AGI (NYSE:AGBK) said its second-quarter results marked an operational inflection point as credit originations, customer additions and fee revenue accelerated following regulatory disruptions that affected Brazil’s payroll-lending market in 2025.
Founder, Chairman and Chief Executive Officer Marciano Testa said the company originated more than BRL 7 billion in gross credit during the quarter and added more than 600,000 customers, ending the period with 7.6 million active clients. He said the company resumed growth after adapting to changes in the INSS payroll-lending framework and related governance measures implemented since mid-April.
Loan Growth and Asset Quality
Total loan balances rose 21% year over year to BRL 37.1 billion. Secured loans represented 88% of the portfolio, or BRL 32.6 billion, while unsecured loans accounted for 12%, or BRL 4.4 billion.
AGI continued to expand in INSS payroll lending, reaching a 9.6% market share in the second quarter, up 160 basis points from a year earlier and 60 basis points sequentially. Testa said the company surpassed 1.5 million payroll-benefit customers and moved ahead of Santander in the segment.
Private payroll lending was a major source of growth. The private payroll portfolio reached BRL 1.4 billion, up 48% from the prior quarter and 184% from a year earlier. Chief Financial Officer Marcello Dubeux said the company has been originating about BRL 200 million to BRL 250 million per month in the product after revising its credit models and testing underwriting approaches late last year.
Responding to analyst questions about the pace of private-payroll expansion, Dubeux said the company was seeing first-payment default rates “below teens level” in its newer cohorts. He added that AGI evaluates the product’s expected losses relative to net interest income and remains comfortable expanding when that measure reaches roughly 1.4 times to 1.5 times.
Nonperforming loans more than 90 days past due declined to 3.3% at quarter-end, while the provision coverage ratio stood at 182%. Dubeux said the company considers that level of coverage comfortable. The company’s annualized net interest margin was broadly unchanged at 11.9%, while net interest margin after provisions declined 50 basis points sequentially to 6.8%.
Revenue Growth and Profitability Pressures
Total revenue increased 26% year over year and 6% sequentially to BRL 3.2 billion. Net interest income rose 11% from a year earlier and 3% from the first quarter to BRL 1.3 billion. Fee revenue exceeded BRL 135 million, increasing more than 35% sequentially, according to Testa.
Dubeux said brokerage fees rose nearly 80% during the quarter, reflecting stronger product activity and customer origination. He also noted that portability fees were lower because of regulatory changes tied to Brazil’s Desenrola program, describing that effect as temporary.
Recurring net income reached BRL 200 million, up 7% from the prior quarter. However, analysts questioned a decline in pre-tax profit, which Morgan Stanley’s Jorge Kuri said totaled BRL 115 million and was down 47% sequentially.
Dubeux described the pressure on pre-tax earnings as transitory, attributing it to upfront costs associated with adding customers, increasing originations and provisioning for new credit vintages. He said expenses include expected credit losses, customer-service costs, transaction expenses and technology investment, while interest income, fees and cross-selling revenue accrue over subsequent quarters.
The operating efficiency ratio increased 570 basis points sequentially to 48.9%, which the company said reflected expense growth tied to the expansion of primary customer relationships and the loan portfolio. Dubeux said AGI does not expect significant overall expense movements ahead, though some costs remain variable with customer growth and technology usage.
The company said its cost of credit was 5.9% during the quarter and that it expects the measure to remain around the lower-6% range. Dubeux also said the effective tax rate should normalize upward as pre-tax income recovers, potentially returning to positive territory during the third or fourth quarter.
Agi+ Subscription Launch
AGI also introduced Agi+, a subscription platform intended to generate recurring service revenue and deepen customer engagement. The service offers three plans priced from BRL 39.90 to BRL 59.90 per month, bundling medical, residential and dental assistance, mobile-phone benefits and, in premium tiers, services such as pet care. Plans also include monthly credits for expenses including cooking gas, food and groceries.
Chief Client Officer Matheus Girardi said the product was designed to address customer needs beyond traditional financial services, including healthcare access, medication costs and household expenses. He said an entry-level subscriber could save up to BRL 1,500 annually.
Within 45 days of launch, Agi+ had more than 250,000 active subscriptions. Dubeux said 67% of new credit originations included an Agi+ cross-sell, and 99% of sales agents had sold at least one subscription. The entry-level plan has seen the strongest demand, he said.
The company estimates annual revenue per Agi+ customer of about BRL 600 and servicing costs of approximately BRL 118, implying an expected contribution margin of about 80%. Dubeux said AGI sees a path to 1 million subscribers by year-end, though Agi+ did not contribute revenue in the second quarter and is expected to begin affecting results in the third quarter.
Funding and Capital
Total deposits rose 18% year over year to BRL 39.9 billion, with institutional counterparties representing 62% of funding and retail sources accounting for 38%. Dubeux said Moody’s and Fitch Ratings each upgraded the company’s credit rating from AA- to AA.
Equity increased 62% from a year earlier, reflecting net proceeds from the company’s initial public offering. Its consolidated capital adequacy ratio was 18.7% at the end of the second quarter, including a Tier 1 capital ratio of 17.6%.
About AGI (NYSE:AGBK)
Our mission is to revolutionize financial services for the largest and fastest growing segment of Brazil’s population: individuals who have been underserved by incumbent banks and have not been effectively reached by digital-only banks. We seek to make credit and banking solutions more accessible and affordable for the Brazilian consumers who we believe need it the most, including social security beneficiaries and private and public sector workers. We have designed a unique value proposition for this population, who may be older, have a lower income, be less tech-savvy or have less access to education.
