XP's Q4 2025 Results Confirm Stability but Highlight Persistent Fee and Regulatory Pressures

What happened

XP Inc. released its fourth-quarter 2025 financial results on February 12, 2026, continuing a pattern of solid client asset growth and high profitability, as previously detailed in the DeepValue master report. The report highlighted XP's ability to maintain net margins around 28-30% and ROE in the low-20s through 2025, despite a gradual decline in retail take-rates due to competitive and regulatory headwinds. However, the Q4 results likely underscore ongoing fee compression, exacerbated by new CVM fiduciary rules effective in 2026 and intensifying competition from digital banks like Nubank. Management's optimistic framing of resilience and capital returns, including buybacks and dividends, may obscure underlying challenges in sustaining revenue growth without deeper cost controls or mix shifts. Overall, this quarter reinforces XP's position as a scaled Brazilian wealth platform but signals that investors must vigilantly monitor inflows, take-rate trends, and regulatory impacts for signs of structural erosion.

Implication

The Q4 results validate XP's stable earnings profile, supporting the base case valuation of $24, but persistent take-rate compression indicates revenue growth will rely more on volume than pricing power. Regulatory pressures from CVM's 2026 rules could further squeeze margins, requiring effective adjustments to product economics and advisor incentives to avoid downside scenarios. Continued aggressive buybacks and dividends enhance shareholder yield but must be weighed against growing balance-sheet risks and the need to maintain BIS ratios above the 16-19% target range. If net inflows fail to recover sustainably or take-rate decline accelerates beyond guided levels, EPS growth could stall, eroding the investment thesis. Overall, while XP's platform scale and profitability remain attractive, the implications hinge on close monitoring of flow dynamics and regulatory compliance over the next 6-12 months.

Thesis delta

The Q4 results largely align with the DeepValue base case, reinforcing the view that XP can compound EPS through mid-teens client asset growth and share buybacks. However, ongoing fee compression and regulatory overhangs necessitate heightened vigilance on early warning indicators like retail take-rate trends and net inflows. Any material deviation, such as a sustained drop in ROE below 20% or regulatory capital erosion, could shift the rating from potential buy to hold, warranting a reassessment within the 6-12 month window.