credit risk. At least that has been our experience and most likely customers who would not be entitled to have access to an unsecure personal loans or even sometimes to an unsecure credit cards but but it's but we're tracking this very very closely in terms of the growth of the market that you've also pointed out. Nha I would highlight that there are a few things to adjust in this growth. One is there's just a natural shift from uh asset classes that were considered private concigan without the collaterals that were instituted by the government and are just now migrating to the new private concern. Those are usually loans that have been carried by kind of the more traditional income banks and they account for a fairly substantial portion of what is seen as the growth of this new asset class i.e. is just migration from the old to the new. The second one we now see kind of a players playing in this space with very two kind of a different approaches. The incumbent banks who have relationships with the corporates when it comes to uh payroll loans. Uh they are more focused on the lower risk customers and the digital players are more focused on the higher risk customers. Um but when we step back we are seeing kind of this market operating with uh first losses of know low double digits which is not yet conducive to the quality of the collateral that this product can have. Once we see kind of a credit uh uh improving as the product will deliver, we will not shy away to leaning very heavily. And the term cannibalization is just not a term that we use. We will be there offering the best product for our customers irrespective if they will actually use the proceeds to prepay or repay higher EU assets. Uh we are not moving ahead with this as strongly as others not because of the risk of cannibalization but more because of conservatism with uh with credit risk. Uh understood lag. And in terms of cannibalization, yes, your NIMs might go down, but risk adjusted NIMs might not be impacted as much even if you replace the credit from unsecured to secured with some of your customers. Right. >> That's correct. The other component of that, Niha, is that you may see at some point in time the amount of capital that you have to allocate to private concern possibly being lower than the ones for unsecure. So not only risk adjusted NES may be preserved or even increasing in an absolute amount but the return on equity may be as appealing if not more appealing because you have to pose to lower lower capital to that yet to be to be defined. >> I just wanted to understand why not offer the private payroll and I understand that there are complexities and you can price for those complexities and collateral not working smoothly. Why not offer it to some of the customers whom you deem to be riskier and you don't want to give them an unsecured loan at this point? Why not start off with a secured private payroll loan with them and price it accordingly? >> Yeah, we most certainly could. But I think what we are what we are saying is that the benefits of the collateral for the higher risk customers have not proven to be mature enough to justify a substantially different credit underwriting or pricing policy to date. But again just to be super clear I think it is a matter of when not a matter of if. This is a good product. This is a good structure. Uh this is this is this will benefit can affect consumers by and large. We just don't think that is yet ready to be kind of uh uh the product in which we will lean in that heavily at this point. >> Excellent. Thank you so much. >> Uh operator, could you open the line for Mr. Tito Labata from Goldman Sachs, please? >> Hi. Uh good evening. Thanks to Lago Davided um taking my question. I guess my question is following up a bit more on expenses. Uh I guess first you know you talked about 2026 being an investment year and thinking more about the global expansion. just help us think a little bit about you know what investments are needed there because I mean you you got the initial license pre-approval I guess in the US but is there more investments that you need to make in the US already in 2026 just to help us think about what are these investments that you need to lay this global foundation and and then also just specifically in the quarter because if I look at the accounting P&L which I guess is more comparable to the estimates that are out there there was a big jump in expenses and I know there was the oneoff uh from the return to office but you know marketing expenses jumped quite a bit GNA expenses jumped a bit ju if you can just give some more color what what specifically drove drove those increases in in operating expenses in the quarter would also be helpful. Thank you. >> Thanks Tito. Quickly on on us um we will continue to invest I mean the kind of we are investing more mostly on team building and product >> uh it's the minimus it's not a significant uh source of uh investing for launch in the US we we did announce a number of bigger marketing partnerships uh over the past couple of months and those really are related to both our core markets as well as US and potential potentially future markets around the world. So there is an increase a bit of marketing their team increases that we're having for the US launch but I wouldn't say they're going to they expect to be significant in 2026 >> and then Tito on your questions about the the breakdown of our u opex in 20 in the fourth quarter of 2025. I think the marketing one is a traditional seasonal one usually spikes a little bit in the fourth quarter of the year. The other ones was uh um uh was uh incorporated in the in the uh DEX uh breaks related to technology investment. So many of the increases in Le Dubane that are recognized as OPAC but they actually drive quite a bunch of uh of tax efficiency but nothing uh extraordinary or non-recurring other than those three moving parts that we that we've mentioned. >> Okay. No, super helpful. Thanks, Lago. And maybe just one quick followup for for Davidid. Any any just initial thoughts on on what the expansion plan in the US will be like just a highle footprint on what you're targeting segments you know go to market there any color or thoughts that you can provide would be super helpful. >> Sure. at a very high level and we we we're not really ready yet to disclose specifically what the strategy there is going to be but at a very very high level this is the largest market in the world and while at a very high level it seems like a very saturated or competitive market in certain segments when you dig in into sub segments in certain niches that by the way happen to be the size of Brazil we actually find opportunity to solve a number of consumer problems that are similar to what we've done in the past So we're going to have a very targeted strategy. Uh we're going to be very disciplined on investing. Uh there are a lot of uh focuses on certain potentially geographies or subsequence that we are interested about. You're not going to see us kind of shooting in all directions here because it's a bit of a long journey and we fully acknowledge that this is a this is a very competitive and sophistic sophisticated market in certain areas. But we do think that it's it's uh there there are there are opportunities for us to create a meaningful business in certain sub areas of the United States. >> That's great. Thanks so much David. >> Thank you. >> So thank you everyone. We now have approached 60 minutes of the call. So we are now concluding today's call. On behalf of New Holdings, our investor relations team, I want to thank you very much for your time and participation on new earnings call today. Over the coming days, we'll be following up with questions received tonight, but we are not able to answer. And please do not hesitate to reach out to our team if you have any further question. Thank you and have a good night. >> The new holdings conference call has now concluded. 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Nu Holdings Ltd. shares their results for the 4th quarter of 2025. For more information, access: https://www.investors.nu